SUBSCRIPTION AGREEMENT
0000 X.
Xxxxxx Xxxx., 0xx
Xxxxx
Xxxx
Xxxxxxxxx, XX 00000
Ladies
and Gentlemen:
The
undersigned subscriber (“Subscriber”) desires to
purchase the number of Shares set forth on the signature page of this Agreement
(the “Agreement”). Accordingly,
the Company and Subscriber agree as follows:
1. Sale and Purchase.
Subject to the terms and conditions set forth in this Agreement, Subscriber
hereby tenders the amount set forth on the signature page of this Agreement for
the purchase of the number of Shares set forth on the signature page
hereto.
2. Representations, Warranties,
and Agreements of Subscriber. In connection with this subscription,
Subscriber hereby makes the following representations, warranties, and
agreements with the Company and confirms the following understandings, each of
which are made or confirmed, as the case may be, with respect to Shares
subscribed for herein:
(a) Investment Purpose.
Subscriber understands that the Shares, (the “Securities”) are “restricted
securities” and have not been registered under the Securities Act (as defined
below) or any applicable state securities law and is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, has no
present intention of distributing any of such Securities and has no
arrangement or understanding with any other persons regarding the distribution
of any them (this representation and warranty not limiting Subscriber’s right to
sell the Securities in compliance with applicable federal and state securities
laws). Subscriber is acquiring the Securities in the ordinary course
of its business. Subscriber does not have any agreement or
understanding, directly or indirectly, with any person or entity to distribute
any of the Securities.
(b) Review and Evaluation of
Information Regarding the Company.
(i) Subscriber
is familiar with the Company’s financial condition and actual and proposed
operations. Without limiting the foregoing, the Subscriber acknowledges that the
undersigned has reviewed the corporate documents regarding the Company and the
terms of this Offering.
xxx.xxxxxxx.xxx
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(ii) In
addition to the foregoing, Subscriber acknowledges that Subscriber has
conducted, or has been afforded the opportunity to conduct, an investigation of
the Company and has been offered the opportunity to ask representatives of the
Company questions about the Company’s financial condition and proposed business
and that Subscriber has obtained such available information as Subscriber has
requested, to the extent Subscriber has deemed necessary, to permit Subscriber
to fully evaluate the merits and risks of an investment in the
Company. Representatives of the Company have answered all inquiries
that Subscriber has put to them concerning the Company and its activities, and
the offering and sale of the Securities.
(c) Risks. Subscriber
recognizes that the purchase of the Securities involves a high degree of risk
and is suitable only for persons of adequate financial means who have no need
for liquidity in this investment in that (i) Subscriber may not be able to
liquidate the investment in the event of an emergency; (ii) transferability is
limited; and (iii) in the event of a disposition, Subscriber could sustain a
complete loss of the entire investment.
(d) Accredited Investor
Status. Subscriber represents that Subscriber is an
“accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, amended (the “Securities
Act”). Specifically, the Subscriber is (check appropriate
items):
_________ (i) A
bank, savings and loan association or other similar institution (as defined in
Sections 3(a)(2) and 3(a)(5)(A) of the Securities Act);
_________ (ii)
A broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”);
_________ (iii) An
insurance company (as defined in Section 2(13) of the Securities
Act);
_________ (iv)
An investment company registered under the Investment Company Act of 1940 (the
“Investment Company
Act”);
_________ (v) A
Small Business Investment Company licensed by the U.S. Small Business
Administration under Sections 301(c) or (d) of the Small Business Investment Act
of 1958;
_________ (vi) Any
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its subdivisions for the benefit to its
employees, which plan has total assets in excess of $5,000,000;
_________ (vii) An
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 (“ERISA”), if the investment
decision is made by a “Plan Fiduciary”, as defined in Section 3(21) of ERISA,
which is either a bank, savings and loan association, insurance company or
registered investment adviser;
xxx.xxxxxxx.xxx
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_________ (viii) An
employee benefit plan within the meaning of ERISA having total assets in excess
of $5,000,000;
_________ (ix) A
self-directed employee benefit plan within the meaning of ERISA, with investment
decisions made solely by persons who are accredited investors as defined in Rule
501(a) of Regulation D;
_________ (x) A
business development company (as defined in Section 2(a)(48) of the Investment
Company Act) or a private business development company (as defined in Section
202(a)(22) of the Investment Advisers Act of 1940);
_________ (xi) A
corporation, partnership, Massachusetts or similar business trust, or
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended (tax exempt organization), not formed for the specific purpose
of acquiring the Securities having total assets in excess of
$5,000,000;
_________ (xii) Any
executive officer or director of the Company;
_________ (xiii) An
individual having an individual net worth or a joint net worth with spouse at
the time of purchase in excess of $1,000,000;
_________ (xiv) An
individual whose net income was in excess of $200,000 in each of the two most
recent years, or whose joint income with spouse was in excess of $300,000 in
each of those years, and who reasonably expects his net income to reach such
level in the current year;
_________ (xv)
A trust with total assets in excess of $5,000,000 not formed for the specific
purpose of acquiring the Securities whose purchase is directed by a
sophisticated person (i.e., person who has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of any securities); or
_________ (xvi) Any
entity in which all of the entity owners are “accredited
investors.”
