SUBSCRIPTION AGREEMENT
Exhibit
4.4
Print
Name of Subscriber:_____________
Amount
Subscribed For: $____________
For
the Purchase of Convertible Note
of
NaturalNano,
Inc.
This
SUBSCRIPTION AGREEMENT (the “Subscription Agreement”) sets forth the terms by
which the undersigned (sometimes also referred to as the “subscriber”) hereby
subscribes for a Convertible Promissory (“Note” or “Securities”) of NaturalNano,
Inc., a Delaware corporation (the “Company”). The Company is offering for
purchase Notes in the aggregate amount of $1,000,000 (subject to increase,
at
the Company’s sole discretion)(the “Offering”).
The
Notes
will be offered by the Company on a best efforts basis but may utilize the
services of selected registered broker-dealers. The Notes shall be offered
only
to “Accredited Investors,” as such term is defined under Rule 501(a) of the
Securities Act of 1933, as amended (the “Act”), including, without limitation,
entities within such definition, without registration, pursuant to the exemption
from registration created by Regulation D under the Act. The Offering will
commence on June 6, 2005, and shall terminate on July 31, 2005, unless extended
by the Company in its sole discretion and without notice to any subscriber
(the
“Offering Period”).
The
subscriber agrees to pay the purchase price listed on the signature page
as a
subscription for the Note being purchased hereunder. The entire purchase
price
is due and payable upon the execution of this Subscription Agreement, and
shall
be paid by check, subject to collection, or by wire transfer. The Company
shall
have the right to reject this subscription in whole or in part.
The
Company, at its discretion, will hold a closing on, and issue, the Notes
upon
the receipt and acceptance by the Company of Subscription Agreements (“First
Closing”). As additional subscriptions are received and accepted by the Company,
the Company will hold additional closings as the Company deems necessary
until
(i) it has received and accepted subscriptions for the entire offering or
(ii)
the Termination Date, whichever occurs first.
PROSPECTIVE
INVESTORS SHOULD RETAIN THEIR OWN PROFESSIONAL
ADVISORS
TO REVIEW AND EVALUATE THE ECONOMIC, TAX AND OTHER
CONSEQUENCES
OF AN INVESTMENT IN THE COMPANY.
THE
SECURITIES ARE OFFERED PURSUANT TO THIS SUBSCRIPTION AGREEMENT AND THE OTHER
DOCUMENTS ANNEXED HERETO (COLLECTIVELY, THE “OFFERING MATERIALS”), WHICH
OFFERING MATERIALS HAVE NOT BEEN FILED OR REGISTERED WITH OR APPROVED BY
THE
SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”), NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS. NO STATE
SECURITIES LAW ADMINISTRATOR HAS PASSED ON OR ENDORSED THE MERITS OF THIS
OFFERING OR THE ACCURACY OR THE ADEQUACY OF THE OFFERING MATERIALS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IT
IS INTENDED THAT THE SECURITIES OFFERED HEREBY WILL BE MADE AVAILABLE ONLY
TO
“ACCREDITED INVESTORS,” AS DEFINED IN RULE 501 OF REGULATION I PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). THE SECURITIES OFFERED
HEREBY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS FOR NONPUBLIC
OFFERINGS. SUCH EXEMPTIONS LIMIT THE NUMBER AND TYPES OF INVESTORS TO WHICH
THE
OFFERING WILL BE MADE AND RESTRICT SUBSEQUENT TRANSFERS OF THE
INTERESTS.
THE
SECURITIES OFFERED HEREBY SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD
TO
SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. INVESTORS WILL BE REQUIRED TO
REPRESENT THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS OF THIS
OFFERING.
NO
SECURITIES MAY BE RESOLD OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS,
IN THE
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, REGISTRATION UNDER THE
APPLICABLE FEDERAL OR STATE SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE
IS
MADE WITH SUCH REGISTRATION REQUIREMENTS.
WE
DRAW YOUR ATTENTION TO THE ANTIFRAUD PROVISIONS OF THE FEDERAL AND STATE
SECURITIES LAWS, PARTICULARLY RULE 10b5 UNDER THE SECURITIES EXCHANGE ACT
OF
1934, AS AMENDED, WHICH PROHIBITS THE PURCHASE OR SALE OF SECURITIES ON THE
BASIS OF MATERIAL NONPUBLIC INFORMATION. IN LIGHT OF THESE PROVISIONS, INCLUDING
RULE l0b5, WE ADVISE YOU THAT, IF YOU ARE IN POSSESSION OF MATERIAL INFORMATION
RELATING TO THE COMPANY WHICH YOU KNOW OR HAVE REASON TO KNOW IS NONPUBLIC,
YOU
SHOULD NOT PURCHASE OR SELL OR CAUSE TO BE PURCHASED OR SOLD ANY OF THE
COMPANY’S SECURITIES. IN ADDITION, YOU SHOULD NOT DISCLOSE ANY OF SUCH
INFORMATION UNLESS AND UNTIL SUCH INFORMATION HAS BEEN PUBLICLY
DISCLOSED.
