EXHIBIT 10.2
Investor Name:
----------------------------
Control No.:
----------------------------
MEDICAREFACTS, LLC
SUBSCRIPTION AGREEMENT
Medicarefacts, LLC
Attn: Xxxxxxx Xxxx, Manager
00-0 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
I. SUBSCRIPTION
The undersigned hereby offers and agrees to purchase the principal
amount of convertible promissory notes (the "Notes") shown on the signature page
hereof to be issued by Medicarefacts, LLC, a Delaware limited liability company
(the "Company"), at a price of $50,000 per Note. The principal amount of each
Note is convertible into 93,750 limited liability company membership interests
("Interests") of the Company. The undersigned has submitted his, her or its
check payable to "Medicarefacts, LLC" or wire transfer aggregating $50,000 per
Note subscribed for by the undersigned.
II. OFFERING AND SALE OF NOTES
The offering price of the Notes has been determined unilaterally by
the Company and is not the result of arm's-length negotiations. The offering of
the Notes (the "Offering") is being made on a best-efforts basis on the terms
described in the Company's Business Plan and related documents. The Company has
not established any minimum offering amount. Therefore, provided that a
subscriber meets the suitability requirements for investment in the Notes and
the Company receives subscriptions for at least one Note in the principal amount
of $50,000, the Company will accept his subscription. Fractional Notes may be
sold by the Company in its sole discretion. All subscription amounts will be
available immediately to the Company for the uses set forth in the form of
business plan of Venture Resources, Inc. ("VRI"), the form of Operating
Agreement dated as of October 19, 1999, the form Contribution Agreement between
the Company and VRI pursuant to which the assets of VRI were contributed to the
Company, the form of Note, and this Subscription Agreement (collectively, the
"Offering Documents"). The Company may offer Notes for six months from the date
of the Offering Documents, with an additional six month extension solely in the
discretion of management of the Company.
ACCREDITATION
The undersigned understands that the Notes are not registered under
the Securities Act of 1933, as amended (the "Securities Act"), or the securities
acts of any state (the "Laws") and are being offered and sold in reliance upon
exemptions from registration under said Securities Act and Laws. To enable the
Company to determine the exemption(s) applicable to the undersigned, the
undersigned hereby warrants and represents as follows:
THIS REPRESENTATION IS PRESENTED IN ALTERNATIVE FORM.
PLEASE INITIAL THE FOLLOWING STATEMENTS WHICH ARE TRUE AS TO YOU IN
THE BRACKETS TO THE LEFT THEREOF. ONE OR MORE STATEMENTS MUST BE
INITIALED BY THOSE WISHING TO INVEST WHO ARE SUITABLE FOR INVESTMENTS
IN THE NOTES. IF NO INITIALS ARE PROVIDED BELOW, THIS DOCUMENT CANNOT
BE ACCEPTED FOR SUBSCRIPTION.
[ ] A. The undersigned is a natural person whose individual net
worth, or joint net worth with the undersigned's spouse, at the
time of purchase, exceeds $1,000,000 (net worth, for purposes of
the Offering, unless otherwise noted INCLUDES home, home
furnishings and automobiles). In all sales made to Illinois
residents, net worth must be calculated EXCLUSIVE of home, home
furnishings and automobiles.
[ ] B. The undersigned is 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 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.
[ ] C. The undersigned is an organization described in Section
501(c)(3) of the Internal Revenue Code, a corporation, a
Massachusetts or similar business trust, a partnership or trust
(if the trust's purchase of securities is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D under the Securities Act); (i) not formed for the
specific purpose of acquiring the securities offered; (ii) with
assets in excess of $5,000,000; and (iii) has the power and
authority to execute and comply with the terms of this
Subscription Agreement.
[ ] D. The undersigned is an Accredited Investor (other than as
described above), as defined in Rule 501 of Regulation D
promulgated under the Securities Act. Note: Investors are advised
that included within the definition of Accredited Investor are the
following: certain institutional investors, including certain
banks, whether acting in their individual or fiduciary capacities;
registered securities broker-dealers; certain insurance companies;
federally registered investment companies; certain business
development companies (as defined under the Investment Partnership
Act of 1940); Small Business Investment Companies licensed by the
U.S. Small Business
2
Administration under the Small Business Act of 1958; certain
employee benefit plans; private business development companies (as
defined in the Investment Advisers Act of 1940); and executive
officers of the Company.
