SUBSCRIPTION AGREEMENT FOR Z TRIM HOLDINGS, INC.
Exhibit
4.1
FOR
0000
Xxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Ladies
and Gentlemen:
1. Subscription.
(a) The
undersigned (the “Purchaser”),
intending to be legally bound, hereby irrevocably agrees to purchase a unit or
units (each, a “Unit” and
collectively, the “Units”) at a purchase
price of $100,000 per Unit, from Z Trim Holdings, Inc., an Illinois corporation
(the “Company”). Each
Unit consists of a convertible senior secured note, due 24 months from issue
(each a “Note”
and collectively, the “Notes”) convertible
at the rate of $0.26 per share into 384,615 shares of common stock, $.00005 par
value per share (“Common Shares”), of Z
Trim Holdings, Inc., an Illinois corporation (the “Company”), bearing
interest at the rate of 8% per annum, which interest is payable quarterly in
Common Shares at the rate of $0.26 per share, and two five-year warrants, one to
purchase 230,769 Common Shares at $0.01 per share (the “$0.01 Warrants”) and
the other to purchase 153,846 Common Shares at $0.26 per share (the “$0.26 Warrants”, and,
together with the $0.01 Warrants, collectively, the “Warrants”). This
subscription is submitted to you in accordance with and subject to the terms and
conditions described in this Subscription Agreement, and the Confidential
Private Placement Memorandum of the Company dated June __, 2008, as amended or
supplemented from time to time, including all documents incorporated by
reference therein and all attachments, schedules and exhibits thereto (the
“Memorandum”),
relating to the offering (the “Offering”) by the
Company of a minimum of 14 Units ($1,400,000) (the “Minimum Amount”) and
a maximum of ___ Units ($___________) (the “Maximum
Amount”).
(b) The
terms of the Offering are more completely described in the Memorandum and such
terms are incorporated herein in their entirety. Certain capitalized
terms used, but not otherwise defined herein, shall have the respective meanings
provided in the Memorandum.
2. Payment. The
Purchaser encloses herewith a check payable to, or will immediately make a wire
transfer payment to, “American Chartered Bank, as Escrow Agent for Z Trim
Holdings, Inc.,” in the full amount of the purchase price of the Units being
subscribed for (the “Subscription
Amount”). Together with the check for, or wire transfer of,
the full Subscription Amount, the Purchaser is delivering a completed and
executed Omnibus Signature Page to this Subscription Agreement and the
Registration Rights Agreement.
3. Deposit of
Funds. All payments made as provided in Section 2 hereof shall
be deposited by the Company as soon as practicable with American Chartered Bank,
as escrow agent (the “Escrow Agent”) or
such other escrow agent appointed by ________ and the Company, in a non-interest
bearing escrow account (the “Escrow
Account”). In the event that the Company does not succeed in
receiving and accepting subscriptions for the Minimum Amount on or before July
31, 2008, which may be extended for up to two additional 45-day periods at the
discretion of ___________ and the Company, the Company will refund all of the
Purchaser’s Subscription Amount, without interest accrued thereon or deduction
therefrom, and will return the subscription documents to the
Purchaser. If the Company rejects a Purchaser’s subscription, either
in whole or in part (which decision is in the sole discretion of the Company),
the rejected Subscription Amount or the rejected portion thereof will be
returned promptly to the Purchaser without interest accrued thereon or deduction
therefrom. The minimum Subscription Amount for a Purchaser in the
Offering is 1 Unit ($100,000); provided, however, that _________ and
the Company, in their sole discretion, may waive such minimum Subscription
Amount requirement from time to time.
4. Acceptance of
Subscription. The Purchaser understands and agrees that the
Company in its sole discretion reserves the right to accept or reject this or
any other subscription for the Units, in whole or in part, notwithstanding prior
receipt by the Purchaser of notice of acceptance of this or any other
subscription. The Company shall have no obligation hereunder until
the Company shall execute and deliver to the Purchaser an executed copy of this
Subscription Agreement. If Purchaser’s subscription is rejected in
whole, or the Offering is terminated or the Minimum Amount is not subscribed for
and accepted, all funds received from the Purchaser will be returned without
interest, penalty, expense or deduction, and this Subscription Agreement shall
thereafter be of no further force or effect. If Purchaser’s
subscription is rejected in part, the funds for the rejected portion of such
subscription will be returned without interest, penalty, expense or deduction,
and this Subscription Agreement will continue in full force and effect to the
extent such subscription was accepted.
