SUBSCRIPTION AGREEMENT
FOR
NEWTOWN LANE MARKETING, INCORPORATED
Newtown Lane Marketing, Incorporated
00 Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
1. Subscription. The undersigned (the "Subscriber") hereby agrees to
purchase (the "Offering"), such number of units (each, a "Unit," and,
collectively, the "Units") from Newtown Lane Marketing, Incorporated, a Delaware
corporation (the "Company"), as set forth on the Signature Page of this
Subscription Agreement. Each Unit consists of (i) a $25,000 principal amount 10%
Senior Convertible Promissory Note (the "Notes"); and (ii) such number of shares
(the "Shares") of common stock of the Company (the "Common Stock"), as shall
equal the product of (i) (1) the aggregate principal amount of each Note,
multiplied by (2) twenty percent (20%), and (ii) divided by thirty-five cents
($0.35).
This Subscription Agreement is submitted to you in accordance with and
subject to the terms and conditions described in this Subscription Agreement and
the Confidential Offering Memorandum of the Company dated December 15, 2005, as
amended or supplemented from time to time, including all documents incorporated
by reference therein and all attachments, schedules and exhibits thereto (the
"Memorandum").
The undersigned acknowledges that upon acceptance of such subscriptions
payment by the Company, the undersigned will receive on of the Notes as
described in the Memorandum. The subscription payment will be held by the Escrow
Agent until such time as the Minimum Release Amount has been obtained. Once this
event has occurred, the Escrow Agent will disburse all accepted subscription
payments to the Company. If this event has not occurred on or prior to the
Termination Date, then the Escrow Agent shall return the undersigned's
subscription payment to the undersigned as soon as practicable following the
Termination Date. After the initial closing is held, the Company may hold one or
more closing from time to time until the maximum of $500,000 principal amount of
Notes is sold.
Officers, Directors and affiliates of the Company may (but are under no
obligation to) purchase Units in the Offering and such purchases shall be
counted toward the Minimum Release Amount.
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, will have the respective meanings
provided in the Memorandum.
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2. Payment. The Subscriber encloses herewith a check payable to, or will
immediately make a wire transfer payment to, "Xxxxx & Xxx Xxxxxx, LLP, escrow
agent for Newtown Lane Marketing, Incorporated", in the full amount of the
purchase price of the Units being subscribed for. Together with the check for,
or wire transfer of, the full purchase price, the Subscriber is delivering a
completed and executed Omnibus Signature Page to this Subscription Agreement,
the completed Investor Profile and the Accredited Investor Certificate.
3. Deposit of Funds. All payments made as provided in Section 2 hereof
will be deposited by the Company as soon as practicable with Xxxxx & Xxx Xxxxxx,
LLP, as escrow agent (the "Escrow Agent") or such other escrow agent appointed
by the the Company, in a non-interest bearing escrow account (the "Escrow
Account"). In the event that the Company does not effect a closing (the
"Closing") on or before December 31, 2005 (the "Initial Offering Period"), which
period may be extended by the Company in its sole discretion (this additional
period and, together with the Initial Offering Period, will be referred to as
the "Offering Period"), the Escrow Agent will refund all subscription funds, and
will return the subscription documents to each Subscriber. If the Company
rejects a subscription, either in whole or in part (which decision is in their
sole discretion), the rejected subscription funds or the rejected portion
thereof will be returned promptly to such subscriber without interest accrued
thereon.
4. Acceptance of Subscription. The Subscriber 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 Subscriber of notice of acceptance of this or any other
subscription. The Company will have no obligation hereunder until the Company
executes and delivers to the Subscriber an executed copy of this Subscription
Agreement. If Subscriber's subscription is rejected in whole, or the Offering is
terminated or the Minimum Release Amount is not subscribed for and accepted, all
funds received from the Subscriber will be returned without interest, penalty,
expense or deduction, and this Subscription Agreement will thereafter be of no
further force or effect. If Subscriber'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.
