Contract
Exhibit
10.1
FOR
INDIVIDUALS
KH
FUNDING COMPANY COMMON STOCK
KH
Funding Company
00000
Xxxxxxxx Xxxxx
Xxxxx
000
Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Corporate
Secretary
Ladies/Gentlemen:
This
Subscription Agreement is being furnished to KH Funding Company, a Maryland
corporation (the “Corporation”), by the undersigned subscriber (the “Purchaser”)
in connection with the proposed purchase by the Purchaser from the Corporation
of ___________ shares (the “Shares”) of its common stock, par value $.01 per
share (the “Common Stock”), at a price of $1.00 per share, or an aggregate
purchase price of $_________ (the “Subscription Price”) in a private
transaction, as described herein.
In connection with the such purchase,
the Purchaser hereby agrees as follows:
1. Purchase. The
Purchaser hereby subscribes to purchase the Shares at the Subscription
Price. A check in the amount of the Subscription Price payable to the
Corporation accompanies this Subscription Agreement. Please deduct
purchase price from my KH account # ___________.
2. Acceptance or Rejection of
Subscription. The Corporation has the right to reject this
subscription for the Shares for any reason. In the event of the
rejection of this subscription, this Subscription Agreement shall have no force
or effect and the Corporation shall continue to be indebted to the Investor as
described above.
3. Representation and
Warranties of the Investor.
(i) The Investor
is acquiring the Shares solely for investment, solely for the Investor's own
account, not for the account of any other person, and not for distribution,
assignment or resale to others and no other person has a direct or indirect
beneficial interest in any Shares so acquired.
(ii) The
Investor has carefully read this Subscription Agreement and, to the extent the
Investor believes necessary, has discussed with the Investor’s professional and
tax advisors with respect to the financial and tax consequences of an investment
in the Corporation, as well as the suitability of this investment, based on the
Investor's individual circumstances.
(iii) The
Investor represents and acknowledges that the Investor has had a reasonable
opportunity, at a reasonable time prior to the Investor's investment in the
Corporation, to ask questions of and receive answers from the Corporation or
other representative of the Corporation concerning the terms and conditions of
the offering of the Shares, and the Corporation and its operations, and all such
questions have been answered to the Investor's full satisfaction. The
Investor further acknowledges that the Investor has had a reasonable opportunity
to obtain any relevant information which the Corporation possesses or can
acquire without unreasonable effort or expense.
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(iv) The
Investor represents and acknowledges that no oral representations have been made
in connection with the offering of the Shares which are in any manner
inconsistent with the materials that have been disclosed to the
Investor.
(v) The
Investor has neither relied upon nor seen any form of advertising or general or
public solicitation, including communications published in or broadcasted by any
print or electronic medium and mass mailings, in connection with the offering of
the Shares, and are aware of no such solicitation or advertisement received by
others.
(vi) The
Investor is an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the “Securities
Act”), and has checked the box(es) below which are next to the category or
categories under which the Investor qualifies as an accredited
investor:
A. ___ I certify that I am an
accredited investor, as that term is defined in Rule 501(a) under the Securities
Act (an “Accredited Investor”) because I have an individual net worth, or my
spouse and I have a combined net worth, in excess of $1,000,000. For
purposes of this Subscription Agreement, “net worth” means the excess of total
assets at fair market value, including home1, home furnishings, and automobiles, over total
liabilities.
B. ___ I certify that I am
an Accredited Investor because I had individual income (exclusive of any income
attributable to my spouse) of more than $200,000 in each of the last two years
or joint income with my spouse in excess of $300,000 for each of those years,
and I reasonably expect to reach the same income level in the current
year. For purposes of this Subscription Agreement, individual income
means adjusted gross income, as reported for U.S. federal income tax purposes,
less any income attributable to a spouse or to property owned by a spouse,
increased by the following amounts (but not including any amounts attributable
to a spouse or to property owned by a spouse): (1) the amount of any
tax-exempt interest income under Section 103 of the U.S. Internal Revenue Code
of 1986 (the “Code”) received, (2) the amount of losses claimed as a limited
partner in a limited partnership as reported on Schedule E of Form 1040, and (3)
any deduction claimed for depletion under Section 611 et seq. of the
Code.