1
5. Representations and Warranties of the
Purchaser. The Purchaser hereby acknowledges, represents,
warrants, and agrees as follows:
(a) None
of the Units, the Notes, the Warrants or any of the shares of Common Stock
issuable upon conversion of, or payment of interest on, the Notes or issuable
upon exercise of the Warrants offered pursuant to the Memorandum are registered
under the Securities Act of 1933, as amended (the “Securities Act”), or
any state securities laws. The Purchaser understands that the
offering and sale of the Units is intended to be exempt from registration under
the Securities Act, by virtue of Section 4(2) thereof and the provisions of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements of the Purchaser contained in this Subscription
Agreement;
(b) The
Purchaser and the Purchaser’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, “Advisors”), have
received the Memorandum and all other documents requested by the Purchaser or
its Advisors, if any, have carefully reviewed them and understand the
information contained therein, prior to the execution of this Subscription
Agreement;
(c) Neither
the Securities and Exchange Commission (the “Commission”) nor any
state securities commission has approved the Units, the Notes, the Warrants or
any of the Common Shares issuable upon conversion of, or payment of interest on,
the Notes or exercise of the Warrants, or passed upon or endorsed the merits of
the Offering or confirmed the accuracy or determined the adequacy of the
Memorandum. The Memorandum has not been reviewed by any Federal,
state or other regulatory authority;
(d) All
documents, records, and books pertaining to the investment in the Units
(including, without limitation, the Memorandum) have been made available for
inspection by the Purchaser and its Advisors, if any;
2
(e) The
Purchaser and its Advisors, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning the offering of the Units and the business, financial
condition, results of operations and prospects of the Company, and all such
questions have been answered by the Company to the full satisfaction of the
Purchaser and its Advisors, if any, and the Purchaser and its Advisors have had
access, through the XXXXX system, to true and complete copies of the Company’s
most recent Annual Report on Form 10-KSB for the fiscal year ended December 31,
2007 (the “10-KSB”), as amended,
and all other reports filed by the Company pursuant to the Securities Exchange
Act of 1934, as amended, since the filing of the 10-KSB and prior to the date
hereof and have reviewed such filings;
(f) In
evaluating the suitability of an investment in the Company, the Purchaser has
not relied upon any representation or other information (oral or written) other
than as stated in the Memorandum or as contained in documents so furnished to
the Purchaser or its Advisors, if any, by the Company in writing;
(g) The
Purchaser is unaware of, is in no way relying on, and did not become aware of
the offering of the Units through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television, radio or over the
Internet, in connection with the offering and sale of the Units and is not
subscribing for Units and did not become aware of the offering of the Units
through or as a result of any seminar or meeting to which the Purchaser was
invited by, or any solicitation of a subscription by, a person not previously
known to the Purchaser in connection with investments in securities
generally;
(h) The
Purchaser has taken no action which would give rise to any claim by any person
for brokerage commissions, finders’ fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby (other than
commissions to be paid by the Company to _________ as described in the
Memorandum or as otherwise described in the Memorandum);
(i) The
Purchaser, either alone or together with its Advisor(s), if any, have such
knowledge and experience in financial, tax, and business matters, and, in
particular, investments in securities, so as to enable them to utilize the
information made available to them in connection with the offering of the Units
to evaluate the merits and risks of an investment in the Units and the Company
and to make an informed investment decision with respect thereto;
(j) The
Purchaser is not relying on the Company, _________ or any of their respective
employees or agents with respect to the legal, tax, economic and related
considerations of an investment in the Units, and the Purchaser has relied on
the advice of, or has consulted with, only its own Advisors;
(k) The
Purchaser is acquiring the Units solely for such Purchaser’s own account for
investment and not with a view to resale or distribution thereof, in whole or in
part. The Purchaser has no agreement or arrangement, formal or
informal, with any person to sell or transfer all or any of the Units, the
Notes, the Warrants or Common Shares issuable upon conversion of, or payment of
interest on, the Notes or issuable upon exercise of the Warrants, and the
Purchaser has no plans to enter into any such agreement or
arrangement;
3
(l) The
purchase of the Units represents high risk capital and the Purchaser is able to
afford an investment in a speculative venture having the risks and objectives of
the Company. The Purchaser must bear the substantial economic risks
of the investment in the Units indefinitely because none of the Units, the