(e) Subscriber’s Financial
Experience. Subscriber is sufficiently experienced in financial and
business matters to be capable of evaluating the merits and risks of an
investment in the Company or, if he or she has utilized the services of a
purchaser representative, together with such representative, are sufficiently
experienced in financial and business matter to be capable of evaluating the
merits and risks of an investment in the Company. Subscriber is able
to bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(f) Suitability of
Investment. Subscriber has evaluated the merits and risks of Subscriber’s
proposed investment in the Company, including those risks particular to
Subscriber’s situation, and has determined that this investment is suitable for
Subscriber. Subscriber has adequate financial resources for an investment of
this character, and at this time Subscriber can bear a complete loss of
Subscriber’s investment. Further, Subscriber will continue to have, after making
an investment in the Securities, adequate means of providing for Subscriber’s
current needs, the needs of those dependent on Subscriber, and possible personal
contingencies. Subscriber specifically represents that he or she has
a net worth at least five times greater than the investment made
herein.
xxx.xxxxxxx.xxx
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(g) Exempt Offering.
Notwithstanding that the Company intends to register the Shares for resale, Subscriber understands
that the sale of the Securities is not being registered on the basis that this
issuance is exempt from registration under the Securities Act, and the
applicable state securities laws, and the rules and regulations promulgated
thereunder, and that reliance on such exemptions is predicated, in part, on
Subscriber’s representations and warranties contained in this
Agreement.
(h) Limitations on
Disposition. Subscriber understands
that there are substantial restrictions on the transferability of the Securities
pursuant to the Securities Act; the Securities will not be, and, except as
provided in the Registration Rights Agreement, Subscriber has no right
to require that the Securities be registered under the Securities Act; and,
accordingly, Subscriber may have to hold the Securities for an indefinite period
of time until the Shares have been registered by the Company or are subject to
an exemption from registration. Subscriber represents that Subscriber can afford
to hold the Securities for an indefinite period of time. Subscriber further
understands that an opinion of counsel and other documents may be required to
transfer the Securities. Subscriber acknowledges that until
registered under the Securities Act, the Securities shall bear the following, or
a substantially similar, restrictive legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT.”
(i) Absence of Official
Evaluation. Subscriber understands
that no federal or state agency has made any finding or determination as to the
fairness of the terms of an investment in the Company, or any recommendation for
or endorsement of the Securities offered hereby.
xxx.xxxxxxx.xxx
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(j) Additional Financing.
Subscriber further acknowledges that nothing hereunder shall preclude the
Company from seeking and/or procuring additional equity and/or debt
financing.
(k) Nonreliance.
Subscriber is not relying on the Company or any representation contained herein
or in the documents referred to herein with respect to the tax and economic
effect of Subscriber’s investment in the Company.
(l) Acceptance.