[ ] E. The undersigned is an entity in which all of the equity
owners meet the suitability standards set forth in (A), (B), (C)
or (D) above and as required in Rule 501 of Regulation D.
III. OFFERING MATERIALS
The undersigned hereby acknowledges receipt of a copy of the
Company's Offering Documents. All capitalized terms used herein that are defined
in the Offering Documents shall have the same meanings herein.
IV. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER
The undersigned makes the following additional agreements,
representations, declarations, acknowledgments and warranties with the intent
that the same may be relied upon in determining his suitability as a purchaser
of the Notes:
(1) The undersigned agrees that, in the event its principal residence
is changed, he, she or it will promptly notify the management of the Company.
(2) The undersigned meets the suitability requirements initialed in
Section II.
(3) The undersigned has received, read, understands and is fully
familiar with the Offering Documents and the Subscription Documents.
(4) The Notes subscribed for herein and any Interests acquired by the
undersigned upon conversion of the Notes into Interests, will be acquired solely
by and for the account of the undersigned for investment, and are not being
purchased for subdivision, fractionalization, resale or distribution; the
undersigned has no contract, undertaking, agreement or arrangement with any
person to sell, transfer or pledge all or any part of the Notes and any
Interests acquired by the undersigned upon conversion of the Notes into
Interests, and the undersigned has no present plans or intentions to enter into
any such contract, undertaking or arrangement. In order to induce management of
the Company to issue and sell the Notes subscribed for hereby to the
undersigned, the undersigned agrees that the Company will have no obligation to
recognize the ownership, beneficial or otherwise, of the Notes by anyone but the
undersigned.
(5) The undersigned agrees that he, she or it will not transfer the
Notes, or any interest therein, and any Interests acquired by the undersigned
upon conversion of the Notes into Interests, except in accordance with the
provisions of the Note. The undersigned acknowledges that he, she or it
generally must hold his, her or its Notes and any Interests acquired upon
conversion of the Notes into Interests, for a minimum period of one year and may
not sell, transfer pledge or otherwise dispose of the same without registration
under the Securities Act or the Laws unless an exemption from registration is
available.
3
(6) The Notes and any Interests acquired by the undersigned upon
conversion of the Notes into Interests have not and will not be registered under
the Securities Act, and cannot be sold or transferred without compliance with
the registration provisions of said Securities Act or compliance with
exemptions, if any, available thereunder. The undersigned understands that
neither the Company nor the management of the Company has any obligation or
intention to register the Notes under any federal or state Securities Act or
law, or to file the reports to make public the information required by Rule 144
under the Securities Act.
(7) The undersigned expressly represents that: (a) he, she or it has
such knowledge and experience in financial and business matters in general and
in investments of the type described in the Offering Documents in particular,
and that he, she or it is capable of evaluating the merits, risks and other
facets of the subject investment; (b) his, her or its financial condition is
such that he, she or it has no need for liquidity with respect to investment in
the Notes to satisfy any existing or contemplated undertaking or indebtedness;
(c) he, she or it is able to bear the economic risk of investment in the Notes
for an indefinite period of time, including the risk of losing all of his, her
or its investment; (d) he, she or it has either secured independent tax advice
with respect to investment in the Notes, upon which he, she or it is relying, or
is sufficiently familiar with the income taxation of debt instruments that he,
she or it deemed such independent advice to be unnecessary; (e) he, she or it
has participated in other privately placed investments and has such knowledge
and experience in business and financial matters, has the capacity to protect
the undersigned's interest in investments like the subject investment, and is
capable of evaluating the risks, merits and other facets of the subject
investment.
(8) The undersigned acknowledges that management of the Company has
made all available documents pertaining to the investment opportunity described
in the Offering Documents available to the undersigned, including but not
limited to an opportunity to review all contracts, books and records of the
Company and has allowed the undersigned an opportunity to ask questions and
receive answers concerning the Offering and an investment in the Notes and to
verify and clarify any information contained in the Offering Documents or
related documents.