Notes, the Warrants, or the Common Shares issuable upon conversion of, or
payment of interest on, the Notes or exercise of the Warrants may be sold,
hypothecated or otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an exemption from such
registration is available. Legends shall be placed on the securities
included in the Units to the effect that they have not been registered under the
Securities Act or applicable state securities laws and appropriate notations
thereof will be made in the Company’s stock books. Stop transfer
instructions will be placed with the transfer agent of the securities
constituting the Units. The Company has agreed that purchasers of the
Units will have, with respect to the Common Shares issuable upon conversion of,
or payment of interest on, the Notes and issuable upon exercise of the Warrants,
the registration rights described in the Registration Rights Agreement in the
form annexed to the Memorandum. Notwithstanding such registration
rights, it is not anticipated that there will be any market for resale of the
Units, the Notes, the Warrants or any of the Common Shares issuable upon
conversion of, or payment of interest on, the Notes or issuable upon exercise of
the Warrants, and such securities will not be freely transferable at any time in
the foreseeable future;
(m) The
Purchaser has adequate means of providing for such Purchaser’s current financial
needs and foreseeable contingencies and has no need for liquidity of the
investment in the Units, the Notes, the Warrants or any of the Common Shares
issuable upon conversion of, or payment of interest on, the Notes or issuable
upon exercise of the Warrants for an indefinite period of time;
(n) The
Purchaser is aware that an investment in the Units involves a number of very
significant risks and has carefully read and considered the matters set forth in
the Memorandum and, in particular, the matters under the caption “Risk Factors”
therein, and, in particular, acknowledges that such risks may materially
adversely affect the Company’s results of operations and future
prospects;
(o) The
Purchaser is an “accredited investor” as that term is defined in Regulation D
under the Securities Act, and has truthfully and accurately completed the
Accredited Investor Certification contained herein;
(p) The
Purchaser: (i) if a natural person, represents that the Purchaser has reached
the age of 21 and has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates and to
carry out the provisions hereof and thereof; (ii) if a corporation, partnership,
or limited liability company or partnership, or association, joint stock
company, trust, unincorporated organization or other entity, represents that
such entity was not formed for the specific purpose of acquiring the Units, such
entity is duly organized, validly existing and in good standing under the laws
of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this Subscription Agreement and all
other related agreements or certificates and to carry out the provisions hereof
and thereof and to purchase and hold the securities constituting the Units, the
execution and delivery of this Subscription Agreement has been duly authorized
by all necessary action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding obligation
of such entity; or (iii) if executing this Subscription Agreement in a
representative or fiduciary capacity, represents that it has full power and
authority to execute and deliver this Subscription Agreement in such capacity
and on behalf of the subscribing individual, xxxx, partnership, trust, estate,
corporation, or limited liability company or partnership, or other entity for
whom the Purchaser is executing this Subscription Agreement, and such
individual, partnership, xxxx, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and represents that this Subscription Agreement constitutes a legal, valid and
binding obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the Purchaser
is a party or by which it is bound;
4
(q) The
Purchaser and its Advisors, if any, have had the opportunity to obtain any
additional information, to the extent the Company had such information in their
possession or could acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information contained in the Memorandum and all
documents received or reviewed in connection with the purchase of the Units and
have had the opportunity to have representatives of the Company provide them
with such additional information regarding the terms and conditions of this
particular investment and the financial condition, results of operations,
business and prospects of the Company deemed relevant by the Purchaser or its
Advisors, if any, and all such requested information, to the extent the Company
had such information in its possession or could acquire it without unreasonable
effort or expense, has been provided by the Company in writing to the full
satisfaction of the Purchaser and its Advisors, if any;
(r) The
Purchaser represents to the Company that any information which the undersigned
has heretofore furnished or is furnishing herewith to the Company or __________
is complete and accurate and may be relied upon by the Company in determining
the availability of an exemption from registration under Federal and state
securities laws in connection with the offering of securities as described in