Subscriber acknowledges that the Company shall, in its sole discretion, have the
right to accept or reject this subscription, in whole or in part, for any reason
or for no reason. If Subscriber’s subscription is accepted by the Company,
Subscriber shall, and Subscriber hereby elects to, execute any and all further
documents necessary in the opinion of the Company to complete his subscription
and become a shareholder of the Company.
(m) Authority to Enter into
Agreement. Subscriber has the full
right, power, and authority to execute and deliver this Agreement and perform
Subscriber’s obligations hereunder.
(n) Entity as a
Subscriber. If Subscriber is a corporation, partnership, trust, or other
entity, (i) Subscriber is authorized and qualified to become a shareholder of,
and is authorized to, make its investment in the Company; (ii) Subscriber has
not been formed for the purpose of acquiring an interest in the Company; (iii)
Subscriber has not been in existence for less than 90 days prior to the date
hereof; (iv) Subscriber is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with full
right, corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations thereunder; (v) the execution, delivery and
performance by Subscriber of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of
Subscriber; and (vi) this Agreement has been duly executed by Subscriber, and
when delivered by Subscriber in accordance with the terms hereof, will
constitute the valid and legally binding obligation of Subscriber, enforceable
against it in accordance with its terms except (x) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (y) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and (z)
insofar as indemnification and contribution provisions may be limited by
applicable law.
(o) Prohibitions on
Cancellation, Termination, Revocation, Transferability, and Assignment.
Subscriber hereby acknowledges and agrees that, except as may be specifically
provided herein or by applicable law, Subscriber is not entitled to cancel,
terminate, or revoke this Agreement, and this Agreement shall survive
Subscriber’s death or disability or any assignment of the
Securities. Subscriber further agrees that Subscriber may not
transfer or assign Subscriber’s rights under this Agreement, and Subscriber
understands that, if Subscriber’s subscription is accepted, the transferability
of the Securities will be restricted.
xxx.xxxxxxx.xxx
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(p) Obligation. This
Agreement constitutes a valid and legally binding obligation of Subscriber and
neither the execution of this Agreement nor the consummation of the transactions
contemplated herein will constitute a violation of or default under, or conflict
with, any judgment, decree, statutes or regulation of any governmental authority
applicable to Subscriber, or any contract, commitment, agreement, or restriction
of any kind to which Subscriber is a party or by which Subscriber’s assets are
bound. The execution and delivery of this Agreement does not, and the
consummation of the transactions described herein will not, violate applicable
laws, or any mortgage, lien, agreement, indenture, lease or understanding
(whether oral or written) of any kind outstanding relative to
Subscriber.
(q) Required Approvals.
No approval, authorization, consent, order, or other action of, or filing with,
any person, firm or corporation or any court, administrative agency or other
governmental authority is required in connection with the execution and delivery
of this Agreement by Subscriber or the purchase of the Securities.
(r) No General
Solicitation. Subscriber is not subscribing for the Securities because of
or following 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
or a subscription by a person other than an authorized representative of the
Company.
(s) Residence. If
Subscriber is an individual, then Subscriber resides in the state or province
identified in the address of Subscriber set forth on the signature page hereto;
if Subscriber is a partnership, corporation, limited liability company or other
entity, then the office or offices of Subscriber in which its investment
decision was made is located at the address or addresses of Subscriber set forth
on the signature page hereto.
(g) Rule
144. Subscriber acknowledges and agrees that the Securities
are “restricted securities” as defined in Rule 144 promulgated under the
Securities Act as in effect from time to time and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Subscriber has been advised or
is aware of the provisions of Rule 144, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about the Company, the resale occurring following the
required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.