5. Representations and Warranties of the Subscriber. The Subscriber hereby
acknowledges, represents, warrants, and agrees as follows:
(a) Neither the Units, Notes, Shares nor the shares of Common Stock
(the "Conversion Shares"), issuable upon conversion of the Notes (collectively,
the "Securities"), are registered under the Securities Act of 1933, as amended
(the "Securities Act"), or any state securities laws. The Subscriber 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 Subscriber contained in this
Subscription Agreement;
(b) The Subscriber and the Subscriber's attorney, accountant,
Subscriber representative and/or tax advisor, if any (collectively, "Advisors"),
have received the Memorandum, the Subscription Documents, the Notes, and all
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other documents requested by the Subscriber 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 Commission nor any state securities commission has
approved the Units or any of the other Securities, 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 Subscriber and its Advisors, if any;
(e) The Subscriber 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 Securities and
the business, financial condition, results of operations and prospects of the
Company, and all such questions have been answered by the Company in writing to
the full satisfaction of the Subscriber and its Advisors, if any;
(f) In evaluating the suitability of an investment in the Company,
the Subscriber 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 Subscriber or its Advisors, if any, by the Company in
writing;
(g) The Subscriber is unaware of, is in no way relying on, and did
not become aware of the offering of the Securities 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 Securities
and is not subscribing for Units and did not become aware of the offering of the
Securities through or as a result of any seminar or meeting to which the
Subscriber was invited by, or any solicitation of a subscription by, a person
not previously known to the Subscriber in connection with investments in
securities generally;
(h) The Subscriber 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;
(i) The Subscriber, either alone or together with its Advisors, if
any, has such knowledge and experience in financial, tax, and business matters,
and, in particular, investments in securities, so as to enable it to utilize the
information made available to it in connection with the offering of the
Securities to evaluate the merits and risks (including tax implications) of an
investment in the Securities and the Company and to make an informed investment
decision with respect thereto;
(j) The Subscriber is not relying on the Company or its employees or
agents with respect to the legal, tax, economic and related considerations of an
investment in the Securities, and the Subscriber has relied on the advice of, or
has consulted with, only its own Advisors;
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(k) The Subscriber is acquiring the Securities solely for such
Subscriber's own account for investment and not with a view to resale or
distribution thereof, in whole or in part. The Subscriber has no agreement or
arrangement, formal or informal, with any person to sell or transfer all or any
part of the Securities and the Subscriber has no plans to enter into any such
agreement or arrangement;
(l) The purchase of the Securities represents high risk investment
and the Subscriber is able to afford an investment in a speculative venture
having the risks and objectives of the Company. The Subscriber must bear the
substantial economic risks of the investment in the Securities indefinitely
because none of the securities included in the Securities 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 will be placed on the Notes, the Shares and
the Conversion Shares 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. It is not anticipated that
there will be any market for resale of any of the Securities, and such
Securities will not be freely transferable at any time in the foreseeable
future, if ever;
(m) The Subscriber has adequate means of providing for such
Subscriber's current financial needs and foreseeable contingencies and has no
need for liquidity of the investment in the Securities for an indefinite period
of time;
(n) The Subscriber is aware that an investment in the Securities
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 any of such risk may
materially adversely affect the Company's results of operations and future
prospects;
(o) The Subscriber 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 Subscriber: (i) if a natural person, represents that the
Subscriber 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 Securities, 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 Securities, 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
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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 Subscriber 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 Subscriber is a party or by which it is bound;
(q) The Subscriber 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 Securities 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 Subscriber 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 Subscriber and its Advisors, if any;
(r) The Subscriber represents to the Company that any information
which the undersigned has heretofore furnished or is furnishing herewith to the
Company 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 Subscriber further represents and warrants that it will
notify and supply corrective information to the Company immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
any of the Securities;
(s) The Subscriber has significant prior investment experience. The
Subscriber 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 Subscriber's overall
commitment to investments which are not readily marketable is not excessive in
view of the Subscriber's net worth and financial circumstances and the purchase
of the Securities will not cause such commitment to become excessive. This
investment is a suitable one for the Subscriber;
(t) The Subscriber 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;
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(v) No oral or written representations have been made, or oral or
written information furnished by the Company, to the Subscriber or its Advisors,
if any, in connection with the offering of the Securities which are in any way
inconsistent with the information contained in the Memorandum;
(w) Within five (5) days after receipt of a request from the
Company, the Subscriber 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 is subject;
(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; and
(z) The Subscriber acknowledges that neither the Units, nor any of
the other Securities, 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
and the other Securities 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.
6. Indemnification. The Subscriber hereby expressly and irrevocably agrees
to indemnify and hold harmless the Company and its officers, directors,
employees, agents, attorneys, 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 Subscriber of any covenant or agreement made by the
Subscriber herein or in any other document delivered in connection with this
Subscription Agreement.
