Exhibit No. 10.10
Subscription Agreement
EASTBROKERS INTERNATIONAL INCORPORATED
SUBSCRIPTION AGREEMENT
TO: Eastbrokers International Incorporated
c/o X.X. Xxxxxx Group, LLC
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxx Xxxx, XX 00000
Xxxxx Xxxxxxx Securities, LLC
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
You have advised the undersigned ("undersigned" or "Subscriber") that
Eastbrokers International Incorporated (the "Company"), a Delaware corporation,
is offering to Accredited Investors only: (a) 800,000 Units on a best efforts,
all or none basis and an additional 450,000 Units on a best efforts basis, each
Unit consisting of one (1) share of Common Stock, par value $.05, and one (1)
Class C Common Stock Purchase Warrant (a "Unit"); (1,) the Units are being
offered on the terms set forth in the Confidential Offering Memorandum, dated
February 5, 1998 (the "Memorandum11), which is being furnished to the
undersigned herewith; (c) the minimum investment is $50,000 although
subscriptions for less amounts may be sold at the discretion of the Company and
X.X. Xxxxxx Group, LLC, and Xxxxx Xxxxxxx Securities, LLC (the "Placement
Agents"), which are acting as exclusive Placement Agents in connection with the
Offering. Terms not defined herein shall have the meanings assigned to them in
the Memorandum.
1. Subscription.
(a) Subject to the terms and conditions hereof the undersigned
hereby tenders this Subscription together with payment of the
subscription price for each Unit being purchased (the "Funds") by wire
transfer, check, certified check or cashiers check payable to
"Eastbrokers International-Escrow Account" in the amount of $5 .00 per
Unit.
(b) Tender of the aforesaid Funds, together with this
Agreement (the "Documents"), shall be made by delivery of same to the
Agents at X.X. Xxxxxx Group, LLC, 0000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxx
Xxxx, XX 00000, Attn: Xxx Xxxxx and/or Xxxxx Xxxxxxx Securities LLC, 00
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxx Xxxxx or by wire transfer
to Republic National Bank, as escrow agent for Eastbrokers
International Inc. For instruction on how to wire transfer funds,
contact the Placement Agents. In the event that the Subscription is not
accepted, all Funds shall be returned to the undersigned without
interest and without deducting for any of the expenses of the Offering.
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2. Acceptance of Agreement.
The Company shall have the right to accept or reject this subscription,
in whole or in part, in its discretion.
3. Representations and Warranties of the Undersigned.
As an inducement to the Company to make an offer to the undersigned,
the undersigned hereby represents and warrants to the Company and the Agents as
follows:
(a) The undersigned is an "Accredited Investor" within the
meaning of Rule 501(a), promulgated under the Securities Act of 1933 as
amended (the "Securities Act"), and, together with his financial
advisors, if any, have such knowledge and expertise in financial and
business matters as to be capable of evaluating the merits and risks
involved in an investment in the Units.
(b) The address set forth at the foot of this Agreement is the
undersigned's true and correct residence address, and he has no present
intention of becoming a resident of any other state or jurisdiction.
(c) The undersigned has received and read or reviewed, and is
familiar with the terms and conditions and other information set forth
in the Memorandum and this Agreement, and he confirms that all
documents, records and books pertaining to the investment in the
Company and requested by him, including but not limited to the Annual
Report on Form 10-KSB, as amended, for the fiscal year ended March31,
1997; Quarterly Report on Form 10-QSB, for the six months September30,
1997; Form 8-K, filed November 6, 1997; Form 8-K, filed January 27,
1998; and Notice of Meeting and Proxy Statement relating to the 1997
Annual Meeting, have been made available or delivered to him.
(d) The undersigned has had an opportunity to ask of the
Company, or a person or persons acting on its behalf, any and all
relevant questions of and receive answers from the Company in
connection with any aspect of the Company and the terms and conditions
of this investment, and has received answers which the undersigned
considers to be responsive to such questions.
(e) The undersigned understands that the Units have not been
registered under the Securities Act in reliance on an exemption for
private offerings and he further understands that he is purchasing
Units without being furnished any offering literature or prospectus
other than the Memorandum.
(f) The Units for which the undersigned hereby subscribes are
being acquired solely for his own account for investment and are not
being purchased with a view to or for the
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resale, distribution, transfer, fractionalization or other disposition thereof,
and the undersigned has no present plans to enter into such contract,
undertaking, agreement or arrangements.
