Exhibit 10.15
Form of Subscription Agreement
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U.S. BRIDGE CORP.
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE 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 OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Maximum Offering: $450,000
This offering consists of $450,000 of Convertible Debentures of U.S. Bridge
Corp. and Warrants to purchase up to 100,000 shares of the Company's Common
Stock
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SUBSCRIPTION AGREEMENT
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SUBSCRIPTION PROCEDURES
Convertible Debentures of U.S. Bridge Corp. (the "Company") are being
offered in an aggregate amount not to exceed $450,000. In addition to the
Debentures, the investors shall receive a warrant (the "Warrant" or "Warrants")
to purchase 10,000 shares of the Company's Common Stock per $90,000 of
Debentures purchased, pro rata. The Debentures and Warrants will be transferable
to the extent that any such transfer is permitted by law. This offering is being
made in accordance with the exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended (the "Act") and Rule 506 of Regulation D
promulgated under the Act (the "Regulation D Offering").
The Investor Questionnaire is designed to enable the Investor to
demonstrate the minimum legal requirements under federal and state securities
laws to purchase the Debentures and Warrants. The Signature Page for the
Investor Questionnaire and the Subscription Agreement contain representations
relating to the subscription.
Also included is an Internal Revenue Service Form W-9: "Request for
Taxpayer Identification Number and Certification" for U.S. citizens or residents
of the U.S. for U.S. federal income tax purposes only. (Foreign investors should
consult their tax advisors regarding the need to complete Internal Revenue
Service Form W-9 and any other forms that may be required).
If you are a foreign person or foreign entity, you may be subject to a
withholding tax equal to 30% of any dividends paid by the Company. In order to
eliminate or reduce such withholding tax you may submit a properly executed
I.R.S. Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United States) or
I.R.S. Form 1001 (Ownership Exemption or Reduced Trade Certificate), claiming
exemption from withholding or eligibility for treaty benefits in the form of a
lower rate of withholding tax on interest or dividends.
Payment must be made by wire transfer as provided below: Immediately
available funds should be sent via wire transfer to the escrow account stated
below and the completed subscription documents should be forwarded to the Escrow
Agent. Your subscription funds will be deposited into a non-interest bearing
escrow account of Xxxxxx X. XxXxxxx, Esq., Escrow Agent, at First Union Bank of
Connecticut, Stamford, Connecticut. In the event of a termination of the
Regulation D Offering or the rejection o this subscription, all subscription
funds will be returned without interest. The wire instructions are as follows:
First Union Bank of Connecticut
Executive Xxxxxx
000 Xxxx Xxxxxx, X. X. Xxx 000
Xxxxxxxx, XX 00000-0000
ABA #: 000000000
Swift #: XXXXXX00
Account #: 00000-0000000-0
Xxxx.Xxxx: Xxxxxx X. XxXxxxx, Esq. Trustee Account
SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
THE SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE 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 OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
To: U.S. BRIDGE CORP.
This Subscription Agreement is made between U.S. BRIDGE CORP. ("Company" or
"Seller") a Delaware corporation, and the undersigned prospective purchaser
("Purchaser") who is subscribing hereby for the Company's Convertible Debentures
(the "Debentures"). In addition to the Debentures, the investors shall receive a
warrant (the "Warrant" or "Warrants") to purchase 10,000 shares of the Company's
Common Stock per $90,000 of Debentures purchased, pro rata. The Debentures and
Warrants being offered will be separately transferable, to the extent that any
such transfer is permitted by law. The conversion terms of the Debentures are
set forth in Section 4. This subscription is submitted to you in accordance with
and subject to the terms and conditions described in this Subscription Agreement
dated ___________, 199_, together with any Exhibits thereto, relating to an
offering (the "Offering") of up to $450,000 of Debentures. This Offering is
comprised of an offering of the Debentures to accredited investors (the
"Regulation D Offering") in accordance with the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended (the "Act"), and
Rule 506 of Regulation D promulgated under the Act ("Regulation D").
1. SUBSCRIPTION.
(a) The undersigned hereby irrevocably subscribes for and agrees to
purchase $________ of the Company's Debentures and a Warrant to purchase _______
shares of the Company's Common Stock. The Debentures shall pay a 8% cumulative
interest payable annually, in cash or in freely trading Common Stock of the
Company, at the Company's option, at the time of each conversion. If paid in
Common Stock, the number of shares of the Company's Common Stock to be received
shall be determined by dividing the dollar amount of the dividend by the then
applicable Market Price, as of the interest payment date. "Market Price" shall
mean the lesser of (a) 100% of the average of the 5-day closing bid prices, as
reported by Bloomberg, LP for the five trading days immediately preceding the
"Closing Date", as defined below, or (b) 75% of the average of the 5-day closing
bid prices, as reported by Bloomberg, LP for the five trading days immediately
preceding the "Conversion Date", as defined below in Section 4(b) hereof. If the
interest is to be paid in cash, the Company shall make such payment within 5
business days of the date of each "Conversion Date" as that term is defined in
Section 4(b). If the interest is to be paid in Common Stock, said Common Stock
shall be delivered to the Purchaser, or per Purchaser's instructions, within 5
business days of the Conversion Date. The Debentures are subject to automatic
conversion at the end of two years from the date of issuance at which time all
Debentures outstandin will be automatically converted based upon the formula set
forth in Section 4(c). The closing shall be deemed to have occurred on the date
the funds are received by the Company (the "Closing Date").
(b) Upon receipt by the Company of the requisite payment for the Debentures
being purchased the Debentures so purchased will be forwarded by the Escrow
Agent, Xxxxxx X. XxXxxxx, to the Purchaser and the name of such Purchaser will
be registered on the Debenture transfer books of the Company as the record owner
of such Debentures. The Escrow Agent shall not be liable for any action taken or
omitted by him in good faith and in no event shall the Escrow Agent be liable or
responsible except for the Escrow Agent's own gross negligence or willful
misconduct. The Escrow Agent has made no representations or warranties in
connection with this transaction and has not been involved in the negotiation of
the terms of this Agreement or any matters relative thereto. Seller and
Purchaser each agree to indemnify and hold harmless the Escrow Agent from and
with respect to any suits, claims, actions or liabilities arising in any way out
of this transaction including the obligation to defend any legal action brought
which in any way arises out of or is related to this Agreement. The Escrow Agent
is not rendering securities advice to anyone with respect to this proposed
transaction; nor is the Escrow Agent opining on the compliance of the proposed
transaction under applicable securities law.