the Memorandum. The Purchaser further represents and warrants that it
will notify and supply corrective information to the Company and __________
immediately upon the occurrence of any change therein occurring prior to the
Company’s issuance of the securities contained in the Units;
(s) The
Purchaser has significant prior investment experience, including investment in
non-listed and non-registered securities. The Purchaser is
knowledgeable about investment considerations in public companies and, in
particular, public companies traded on the American Stock
Exchange. The Purchaser has a sufficient net worth to sustain a loss
of its entire investment in the Company in the event such a loss should
occur. The Purchaser’s overall commitment to investments which are
not readily marketable is not excessive in view of the Purchaser’s net worth and
financial circumstances and the purchase of the Units will not cause such
commitment to become excessive. This investment is a suitable one for
the Purchaser;
(t) The
Purchaser is satisfied that it has received adequate information with respect to
all matters which it or its Advisors, if any, consider material to its decision
to make this investment;
(u) The
Purchaser acknowledges that any estimates or forward-looking statements or
projections included in the Memorandum were prepared by the Company in good
faith, but that the attainment of any such projections, estimates or
forward-looking statements cannot be guaranteed by the Company and should not be
relied upon;
5
(v) No
oral or written representations have been made, or oral or written information
furnished, to the Purchaser or its Advisors, if any, in connection with the
offering of the Units which are in any way inconsistent with the information
contained in the Memorandum;
(w) Within
five days after receipt of a request from the Company or __________, the
Purchaser will provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and ordinances to which
the Company or __________ is subject;
(x) The
Purchaser’s substantive relationship with __________ or subagent through which
the Purchaser is subscribing for Units predates __________’s or such subagent’s
contact with the Purchaser regarding an investment in the Units;
(y) THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID
ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL;
(z) The
Purchaser acknowledges that none of the Notes, the Warrants or the Common Shares
issuable upon conversion of, or payment of interest on, the Notes or issuable
upon exercise of the Warrants have been recommended by any Federal or state
securities commission or regulatory authority. 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. Furthermore, the foregoing authorities have not confirmed
the accuracy or determined the adequacy of this Subscription
Agreement. Any representation to the contrary is a criminal
offense. The Units, the Notes, the Warrants, and the Common Shares
issuable by the Company upon conversion of, or payment of interest on, the Notes
and issuable upon the exercise of the Warrants, are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Securities Act, and the applicable state securities laws,
pursuant to registration or exemption therefrom. Investors should be
aware that they will be required to bear the financial risks of this investment
for an indefinite period of time; and
(aa) (For ERISA plans
only) The fiduciary of the ERISA plan (the “Plan”) represents
that such fiduciary has been informed of and understands the Company’s
investment objectives, policies and strategies, and that the decision to invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent
with the provisions of ERISA that require diversification of plan assets and
impose other fiduciary responsibilities. The Purchaser or Plan
fiduciary (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company and any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Purchaser or Plan
fiduciary has not relied on any advice or recommendation of the Company or any
of its affiliates.
6
6. Representations and Warranties of the
Company. The Company hereby acknowledges, represents,
warrants, and agrees as follows:
(a) The
Company is duly organized, validly existing and in good standing under the laws
of the State of Illinois. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which failure to do so
would have a material adverse effect on the assets, business, properties,
operations, financial condition or prospects of the Company; and
(b) The
execution and delivery of this Subscription Agreement, the Notes, the Warrants
and the Registration Rights Agreement and the performance by the Company of its
obligations hereunder and thereunder and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Company and no
other proceedings on the part of the Company are necessary. The
person(s) executing this Subscription Agreement, the Notes, the Warrants and the
Registration Rights Agreement on behalf of the Company has all right, power and
authority to execute and deliver such agreements in the name and on behalf of
the Company. This Subscription Agreement, the Notes, the Warrants and
the Registration Rights Agreement have been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
the subscriber hereto, will constitute the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and the availability of equitable remedies.