C. ___ I certify that I am an
Accredited Investor because I am a director, or executive officer of the
Corporation.
________________________
1
Notwithstanding anything to the contrary herein, for purposes of determining
“net worth”, the principal residence owned by an individual shall be valued
either at (A) cost, including the cost of improvements, or (B) the appraised
value of the property as determined by an institutional lender, net of current
encumbrances upon the property.
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(vii) The
Investor, if a natural person, has his or her principal residence in the state
listed on the signature page hereof, and has no present intention of changing
such residence; and, if an entity, has its principal office in the state listed
on the signature page hereof, and has no present intention of changing such
principal office.
(viii) The
Investor acknowledges that an investment in the Corporation involves a high
degree of risk, and, having made Investor’s own evaluation of the risks
associated with this investment, the Investor is aware and has been advised that
the Investor must bear the economic risks of a purchase of the Shares
indefinitely.
(ix) The
Investor acknowledges that the Shares have not been registered under the
Securities Act or any applicable State securities laws (the “State Acts”), and
are being offered and sold pursuant to exemptions from registration under the
Securities Act by virtue of Section 4(2) of the Act and/or the provisions of
Regulation D promulgated under Section 3(b) of the Securities Act, and such
exemptions depend in part upon the accuracy of the statements, representations
and agreements made by the Investor in this Subscription
Agreement. The Investor understands that the merits of investment in
the Shares have not been reviewed by, passed on, or submitted for review to any
federal or state agency or other regulatory organization.
(x) The Investor
understands that there is no market for the Shares, that none may develop, and
that limited rights exist to transfer the Shares.
(xi) Not
applicable.
(xi) The
Investor is aware that the Corporation may offer and sell additional shares of
Common Stock in the future, thereby diluting the Investor’s percentage equity
ownership of the Corporation.
(xii) As
of the date or dates of the Investor's acquisition of the Shares in the
Corporation (i) the value of all securities owned by the Investor of all issuers
that are or would be, but for the exemption set forth in Section 3(c)(1)(A) of
the Investment Company Act of 1940, as amended, excluded from the definition of
“investment company” under such Act solely by reason of Section 3(c)(1) thereof,
will not exceed 10% of the value of the Investor's total assets, and (ii) the
Investor is not relying on Section 3(c)(1) of the Investment Company Act of 1940
as an exemption from classification as an investment company.
(xiii) The
foregoing representations and warranties and all other information which the
Investor has provided to the Corporation concerning such Investor, the financial
position of the Investor, and the Investor's knowledge of financial and business
matters, or in the case of persons investing as joint tenants or a corporation,
partnership, trust or other entity, the knowledge of financial and business
matters of the person making the investment decision on behalf of such joint
tenants or entity, including all information contained herein, are true and
accurate as of this date and shall be true and accurate as of the date of the
issuance of the Shares. If in any respect such representations,
warranties or information shall not be true and accurate at any time prior to
the Investor's admission to the Corporation, the Investor will give written
notice of such fact to the Corporation, specifying which representations,
warranties or information are not true and accurate and the reasons
therefor.
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4. Covenants of the
Investor. The Investor covenants and agrees that the Investor
will not take, or cause to be taken any action with respect to the Shares that
would cause the Investor to be deemed an “underwriter” as defined in Section
2(11) of the Securities Act.
5. Investor
Questionnaire. The Investor has previously completed and
delivered to the Corporation, or is concurrently with the delivery hereof
delivering, an Investor Questionnaire in the form attached hereto. The Investor
understands and acknowledges that the Corporation is relying on the accuracy of
the information set forth in the Investor Questionnaire in complying with
applicable federal and state securities laws.
6. Indemnification. The
Investor understands and acknowledges that the Corporation and its control
persons are relying on the representations, warranties and agreements made by
the Investor in this Subscription Agreement and the Investor agrees to indemnify
and hold harmless the Corporation, its control persons, the corporation's
affiliates and anyone acting on its behalf from and against all damages, losses,
costs and expenses (including reasonable attorneys' fees) which they may incur
by reason of my failure to fulfill any of the terms or conditions of this
Subscription Agreement, or by reason of any breach of the representations and
warranties made by the Investor herein, or in any document provided by the
Investor to the Corporation.