2. REPRESENTATIONS AND WARRANTIES.
The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:
(a) The undersigned has been furnished with, and has carefully read the
applicable form of Debenture included herein as Exhibit A and the form of
Registration Rights Agreement annexed hereto as Exhibit B (the "Registration
Rights Agreement"), and is familiar with and understands the terms of the
Offering. With respect to tax and other economic considerations involved in his
investment, the undersigned is not relying on the Company. The undersigned has
carefully considered and has, to the extent the undersigned believes such
discussion necessary, discussed with the undersigned's professional legal, tax,
accounting and financial advisors the suitability of an investment in the
Company, by purchasing the Debentures, for the undersigned's particular tax and
financial situation and has determined that the investment being made by the
undersigned is a suitable investment for the undersigned.
(b) The undersigned acknowledges that all documents, records, and books
pertaining to this investment which the undersigned has requested including Form
10-K for the fiscal year ended December 31, 1996 and Form 10-QSB for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997 (the
"Disclosure Documents") have been made available for inspection by the
undersigned, or the undersigned has had access thereto.
(c) The undersigned has 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 and all such questions have been answered to the full
satisfaction of the undersigned.
(d) The undersigned will not sell or otherwise transfer the Debentures or
Warrants without registration under the Act or applicable state securities laws
or an exemption therefrom. The Debentures and Warrants have not been registered
under the Act or under the securities laws of any states. The Common Stock
underlying the Debentures and Warrants is to be registered by the Company
pursuant to the terms of the Registration Rights Agreement attached hereto as
Exhibit B and incorporated herein and made a part hereof. Without limiting the
right to convert the Debentures and Warrants and sell the Common Stock pursuant
to the Registration Rights Agreement, the undersigned represents that the
undersigned is purchasing the Debentures and Warrants for the undersigned's own
account, for investment and not with a view to resale or distribution except in
compliance with the Act. The undersigned has not offered or sold any portion of
the Debentures or Warrants being acquired nor does the undersigned have any
present intention of dividing the Debentures or Warrants with others or of
selling, distributing or otherwise disposing of any portion of the Debentures or
Warrants either currently or after the passage of a fixed or determinable period
of time or upon the occurrence or non-occurrence of any predetermined event or
circumstance in violation of the Act. Except as provided in the Registration
Rights Agreement, the Company has no obligation to register the Common Stock
issuable upon conversion of th Debentures and exercise of the Warrants
(e) The undersigned recognizes that an investment in the Debentures
involves substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has carefully read and considered the
schedule entitled Pending Litigation matters attached hereto as Exhibit C.
(f) Legends (i) The undersigned acknowledges that each certificate
representing the Debentures and Warrants unless registered pursuant to the
Registration Rights Agreement, shall be stamped or otherwise imprinted with a
legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) IF AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
NOTWITHSTANDING THE FOREGOING, THE COMMON STOCK INTO WHICH THE SECURITIES
EVIDENCED BY THIS CERTIFICATE ARE CONVERTIBLE ARE ALSO SUBJECT TO THE
REGISTRATION RIGHTS SET FORTH IN EACH OF THAT CERTAIN SUBSCRIPTION AGREEMENT AND
REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY,
A COPY OF EACH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
(ii) The Common Stock issued upon conversion shall contain the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN INCLUDED IN THE COMPANY'S
REGISTRATION STATEMENT INITIALLY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON __________, 1998, AND MAY BE SOLD IN ACCORDANCE WITH THE COMPANY'S
PROSPECTUS DATED ___________, 1998, WHICH FORMS A PART OF SUCH REGISTRATION
STATEMENT, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
(g) If this Subscription Agreement is executed and delivered on behalf of a
corporation, (i) such corporation has the full legal right and power and all
authority and approval required (a) to execute and deliver, or authorize
execution and delivery of, this Subscription Agreement and all other instruments
(including, without limitation, the Registration Rights Agreement) executed and
delivered by or on behalf of such corporation in connection with the purchase of
the Debentures and (b) to purchase and hold the Debentures: (ii) the signature
of the party signing on behalf of such corporation is binding upon such
corporation; and (iii) such corporation has not been formed for the specific
purpose of acquiring the Debentures, unless each beneficial owner of such entity
is qualified as an accredited investor within the meaning of Rule 501(a) of
Regulation D and has submitted information substantiating such individual
qualification.
(h) The undersigned shall indemnify and hold harmless the Company and each
stockholder, executive, employee, representative, affiliate, officer, director,
agent (including Counsel) or control person of the Company, who is or may be a
party or is or may be threatened to be made a party to any threatened, pending
or contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of or arising from any actual or
alleged misrepresentation or misstatemen of facts or omission to represent or
state facts made or alleged to have been made by the undersigned to the Company
or omitted or alleged to have been omitted by the undersigned, concerning the
undersigned or the undersigned's subscription for and purchase of the Debentures
or the undersigned's authority to invest or financial position in connection
with the Offering, including, without limitation, any such misrepresentation,
misstatement or omission contained in this Subscription Agreement, the
Questionnaire or any other document submitted by the undersigned, against
losses, liabilities and expenses for which the Company, or any stockholder,
executive, employee, representative, affiliate, officer, director, agent
(including Counsel) or control person of the Company has not otherwise been
reimbursed (including attorneys' fees and disbursements, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by the Company, or
such officer, director stockholder, executive, employee, agent (including
Counsel), representative, affiliate or control person in connection with such
action, suit or proceeding.
(i) The undersigned is not subscribing for the Debentures or Warrants as a
result of, or pursuant to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or meeting.
(j) The undersigned or the undersigned's representatives, as the case may
be, has such knowledge and experience in financial, tax and business matters so
as to enable the undersigned to utilize the information made available to the
undersigned in connection with the Offering to evaluate the merits and risks of
an investment in the Debentures and Warrants and to make an informed investment
decision with respect thereto.
(k) The Purchaser is purchasing the Debentures for its own account for
investment, and not with a view toward the resale or distribution thereof.
Purchaser is neither an underwriter of, nor a dealer in, the Debentures or the
Common Stock issuable upon conversion thereof and is not participating in the
distribution or resale of the Debentures or the Common Stock issuable upon
conversion thereof.
(l) The Company will be responsible for the payment of $7,500 to Xxxxxx X.
XxXxxxx for escrow services and a 10% fee to VenGua Capital Markets as a
placement fee, all of which fees may be deducted from escrow on the Closing
Date.
(m) (i) Neither the Purchaser nor any person or entity for whom the
Purchaser is acting as fiduciary is a U.S. person. A U.S. person means any one
of the following:
(1) any natural person resident in the United States of America;
(2) any partnership or corporation organized or incorporated under the laws
of the United States;
(3) any estate of which any executor or administrator is a U.S. person;
(4) any trust of which any trustee is a U.S. person;
(5) any agency or branch of a foreign entity located in the United States;
(6) any non-discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary for the benefit or account of a
U.S. person;
(7) any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the Untied States; and
(8) any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign jurisdiction;
and
(B) formed by a U.S. person, principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a)
under the Securities Act) who are not natural persons, estates or trusts.