THE
OFFERING MATERIALS ARE SUBMITTED IN CONNECTION WITH THE PRIVATE PLACEMENT
OF THE
SECURITIES AND DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED. IN
ADDITION, THE OFFERING MATERIALS CONSTITUTE AN OFFER ONLY IF A NAME AND
IDENTIFICATION NUMBER APPEAR IN THE APPROPRIATE SPACES PROVIDED ON THE COVER
PAGE AND CONSTITUTE AN OFFER ONLY TO THE PERSON WHOSE NAME APPEARS THEREON.
ANY
REPRODUCTION OR DISTRIBUTION OF THE OFFERING MATERIALS IN WHOLE OR IN PART,
OR
THE DIVULGENCE OF ANY OF THEIR CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT
OF
THE COMPANY, IS PROHIBITED. ANY PERSON ACTING CONTRARY TO THE FOREGOING
RESTRICTIONS MAY PLACE HIMSELF AND THE COMPANY IN
VIOLATION OF FEDERAL OR STATE SECURITIES LAWS.
THE
COMPANY RESERVES THE RIGHT TO ACCEPT OR REJECT ANY SUBSCRIPTION FOR SECURITIES,
IN WHOLE OR IN PART, OR TO ALLOT TO ANY PROSPECTIVE INVESTOR FEWER THAN THE
NUMBER OF SECURITIES SUCH INVESTOR DESIRES TO
PURCHASE.
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IN
DECIDING WHETHER TO PURCHASE SECURITIES, EACH INVESTOR MUST CONDUCT AND RELY
ON
ITS OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING
THE
MERITS AND RISKS INVOLVED IN MAKING AN INVESTMENT DECISION WITH RESPECT TO
THE
SECURITIES. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THE
OFFERING MATERIALS OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY,
OR ANY PROFESSIONAL ASSOCIATED WITH THE OFFERING, AS LEGAL OR TAX ADVICE.
THE
OFFEREE AUTHORIZED TO RECEIVE THE OFFERING MATERIALS SHOULD CONSULT ITS OWN
TAX
COUNSEL, ACCOUNTANT OR BUSINESS ADVISOR, RESPECTIVELY, AS TO LEGAL, TAX AND
RELATED MATTERS CONCERNING ITS PURCHASE OF THE SECURITIES.
THE
INFORMATION PRESENTED HEREIN WAS PREPARED BY THE COMPANY AND IS BEING FURNISHED
SOLELY FOR USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THE OFFERING.
THE
INFORMATION CONTAINED IN THE OFFERING MATERIALS HAS BEEN SUPPLIED BY THE
COMPANY
AND HAS BEEN INCLUDED HEREIN IN RELIANCE ON THE COMPANY.
EXCEPT
AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THE DATE HEREOF.
NEITHER THE DELIVERY OF THE OFFERING MATERIALS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY AFTER
THE DATE HEREOF.
NO
GENERAL SOLICITATION WILL BE CONDUCTED AND NO OFFERING LITERATURE OR ADVERTISING
IN ANY FORM
WILL OR MAY BE EMPLOYED IN THE OFFERING OF THE SECURITIES, EXCEPT FOR THE
OFFERING MATERIALS (INCLUDING AMENDMENTS OR SUPPLEMENTS HERETO). NO PERSON
IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED
IN THE OFFERING MATERIALS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON.
BY
ACCEPTING DELIVERY OF ANY OFFERING MATERIAL, THE OFFEREE AGREES (I) TO KEEP
CONFIDENTIAL THE CONTENTS THEREOF, AND NOT TO DISCLOSE THE SAME TO ANY THIRD
PARTY OR OTHERWISE USE THE SAME FOR ANY PURPOSE OTHER THAN EVALUATION BY
SUCH
OFFEREE OF A POTENTIAL PRIVATE INVESTMENT IN THE COMPANY AND (II) TO RETURN
THE
SAME TO THE COMPANY IF (A) THE OFFEREE DOES NOT SUBSCRIBE TO PURCHASE ANY
SECURITIES, (B) THE OFFEREE’S SUBSCRIPTION IS NOT ACCEPTED, OR (C) THE OFFERING
IS TERMINATED OR WITHDRAWN.