3. Representations, Warranties
and Agreements of the Company. In connection with this subscription, the
Company makes the following representations, warranties and agreements and
confirms the following understandings:
(a) Company’s Good
Standing. The Company is a corporation organized and validly existing
under the laws of the State of Nevada, and it has all corporate authority and
power to conduct its business and to own its properties. The Company
is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which its operations require such qualification.
xxx.xxxxxxx.xxx
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(b) Authorization; Conflict;
Valid and Binding Obligation. This Agreement and the transactions
contemplated herein have been duly and validly authorized by all requisite
corporate action of the Company and no further consent or authorization of the
Company or the Board of Directors or its stockholders is required. The Company
has full right, power and capacity to execute, deliver and perform its
obligations under this Agreement and the other agreements, instruments and
documents contemplated hereby. No governmental license, permit or authorization
and no registration or Reports with any court, governmental authority or
regulatory agency is required in connection with the Company’s execution,
delivery and/or performance of this Agreement, other than any Reports required
by applicable federal and state securities laws. The execution, delivery and
performance of this Agreement, the consummation of the transactions herein
contemplated and the compliance with the terms of this Agreement by the Company
will not violate or conflict with any provision of the Articles of Incorporation
or Bylaws of the Company, or any agreement, instrument, law or regulation to
which the Company is a party or by which the Company may be bound. This
Agreement, upon execution and delivery by the Company, will represent the valid
and binding obligation of the Company enforceable in accordance with its
terms.
(c) Use of Proceeds. The
Company will be using the funds raised in this Offering for general working
capital and to pursue its business plan.
(d) Reports, Consents and
Approvals. 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 in connection with the execution, delivery and
performance by the Company of this Agreement, other than (i) application(s) to
each applicable Trading Market (as defined in the Registration Rights Agreement)
for the listing of the Shares for trading thereon in the time and manner
required thereby and (ii) the filing of Form D with the Securities and Exchange
Commission (the “Commission”) and such Reports
as are required to be made under applicable state securities
laws.
(e) Issuance of the
Securities. The Securities are duly authorized and, when issued and paid
for in accordance with this Agreement, will be duly and validly issued, fully
paid and nonassessable, free and clear of all liens imposed by the Company other
than restrictions on transfer provided for in this Agreement.
(f) Capitalization. As of
the date of this Agreement, the Company’s authorized capitalization consisted of
Five Hundred Million (500,000,000) shares of Common Stock, $0.001 par value per
share, of which 162,645,000 shares are issued and outstanding as of September 9,
2009. There are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock. The Company does not have any subsidiaries and does not own
any capital stock of, assets comprising the business of, obligations of, or any
other interest (including any equity or partnership interest) in any person or
entity.
xxx.xxxxxxx.xxx
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(g)
No Conflict or
Violation. The execution and delivery by the Company of this
Agreement, will not result in any conflict with, or result in a violation or
breach of any of the terms, conditions or provisions of, or constitute (with or
without due notice, lapse of time or both) a default under, or give rise to a
right of termination, cancellation or acceleration of any obligation under
agreement, note, contract, franchise, lease or other agreement or instrument to
which the Company is a party or by which it may be bound.
(i) SEC
Reports. The Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Act and the Exchange
Act (all of the foregoing filed reports and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the “SEC Reports”), or has
timely filed for a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as applicable, and
the applicable rules and regulations of the SEC promulgated
thereunder. The SEC Reports do not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Since June 30, 2009 there has not
occurred any event, change, circumstance or effect that could reasonably be
expected to have a material adverse effect on the Company that has not been set
forth in the SEC Reports.
(j) Financial
Statements. As of their respective dates, the financial
statements of the Company included in the SEC Reports complied as to form in all
material respects with applicable accounting requirements and the applicable
published rules and regulations of the SEC with respect thereto. The
financial statements included in the SEC Reports were prepared in conformity
with GAAP applied on a consistent basis and fairly present, in all material
respects, the financial position of the Company as at the respective dates
thereof and the results of operations and cash flows, on a consolidated basis,
of the Company for each of the periods then ended. The Company has no
contingent liability or liability for taxes, long term lease or unusual forward
or long term commitment that is not reflected in the financial statements
included in the SEC Reports or the notes thereto and which in any such case is
material in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of the Company.