(ii) At the time the buy order was originated, Purchaser was outside the
United States and is outside the United States as of the date of the execution
and delivery of this Agreement. No offer to purchase the Debentures and Warrants
by Purchaser was made to a person in the United States.
(iii) Purchaser is purchasing the Debentures and Warrants for its own
account or for the account of beneficiaries for whom the Purchaser has full
investment discretion with respect to the Debentures and Warrants and whom the
Purchaser has full authority to bind so that each such beneficiary is bound
hereby as if such beneficiary were a direct purchaser hereunder and all
representations, warranties and agreements herein were made directly by such
beneficiary. Purchaser is not purchasing the Debentures and Warrants on behalf
of any U.S. person and the sale has not been prearranged with a purchaser in the
United States.
(iv) Purchaser represents and warrants and hereby agrees that all offers
and sales of the Debentures and Warrants by it or by persons acting on its
behalf shall only be made (A) in compliance with the safe harbor contained in
Regulation S; (B) pursuant to registration of Debentures and Warrants under the
Securities Act; or (C) pursuant to an exemption from registration.
(v) Purchaser understands and acknowledges that the Debentures and Warrants
have not been registered under the 1933 Act and may not be offered or sold in
the United States or to U.S. persons or for the account or benefit of a U.S.
person (other than distributors as defined in Regulation S) unless the
Debentures are registered under the Securities Act or an exemption from the
registration requirements is available.
(vi) Purchaser acknowledges that the purchase of the Debentures and
Warrants involves a high degree of risk and further acknowledges that it can
bear the economic risk of the purchase of the Debentures and Warrants, including
the total loss of its investment. Purchaser acknowledges that it has obtained
the advice of competent legal counsel in its domicile jurisdiction that
Purchaser is qualified under the laws of its domicile to purchase the Debentures
and Warrants offered hereunder and that the offer and sale of said Debentures
and Warrants will not violate the laws of its domicile jurisdiction.
(vii) Purchaser understands that the Debentures and Warrants are being
offered and sold to it in reliance on the rules promulgated under Regulation S
and that the Issuer is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Purchaser set forth herein in order to determine the applicability of such rules
and the legality of Purchaser to acquire the Debentures and Warrants. (viii) The
Purchaser is purchasing the Debentures and Warrants for its own account for
investment, and not with a view toward the resale or distribution thereof.
Purchaser is neither an underwriter of, nor a dealer in, the Debentures and
Warrants or the Common Stock issuable upon conversion thereof and is not
participating in the distribution or resale of the Debentures and Warrants or
the Common Stock issuable upon conversion or exercise thereof.
(ix) In evaluating its investment, Purchaser has consulted with its own
investment and/or legal and/or tax advisors.
(x) Purchaser understands that in the view of the SEC the statutory basis
for the exemption claimed for this transaction would not be present if the
offering of Debentures and Warrants, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration provision of
the Securities Act. Purchaser is acquiring the Debentures and Warrants for
investment purposes and has no present intention to sell the Debentures and
Warrants in the United States, to a U.S. person o for the account or benefit of
a U.S. person.
(xi) Purchaser represents and warrants that neither it nor any of its
affiliates will directly or indirectly maintain any short position in
Debentures, Common Stock or any other securities of the Issuer so long as any of
the Debentures have not been converted into Common Stock;
(xii) Purchaser represents and warrants that it is an "accredited investor"
as that term is defined in Regulation D.
(xiii) The undersigned is not subscribing for the Debentures and Warrants
as a result of, or pursuant to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or meeting.
(xiv) The undersigned or the undersigned's representatives, as the case may
be, has such knowledge and experience in financial, tax and business matters so
as to enable the undersigned to utilize the information made available to the
undersigned in connection with the Offering to evaluate the merits and risks of
an investment in the Debentures and Warrants and to make an informed investment
decision with respect thereto.
If Purchaser is purchasing the Debentures and Warrants subscribed for
hereby in representative or fiduciary capacity, the representations and
warranties in this Agreement shall be deemed to have been made on behalf of the
person or persons for whom Purchaser is so purchasing.
The foregoing representations and warranties are true and accurate as of
the date hereof, shall be true and accurate as of the date of the acceptance by
the Issuer of Purchaser's subscription, and shall survive thereafter. If
Purchaser has knowledge, prior to the acceptance of this Agreement by the
Issuer, that any such representations and warranties shall not be true and
accurate in any respect, the Purchaser, prior to such acceptance, will give
written notice of such fact to the Issuer specifying which representations and
warranties are not true and accurate and the reasons therefor.
3. SELLER REPRESENTATIONS.
(a) Concerning the Securities. The issuance, sale and delivery of the
Debentures and Warrants have been duly authorized by all required corporate
action on the part of Seller, and when issued, sold and delivered in accordance
with the terms hereof and thereof for the consideration expressed herein and
therein, will be duly and validly issued and enforceable in accordance with
their terms, subject to the laws of bankruptcy and creditors' rights generally.
At least 1,000,000 shares of Common Stock issuable upon conversion of all the
Debentures and Warrants issued pursuant to this offering have been duly and
validly reserved for issuance and, upon issuance shall be duly and validly
issued, fully paid, and non-assessable (the "Reserved Shares"). From time to
time, the Company shall keep such additional shares of Common Stock reserved so
as to allow for the conversion of all the Debentures and exercise of all the
Warrants issued pursuant to this offering.
Prior to conversion of all the Debentures, if at anytime the conversion of
all the Debentures and Warrants outstanding would result in an insufficient
number of authorized shares of Common Stock being available to cover all the
conversions, then in such event, the Company will move to call and hold a
shareholder's meeting within 60 days of such event for the sole purpose of
authorizing additional shares of Common Stock to facilitate the conversions. In
such an event, the Company shall recommend to all shareholders to vote their
shares in favor of increasing the authorized number of shares of Common Stock .
Seller represents and warrants that under no circumstances will it deny or
prevent Purchaser's right to convert the Debentures and Warrants as permitted
under the terms of this Subscription Agreement or the Registration Rights
Agreement. Nothing in this Section shall limit the obligation of the Company to
make the payments set forth in Section 4(h).
(b) Authority to Enter Agreement. This Agreement has been duly authorized,
validly executed and delivered on behalf of Seller and is a valid and binding
agreement in accordance with its terms, subject to general principals of equity
and to bankruptcy or other laws affecting the enforcement of creditors' rights
generally.