THE
COMPANY WILL MAKE AVAILABLE TO ANY PROSPECTIVE INVESTOR, PRIOR TO THE CLOSING,
THE OPPORTUNITY TO ASK QUESTIONS OF AND TO RECEIVE ANSWERS FROM REPRESENTATIVES
OF THE COMPANY CONCERNING THE COMPANY OR THE TERMS AND CONDITIONS OF THE
OFFERING AND TO OBTAIN ANY ADDITIONAL RELEVANT INFORMATION TO THE EXTENT
THE
COMPANY POSSESSES SUCH INFORMATION OR CAN OBTAIN IT WITHOUT UNREASONABLE
EFFORT
OR EXPENSE. INVESTORS AGREE TO ADVISE THE COMPANY IN WRITING IF THEY ARE
RELYING
UPON ANY SUCH INFORMATION.
FOR
RESIDENTS OF ALL STATES
IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES 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.
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THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE 1933 ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
FOR
FLORIDA RESIDENTS
THE
SECURITIES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER
IN A
TRANSACTION EXEMPT UNDER §517.061 OF THE FLORIDA SECURITIES ACT. THE SECURITIES
HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION,
ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN
THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE
BY SUCH
PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER OR AN ESCROW
AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS
COMMUNICATED TO SUCH INVESTOR, WHICHEVER OCCURS LATER.
FOR
NEW JERSEY RESIDENTS
THESE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BUREAU OF SECURITIES
OF
THE STATE OF NEW JERSEY NOR HAS THE BUREAU PASSED ON OR ENDORSED THE MERITS
OF
THIS OFFERING. THE FILING OF THE WITHIN OFFERING DOES NOT CONSTITUTE APPROVAL
OF
THE ISSUE OR SALE THEREOF BY THE BUREAU OF SECURITIES. ANY REPRESENTATION
TO THE
CONTRARY IS UNLAWFUL.
FOR
NEW YORK RESIDENTS
THE
OFFERING MATERIALS HAVE NOT BEEN REVIEWED BY THE ATTORNEY GENERAL OF THE
STATE
OF NEW YORK PRIOR TO THEIR ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE
STATE
OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE
OFFERING MATERIALS DO NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT
OR OMIT
TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE IN LIGHT OF
THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE NOT MISLEADING. THEY CONTAIN A FAIR
SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN,
TO THE EXTENT ANY SUCH SUMMARIES ARE SO INCLUDED.
FOR
TEXAS RESIDENTS
THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR THE TEXAS ACT AND
ARE
BEING SOLD IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 5(1)(a) AND
RULE
109.13 OF SUCH ACT. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER
THE
1933 ACT AND/OR THE TEXAS ACT OR EXEMPTION THEREFROM.
The
subscriber acknowledges that the Note being purchased hereunder will not
be
registered under the 1933 Act, or the securities laws of any State, that
absent
an exemption from registration contained in those laws, the issuance and
sale of
the Note, or the shares into which the Note is converted, would require
registration, and that the Company’s reliance upon such exemption is based upon
the subscriber’s representations, warranties, and agreements contained in the
Offering Materials.
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REPRESENTATIONS,
WARRANTIES AND AGREEMENTS OF SUBSCRIBER
1. The
subscriber represents, warrants, and agrees as follows:
(a) The
subscriber agrees that this Subscription Agreement is and shall be
irrevocable.
(b) The
subscriber has carefully read the Offering Materials, all of which the
subscriber acknowledges have been provided to the subscriber. The subscriber
has
been given the opportunity to ask questions of, and receive answers from,
the
Company concerning the terms and conditions of this Offering and the Offering
Materials and to obtain such additional written information, to the extent
the
Company possesses such information or can acquire it without unreasonable
effort
or expense, necessary to verify the accuracy of same as the subscriber desires
in order to evaluate the investment. The subscriber further acknowledges
that he
or she fully understands the Offering Materials, and the subscriber has had
the
opportunity to discuss any questions regarding any of the Offering Materials
with his or her counsel or other advisor. Notwithstanding the foregoing,
the
only information upon which the subscriber has relied is that set forth in
the
Offering Materials and his or her own independent investigation. The subscriber
acknowledges that the subscriber has received no representations or warranties
from the Company, or its respective officers, directors, stockholders, employees
or agents in making this investment decision other than as specifically set
forth in the Offering Materials.
(c) The
subscriber is aware that the purchase of the Note is a speculative investment
involving a high degree of risk and that there is no guarantee that the
subscriber will realize any gain from this investment, and that the subscriber
could lose the total amount of the subscriber’s investment. The subscriber
acknowledges that the subscriber has satisfied itself as to its awareness
of all
of the risk factors related to the purchase of the Note.
(d) The
subscriber understands that no federal or state agency or authority has made
any
finding or determination regarding the fairness of this Offering of the Note
for
investment, or any recommendation or endorsement of this Offering of the
Note.