7. Irrevocability; Binding Effect. The Subscriber hereby acknowledges and
agrees that the subscription hereunder is irrevocable by the Subscriber, except
as required by applicable law, and that this Subscription Agreement will survive
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the death or disability of the Subscriber and will be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns. If the Subscriber is
more than one person, the obligations of the Subscriber hereunder will be joint
and several and the agreements, representations, warranties and acknowledgments
herein will 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.
8. Modification. This Subscription Agreement will not be modified or
waived except by an instrument in writing signed by the party against whom any
such modification or waiver is sought.
9. Notices. Any notice or other communication required or permitted to be
given hereunder will be in writing and will 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
Subscriber, at the address set forth on the signature page hereof (or, in either
case, to such other address as the party will have furnished in writing in
accordance with the provisions of this Section 9). Any notice or other
communication given by certified mail will be deemed given at the time of
certification thereof, except for a notice changing a party's address which will
be deemed given at the time of receipt thereof.
10. Assignability. This Subscription Agreement and the rights, interests
and obligations hereunder are not transferable or assignable by the Subscriber
and the transfer or assignment of the Units issued by the Company or the
Conversion Shares will be made only in accordance with all applicable laws
11. Applicable Law. This Subscription Agreement will be governed by and
construed under the laws of the State of New York as applied to agreements among
New York residents entered into and to be performed entirely within New York.
Each of the parties hereto (1) agree that any legal suit, action or proceeding
arising out of or relating to this Agreement will be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (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 New
York State Supreme Court, County of New York, and the United States District
Court for the Southern District of New York 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 New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York and agree
that service of process upon it mailed by certified mail to its address will 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.
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12. Blue Sky Qualification. The purchase of the Securities under this
Subscription Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Securities from applicable Federal
and state securities laws. The Company will not be required to qualify this
transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company will be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in the
jurisdiction.
13. Confidentiality. The Subscriber acknowledges and agrees that any
information or data the Subscriber has acquired from or about the Company, not
otherwise properly in the public domain, was received in confidence (the
"Confidential Information"). Any distribution of the Confidential Information to
any person other than the Subscriber named above, in whole or in part, or the
reproduction of the Confidential Information, or the divulgence of any of its
contents (other than to the Subscriber's tax and financial advisers, attorneys
and accountants, who will likewise be required to maintain the confidentiality
of the Confidential Information) is unauthorized, except that any prospective
investor (and each employee, representative, or other agent of such prospective
investor) may disclose to any and all persons, without limitations of any kind
(except as provided in the next sentence) the tax treatment and tax structure of
the transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to the taxpayer relating to such tax treatment and
tax structure. Any such disclosure of the tax treatment, tax structure and other
tax-related materials shall not be made for the purpose of offering to sell the
securities offered hereby or soliciting an offer to purchase any such
securities. Except as provided above with respect to tax matters, the above
named Subscriber, 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.
15. Miscellaneous.
(a) This Subscription Agreement, together with the Memorandum, the
Notes and the Registration Rights Agreement, constitute the entire agreement
between the Subscriber 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 Subscriber's and the Company's representations and
warranties made in this Subscription Agreement will survive the execution and
delivery hereof and delivery of the Units and the Securities for a period of
twenty-four (24) months from the date of issuance.
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(c) Each of the parties hereto will 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 manually or by
facsimile signature in two or more counterparts each of which will be deemed an
original, but all of which will together constitute one and the same instrument.
(e) Each provision of this Subscription Agreement will 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 will not impair the operation of or affect the remaining portions of
this Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only and will not
control or alter the meaning of this Subscription Agreement as set forth in the
text.
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XXXXXXX XXXX MARKETING, INCORPORATED
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
Subscriber hereby elects to purchase $________________ aggregate principal
amount of Units (NOTE: to be completed by the Subscriber).
Date (NOTE: To be completed by the Subscriber): __________________, 2005
--------------------------------------------------------------------------------
If the Subscriber 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 Subscriber(s) Signature
____________________________ ______________________________
Date Address
If the Subscriber is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:
____________________________ ______________________________
Name of Partnership, Federal Taxpayer Identification Number
Corporation, Limited
Liability Company or Trust
By:_________________________ ______________________________
Name: State of Organization
Title:
____________________________ ______________________________
Date Address
NEWTOWN LANE MARKETING, INCORPORATED
By: __________________________
Authorized Officer
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