(c) Non-contravention. The execution and delivery of this Agreement and the
consummation of the issuance of the Debentures and Warrants, and the
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by Seller of any of the terms or provisions of, or constitute
a default under, the articles of incorporation or by-laws of Seller, or any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which Seller is a party or by which it or any of its properties or assets are
bound, or any existing applicable law, rule, or regulation of the United States
or any State thereof or any applicable decree, judgment, or order of any Federal
or State court, Federal or State regulatory body, administrative agency or other
United States governmental body having jurisdiction over Seller or any of its
properties or assets.
(d) Company Compliance. The Company represents and warrants that the
Company and its subsidiaries are: (i) in full compliance, to the extent
applicable, with all reporting obligations under either Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; (ii) not in violation of any term or
provision of its Certificate of Incorporation or by-laws; (iii) not in default
in the performance or observance of any obligation, agreement or condition
contained in any bond, debenture note or any other evidence of indebtedness or
in any mortgage, deed of trust, indenture or other instrument or agreement to
which they are a party, either singly or jointly, by which it or any of its
property is bound or subject except at set forth in Exhibit C. Furthermore, the
Company is not aware of any other facts, which it has not disclosed which could
have a material adverse effect on the business, condition, (financial or
otherwise), operations, earnings, performance, properties or prospects of the
Company and its subsidiaries taken as a whole.
(e) Pending Litigation. Except as otherwise disclosed in Exhibit C, there
is (i) no action, suit or proceeding before or by any court, arbitrator or
governmental body now pending or, to the knowledge of the Company, threatened or
contemplated to which the Company or any of its subsidiaries is or may be a
party or to which the business or property of the Company or any of its
subsidiaries is or may be bound or subject, (ii) no law, statute, rule,
regulation, order or ordinance that has been enacted, adopted or issued by any
Governmental Body or that, to the knowledge of the Company, has been proposed by
any Governmental Body adversely affecting the Company or any of its
subsidiaries, (iii) no injunction, restraining order or order of any nature by a
federal, state or foreign court or Governmental Body of competent jurisdiction
to which the Company or any of its subsidiaries is subject issued that, in the
case of clauses (i), (ii) and (iii) above, (x) is reasonably likely, singly or
in the aggregate, to result in a material adverse effect on the business,
condition, (financial or otherwise), operations, earnings, performance,
properties or prospects of the Company, and its subsidiaries taken as a whole or
(y) would interfere with or adversely affect the issuance of the Debentures and
Warrants or would be reasonably likely to render this Subscription Agreement or
the Debentures and Warrants, or any portion thereof, invalid or unenforceable.
(f) Issuance of the Debentures. No action has been taken and no law,
statute, rule, regulation, order or ordinance has been enacted, adopted or
issued by any Governmental Body that prevents the issuance of the Debentures and
Warrants or the Common Stock issuable upon conversion or exercise thereof; no
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction has been issued that prevents the issuance of the
Debentures and Warrants or the Common Stock issuable upon conversion or exercise
thereof or suspends the sale of the Debentures and Warrants or the Common Stock
issuable upon conversion thereof in any jurisdiction; and no action, suit or
proceeding is pending against or, to the best knowledge of the Company,
threatened against or affecting, the Company, any of its subsidiaries or, to the
best knowledge of the Company, before any court or arbitrator or any
Governmental Body that, if adversely determined, would prohibit, materially
interfere with or adversely affect the issuance or marketability of the
Debentures or the Common Stock issuable upon conversion or exercise thereof or
render the Subscription Agreement or the Debentures and Warrants, or any portion
thereof, invalid or unenforceable.
(g) The Company shall indemnify and hold harmless the Purchaser and each
stockholder, executive, employee, representative, affiliate, officer, director
or control person of the Purchaser, who is or may be a party or is or may be
threatened to be made a party to any threatened, pending or contemplated action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of or arising from any actual or alleged misrepresentation or
misstatement of facts or omission to represent or state facts made or alleged to
have been made by the Company to the Purchaser or omitted or alleged to have
been omitted by the Company, concerning the Purchaser or the Purchaser's
subscription for and purchase of the Debentures and Warrants or the Purchaser 's
authority to invest or financial position in connection with the Offering,
including, without limitation, any such misrepresentation, misstatement or
omission contained in this Subscription Agreement, the Questionnaire or any
other document submitted by the Company, against losses, liabilities and
expenses for which the Purchaser, or any stockholder, executive, employee,
representative, affiliate, officer, director or control person of the Purchaser
has not otherwise been reimbursed (including attorneys' fees and disbursements,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Purchaser, or such officer, director, stockholder, executive,
employee, representative, affiliate or control person in connection with such
action, suit or proceeding.
(h) No Change. Other than filings required by the Blue Sky or federal
securities law, no consent, approval or authorization of or designation,
declaration or filing with any governmental or other regulatory authority on the
part of the Company is required in connection with the valid execution, delivery
and performance of this Agreement. Any required qualification or notification
under applicable federal securities laws and state Blue Sky laws of the offer,
sale and issuance of the Debentures and Warrants, has been obtained on or before
the date hereof or will have been obtained within the allowable period
thereafter, and a copy thereof will be forwarded to Counsel for the Purchaser.
(i) True Statements. Neither this Agreement nor any of the "Disclosure
Documents", as hereinafter defined, contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading in the light of the
circumstances under which such statements are made. There exists no fact or
circumstances which, to the knowledge of the Company, materially and adversely
affects the business, properties or assets, or conditions, financial or
otherwise, of the Company, which has not been set forth in this Subscription
Agreement or disclosed in such documents.
(j) The Purchaser has been advised that the Company has not retained any
independent professionals to review or comment on this Offering or otherwise
protect the interests of the Purchaser. Although the Company has retained its
own counsel, neither such counsel nor any other firm, including Xxxxxx X.
XxXxxxx, Esq., has acted on behalf of the Purchaser, and the Purchaser should
not rely on the Company's legal counsel or Xxxxxx X. XxXxxxx, Esq. with respect
to any matters herein described.
(k) There has never been represented, guaranteed, or warranted to the
undersigned by any broker, the Company, its officers, directors or agents, or
employees or any other person, expressly or by implication (i) the percentage of
profits and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of the Company's operations; and (ii) that the
past performance or experience on the part of the management of the Company, or
of any other person, will in any way result in the overall profitable operations
of the Company.
(l) Prior Shares Issued Under Regulation S or Regulation D. Since January
1, 1997, the Company raised $ 0 in Regulation S offerings for which $ 0 remains
outstanding. Since January 1, 1997, the Company raised $ 0 in Regulation D
offerings for which $ 0 remains outstanding.