7. Transferability and
Resale.
(i) The Investor
acknowledges that the Shares have not been registered under the Securities Act
or the State Acts, and may not be sold, pledged, hypothecated, donated or
otherwise transferred (whether or not for consideration) by the Investor unless
registered pursuant to the Securities Act and the State Acts, or upon
presentation to the Corporation of evidence satisfactory to the Corporation, or
submission to the Corporation of a favorable opinion of counsel acceptable to
the Corporation, to the effect that any such transfer is subject to an
applicable exemption under and will not be in violation of the Securities Act
and the State Acts, and will not prejudice the “S” tax status of the
Corporation.
(ii) The
Investor acknowledges that the Corporation is not expected to file periodic
reports with the Securities and Exchange Commission pursuant to the requirements
of Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934, as
amended. The Investor also understands that the Corporation is under
no obligation to register the Shares for distribution in accordance with the
provisions of the Securities Act and the State Acts, or to assist the Investor
in complying with any exemption under the Securities Act and the State Acts for
the transfer of the Shares. However, the Corporation does make periodic filings
with the Securities and Exchange Commission pursuant to the issuance of debt
securities by the Corporation.
(iii) The
Investor acknowledges that, as a result of the strict limitations on the ability
to transfer the Shares, the Investor may be required to hold the Shares
indefinitely and therefore may not realize any liquidity from any sale of the
Shares.
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"THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO KH
FUNDING COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
9. Binding Effect; Successors
and Assigns. This Subscription Agreement will be binding upon
the parties hereto, the successors and assigns of the Corporation and the heirs,
personal representatives, successors and assigns of the
Investor. This Subscription Agreement will inure to the benefit of
the Corporation and its successors and assigns. Neither this
Subscription Agreement nor any part of it will be assignable by the
Investor.
10. Option to Purchase
Shares. The purchaser shall receive an option to purchase half
as many shares as are being purchased hereunder for the price of $1.00 per share
(the “Option Agreement”). The Option Agreement shall expire five (5)
years from the date of issuance of the stock purchased herein.
11. [Intentionally omitted].
12. Miscellaneous.
(i) This
Subscription Agreement constitutes the entire agreement among the parties hereto
with respect to the subscription of the Investor's Shares and may be amended
only by a writing executed by the parties hereto.
(ii) Within
10 days after receipt of a written request from the Corporation, the Investor
agrees to provide such information and to execute and deliver such documents as
reasonably may be necessary to comply with any and all laws and ordinances to
which the Corporation is subject.
(iii) In
this Subscription Agreement the singular shall include the plural and the
masculine gender shall include the feminine and neuter and vice versa, as the
context requires.
(iv) 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 shall not impair the operation of
or affect the remaining portions of this Subscription Agreement.
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(v) 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.
(vi) This Subscription
Agreement may not be orally modified or amended, but may be modified or amended
only in a writing duly executed by each of the parties hereto. All
communications hereunder shall be in writing and shall be delivered personally
or sent by registered or certified mail or by a recognized overnight delivery
service (with postage and costs prepaid).
(vii) This
Subscription Agreement shall be construed in accordance with the laws of the
State of Maryland, without regard to principles of conflict of
laws.
[SIGNATURE
PAGE FOLLOWS]
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SIGNATURE
PAGE FOR PURCHASE OF
KH
FUNDING COMPANY COMMON STOCK
IN WITNESS WHEREOF, the undersigned has
executed and sealed this Subscription Agreement as of this ___ day of
___________, 2009.
Check
One:
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Tenants-in-common
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(SEAL)
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Joint
tenants
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Signature
of Investor
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Tenants
by the entireties
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Individual
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Typed
or Printed Name of Investor
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(SEAL)
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Signature
of Co-Investor (if any)
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Typed
or Printed Name of Co-Investor (if any)
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Residence
or Business Address
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City State Zip
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Telephone
Number
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Social
Security Number
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ACCEPTED
THIS ____ DAY OF ______________, ______
KH
FUNDING COMPANY
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