(e) The
subscriber is purchasing the Note for the subscriber’s own account, with the
intention of holding the Note, with no present intention of dividing or allowing
others to participate in this investment or of reselling or otherwise
participating, directly or indirectly, in a distribution of the Note, and
shall
not make any sale, transfer, or pledge thereof without registration under
the
1933 Act and any applicable securities laws of any state or other jurisdiction
or unless an exemption from registration is available under those laws to
the
satisfaction of the Company and its counsel.
(f) The
subscriber represents that the subscriber, if an individual, has adequate
means
of providing for his or her current needs and personal and family contingencies
and has no need for liquidity in this investment in the Note. The subscriber
represents that the subscriber is an “Accredited Investor” as defined in Rule
501(a) of Regulation D promulgated under the 1933 Act, as evidenced by meeting
at least one of the following standards:
(i) the
Investor is a natural person and had individual income (i.e.,
not
including, if applicable, income of the Investor’s spouse) in excess of $200,000
in the two previous years and reasonably expects to have income in excess
of
$200,000 in the present year, or he, she and his or her spouse had joint
income
in excess of $300,000 in the two previous years and reasonably expect to
have
joint income of $300,000 in the present year;
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(ii) the
Investor is a natural person and his or her net worth at the time of his
or her
purchase of the Note (i.e.,
excess
of total assets over total liabilities), inclusive of home, home furnishings
and
automobiles, either individually or jointly with his or her spouse, exceeds
$1,000,000;
(iii) the
Investor is an organization defined in Section 501(c)(3) of the Internal
Revenue
Code, business trust, partnership, or corporation with total assets in excess
of
$5,000,000, which was not formed for the specific purpose of acquiring the
Note;
(iv) any
trust
with total assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Note, whose purchase is directed by a sophisticated person
as
described in Rule 506(b)(2)(ii);
(v) the
Investor is an employee benefit plan within the meaning of ERISA and (i)
the
Investor’s investment decision is made by a plan fiduciary, as defined in
Section 3(21) of ERISA, that is either a bank, savings and loan association,
insurance company, or registered investment advisor, (ii) the investor’s total
assets are in excess of $5,000,000 or (iii), if a self-directed plan, the
Investor’s investment decisions are made solely by persons who are Accredited
Investors;
(vi) the
Investor is a bank as defined in Section 3(a)(2) of the Securities Act; any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to Section 5 of the
Securities Exchange Act of 1934; an insurance company as defined in Section
2(13) of the Securities Act; an investment company registered under the
Investment Company Act of 1940, as amended; a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section 301(c) or
(d)
of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality thereof, for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; or a private business development company
as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
or
(vii) the
Investor is an entity in which all of the equity owners would qualify as
“Accredited Investors.”
The
subscriber has no reason to anticipate any material change in his or her
personal financial condition for the foreseeable future.
(g) The
subscriber is financially able to bear the economic risk of this investment,
including the ability to hold the Note indefinitely or to afford a complete
loss
of his or her investment in the Note.
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(h) The
subscriber represents that the subscriber’s overall commitment to investments
which are not readily marketable is not disproportionate to the subscriber’s net
worth, and the subscriber’s investment in the Note will not cause such overall
commitment to become excessive. The subscriber understands that the statutory
basis on which the Notes are being sold to the subscriber and others would
not
be available if the subscriber’s present intention were to hold the Note for a
fixed period or until the occurrence of a certain event. The subscriber realizes
that, in the view of the Securities and Exchange Commission, a purchase now
with
a present intent to resell by reason of a foreseeable specific contingency
or
any anticipated change in the market value, or in the condition of the Company,
or that of the industry in which the business of the Company is engaged or
in
connection with a contemplated liquidation, or settlement of any loan obtained
by the subscriber for the acquisition of the Note, and for which such Note
may
be pledged as security or as donations to religious or charitable institutions
for the purpose of securing a deduction on an income tax return, would, in
fact,
represent a purchase with an intent inconsistent with the subscriber’s
representations to the Company and the Securities and Exchange Commission
would
then regard such sale as a sale for which the exemption from registration
is not
available. The subscriber will not pledge, transfer or assign this Subscription
Agreement, or any interest herein or any obligation or right hereunder, without
first obtaining the written consent of the Company.
(i) The
subscriber represents that the funds provided for this investment are either
separate property of the subscriber, community property over which the
subscriber has the right of control, or are otherwise funds as to which the
subscriber has the sole right of management.