(g) The undersigned acknowledges and is aware of the following:
(i) That there are substantial restrictions on the
transferability of the Units; that other than as set forth in the Memorandum,
the Units will not be, and investors in the Company will have no rights to
require that the Units be, registered under the Securities Act.
(ii)That there never has been any representation, guarantee,
or warranty made to the undersigned by any broker, the Company, its officers,
directors, agents (including without limitation, the Agents), or employees or
any other person, expressly or by implication, as to:
(A) The approximate or exact length of time that he
will be required to remain as owner of his Units.
(B) The percentage of profits and/or amount of or
type of consideration, profit or loss (including tax credits
and/or benefits) to be realized, if any, as a result of this
investment.
(C) The past performance or experience on the part of
the Company, its personnel, affiliates, Agents, employees or
of any other person, will in any way indicate the predictable
results of the ownership of Units.
(iii) That the Company will rely on the offer to purchase
being made by the undersigned hereby and that, accordingly, this offer may not
be canceled, rescinded or otherwise revoked by the undersigned.
(h) The Subscriber is 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 of the Securities to the Subscriber for
purposes of federal and state securities laws.
(i) The Subscriber further acknowledges that the Subscriber has been
advised that the Securities being purchased by the Subscriber hereunder have not
been registered under the provisions of the Securities Act and that the Company
has represented to the Subscriber (assuming the veracity of the representations
of the Subscriber made herein) that the Securities have been offered and sold by
the Company in reliance upon an exemption from registration provided in Section
4(2) of the Securities Act and Regulation D thereunder.
(j) In entering into this Agreement and in purchasing the Securities,
the Subscriber further acknowledges that:
(i) The Company has informed the Subscriber that the
Securities have not been offered for sale by means of general advertising or
solicitation.
(ii) The Securities may not be resold by the Subscriber in
absence of registration under the Securities Act or exemption from registration.
In particular, the undersigned is aware that the Units, Common Stock, Warrants
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and Warrant Shares will be "restricted securities," as such term is defined in
Rule 144 promulgated under the Securities Act ("Rule 144'~), and they may not be
sold pursuant to Rule 144 until the conditions thereof are met.
(iii) The following legend shall be placed on the
Certificate(s) evidencing the Securities:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "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 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
(iv) The Company may place a stop transfer order on its
transfer books against the Securities. Such stop order will be removed, and
further transfer of the Securities will be permitted upon an effective
registration of the respective Securities, or the receipt by the Company of an
opinion of counsel satisfactory to the Company that such further transfer may be
effected pursuant to an applicable exemption from registration.
(v) The purchase of the Securities involves risks which the
Subscriber has evaluated, and the Subscriber is able to bear the economic risk
of the purchase of such securities and the loss of its entire investment.
(k) The undersigned has completed the accompanying Qualified Investor
Questionnaire and has delivered it herewith and represents and warrants that it
is accurate and true in all respects and that it accurately and completely sets
forth the financial condition of the undersigned on the date hereof. The
undersigned has no reason to expect there will be any material adverse change in
his financial condition and will advise the Company of any such changes
occurring prior to the closing or termination of the Offering.
(1) 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 Securities for an indefinite
period of time, has no need for liquidity in such investment, and the
undersigned is prepared to lose his entire investment in the Securities.
(m) The undersigned's overall commitment to investments that are not
readily marketable is not, and his acquisition of Securities will not cause such
overall commitment to become, disproportionate to his net worth.
(n) The Subscriber acknowledges that the Subscriber has made his own
investigation concerning the business and affairs of the Company and in that
connection, the Subscriber acknowledges the previous receipt of the Offering
Memorandum and the exhibits attached thereto.
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(o) The undersigned understands that the Company shall have the right
to accept or reject this subscription in whole or in part. Unless this
subscription is accepted in whole or in part by the Company prior to the Initial
Closing (as such term is defined in the Offering Memorandum) or the final
closing date, this subscription shall be deemed rejected in whole.
(p) It never has been represented, guaranteed or warranted by any
broker, the Company, the Placement Agents, any of the officers, directors,
stockbrokers, partners, employees or agents of either of the Company or the
Placement Agents, or any other persons, whether expressly or by implication,
that:
(i) the Company or the undersigned will realize any
given percentage of profits and/or amount or type of consideration,
profit or loss as a result of the Company's activities or the
undersigned's investment in the Company; or
(ii)the past performance or experience of the
management of the company, or of any other person, will in any way
indicate the predictable results of the ownership of the Securities or
of the Company's activities.