(k) Taxes. All
Tax returns and reports of the Company required to be filed by it have been
prepared in accordance with law, have been timely filed, and all Taxes,
assessments, fees and other governmental charges upon the Company and upon its
respective properties, assets, income and franchises which are shown as due and
payable thereon, or have been assessed, have been paid, except for those claims
or charges which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted. No taxing authority has given
notice of an assertion, or is threatening to assert, against the Company any
deficiency or claim for additional Taxes or interest thereon or penalties in
connection therewith
xxx.xxxxxxx.xxx
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(l) Litigation;
Orders. Except as disclosed in the SEC Reports, there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the
Company, or any of its properties or assets before or by any court, arbitrator,
governmental or administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading facility
that, individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company or that adversely affects the legality,
validity or enforceability of this Agreement.
(m) Material Non-Public
Information. The Company has not provided to the Subscribers
any material non-public information other than information related to the
transactions contemplated by this Agreement, all of which information related to
the transactions contemplated hereby shall be disclosed by the Company pursuant
to Section 6(j) hereof. The Company understands and confirms that
each Subscriber shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
(n) Xxxxxxxx-Xxxxx. The Chief
Executive Officer and the Chief Financial Officer of the Company have signed,
and the Company has furnished to the SEC, all certifications required by
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002. Such
certifications contain no qualifications or exceptions to the matters certified
therein and have not been modified or withdrawn; and neither the Company nor any
of its officers has received notice from any governmental entity questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications. The Company is otherwise in compliance in all
material respects with all applicable effective provisions of the Xxxxxxxx-Xxxxx
Act of 2002 and the rules and regulations issued thereunder by the
SEC. The Company has established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SEC’s rules and forms. The Company has
established internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Company and designed such internal
control over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principals. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures and internal
control over financial reporting as of the end of the period covered by the
Company’s most recently filed periodic report under the Exchange Act (such date,
the “Evaluation
Date”). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures and
internal control over financial reporting based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no
changes in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
xxx.xxxxxxx.xxx
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(o) Financial
Statements. The financial statements of the Company in the SEC
Reports present fairly, in accordance with United States generally accepted
accounting principles (“GAAP”), consistently applied,
the financial position of the Company as of the dates indicated, and the results
of its operations and cash flows for the periods therein specified, subject, in
the case of unaudited financial statements for interim periods, to normal
year-end audit adjustments.
(p) Absence of Certain Changes
Since the Balance Sheet Date. Except as set
forth in the SEC Reports, since December 31, 2008, the business and operations
of the Company have been conducted in the ordinary course consistent
with past practice, and there has not been:
(i) any declaration, setting aside or
payment of any dividend or other distribution of the assets of the Company with
respect to any shares of capital stock of the Company or any repurchase,
redemption or other acquisition by the Company or any subsidiary of the Company
of any outstanding shares of the Company’s capital stock (and the Company has
not made any agreements to do any of the foregoing);
(ii) any
damage, destruction or loss, whether or not covered by insurance, except for
such occurrences, individually and collectively, that have not had, and would
not reasonably be expected to have, a material adverse effect on the
Company;
(iii) any
waiver by the Company of a valuable right or of a material debt owed to it,
except for such waivers, individually and collectively, that have not had, and
would not reasonably be expected to have, a material adverse effect on the
Company;
(iv) any
material change or amendment to, or any waiver of any material right under a
material contract or arrangement by which the Company or any of its or their
respective assets or properties is bound or subject;
(v) any
change by the Company in its accounting principles, methods or practices or in
the manner in which it keeps its accounting books and records, except any such
change required by a change in GAAP or by the SEC; or
(vi) any
other event or condition of any character, except for such events and conditions
that have not resulted, and are not expected to result, either individually or
collectively, in a material adverse effect on the Company.
xxx.xxxxxxx.xxx
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(q) Intellectual
Property.
(i) Except
as set forth in the SEC Reports, the Company owns or possesses sufficient rights
to use all patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, copyrights, information and other
proprietary rights and processes (collectively, “Intellectual
Property”), which are necessary to conduct its or their respective
businesses as currently conducted and as described in the SEC Reports free and
clear of all liens, encumbrances and other adverse claims, except where the
failure to own or possess free and clear of all liens, encumbrances and other
adverse claims would not reasonably be expected to result, either individually
or in the aggregate, in a material adverse effect on the Company.