(j) FOR
PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES ONLY:
If the
subscriber is a partnership, corporation, trust or other entity, (i) the
subscriber has enclosed with this Subscription Agreement appropriate evidence
of
the authority of the individual executing this Subscription Agreement to
act on
its behalf (e.g.,
if a
trust, a certified copy of the trust agreement; if a corporation, a certified
corporate resolution authorizing the signature and a certified copy of the
articles of incorporation; or, if a partnership, a certified copy of the
partnership agreement); (ii) the subscriber represents and warrants that
it was
not organized or reorganized for the specific purpose of acquiring the Note;
(iii) the subscriber has the full power and authority to execute this
Subscription Agreement on behalf of such entity and to make the representations
and warranties made herein on its behalf; and (iv) this investment in the
Company has been affirmatively authorized, if required, by the governing
board
of such entity and is not prohibited by the governing documents of the
entity.
(k) The
address shown under the subscriber’s signature at the end of this Subscription
Agreement is the subscriber’s principal residence if he or she is an individual
or its principal business address if a corporation or other entity.
(l) The
subscriber has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Note.
(m) The
subscriber acknowledges that the certificates for the Note and the shares
into
which the Note may be converted which the subscriber will receive will contain
a
legend substantially as follows:
THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED
OF
UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE
UNDER
SUCH ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS
IS
AVAILABLE.
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The
subscriber further acknowledges that stop transfer orders will be placed
upon
the certificates for the Securities which the Note maybe converted into in
accordance with the 1933 Act.
2. Registration
of Securities.
(a) The
subscriber acknowledges that the Company has agreed to use its best efforts
to
include a portion of the shares which the Note may be converted into, or
Securities with which the shares are exchanged into (also referred to as
the
“Registrable Securities”) in any registration statement to be filed with the
Securities and Exchange Commission (the “Commission”) for its own account or the
accounts of others under the Securities Act (the “Act”) any of its equity
securities, other than on Form S-4 or Form S-8 or their equivalents relating
to
shares of Common Stock to be issued solely in connection with any acquisition
of
any entity or business or shares of Common Stock issuable in connection with
stock option or other employee benefit plans. The piggy back registration
rights
shall be subject to underwriter’s approval and other such restrictions (the
“Registration Statement”). The Company shall use its good faith efforts to keep
such Registration Statement continuously effective as long as the delivery
of a
prospectus thereunder is required under the Act and its regulations, including,
but not limited to, Rule 144 thereunder or its successor regulations (“Rule
144”), in connection with the disposition of the Securities; provided, that it
is agreed and acknowledged that such obligation of the Company to maintain
the
effectiveness of the Registration Statement shall cease upon the ability
of the
subscribers to sell or otherwise dispose of all of the Registrable Securities
covered by the Registration Statement under Rule 144; provided further, that,
notwithstanding the Company’s obligation to maintain the effectiveness of the
Registration Statement pursuant to the immediately preceding proviso, and
notwithstanding the duration of any Blackout Period, such obligation to maintain
the effectiveness of the Registration Statement shall cease under all
circumstances no later than the second anniversary of the date of the final
Closing of the Offering (the “Final Date”).
(b) The
Company agrees to pay all Registration Expenses in connection with the
Registration Statement. All Selling Expenses relating to Registrable Securities
registered on behalf of the subscriber pursuant to the Registration Statement
shall be borne by the subscriber. For purposes of this Subscription Agreement,
“Registration Expenses” shall mean (i) all registration, listing, qualification
and filing fees (including NASD filing fees), (ii) fees and disbursements
of
counsel for the Company, (iii) accounting fees incident to any such
registration, (iv) blue sky fees and expenses (including counsel fees in
connection with the preparation of a Blue Sky Memorandum and legal investment
survey and NASD filings), (v) all expenses of any persons in preparing or
assisting in preparing, printing, distributing, mailing and delivering the
Registration Statement, any prospectus, any underwriting agreements, transmittal
letters, securities sales agreements, securities certificates and other
documents relating to the performance of and compliance with this Subscription
Agreement, and (vi) all internal expenses of the Company (including all salaries
and expenses of officers and employees performing legal or accounting duties);
provided, however, that Registration Expenses shall not include any Selling
Expenses. For purposes of this Subscription Agreement, “Selling Expenses” shall
mean underwriting discounts, selling commissions and stock transfer taxes
applicable to the Registrable Securities registered on behalf of the subscriber
for Note hereunder.
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(c) The
Registration Statement will not be deemed to have become effective (and the
related registration will not be deemed to have been effected) unless it
has
been declared effective by the Commission prior to a request by the subscriber
that such Registration Statement be withdrawn; provided, however, that if,
after
it has been declared effective, the offering of any Registrable Securities
pursuant to such Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court.
(d) At
any
time or from time to time, the subscriber may elect to have its Registrable
Securities sold in an underwritten offering and may select the investment
banker
or investment bankers and manager or managers that will serve as lead and
co-managing underwriters with respect to the offering of its Registrable
Securities, subject to the consent of the Company which shall not be
unreasonably withheld.