7. Indemnification. The
Purchaser agrees to indemnify and hold harmless the Company, __________ and
their respective officers, directors, employees, agents, control persons and
affiliates from and against all losses, liabilities, claims, damages, costs,
fees and expenses whatsoever (including, but not limited to, any and all
expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of any actual or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Purchaser of any covenant
or agreement made by the Purchaser herein or in any other document delivered in
connection with this Subscription Agreement.
8. Irrevocability; Binding
Effect. The Purchaser hereby acknowledges and agrees that the
subscription hereunder is irrevocable by the Purchaser, except as required by
applicable law, and that this Subscription Agreement shall survive the death or
disability of the Purchaser and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns. If the Purchaser is more than
one person, the obligations of the Purchaser hereunder shall be joint and
several and the agreements, representations, warranties, and acknowledgments
herein shall be deemed to be made by and be binding upon each such person and
such person’s heirs, executors, administrators, successors, legal
representatives, and permitted assigns.
9. Modification. This
Subscription Agreement shall not be modified or waived except by an instrument
in writing signed by the party against whom any such modification or waiver is
sought.
10. Notices. Any notice
or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or
delivered against receipt to the party to whom it is to be given (a) if to the
Company, at the address set forth above or (b) if to the Purchaser, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 10). Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party’s address which shall be deemed
given at the time of receipt thereof.
11. Assignability. This
Subscription Agreement and the rights, interests and obligations hereunder are
not transferable or assignable by the Purchaser and the transfer or assignment
of the Units, the Notes, the Warrants and the shares of Common Stock issuable by
the Company upon conversion of, or payment of interest on, the Notes or upon
exercise of the Warrants shall be made only in accordance with all applicable
laws.
7
12. Applicable Law. This Subscription
Agreement shall be governed by and construed under the laws of the State of
Illinois as applied to agreements among Illinois residents entered into and to
be performed entirely within Illinois. Each of the parties hereto
(1) agree that any legal suit, action or proceeding arising out of or
relating to this Agreement shall be instituted exclusively in the 19th
Judicial Circuit Court of Lake County, Illinois, or in the United States
District Court for the Northern District of Illinois, (2) waive any
objection which the Company may have now or hereafter to the venue of any such
suit, action or proceeding, and (3) irrevocably consent to the jurisdiction
of the 19th
Judicial Circuit Court of Lake County, Illinois, and the United States District
Court for the Northern District of Illinois in any such suit, action or
proceeding. Each of the parties hereto further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the 19th
Judicial Circuit Court of Lake County, Illinois, or in the United States
District Court for the Northern District of Illinois and agrees that service of
process upon it mailed by certified mail to its address shall be deemed in every
respect effective service of process upon it, in any such suit, action or
proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.
13. Blue Sky
Qualification. The purchase of Units under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Units from applicable Federal and state securities
laws. The Company shall not be required to qualify this transaction
under the securities laws of any jurisdiction and, should qualification be
necessary, the Company shall be released from any and all obligations to
maintain its offer, and may rescind any sale contracted, in the
jurisdiction.
14. Use of
Pronouns. All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.
15. Confidentiality. The
Purchaser acknowledges and agrees that any information or data the Purchaser has
acquired from or about the Company, not otherwise properly in the public domain,
was received in confidence. The Purchaser agrees not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Subscription Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company, including any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, ideas, discoveries, inventions,
developments and improvements belonging to the Company and confidential
information obtained by or given to the Company about or belonging to third
parties.
8
16. Miscellaneous.
(a) This
Subscription Agreement, together with the Notes, the Warrants and the
Registration Rights Agreement, constitute the entire agreement between the
Purchaser and the Company with respect to the subject matter hereof and
supersede all prior oral or written agreements and understandings, if any,
relating to the subject matter hereof. The terms and provisions of
this Subscription Agreement may be waived, or consent for the departure
therefrom granted, only by a written document executed by the party entitled to
the benefits of such terms or provisions.