(9) In evaluating the suitability of an investment by the undersigned
in the Notes, the undersigned, having been delivered a copy of the Offering
Documents, acknowledges that he, she or it has relied solely upon the Offering
Documents, documents and materials submitted therewith, and independent
investigations made by the undersigned in making the decision to purchase the
Notes subscribed for herein, and acknowledges that no representations or
agreements (oral or written), other than those set forth in the Offering
Documents, have been made to the undersigned with respect thereto. The
undersigned acknowledges that the Offering Documents supersede any prior
information submitted to the undersigned regarding the investment opportunity
described in the Offering Documents.
4
(10) The undersigned was not induced to invest by any form of general
solicitation or general advertising including, but not limited to, the
following: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over the
television or radio; and (ii) any seminar or meeting whose attendees had been
invited by any general solicitation or general advertising.
(11) The undersigned expressly acknowledges that: (a) the Notes (and
underlying Interests) are speculative investments that involve a high degree of
risk of loss of the entire investment of the undersigned; (b) no federal or
state agency has reviewed or passed upon the adequacy or accuracy of the
information set forth in the Offering Documents, or made any finding or
determination as to the fairness for investment, or any recommendation or
endorsement of the Notes as an investment; (c) there are restrictions on the
transferability of the Notes; there will be no public market for the Notes and,
accordingly, it may not be possible for the undersigned to liquidate his, her or
its investment in the Notes; (d) the Notes shall bear a legend describing the
restrictions on transfer; stop transfer instructions shall be noted in the
appropriate records of the Company and the originally executed copy of the
Subscription Agreement will be retained by the Company; and (e) any anticipated
federal and/or state income tax benefits applicable to the Notes may be lost
through changes in, or adverse interpretations of, existing laws and
regulations.
(12) The Company has a limited operating history upon which evaluation
of the Company and its business can be based. The Company's business must be
considered in light of the risks, expenses and problems frequently encountered
by companies operating in new and rapidly evolving markets such as the Internet.
Specifically, such risks include the failure of the Company to anticipate and
adapt to a developing market, the rejection of the Company's services and
products by Internet consumers, development of equal or superior products or
services by competitors, the failure of the market to adopt the Internet as a
commercial medium and the inability to identify, attract, retain and motivate
qualified personnel. There can be no assurance that the Company will be
successful in addressing such risks.
(13) The Company can give no assurance that it can generate revenue
growth, or that any revenue growth that is achieved can be sustained. Revenue
growth that the Company may achieve may not be indicative of future operating
results. If there are no increased revenues, the Company's business, results of
operations and financial condition will be materially adversely affected. There
can be no assurance that the Company will be able to sustain profitability.
(14) The market for the Company's services and products is rapidly
evolving and is characterized by an increasing number of market entrants who
have or may introduce or develop services and products for use on the Internet.
As a result, the Company's mix of services and products may undergo substantial
changes as the Company reacts to competitive and other developments in the
overall Internet market. The Company expects that its market will become highly
dependent upon the increased use of the Internet for information, publication,
distribution and commerce.
5
The Internet and businesses using the Internet is an unproven medium
for products and services such as those of the Company. Accordingly, the
Company's future operating results will depend substantially upon the increased
use of the Internet by individuals and companies for information, publication,
distribution and commerce, the emergence of the Internet as an effective
business use medium and the successful implementation of the Company's services
and products program. Moreover, critical issues concerning the commercial use of
the Internet (including security, reliability, cost, ease of use, access,
quality of service and acceptance of advertising) remain unresolved and may
impact the growth of Internet use. If widespread commercial use of the Internet
does not develop, or if the Internet does not develop as an effective business
medium, the Company's business, results of operations and financial condition
will be materially adversely affected.
(15) The market for Internet services and products is intensely
competitive. Since there are no substantial barriers to entry, the Company
expects competition in these markets to intensify. Such competitors may be able
to undertake more extensive marketing campaigns and make more attractive offers
to potential employees, distribution partners, advertisers and content
providers. Further, there can be no assurance that the Company's competitors
will not develop Internet services and products that are equal or superior to
those of the Company or that achieve greater market acceptance than the
Company's offerings. There can be no assurance that the Company will be able to
compete successfully against its current or future competitors.