(e) The
subscriber agrees, as a condition to the registration obligations with respect
to the subscriber provided herein, to furnish to the Company such information
regarding the subscriber required to be included in the Registration Statement,
the ownership of Registrable Securities by the subscriber and the proposed
distribution by the subscriber of such Registrable Securities as the Company
may
from time to time reasonably request in writing.
(f) The
subscriber agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind which the Company reasonably regards as
requiring the subscriber to discontinue sale of the Registrable Securities
pursuant to the Registration Statement, the subscriber will forthwith
discontinue disposition of the Registrable Securities pursuant to the affected
Registration Statement until the subscriber’s receipt of the copies of any
supplemented or amended prospectus as shall be required in the reasonable
opinion of the Company, and, if so directed by the Company, the subscriber
will
deliver to the Company (at the expense of the Company) all copies in its
possession, other than permanent file copies then in the subscriber’s
possession, of any prospectus covering such Registrable Securities which
was
current at the time of receipt of such notice.
3. Indemnification;
Contribution.
(a) Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless each person who participates
as an
underwriter of the Securities pursuant to the Registration Statement, the
subscriber and its respective partners, directors, officers and employees
and
each person, if any, who controls any subscriber or underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange
Act of
1934, as amended (the “Exchange Act”), as follows:
(i) against
any and all losses, liabilities, claims, damages, judgments and reasonable
expenses whatsoever, as incurred, arising out of any untrue statement or
alleged
untrue statement of a material fact contained in the Registration Statement
pursuant to which Securities were registered under the Act, including all
documents incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make
the statements therein not misleading or arising out of any untrue statement
or
alleged untrue statement of a material fact contained in any prospectus,
including all documents incorporated therein by reference, or the omission
or
alleged omission therefrom of a material fact necessary in order to make
the
statements therein, in light of the circumstances under which they were made,
not misleading;
9
(ii) against
any and all losses, liabilities, claims, damages, judgments and reasonable
expenses whatsoever, as incurred, to the extent of the aggregate amount paid
in
settlement of any litigation, investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any other claim whatsoever
based
upon any such untrue statement or omission, or any such alleged untrue statement
or omission, if such settlement is effected with the written consent of the
Company; and
(iii) against
any and all reasonable expense whatsoever, as incurred (including fees and
disbursements of counsel) in investigating, preparing or defending against
any
litigation, investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not such person is a party,
or
any claim whatsoever based upon any such untrue statement or omission, or
any
such alleged untrue statement or omission; provided, however, that this
indemnity agreement does not apply to the subscriber or underwriter with
respect
to any loss, liability, claim, damage, judgment or expense to the extent
arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any prospectus, or the omission or alleged omission therefrom
of a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in any such case
made
in reliance upon and in conformity with written information furnished to
the
Company by the subscriber or underwriter expressly for use in a Registration
Statement (or any amendment thereto) or any prospectus (or any amendment
or
supplement thereto); and provided further, in the case of an offering that
is
not an underwritten offering, the Company will not be liable to the subscriber
under the indemnity agreement in this Section 3(a) for any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
that
arises out of the subscriber’s failure to send or give a copy of the final
prospectus (as its may then be amended or supplemented) to the person asserting
an untrue statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of the Securities to
such
person if such statement or omission was corrected in such final prospectus
(as
it may then be amended or supplemented) and the Company has previously furnished
copies thereof in accordance with this Subscription Agreement.
(b) Indemnification
by the Subscriber.
The
subscriber agrees to indemnify and hold harmless the Company, and each
underwriter and each of their respective partners, directors, officers and
employees (including each officer of the Company who signed the Registration
Statement), and each person, if any, who controls the Company or any underwriter
within the meaning of Section 15 of the Act, against any and all losses,
liabilities, claims, damages, judgments and expenses described in the indemnity
contained in paragraph (a) of this Section (provided that any settlement
of the
type described therein is effected with the written consent of the subscriber),
as incurred, but only with respect to untrue statements or alleged untrue
statements of a material fact contained in any prospectus or the omissions
or
alleged omissions therefrom of a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in any such case made in reliance upon and in conformity with
written information furnished to the Company by the subscriber expressly
for use
in such Registration Statement (or any amendment thereto) or such prospectus
(or
any amendment or supplement thereto).
10
(c) Conduct
of Indemnification Proceedings.