(b) Each
of the Purchaser’s and the Company’s representations and warranties made in this
Subscription Agreement shall survive the execution and delivery hereof and
delivery of the Notes, the Warrants and the Common Shares issuable upon
conversion of, or payment of interest on, the Notes and issuable upon the
exercise of the Warrants.
(c) Each
of the parties hereto shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Subscription Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated.
(d) This
Subscription Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
(e) Each
provision of this Subscription Agreement shall be considered separable and, if
for any reason any provision or provisions hereof are determined to be invalid
or contrary to applicable law, such invalidity or illegality shall not impair
the operation of or affect the remaining portions of this Subscription
Agreement.
(f) Paragraph
titles are for descriptive purposes only and shall not control or alter the
meaning of this Subscription Agreement as set forth in the text.
17. Omnibus Signature
Page. This Subscription Agreement is intended to be read and
construed in conjunction with the Registration Rights Agreement pertaining to
the issuance by the Company of the shares of Common Stock and Warrants to
subscribers pursuant to the Memorandum. Accordingly, pursuant to the
terms and conditions of this Subscription Agreement and such related agreements
it is hereby agreed that the execution by the Purchaser of this Subscription
Agreement, in the place set forth herein, shall constitute agreement to be bound
by the terms and conditions hereof and the terms and conditions of the
Registration Rights Agreement, with the same effect as if each of such separate,
but related agreement, were separately signed.
[REMAINDER
OF THIS PAGE IS BLANK]
9
ANTI-MONEY
LAUNDERING REQUIREMENTS
|
The
USA PATRIOT Act
|
What
is money laundering?
|
How
big is the problem and why is it important?
|
|
The
USA PATRIOT Act is designed to detect, deter, and punish terrorists in the
United States and abroad. The Act imposes new anti-money
laundering requirements on brokerage firms and financial
institutions. Since April 24, 2002 all brokerage firms have
been required to have new, comprehensive anti-money laundering
programs.
To
help you understand theses efforts, we want to provide you with some
information about money laundering and our steps to implement the USA
PATRIOT Act.
|
Money
laundering is the process of disguising illegally obtained money so that
the funds appear to come from legitimate sources or
activities. Money laundering occurs in connection with a wide
variety of crimes, including illegal arms sales, drug trafficking,
robbery, fraud, racketeering, and terrorism.
|
The
use of the U.S. financial system by criminals to facilitate terrorism or
other crimes could well taint our financial markets. According
to the U.S. State Department, one recent estimate puts the amount of
worldwide money laundering activity at $1 trillion a
year.
|
|
What
are we required to do to eliminate money laundering?
|
|
|
Under
new rules required by the USA PATRIOT Act, our anti-money laundering
program must designate a special compliance officer, set up employee
training, conduct independent audits, and establish policies and
procedures to detect and report suspicious transaction and ensure
compliance with the new laws.
|
As
part of our required program, we may ask you to provide various
identification documents or other information. Until you
provide the information or documents we need, we may not be able to effect
any transactions for you.
|
10
OMNIBUS
SIGNATURE PAGE TO
SUBSCRIPTION
AGREEMENT, REGISTRATION RIGHTS AGREEMENT, AND SECURITY AGREEMENT
Purchaser
hereby elects to purchase a total of ______ Units at a price of $100,000 per
Unit (NOTE: to be completed by the Purchaser).
Date
(NOTE: To be completed by the Purchaser): __________________, 2008
If the
Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN
COMMON, or as COMMUNITY PROPERTY:
| Print Name(s) | Social Security Number(s) | |||
| Signature(s) of Purchaser(s) | Signature | |||
| Date | Address |
If the
Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:
|
Name of
Partnership,
Corporation, Limited
Liability Company or
Trust
|
Federal Taxpayer
Identification Number
|
|||
|
By:
|
||||
| Name: | State of Organization | |||
| Title: | ||||
| Date | Address |
| By: |
/s/
|
|
|||
|
Authorized
Officer
|
|
||||
|
|
|
11