(m) Current Authorized Shares. As of January 15, 1998, there were
50,000,000 authorized shares of Common Stock of which approximately 7,500,000
shares of Common Stock were issued and outstanding.
(n) Disclosure Documents. The Disclosure Documents are all the documents
(other than preliminary materials) that the Company has been required to file
with the SEC from December 31, 1996, to the date hereof. As of their respective
dates, none of the Disclosure Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and no material event
has occurred since the Company's filing on Form 10-K for the year ended December
31, 1996, which could make any of the disclosures contained therein misleading.
The financial statements of the Company included in the Disclosure Documents
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited financial
statements, only to normal recurring year-end audit adjustments) the
consolidated financial position of the Company and its consolidated subsidiaries
as at the dates thereof and the consolidated results of their operations and
changes in financial position for the periods then ended.
(o) Information Supplied. The information supplied by the Company to
Purchaser in connection with the offering of the Debentures and Warrants does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements, in the light of the circumstances in
which they were made, not misleading. There exists no fact or circumstances
which, to the knowledge of the Company, materially and adversely affects the
business, properties, assets, or conditions, financial or otherwise, of the
Company, which has not been set forth in this Agreement or disclosed in such
documents.
(p) Delivery Instructions. On the Closing Date the Debentures being
purchased hereunder shall be delivered to Xxxxxx X. XxXxxxx, Esq. as Escrow
Agent, who will simultaneously wire to the Company the funds being held in
escrow, less the escrow fee and placement fee, at which time the Escrow Agent
shall then have the Debentures and Warrants delivered to the Purchaser, per the
Purchaser's instructions.
(q) Non-contravention. The execution and delivery of this Agreement by the
Company, the issuance of the Debentures and Warrants, and the consummation by
the Company of the other transactions contemplated by this Agreement, and the
Debentures and Warrants do not and will not conflict with or result in a breach
by the Company of any of the terms or provisions of, or constitute a default
under, the (i) certificate of incorporation or by-laws of the Company, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound, (iii) any material existing applicable law, rule, or regulation or
any applicable decree, judgment, or (iv) order of any court, United States
federal or state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or any of its properties or assets,
except such conflict, breach or default which would not have a material adverse
effect on the transactions contemplated herein.
(r) No Default. Except as set forth in the Company's report on form 10-K
for the year ending December 31, 1996, the Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it or its property is
bound, and neither the execution of, nor the delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement or the
Debentures, other than the conversion provision thereof, will conflict with or
result in the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under, (i) any material
indenture, mortgage, deed of trust or other material agreement applicable to the
Company or instrument to which the Company is a party or by which it is bound,
(ii) any statute applicable to the Company or its property, (iii) the
Certificate of Incorporation or By-Laws of the Company, (iv) any decree ,
judgment, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company regulation of any court or governmental
agency or body having jurisdiction over the Company or its properties, or (v)
the Company's listing agreement for its Common Stock.
(s) Use of Proceeds. The Company represents that the net proceeds of this
offering will be used for working capital.
(t) Lock-up and Right of First Refusal. The Company agrees not to pursue a
transaction of the nature already contemplated hereby with any other person or
entity unless and until the Purchaser(s) have been informed that good faith
negotiations with the Company have been terminated. During the one hundred and
eighty (180) day period following the Closing Date, the Company will not
conduct, without the prior written consent of each Purchaser in this offering,
any Regulation S or Regulation D financing and/or equity private placement with
common stock registration/public sale rights within twelve (12) months of the
Closing Date. Thereafter, for the next three hundred and sixty (360) days, the
Purchaser will have a pro-rata right of first refusal with all other Purchasers
in this offering with respect to any equity financing.
(u) Reporting Company Status. Seller is a "Reporting Issuer" as defined by
Rule 902 of Regulation S. Seller has registered its Common Stock, $0.01 par
value per share (the "Common Stock"), pursuant to the Securities Exchange Act of
1933, as amended (the "Exchange Act"), and the Common Stock is listed and trades
on the Electronic Bulletin Board. Seller has filed all material required to be
filed pursuant to all reporting obligations under Section 15(d) of the Exchange
Ac for a period of at least twelve (12) months immediately preceding the offer
or sale of the Securities (or for such shorter period that Seller has been
required to file such material).
(v) Offshore Transaction. Seller has not offered the Debentures or Warrants
to any person in the United States or to any U.S. person or for the account or
benefit of any U.S. person. At the time the buy order was originated, Issuer
and/or its agent reasonably believed that Purchaser was outside of the United
States and was not a U.S. Person. Issuer and/or its agent reasonably believe
that the transaction has not been prearranged with a Purchaser in the United
States.
(w) No Directed Selling Efforts. In regard to this transaction, Seller has
not conducted any "directed selling efforts" as that term is defined in Rule 902
of Regulation S nor has Seller conducted any general solicitation relating to
the offer and sale of Debentures or Warrants to U.S. persons residing within the
United States or elsewhere.
4. TERMS OF CONVERSION.
(a) Debentures. Upon the Company's receipt of a facsimile or original of
Purchaser's signed Notice of Conversion and the original Debenture to be
converted in whole or in part, the Company shall instruct its transfer agent to
issue one or more Certificates representing that number of shares of Common
Stock into which the Debenture is convertible in accordance with the provisions
regarding conversion set forth in Exhibit D hereto. The Seller's transfer agent
or attorney shall act as Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Debenture.
(b) Conversion Procedures. The face amount of the Debentures, plus accrued
interest, may be converted anytime sixty (60) days after the Closing Date The
date on which the Notice of Conversion is effective ("Conversion Date") shall be
deemed to be the date on which the Purchaser has delivered to the Company a
facsimile or original of the signed Notice of Conversion, as long as the
original Debentures to be converted are received by the Company or its
designated attorney within 5 business days thereafter.
(c) Issuance of Common Stock. Upon the conversion of any Debentures and
upon receipt by the Company or its attorney of a facsimile or original of
Purchaser's signed Notice of Conversion (see Exhibit D) Seller shall instruct
Seller's transfer agent to issue Stock Certificates with restrictive legends as
set forth in this Agreement in the name of Purchaser (or its nominee) and in
such denominations to be specified at conversion representing the number of
shares of Common Stock issuable upo such conversion, as applicable. Seller
warrants that no instructions, other than these instructions, have been given or
will be given to the transfer agent and that the Common Stock shall otherwise be
freely transferable on the books and records of Seller.
(d) Conversion Rate. Purchaser is entitled to convert the entire face
amount of the Debentures, plus accrued interest at the lesser of (a) 100% of the
5-day average closing bid price, as reported by Bloomberg, LP for the 5 trading
days immediately preceding the applicable Closing Date or (b) 75% of the 5-day
average closing bid price, as reported by Bloomberg, LP for the 5 trading days
immediately preceding the applicable Conversion Date (the "Conversion Price").