The foregoing representations and warranties are true and accurate as
of the date hereof and shall be true and accurate as of the date of delivery of
the Funds to the Company and shall survive such delivery.
If in any respect such representations and warranties shall not be true
and accurate prior to delivery of the Funds pursuant to Paragraph I hereof, the
undersigned shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
4. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each
Subscriber as follows:
(a) The Company is duly organized, validly existing and in good
standing under the laws of its state of incorporation, with all requisite power
and authority to own, lease, license, and use its properties and assets and to
carry out the business in which it is engaged, except where the failure to have
or be any of the foregoing may not necessarily be expected to have a material
adverse effect on the Company's presently conducted businesses. The Company is
duly qualified to transact the business in which it is engaged and is in good
standing as a foreign corporation in every jurisdiction in which its ownership,
leasing, licensing or use of property or assets or the conduct of its business
make such qualification necessary, except where the failure to be so qualified
may not be expected to have a material adverse effect upon the Company's
business.
(b) The Company is authorized to issue 20,000,000 shares of capital
stock, of which 10,000,000 have been designated preferred stock at par value
$.01, and 10,000,000 have been designated common stock, par value S.05 per
share. As of February 4, 1998, the Company had issued an outstanding 3,063,000
shares of Common Stock and no shares of Preferred Stock.
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(c) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, to issue, sell and
deliver the Units. This Agreement has been duly authorized by the Company, and
when executed and delivered by the Company, will constitute the legal, valid and
binding obligation of the Company, enforceable as to the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance or transfer, moratorium or
other laws or court decisions, now or hereinafter in effect, relating to or
affecting the rights of creditors generally and as may be limited by general
principles of equity and the discretion of the court having jurisdiction in an
enforcement action (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(d) No consent, authorization, approval, order, license, certificate or
permit of or from, or declaration or filing with, any federal, state, local or
other governmental authority or any court or any other tribunal is required by
the Company for the execution, delivery or performance by the Company of this
Agreement or the execution, issuance, sale or delivery of the Units.
(e) No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement or understanding to which the Company is
a party or to which any of its properties or assets are subject is required for
the execution, delivery or performance by the Company of this Agreement, or the
execution, issuance, sale or delivery of the Units.
(f) The execution, delivery and performance of this Agreement will not
violate, result in a breach of, conflict with (with or without the giving of
notice or the passage of time or both) or entitle any party to terminate or call
a default under any material contract, agreement, instrument, lease, license,
arrangement or understanding or violate or result in a breach of any term of the
certificate of incorporation or by-laws of, or conflict with any law, rule,
regulation, order, judgment or decree binding upon, the Company or to which any
of its operations, businesses, properties or assets are subject.
(g) The Units, Common Stock, Warrants and Warrant Shares upon delivery
to the Subscriber, will be validly issued, fully paid and nonassessable and will
not be issued in violation of any preemptive or other rights of stockholders
known to the Company.
5. Registration Rights.
(a) The Company hereby agrees to use its best efforts on one occasion
to file a registration statement with the Securities and Exchange Commission
("SEC") upon receipt of demand from a "majority" of the holders of the Common
Stock and the Warrants at any time after six months of the final closing of the
Offering, registering the Common Stock, Warrants and Warrant Shares for resale
under the Securities Act. The Company further agrees to use its best efforts to
have such registration statement declared effective by the SEC as soon as
reasonably possible thereafter. The Company shall bear all fees and expenses
incurred by it in the preparation and filing of the registration. A "majority"
means more than 50% of the holders of the Common Stock and the Warrants.
(b) If, at any time, the Company proposes to register any of its
securities under the Act (other than in connection with a merger or acquisition
and the Company utilizes Form S-4 or other similar form) it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to each of the Placement Agents and to all other
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Holders of the Common Stock, Warrants and/or the Warrant Securities of its
intention to register its securities. If any of the Placement Agents or other
Holders of the Common Stock, Warrants and/or Warrant Securities notify the
Company within twenty (20) days after receipt of any such notice of its or their
desire to include the Common Stock, Warrants and the Warrant Securities in such
proposed registration statement, the Company shall afford each of the Placement
Agents and such Holders of the Common Stock, Warrants and/or Warrant Securities
the opportunity to have any such Common Stock, Warrants and/or Warrant
Securities registered under such registration statement. Notwithstanding the
provisions of this Section 5(b), the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 5
(irrespective of whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof.