(16) All information that the undersigned has provided is correct and
complete as of the date set forth on the subscription page hereof, and if there
should be any material change in such information prior to the acceptance of
his, her or its subscription for the Notes that he, she or it is purchasing, the
undersigned will immediately provide such information to management of the
Company.
V. LEGEND REQUIREMENTS
FOR ALL INVESTORS:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE NOTES 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.
THE NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY
6
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
VI. INDEMNIFICATION
The undersigned hereby agrees to indemnify the Company, its officers
and directors, and their Affiliates, agents and employees, and hold each of them
harmless against any and all loss, damage, liability or expense, including
reasonable attorneys' fees, which they or any of them may suffer, sustain or
incur by reason of or in connection with any misrepresentation or breach of
warranty or agreement made by the undersigned thereto, or in connection with the
sale or distribution by the undersigned of the Notes purchased by the
undersigned pursuant hereto in violation of the Securities Act or any other
applicable law.
VII. ACCEPTANCE AND REVOCATION
The undersigned understands and agrees that this subscription may be
accepted or rejected by management of the Company, in whole or in part, in its
sole and absolute discretion, and if accepted, the Notes purchased pursuant
hereto will be issued only in the name of the undersigned. The undersigned
hereby acknowledges and agrees that this Subscription Agreement may not be
canceled, revoked or withdrawn, and that this Subscription Agreement and the
documents submitted herewith shall survive: (a) changes in the transactions,
documents and instruments described in the Offering Documents that are not
material; and (b) the death or disability of the undersigned; provided, however,
that if the Company shall not have entered into an agreement with two of its
present stockholders to redeem their shares of Interests, then this Subscription
Agreement and all documents submitted herewith shall automatically be canceled,
terminated and revoked, and all funds heretofore or herewith paid shall be
returned promptly to the undersigned or his, her or its successor without
interest.
VIII. LOCK-UP RESTRICTIONS
The undersigned further agrees that should the Company effect an
initial public offering ("IPO") of its Interests (or any equity securities into
which the Interests convert), the undersigned agrees that he, she or it will not
sell, pledge or otherwise transfer any of the Interests or successor securities
owned by the undersigned for a period of 270 days following the declaration of
effectiveness of the IPO without the prior written consent of the Company, which
consent may be withheld for any reason.
7
IX. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company incorporates by reference and makes a part hereof all of
the representations and warranties made to the Company in Article III of the
Contribution Agreement between VRI and the Company, and the Company hereby
represents and warrants to the undersigned subscriber that all such
representations made to it by VRI have equal applicability to the Company and
the Company hereby makes such representations and warranties to subscriber
insofar as they relate to the business of the Company from the "Closing Date" in
the Contribution Agreement through the date of the acceptance of subscriber's
subscription below by the Company. The Notes, when issued and delivered will be
duly and validly issued and will be fully paid and nonassessable and free and
clear of all encumbrances, except for the restrictions as provided herein.
X. MISCELLANEOUS
The undersigned hereby intends that the undersigned's signature hereon
shall constitute a subscription to the Company for the Notes specified on the
signature page of this Subscription Agreement.
This Subscription Agreement, and the representations and warranties
contained herein shall be binding upon the heirs, executors, administrators and
other successors of the undersigned. If there is more than one signatory hereto,
the obligations, representations, warranties and agreements of the undersigned
are made jointly and severally. This Subscription Agreement shall be governed by
the laws of the State of Illinois.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
8
MEDICAREFACTS, LLC.
SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
The undersigned hereby subscribes for the number of Notes set forth
below, and agrees to be bound by the terms of the Subscription Agreement to
which this counterpart signature page is a part.
EXECUTED this 15th day of October, 2000 at Chicago, Illinois.
8.0 Notes *Subscribed for at $50,000 each: $400,000.
XXXXXXX HEALTHCARE, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------------
Printed
Name: Xxxxxx X. Xxxxxxx, Xx.
---------------------------------
Title: Chairman, CEO and President
---------------------------------
ACCEPTANCE AND AGREEMENT
Accepted and Agreed by Medicarefacts, LLC, this 15th day of October, 2000 at
Barrington, Illinois.
Medicarefacts, LLC,
a Delaware limited liability company
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Printed
Name: XXXXXXX X. XXXX
---------------------------------
Title: President
---------------------------------
9