If the Registration Statement, covering the shares of Common Stock to be issued
upon conversion of the Debentures, has not been declared effective within 90
days following the Closing Date then the 100% referred to in (a) of this
paragraph shall be decreased to 97.5% and the 75% referred to in (b) of this
paragraph shall be increased to 72.5%, per 30 day period or portion thereof pro
rata, until the Registration Statement has been declared effective or;
alternatively, if the Registration Statement has not been declared effective
within said 90-day period, then at the Purchaser's sole option, which option
must be exercised by written notice to the Company, the Debentures shall convert
to having been issued pursuant to Regulation S for qualifying Purchasers, with
immediate availability to convert the Debentures. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded up or down, as the case may be, to the nearest
whole share.
The Debentures are subject to a mandatory, 24 month conversion feature at
the end of which all Debentures outstanding will be automatically converted,
upon the terms set forth in this section ("Mandatory Conversion Date").
(e) Nothing contained in this Subscription Agreement shall be deemed to
establish or require the payment of interest to the Purchaser at a rate in
excess of the maximum rate permitted by governing law. In the event that the
rate of interest required to be paid exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing law and
such excess shall be returned with reasonable promptness by the Purchaser to the
Company.
(f) It shall be the Company's responsibility to take all necessary actions
and to bear all such costs to issue the Certificate of Common Stock as provided
herein, including the responsibility and cost for delivery of an opinion letter
to the transfer agent, if so required. The person in whose name the certificate
of Common Stock is to be registered shall be treated as a shareholder of record
on and after the conversion date. Upon surrender of any Debentures that are to
be converted in part, the Company shall issue to the Purchaser a new Debenture
equal to the unconverted amount, if so requested in writing by Purchaser.
(g) Within five (5) business days after receipt of the documentation
referred to above in Section 4(b), the Company shall deliver a certificate,
without stop transfer instructions, for the number of shares of Common Stock
issuable upon the conversion. It shall be the Company's responsibility to take
all necessary actions and to bear all such costs to issue the Common Stock as
provided herein, including the cost for delivery of an opinion letter to the
transfer agent, if so required. The person in whose name the certificate of
Common Stock is to be registered shall be treated as a shareholder of record on
and after the conversion date. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Purchaser a new Debenture
equal to the unconverted amount, if so requested in writing by Purchaser.
In the event the Company does not make delivery of the Common Stock, as
instructed by Purchaser, within 5 business days after delivery of the original
Debenture, then in such event the Company shall pay to Purchaser an amount, in
cash in accordance with the following schedule, wherein "No. Business Days Late"
is defined as the number of business days beyond the 5 business days delivery
period.
Late Payment for Each
$10,000 of Debenture
No. Business Days Late Amount Being Converted
---------------------- ----------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 + $200 for each
Business Day Beyond 10
The Company acknowledges that its failure to deliver the Common Stock
within 5 business days after the Conversion Date will cause the Purchaser to
suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Agreement a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to qualify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to deliver the Common Stock pursuant to the terms of this
Agreement.
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 4(g) is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 4(g) shall not
apply but instead the provisions of Section 4(h) shall apply.
The Company shall make any payments incurred under this Section 4(g) in
immediately available funds within five (5) business days from the Conversion
Date if late. Nothing herein shall limit a Purchaser's right to pursue actual
damages or cancel the conversion for the Company's failure to issue and deliver
Common Stock to the Holder within 10 business days after the Conversion Date.
(h) The Company shall at all times reserve and have available all Common
Stock necessary to meet conversion of the Debentures by all Purchasers of the
entire amount of Debentures then outstanding. If, at any time Purchaser submits
a Notice of Conversion and the Company does not have sufficient authorized but
unissued shares of Common Stock available to effect, in full, a conversion of
the Debentures (a "Conversion Default", the date of such default being referred
to herein as the "Conversion Default Date"), the Company shall issue to the
Purchaser all of the shares of Common Stock which are available, and the Notice
of Conversion as to any Debentures requested to be converted but not converted
(the "Unconverted Debentures"), upon Purchaser's sole option, may be deemed null
and void. The Company shall provide notice of such Conversion Default ("Notice
of Conversion Default") to all existing Purchasers of outstanding Debentures, by
facsimile, within three (3) business day of such default (with the original
delivered by overnight or two day courier), and the Purchaser shall give notice
to the Company by facsimile within five business days of receipt of the original
Notice of Conversion Default (with the original delivered by overnight or two
day courier) of its election to either nullify or confirm the Notice of
Conversion.
The Company agrees to pay to all Purchasers of outstanding Debentures
payments for a Conversion Default ("Conversion Default Payments") in the amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Purchaser where N = the
number of days from the Conversion Default Date to the date (the "Authorization
Date") that the Company authorizes a sufficient number of shares of Common Stock
to effect conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Purchaser of outstanding Debentures that
additional shares of Common Stock have been authorized, the Authorization Date
and the amount of Purchaser's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in cash or shall be convertible into Common
Stock at the Conversion Rate, at the Purchaser's option, payable as follows: (i)
in the event Purchaser elects to take such payment in cash, cash payments shall
be made to such Purchaser of outstanding Debentures by the fifth day of the
following calendar month, or (ii) in the event Purchaser elects to take such
payment in stock, the Purchaser may convert such payment amount into Common
Stock at the conversion rate set forth in section 4(d) at anytime after the 5th
day of the calendar month following the month in which the Authorization Notice
was received, until the expiration of the mandatory 24 month conversion period.
The company acknowledges that its failure to maintain a sufficient number
of authorized but unissued shares of Common Stock to effect in full a conversion
of the Debentures will cause the Purchaser to suffer damages in an amount that
will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision set forth in
this section represents the parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Agreement.
Nothing herein shall limit the Purchaser's right to pursue actual damages
or cancel the conversion for the Company's failure to maintain a sufficient
number of authorized shares of Common Stock.
(i) The Company shall furnish to Purchaser such number of prospectuses and
other documents incidental to the registration of the shares of Common Stock
underlying the Debentures, including any amendment of or supplements thereto.
(j) Redemption Terms. The Company shall have the right to redeem the
unconverted portion of the Debentures in whole or in part, at any time as
follows: Up to and including the 90th day following the Closing Date, the
Company shall have the right to redeem any or all of the Debentures for 120% of
the face amount of the Debentures and Warrants being redeemed, plus all accrued
interest thereon.