Each
indemnified party or parties shall give reasonably prompt notice to each
indemnifying party or parties of any action or proceeding commenced against
it
in respect of which indemnity may be sought hereunder, but which it or they
may
have under this indemnity agreement, except to the extent that the indemnifying
party is materially prejudiced by such failure to give notice. If the
indemnifying party or parties so elects within a reasonable time after receipt
of such notice, the indemnifying party or parties may assume the defense
of such
action or proceeding at such indemnifying party’s or parties’ expense with
counsel chosen by the indemnifying party or parties and approved by the
indemnified party defendant in such action or proceeding, which approval
shall
not be unreasonably withheld; provided, however, that, if such indemnified
party
or parties determines in good faith that a conflict of interest exists and
that
therefore it is advisable for such indemnified party or parties to be
represented by separate counsel or that, upon advice of counsel, there may
be
legal defenses available to it or them which are different from or in addition
to those available to the indemnifying party, then the indemnifying party
or
parties shall not be entitled to assume such defense and the indemnified
party
or parties shall be entitled to separate counsel (limited in each jurisdiction
to one counsel for all underwriters and another counsel for all other
indemnified parties under this Subscription Agreement) at the indemnifying
party’s or parties’ expense. If an indemnifying party or parties is not so
entitled to assume the defense of such action or does not assume such defense,
after having received the notice referred to in the first sentence of this
paragraph, the indemnifying party or parties will pay the reasonable fees
and
expenses of counsel for the indemnified party or parties (limited in each
jurisdiction to one counsel for all underwriters and another counsel for
all
other indemnified parties under this Subscription Agreement). No indemnifying
party or parties will be liable for any settlement effected without the written
consent of such indemnifying party or parties, which consent shall not be
unreasonably withheld. If an indemnifying party is entitled to assume, and
assumes, the defense of such action or proceeding in accordance with this
paragraph, such indemnifying party or parties shall not, except as otherwise
provided in this subsection (c), be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action
or proceeding.
(d) Contribution.
(i) In
order
to provide for just and equitable contribution in circumstances in which
the
indemnity agreement provided for in this Section is for any reason held to
be
unenforceable by the indemnified parties although applicable in accordance
with
its terms in respect of any losses, liabilities, claims, damages, judgments
and
expenses suffered by an indemnified party referred to therein, each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, liabilities, claims, damages, judgments and expenses in such
proportion as is appropriate to reflect the relative fault of the Company,
on
the one hand, and of the subscriber (including, in each case, that of their
respective officers, directors, employees and agents), on the other, in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages, judgments or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company, on
the one
hand, and of the subscriber (including, in each case, that of their respective
officers, directors, employees and agents), on the other, shall be determined
by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
fact
relates to information supplied by the Company, on the one hand, or by or
on
behalf of the Holder, on the other, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or
omission. The amount paid or payable by a party as a result of the losses,
liabilities, claims, damages, judgments and expenses referred to above shall
be
deemed to include, subject to the limitations set forth in paragraph (c)
of this
Section, any legal or other fees or expenses reasonably incurred by such
party
in connection with investigating or defending any action or claim.
11
(ii) The
Company and the subscriber agree that it would not be just and equitable
if
contribution pursuant to this paragraph (d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of
the equitable considerations referred to in sub-paragraph (i) above.
Notwithstanding the provisions of this paragraph (d), in the case of
distributions to the public, the subscriber shall not be required to contribute
any amount in excess of the amount by which (A) the total price at which
the
Securities sold by the subscriber and distributed to the public were offered
to
the public exceeds (B) the amount of any damages which the subscriber has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from
any person who was not guilty of such fraudulent misrepresentation.
(iii) For
purposes of this Section, each person, if any, who controls the subscriber
or an
underwriter within the meaning of Section 15 of the Act (and their respective
partners, directors, officers and employees) shall have the same rights to
contribution as the subscriber or underwriter; and each director of the Company,
each officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15
of the
Act shall have the same rights to contribution as the Company.
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4.
|
The
subscriber expressly acknowledges and agrees that the Company is
relying
upon the subscriber’s representations
herein.
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5.
|
The
subscriber does not have any direct or indirect affiliation with
any
member of the National Association of Registrable Securities Dealers,
Inc.
|
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6.
|
The
subscriber acknowledges that the subscriber understands the meaning
and
legal consequences of the representations and warranties which
are
contained herein and hereby agrees to indemnify, save and hold
harmless
the Company, and its respective officers, directors, partners,
employees,
agents, and attorneys, from and against any and all claims or actions
arising out of a breach of any representation, warrant or acknowledgment
of the subscriber contained herein. Such indemnification shall
be deemed
to survive any purchase of the Note and to include not only the
specific
liabilities, losses, damages or obligations with respect to which
such
indemnity is provided, but also all reasonable costs, expenses,
counsel
fees and expenses of settlement relating thereto, whether or not
any such
liabilities, losses, damages or obligations shall have been reduced
to
judgment.