(ii) The
Company has not received any written notice of, nor has knowledge of, any
infringement of or conflict with rights of others with respect to any
Intellectual Property and neither the Company nor any of its Subsidiaries has
knowledge of any infringement, misappropriation or other violation of any
Intellectual Property by any third party, which, in either case, either
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would reasonably be expected to have a material adverse
effect on the Company.
(iii) To
the Company’s knowledge, none of the patent rights owned or licensed by the
Company are unenforceable or invalid.
(iv) The
Company is not aware that any of its employees is 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 their duties to the Company or that would
conflict with the Company’s business.
(r)
Insurance. The
Company maintains insurance of the types and in the amounts that the Company
reasonably believes is prudent and adequate for its business and which is at
least as extensive as is customary for other companies in the Company’s
industry, all of which insurance is in full force and effect.
(t) Labor Relations. No material labor
dispute exists or, to the knowledge of the Company, is imminent with respect to
any of the employees of the Company. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company to any liability
with respect to any of the foregoing matters.
xxx.xxxxxxx.xxx
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(u) Internal Accounting
Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(v) Transactions With Officers
and Directors. Except as set forth in the SEC Reports, none of
the officers or directors of the Company has entered into any transaction with
the Company that would be required to be disclosed pursuant to Item
404(a) or (c) of Regulation S-K of the SEC.
(w) Investment
Company. The Company is not now, and after the sale of the
Securities under this Agreement and the application of the net proceeds from the
sale of the Securities described herein will not be, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.
(y) No Integrated
Offering. Neither the Company, nor any Affiliate of the
Company, nor any person acting on its or their behalf has, directly or
indirectly, engaged in any form of general solicitation or general advertising
with respect to any security or made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
the offering or issuance of the Securities to be integrated with prior offerings
by the Company for purposes of the Securities Act which would cause Regulation D
or any other applicable exemption from registration under the Securities Act to
be unavailable, or would cause any applicable state securities laws exemptions
or any applicable stockholder approval provisions exemptions, including, without
limitation, under the rules and regulations of any national securities exchange
or automated quotation system on which any of the securities of the Company are
listed or designated to be unavailable, nor will the Company take any action or
steps that would cause the offering or issuance of the Securities to be
integrated with other offerings.
(z) Application of Takeover
Protections. The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Articles of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Subscribers as
a result of the Subscribers and the Company fulfilling their obligations or
exercising their rights under this Agreement and the Warrants, including without
limitation as a result of the Company’s issuance of the Securities and the
Subscribers’ ownership of the Securities.
(aa) No Disagreements with
Accountants and Lawyers. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company.
xxx.xxxxxxx.xxx
-12-
(bb) Acknowledgment Regarding
Subscribers’ Purchase of Purchased Securities. The Company
acknowledges and agrees that each of the Subscribers is acting solely in the
capacity of an arm’s length Subscriber with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges
that no Subscriber is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Subscriber or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Subscribers’
purchase of the Securities. The Company further represents to each
Subscriber that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(cc) Manipulation of
Price. The Company has not, and to its knowledge no one acting on
its behalf has, (i) taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or, paid any compensation for soliciting purchases of,
any of the Securities or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Company’s placement agent and any approved broker-dealers in connection with
the placement of the Securities.
(dd) Legend
Removal. The Company agrees, upon a Subscriber’s reasonable
request, to reissue certificates representing any of the Shares and Warrant
Shares without any restrictive legend: (i) while a registration
statement covering the resale of such securities is effective under the
Securities Act, (ii) following any sale of such securities pursuant to Rule 144
(assuming the transferor is not an affiliate of the Company), (iii) if such
Securities are eligible for sale under Rule 144(b) (to the extent that the
applicable Subscriber provides a certification or legal opinion to the Company
to that effect), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including controlling judicial
interpretations and pronouncements issued by the Commission). Following the
effective date of a registration statement, which includes the Securities, or at
such earlier time as a legend is no longer required for the Shares and the
Warrant Shares, the Company will, promptly following the delivery by a
Subscriber to the Company or the Company’s transfer agent of a legended
certificate representing such securities, deliver or cause to be delivered to
such Subscriber a certificate representing such securities that is free from all
restrictive legends. If requested by a Subscriber, certificates for
securities subject to legend removal hereunder shall be transmitted by the
transfer agent of the Company to the Subscribers by crediting the account of the
Subscriber’s prime broker with the Depository Trust Company (“DTC”).