Redemption by the Company shall be effected by the Company notifying the
Purchaser by facsimile at the number listed in this Agreement as to the
Company's intention to exercise its right of redemption. The Company shall state
in such notice the amount of Debentures it intends to redeem, the amount that it
will pay to effectuate such redemption and the date by which the Purchaser must
deliver the original Debentures to be redeemed to the Escrow Agent. The Company
shall give the Purchaser at least 5 business day's advance notice of the above
information. On or before the date by which the Purchaser is to deliver the
original Debentures to the Escrow Agent, the Company shall wire to the Escrow
Agent that amount necessary to effect the redemption. Once the Escrow Agent is
in receipt of the original Debentures being redeemed and those funds necessary
to effect the redemption the Escrow Agent shall wire those funds to the
Purchaser and deliver the original Debentures via overnight courier to th
Company. With respect to that portion of the Debentures being redeemed, provided
sufficient funds are on deposit with the Escrow Agent on the redemption date as
herein described, then in such event, after the date of redemption, interest
shall cease to accrue on those Debentures being redeemed and the Purchaser shall
have no further rights as to those Debentures being redeemed other than the
right to receive payments on the redemption date.
5. LIMITS ON AMOUNT OF CONVERSION AND OWNERSHIP.
Other than the Mandatory Conversion provisions contained in this Agreement
which are not limited by the following, in no other event shall the Purchaser be
entitled to convert that amount of Debentures and Warrants in excess of that
amount upon conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Purchaser and its affiliates (other than shares
of Common Stock which may be deemed beneficially owned through the ownership of
the unconverted portion of the Debentures and Warrants), and (2) the number of
shares of Common Stock issuable upon the conversion of the Debentures and
Warrants with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Purchaser and its affiliates of more
than 4.9% of the outstanding shares of Common Stock of the Company. For purposes
of this provision to the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13 (d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13 D-G thereunder, except as otherwise
provided in clause (1) of such provision.
6. DELIVERY INSTRUCTIONS.
Prior to or on the Closing Date the Company shall deliver to the Escrow
Agent a copy of the board resolution authorizing the offering a copy of which is
attached hereto as Exhibit E. Also, prior to or on the Closing Date the Company
shall deliver to the Escrow Agent a signed Registration Rights Agreement in the
form attached hereto as Exhibit B. The Debentures being purchased hereunder
shall be delivered to Xxxxxx X. XxXxxxx, Esq. as Escrow Agent, who will hold
them in escrow until funds have been wired to the Company or its Counsel at
which time the Escrow Agent shall then have the Debentures delivered to the
Purchaser, per the Purchaser's instructions.
7. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the Company as
follows:
FOR ALL SUBSCRIBERS:
(a) This Subscription may be rejected, in whole or in part, by the Company
in its sole and absolute discretion at any time before the date set for closing
unless the Company has given notice of acceptance of the undersigned's
subscription by signing this Subscription Agreement.
(b) No U.S. federal or state agency or any agency of any other jurisdiction
has made any finding or determination as to the fairness of the terms of the
Offering for investment nor any recommendation or endorsement of the Debentures
and Warrants.
(c) The representations, warranties and agreements of the undersigned and
the Company contained herein and in any other writing delivered in connection
with the transactions contemplated hereby shall be true and correct in all
material respects on and as of the date of the sale of the Debentures and
Warrants, and as of the date of the conversion and exercise thereof, as if made
on and as of such date and shall survive the execution and delivery of this
Subscription Agreement and the purchase of the Debentures and Warrants.
(d) IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE DEBENTURES 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 ANY
MEMORANDUM OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(e) The Regulation D Offering is intended to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the undersigned
herein and in the Questionnaire.
(f) It is understood that in order not to jeopardize the Offering's exempt
status under Section 4(2) of the Securities Act and Regulation D, any transferee
may, at a minimum, be required to fulfill the investor suitability requirements
thereunder.
(g) THE DEBENTURES AND WARRANTS MAY NOT BE TRANSFERRED, RESOLD OR OTHERWISE
DISPOSED OF EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS
SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
(h) NASAA UNIFORM LEGEND
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES 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. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT OF 1933 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.
9. Litigation.
(a) Forum Selection and Consent to Jurisdiction. Any litigation based
thereon, or arising out of, under, or in connection with, this agreement or any
course of conduct, course of dealing, statements (whether oral or written) or
actions of the Company or Holder shall be brought and maintained exclusively in
the courts of the state of Delaware. The Company hereby expressly and
irrevocably submits to the jurisdiction of the state and federal Courts of the
state of Delaware for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Company further irrevocably consents to the
service of process by registered mail, postage prepaid, or by personal service
within or without the State of Delaware. The Company hereby expressly and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such litigatio
brought in any such court referred to above and any claim that any such
litigation has been brought in any inconvenient forum. To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property. The Company hereby irrevocably waives such immunity in respect
of its obligations under this agreement and the other loan documents.
(b) Waiver of Jury Trial. The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the Company.
The Company acknowledges and agrees that it has received full and sufficient
consideration for this provision an that this provision is a material inducement
for the Holder entering into this agreement.
(c) Submission To Jurisdiction. Any legal action or proceeding in
connection with this Agreement or the performance hereof may be brought in the
state and federal courts located in Delaware, and the parties hereby irrevocably
submit to the non-exclusive jurisdiction of such courts for the purpose of any
such action or proceeding.
10. MISCELLANEOUS.
(a) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(b) Neither this Subscription Agreement nor any provision hereof shall be
waived, modified, changed, discharged, terminated, revoked or canceled, except
by an instrument in writing signed by the party effecting the same against whom
any change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered or sent
by registered mail, return receipt requested, addressed: (i) if to the Company,
at 00-00 00xx Xxxxx, Xxxxxx, XX 00000 (ii) if to the undersigned, at the address
for correspondence set forth in the Questionnaire, or at such other address as
may have been specified by written notice given in accordance with this
paragraph 10(c).
(d) This Subscription Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of the State of Delaware, as such
laws are applied by Delaware courts to agreements entered into, and to be
performed in, Delaware by and between residents of Delaware, and shall be
binding upon the undersigned, the undersigned's heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the
Company, its successors and assigns. If any provision of this Subscription
Agreement is invalid or unenforceable under any applicable statue or rule of
law, then such provisions shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof that may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
(e) This Subscription Agreement, together with Exhibits A, B, C, D and E
attached hereto and made a part hereof, constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by both parties hereto. An executed facsimile copy of
the Subscription Agreement shall be effective as an original.