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7.
|
The
Company has been duly and validly incorporated and is validly existing
and
in good standing as a corporation under the laws of the State of
Delaware.
The Company has all requisite power and authority, and all necessary
authorizations, approvals and orders required as of the date hereof
to own
its properties and conduct its business and to enter into this
Subscription Agreement and to be bound by the provisions and conditions
hereof or therein.
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12
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8.
|
If
the Company utilizes the services of registered broker-dealers,
it may pay
reasonable and customary fees in connection with the sales by the
broker.
|
|
9.
|
Except
as otherwise specifically provided for hereunder, no party shall
be deemed
to have waived any of his or her or its rights hereunder or under
any
other agreement, instrument or papers signed by any of them with
respect
to the subject matter hereof unless such waiver is in writing and
signed
by the party waiving said right. Except as otherwise specifically
provided
for hereunder, no delay or omission by any party in exercising
any right
with respect to the subject matter hereof shall operate as a waiver
of
such right or of any such other right. A waiver on any one occasion
with
respect to the subject matter hereof shall not be construed as
a bar to,
or waiver of, any right or remedy on any future occasion. All rights
and
remedies with respect to the subject matter hereof, whether evidenced
hereby or by any other agreement, instrument, or paper, will be
cumulative, and may be exercised separately or
concurrently.
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10.
|
The
parties have not made any representations or warranties with respect
to
the subject matter hereof not set forth herein, and this Subscription
Agreement, together with any instruments executed simultaneously
herewith,
constitutes the entire agreement between them with respect to the
subject
matter hereof. All understandings and agreements heretofore entered
into
between the parties with respect to the subject matter hereof are
merged
in this Subscription Agreement and any such instrument, which alone
fully
and completely expresses their
agreement.
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11.
|
This
Subscription Agreement may not be changed, modified, extended,
terminated
or discharged orally, but only by an agreement in writing, which
is signed
by all of the parties to this Subscription
Agreement.
|
|
12.
|
The
parties agree to execute any and all such other and further instruments
and documents, and to take any and all such further actions reasonably
required to effectuate this Subscription Agreement and the intent
and
purposes hereof.
|
|
13.
|
If
any provision or any portion of any provision of this Subscription
Agreement or the application of any such provision or any portion
thereof
to any person or circumstance shall be held invalid or unenforceable,
the
remaining portion of such provision not held invalid or unenforceable
to
any person or circumstance shall not be affected
thereby.
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|
14.
|
This
Subscription Agreement may be executed in one or more counterparts,
each
of which shall be deemed an original but all of which together
shall
constitute one and the same instrument. The execution of this Subscription
Agreement may be by actual or facsimile
signature.
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15.
|
This
Subscription Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without giving
effect to
conflicts of law principles and the subscriber hereby consents
to the
jurisdiction of the courts of the State of New York and/or the
United
States District Court located in the State of New
York.
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13
AMOUNT
OF NOTE PURCHASED: $
Manner
in
Which Title is to be Held: (check one)
1. _____ Individual
2. _____ Joint
Tenants with Right of Survivorship (both parties must sign)
3. _____ Married
with Separate Property
4. _____ Community
Property
5. _____ Tenants
in Common
6. _____ Corporation
7. _____ Partnership
8. _____ XXX
of
___________________________________________
9. _____
Trust,
dated opened _____________
10.
_____ Xxxxx
of
__________________________________________
11.
_____ As
a
Custodian for __________________________________________________
under the Uniform Gift to Minors Act of the State of _______________________
under the Uniform Gift to Minors Act of the State of _______________________
12.
_____ Other
(please indicate)
|
INDIVIDUAL
INVESTORS
|
ENTITY
INVESTORS
|
|
___________________________________
|
____________________________________
|
|
Signature
(Individual)
|
Name
of Entity, if any
|
|
____________________________________
|
|
|
Signature
|
|
|
___________________________________
|
Its
_________________________________
|
|
Signature
(all record holders should sign)
|
Title
|
|
___________________________________
|
____________________________________
|
|
Name(s)
Typed or Printed
|
Name
Typed or Printed
|
|
Address
to Which Correspondence
|
Address
to Which Correspondence
|
|
Should
be Directed
|
Should
be Directed
|
|
___________________________________
|
____________________________________
|
|
___________________________________
|
____________________________________
|
|
___________________________________
|
____________________________________
|
|
City,
State and Zip Code
|
City,
State and Zip Code
|
|
___________________________________
|
____________________________________
|
|
Social
Security Number
|
Tax
Identification Number
|
The
foregoing subscription is accepted this ______ day of _______________,
2005, on
behalf of NaturalNano, Inc.
___________________________________
By:
_______________________________
Name:
Xxxxxxx Xxxxxxxxxx
Title:
President
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