(ee)
Shell Company Status.
The Company has ceased to be an issuer defined in Rule 144(i)(1)(i); is subject
to the reporting requirements of Section 13 or 15 (d) of the Exchange Act; has
filed all reports and other materials required to be filed by Section 13 or
15(d) of the Exchange Act, as applicable, during the preceding 12 months, other
than Form 8-K reports; has filed current "Form 10 information" (as defined in
Rule 144(i)(3)) with the SEC reflecting its status as an entity that is no
longer an issuer described in Rule 144(i)(1)(i); and the Company filed “Form 10
information” with the SEC on April 15, 2009.
xxx.xxxxxxx.xxx
-13-
4. Survival of Representations,
Warranties, Agreements and Acknowledgments. The representations,
warranties, agreements, and acknowledgments of the Company and Subscriber shall
survive the offering and purchase of the Securities.
5. (a)
Indemnification of the
Company. Subscriber agrees to indemnify and hold harmless the Company
against and in respect of any and all loss, liability, claim, damage,
deficiency, and all actions, suits, proceedings, demands, assessments,
judgments, costs and expenses whatsoever (including, but not limited to,
attorneys’ fees reasonably incurred in investigating, preparing, or defending
against any litigation commenced or threatened or any claim whatsoever through
all appeals) arising out of or based upon any false representation or warranty
or breach or failure by Subscriber to comply with any covenant or agreement made
by it herein or in any other document furnished by it in connection with this
subscription.
(b) Indemnification of the
Subscriber. The Company agrees to indemnify and hold harmless the
Subscriber against and in respect of any and all loss, liability, claim, damage,
deficiency, and all actions, suits, proceedings, demands, assessments,
judgments, costs and expenses whatsoever (including, but not limited to,
attorneys’ fees reasonably incurred in investigating, preparing, or defending
against any litigation commenced or threatened or any claim whatsoever through
all appeals) arising out of or based upon any false representation or warranty
or breach or failure by the Company to comply with any covenant or agreement
made by it herein or in any other document furnished by it in connection with
this subscription.
6. Miscellaneous.
(a) Amendments. This
Agreement may not be amended, supplemented, or modified in whole or in part
except by an instrument in writing signed by the party or parties against whom
enforcement of any such amendment, supplement, or modification is
sought.
(c) Notices. Any notice,
demand, or other communication that any party hereto may be required, or may
elect, to give to anyone interested hereunder shall be deemed given on the date
initially received if delivered by facsimile transmission followed by registered
or certified mail confirmation; on the date delivered by an overnight courier
service; on the third business day after it is mailed if mailed by registered or
certified mail (return receipt requested, with postage and other fees prepaid)
addressed to such addresses as provided herein.
xxx.xxxxxxx.xxx
-14-
(d) Successors and
Assigns. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to Subscriber’s benefit and the benefit of Subscriber’s
heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the undersigned is more than one person, the obligation of
the undersigned shall be joint and several and the agreements, representations,
warranties, and acknowledgements herein contained shall be deemed to be made by
and be binding upon each such person and his heirs, executors, successors,
administrators, legal representatives, and permitted assigns.
(e) Choice of Law; Venue.
This Agreement will be interpreted, construed, and enforced in accordance with
the internal laws of the State of New York, without giving effect to the
application of the principles pertaining to conflicts of laws. Any
proceeding arising between the parties in any manner pertaining or relating to
this Agreement shall, to the extent permitted by law, be held in New
York.