11. NOTICE.
All notices or other communications required or permitted hereunder shall
be in writing and shall be deemed given, delivered and received (a) when
delivered, if delivered personally, (b) four days after mailing, when sent by
registered or certified mail, return receipt requested and postage prepaid, (c)
the next business day after delivery to a private courier service, and (d) on
the date of delivery by telecopy, receipt confirmed, provided that a
confirmation copy is sent on the next business day by registered or certified
mail, return receipt requested and postage prepaid, in each case addressed as
follows:
If to Company, to:
U.S. Bridge Corp.
00-00 00xx Xxxxx
Xxxxxx, XX 00000
Attention:
Phone: 000-000-0000
Fax: 718-
If to Purchaser, to:
================================
--------------------------------
Phone: ___________________________
Fax: ___________________________
or to such other address as the recipient party may indicate by a notice
delivered to the sending party (such change of address notice to be deemed
given, delivered and received only upon actual receipt thereof by the recipient
of such notice).
12. SIGNATURE.
The signature of this Subscription Agreement is contained as part of the
applicable Subscription Package, entitled "Signature Page."
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
U.S. BRIDGE CORP.
CORPORATION QUESTIONNAIRE
Investor Name: _______________
The information contained in this Questionnaire is being furnished in order
to determine whether the undersigned CORPORATION'S Subscription to purchase the
Debentures described in the Subscription Agreement may be accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned CORPORATION understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Debentures
is exempt from registration under the Securities Act of 1933, as amended.
Further, the undersigned CORPORATION understands that the offering is required
to be reported to the Securities and Exchange Commission and to various state
securities and "blue sky" regulators.
IN ADDITION TO SIGNING THE SIGNATURE PAGE, THE UNDERSIGNED CORPORATION MUST
COMPLETE FORM W-9 ATTACHED HERETO.
I. PLEASE CHECK EACH OF THE STATEMENTS BELOW THAT APPLIES TO THE
CORPORATION.
1. The undersigned CORPORATION: (a) has total assets in excess of
$5,000,000; (b) was not formed for the specific purpose of acquiring the
Debentures and (c) has its principal place of business in ___________.
2. Each of the shareholders of the undersigned CORPORATION is able to
certify that such shareholder meets at least one of the following three
conditions:
(a) the shareholder is a natural person whose individual net worth* or
joint net worth with his or her spouse exceeds $1,000,000; or
(b) the shareholder is a natural person who had an individual income* in
excess of $200,000 in each of 1996 and 1997 and who reasonably expects an
individual income in excess of $200,000 in 1998; or
(c) Each of the shareholders of the undersigned CORPORATION is able to
certify that such shareholder is a natural person who, together with his or her
spouse, has had a joint income in excess of $300,000 in each of 1996 and 1997
and who reasonably expects a joint income in excess of $300,000 during 1998; and
the undersigned CORPORATION has its principal place of business in
___________________.
* For purposes of this Questionnaire, the term "net worth" means the excess
of total assets over total liabilities. In determining income, an investor
should add to his or her adjusted gross income any amounts attributable to
tax-exempt income received, losses claimed as a limited partner in any limited
partnership, deductions claimed for depletion, contributions to XXX or Xxxxx
retirement plan, alimony payments and any amount by which income from long-term
capital gains has been reduced in arrivin at adjusted gross income.
3. The undersigned CORPORATION is:
(a) a bank as defined in Section 3(a)(2) of the Securities Act; or
(b) a 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; or
(c) a broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; or
(d) an insurance company as defined in Section 2(13) of the Securities Act;
or
(e) An investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section 2(a)(48) of the
Investment Company Act of 1940; or
(f) 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; or
(g) a private business development company as defined in Section 202(a)
(22) of the Investment Advisors Act of 1940.
II. OTHER CERTIFICATIONS.
By signing the Signature Page, the undersigned certifies the following:
(a) That the CORPORATION'S purchase of the Debentures will be solely for
the CORPORATION'S own account and not for the account of any other person or
entity; and
(b) that the CORPORATION'S name, address of principal place of business,
place of incorporation and taxpayer identification number as set forth in this
Questionnaire are true, correct and complete.
III. GENERAL INFORMATION
(a) PROSPECTIVE PURCHASER (THE CORPORATION)
Name:
Principal Place of Business: ________________________________________
----------------------------------------------------------------
Address for Correspondence (if different): ___________________________
(Number and Street)
----------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number:________________________________________________
(Area Code) (Number)
Jurisdiction of Incorporation:__________________________________
Date of Formation:_________________________________________________
Taxpayer Identification Number:______________________________________
Number of Shareholders:____________________________________________
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
CORPORATION.
Name:___________________________________________________________
Position or Title:__________________________________________________
U.S. BRIDGE CORP.
CORPORATION SIGNATURE PAGE
Your signature on this Corporation Signature Page evidences the agreement
by the Purchaser to be bound by the Questionnaire and the Subscription
Agreement.
1. The undersigned hereby represents that (a) the information contained in
the Questionnaire is complete and accurate and (b) the Purchaser will notify
U.S. BRIDGE CORP. immediately if any material change in any of the information
occurs prior to the acceptance of the undersigned Purchaser's subscription and
will promptly send U.S. BRIDGE CORP. written confirmation of such change.
2. The undersigned officer of the Purchaser hereby certifies that he has
read and understands this Subscription Agreement.
3. The undersigned officer of the Purchaser hereby represents and warrants
that he has been duly authorized by all requisite action on the part of the
Corporation to acquire the Debentures and sign this Subscription Agreement on
behalf of _______________ and, further, that ____________________ has all
requisite authority to purchase the Debentures and enter into this Subscription
Agreement.
-------------------------- --------------------------
Amount of Debentures subscribed for Date
_____________________
(Purchaser)
By: _______________________
(Signature)
Name: ____________________
(Please Type or Print)
Title: _____________________
(Please Type or Print)
THE DEBENTURES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT.
COMPANY ACCEPTANCE PAGE
This Subscription Agreement accepted
and agreed to this ____ day of _______, 1998
U.S. BRIDGE CORP.
BY____________________________________
, its CEO duly authorized
EXHIBIT D
NOTICE OF CONVERSION
(To be Executed by the Registered owner in order to Convert
the Debentures)
The undersigned hereby irrevocably elects, as of ______________, 199_ to
convert $__________ of Convertible Debentures into Common Stock of U.S. BRIDGE
CORP. (the "Company") according to the conditions set forth in the Subscription
Agreement dated ________, 1998.
Date of Conversion_________________________________________
Applicable Conversion Price_________________________________
Number of Shares Issuable upon this conversion______________
Signature___________________________________________________
[Name]
Address_____________________________________________________
------------------------------------------------------------
Phone______________________ Fax___________________________
EXHIBIT E
SCHEDULE OF PENDING LITIGATION
There are no pending litigation matters other than as stated in the
Company's most recent quarterly report.