(c) If and whenever the Company is required by any of the provisions of
this Agreement to use its best efforts to effect the registration for resale of
any of the Common Stock, Warrant and Warrant Shares under the Securities Act,
the Company shall (except as otherwise provided in the Agreement), as
expeditiously as possible (subject any conditions set forth herein):
(i) prepare and file with the SEC a registration statement on
an appropriate form and shall use its best efforts to cause such registration
statement to become effective as soon as reasonably possible.
(ii)prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
whenever the holders of such securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the sales
of securities from time to time in connection with a registration statement
pursuant to Rule 415 of the SEC);
(iii) furnish to each holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such holder may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by such holder;
(iv) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the holders shall reasonably request, and
do any and all other acts and things which may be necessary or advisable to
enable each holder to consummate the public sale or other disposition in such
jurisdiction of the Units owned by such holder, except that the Company shall
not for any such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(v) notify each holder of Common Stock, Warrants and/or
Warrant Shares covered by such registration statement, at any time when a
prospectus relating thereto covered by such registration statement is required
to be delivered under the Securities Act, of the happening of any event of which
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it has knowledge as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; provided, however, nothing contained herein shall
be deemed to require the Company to report any event or facts which it is not
otherwise required to report under the Securities and Exchange Act of 1934, as
amended.
(vi) keep the prospectus covering the Common Stock, Warrants
and the Warrant Shares current for the term of the Warrants.
6. Lock-Up Agreement.
The Subscriber hereby understands and agrees that the Units, Warrants
and Warrant Shares shall be subject to a lock-up agreement in favor of both of
the Placement Agents. Pursuant to this Section 6, the Subscriber agrees that,
provided the Company has fulfilled its registration obligations under Section 5
hereof, the Units, Warrants or Warrant Shares shall not be sold, transferred or
assigned without the prior written consent of the Placement Agents for a period
of 12 months from the Final Closing.
The Subscriber understands and agrees that a legend may be placed upon
the certificates representing the Securities and a "stop transfer" order given
to the Company's transfer agent to effectuate the lock-up agreement.
7. Indemnification.
The undersigned acknowledges that he understands the meaning and legal
consequences of the representations and warranties contained in Paragraph 3
hereof, and he hereby agrees to indemnify and hold harmless the Company, the
Agents and their agents, officers and directors, from and against any and all
loss, damage or liability due to or arising out of a breach of any
representation or warranty of the undersigned contained in this Agreement.
8. No Waiver.
Notwithstanding any of the representations, warranties, acknowledgments
or agreements made herein by the undersigned, the undersigned does not thereby
or in any other manner waive any rights granted to him under federal and state
securities laws.
9. Transferability.
The undersigned agrees not to transfer or assign this Agreement, or any
of his interest.
10. Revocation.
The undersigned agrees that he shall not have the right to cancel,
terminate or revoke this Agreement or any agreement of the undersigned made
hereunder, and that this Agreement shall survive the death or disability of the
undersigned, except as provided below in Paragraph 11.
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11. Termination of Agreement.
(a) If all of the Units shall not be subscribed and paid for
by the Closing Date, as extended, or if any representation or warranty
of the undersigned contained in Paragraph 3 hereof shall not be true
prior to delivery of the Funds pursuant to Paragraph 1 hereof and
written notice of such fact has been given to the Company, then and in
any such event, this Agreement shall be null and void and of no further
force and effect, and no party shall have any rights against any other
party hereunder, and the Escrow Agent shall promptly return to the
undersigned the Funds, without interest, and this Agreement.
(b) In connection with the foregoing, the undersigned shall
complete and tender together with this Agreement the federal tax
information required by Form W9 or Form W-8, as appropriate.
12. Miscellaneous.
(a) All notices or other communications given or made
hereunder shall be in writing and shall be delivered or mailed by
registered or certified mail, return receipt requested, postage
prepaid, to the undersigned at his address set forth below and to the
Company at the address set forth at the outset of this Agreement.
(b) This Agreement shall be construed in accordance with and
governed by the laws of the State of New York.
(c) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement and Power of Attorney as of the day and year set forth below.
Dated: 1998
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Name (Please Print)
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Signature
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Address:
Number of Units ($5.00 per Unit):
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Number and Street
--------------------------------------
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City State Zip Code
Subscription Amount:
$-------------------
Social Security Number or other
Taxpayer Identification Number:
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Name of Purchaser Representative
(if any)
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The Company hereby accepts this Subscription pursuant to the terms and
conditions of the Memorandum.
EASTBROKERS INTERNATIONAL INCORPORATED
By:--------------------------------------
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