(f) Effect of Waiver. The
failure of any party at any time or times to require performance of any
provision of this Agreement will in no manner affect the right to enforce the
same. The waiver by any party of any breach of any provision of this Agreement
will not be construed to be a waiver by any such party of any succeeding breach
of that provision or a waiver by such party of any breach of any other
provision.
(g) Severability. The
invalidity, illegality, or unenforceability of any provision or provisions of
this Agreement will not affect any other provision of this Agreement, which will
remain in full force and effect, nor will the invalidity, illegality, or
unenforceability of a portion of any provision of this Agreement affect the
balance of such provision. In the event that any one or more of the provisions
contained in this Agreement or any portion thereof shall for any reason be held
to be invalid, illegal, or unenforceable in any respect, this Agreement shall be
reformed, construed, and enforced as if such invalid, illegal, or unenforceable
provision had never been contained herein.
(h) Enforcement. Should
it become necessary for any party to institute legal action to enforce this
Agreement, the successful party will be awarded reasonable attorneys’ fees at
all trial and appellate levels, expenses, and costs.
(i) Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original and all of which together will constitute one and the same
instrument.
xxx.xxxxxxx.xxx
-15-
(j) 8-K Filing and Publicity;
Standstill. On or before 8:30 a.m., Eastern time, on the first
business day following the date of this Agreement, the Company shall issue a
press release describing the terms of the transactions contemplated by this
Agreement, but not including the names of the Subscriber and the amount of
Securities purchased hereby. On or before 8:30 a.m., Eastern time, on
the second business day following the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing the terms of the transactions
contemplated by this Agreement in the form required by the Exchange Act and
attaching this Agreement as an exhibit to such filing (the “8-K
Filing”), but not including the name of the Subscriber and the amount of
Securities purchased hereby except as required by the instructions to Form
8-K. From and after the filing of the 8-K Filing with the SEC, the
Subscribers as a consequence of participating in the transactions contemplated
by this Agreement shall not be in possession of any material, nonpublic
information received from the Company, any of its subsidiaries or any of their
respective officers, directors, employees or agents authorized to disclose such
information, that is not disclosed in the 8-K Filing. The Company
shall not, and shall cause each of its subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide the
Subscribers with any material, nonpublic information regarding the Company or
any of its subsidiaries from and after the filing of the 8-K Filing with the SEC
without the consent of the Subscribers. If a Subscriber has, or believes it has,
received any such material, nonpublic information regarding the Company or any
of its subsidiaries prior to the Closing Date, it shall provide the Company with
written notice thereof and the Company shall within five (5) business days
thereafter, make public disclosure of such material, nonpublic information if
permitted under applicable law or without breach or violation of any agreement,
contract or other obligation of the Company unless the Board of Directors of the
Company shall determine that such disclosure would reasonably be expected to
result in a material and adverse effect on the Company or its business,
prospects, finances or properties. Except for such disclosure as the
Company is advised by counsel is required to be included in documents filed with
the SEC or otherwise required by law, the Company shall not use the name of, or
make reference to, any Subscriber or any of its Affiliates or investment
advisers in any press release or in any public manner (including any reports or
Reports made by the Company under the Exchange Act) without such Subscriber's
prior written consent.
(k) Further Assurances.
The parties hereto will execute and deliver such further instruments and do such
further acts and things as may be reasonably required to carry out the intent
and purposes of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
xxx.xxxxxxx.xxx
-16-
IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be executed as
of this ____ day of November, 2009.
Total
Number of Shares Subscribed for: Five Million, Two Hundred Fifty Thousand Five
Hundred Twenty-Five (5,250,525).
Total
Purchase Price: $1,750,000
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(Signature
of Subscriber)
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(Print
Name of Subscriber)
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(Address)
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(Telephone
Number)
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(Date)
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(Federal
Employer Identification Number
or
Other Tax Identification Number)
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[TO
BE COMPLETED BY THE COMPANY]
Subscription
Acceptance Page
APPROVED AND ACCEPTED in
accordance with the terms of this Subscription Agreement on this _____ day of
November, 2009.
On behalf
of GETFUGU, INC.
By:
Print
Name:
Title:
