EXHIBIT 10 (g) ACCREDITED INVESTOR SUBSCRIPTION AGREEMENT
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TECHSCIENCE INDUSTRIES, INC.
ACCREDITED INVESTOR SUBSCRIPTION AGREEMENT (the "Agreement") dated
February 19, 1999 between Techscience Industries, Inc., a Delaware corporation
with principal offices at 0 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (the
"Company") and the person or persons executing this Agreement on the last page
(the "Subscriber").
1. DESCRIPTION OF THE OFFERING. This Agreement sets forth the terms
under which the Subscriber will invest in the Company. This subscription is for
units comprised of 6,250 shares of the Company's common stock, $.01 par value
per share (the "Shares") offered at a price of $4.00 Share or an aggregate of
$25,000 per unit (the "Unit"). This subscription is one of 60 subscriptions for
60 Units or an aggregate of $1,500,000 if all offered Units are sold. The Shares
will be "restricted securities" as that term is defined under Rule 144 under the
Act and ineligible for public sale for a period of 12 months from the date of
issuance. The Units are being offered under and pursuant to Rule 506 of
Regulation D (the "Rule") under the Securities Act of 1933, as amended (the
"Act") for a period of 90 days business days, subject to a single extension of
30 days. This offering is being conducted solely to "Accredited Investors" as
that term is defined in Rule 501(a) of Regulation D under the Act for the
purpose of providing the working capital necessary to put the Company in the
position to implement the Company's proposed business combination with
XxxXxxxxx.xxx, Inc., a non-affiliated California corporation ("PPI") wherein the
Company will acquire all of the issued and outstanding shares of PPI's common
stock, $.01 par value per share, solely in exchange for the issuance of an
aggregate of 7,325,000 shares of the Company (the "Reorganization").
2. TERMS OF THE OFFERING. The Company is offering the Units on a
strictly best efforts basis with no minimum number of Units that must be
purchased. However, and unless the Company is successful in selling a minimum of
40 Units, it will be in default under its February 10, 1999 letter of intent
with PPI, a copy of which is annexed hereto as Exhibit "A" and incorporated
herein by reference (the "LOI"), which requires the Company to have a positive
tangible net worth of at least $975,000 at the closing of the Reorganization
currently scheduled for April 1, 1999. As provided in the escrow agreement
annexed to this Agreement as Exhibit "B" and hereby incorporated herein by
reference (the "Escrow Agreement"), all Shares comprising the Units will be held
in escrow by Xxxxxx Xxxxxxxxxxx, Esq., securities counsel to the Company until
the closing of the Reorganization. In the event the Reorganization does not
close on or before April 1, 1999, and unless extended in writing by the Company
and PPI, the Company will: (i) refund the Subscriber the full amount of his
investment in the Units; and (ii) restore the Shares comprising the Units to
authorized but unissued status. In the event a minimum of 250,000 Shares are
sold prior to the closing of the Reorganization, the Company may continue to
sell the remaining Shares until the expiration of the 120 day Offering period.
The Execution of this Agreement shall constitute an offer by the Subscriber to
subscribe to the Shares in the amount and on the terms specified herein. The
Company reserves
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the right, in its sole discretion, to reject in whole or in part, any
subscription offer. If the Subscriber's offer is accepted, the Company will
execute a copy of this Agreement and return it to Subscriber. Upon execution of
this Agreement, the Company will instruct its transfer agent to cause the
original issuance of certificates representing the Shares and the delivery
thereof to the Subscriber at such address as she shall designate.
3. SUBSCRIPTION PAYMENT. Subscription to each Unit requires a minimum
total cash investment of $25,000. The subscription price will be payable in cash
in full on subscription.
4. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants as follows:
(a) The Company is a corporation duly formed and in good
standing under the laws of the State of Delaware with full power and authority
to conduct its business as presently contemplated;
(b) The Company has the corporate power to execute, deliver
and perform this Agreement, the LOI and the Escrow Agreement in the time and
manner contemplated; and
(c) The Shares issuable to Subscribers have been reserved for
issuance and when issued, will be duly and validly issued, fully paid and
non-assessable with no personal liability attaching to the ownership thereof.
5. SUBSCRIBER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Subscriber hereby represents, warrants and covenants as follows:
(a) The Subscriber is an entity, and is an "Accredited
Investor" as defined in Rule 501(a) of Regulation D under the Act. This
representation is based on the fact that the Subscriber is an accredited
individual who, together with the Subscriber's spouse, have a net worth of at
least $1,000,000 OR the Subscriber, individually, has had net income of not less
than $200,000 during the last two years, and reasonably anticipates that the
Subscriber will have an income of at least $200,000 during the present year and
the next year;
(b) If the Subscriber is a corporation, partnership, trust or
any unincorporated association: (i) the person executing this Subscription
Agreement does so with full right, power and authority to make this investment;
(ii) that such entity was not formed for the specific purpose of making an
investment in the Company; and (iii) that all further representations and
warranties made herein are true and correct with respect to such corporation,
partnership, trust and unincorporated association;
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(c) The address set forth below is the Subscriber's true and
correct residence, and the Subscriber has no present intention of becoming a
resident of any state or jurisdiction;
(d) The Subscriber has received and read or reviewed, is
familiar with and fully understands the due diligence material furnished by the
Company, annexed to this Agreement and comprising, inter alia: (i) a draft copy
of the Company's Form 10-KSB Annual Report for the eight fiscal years ended
October 31, 1998; (ii) audited financial statements for the five fiscal years
ended October 31, 1995; (iii) draft audited financial statements for the six
fiscal years ended October 31, 1996; (iv) the LOI; and (v) a copy of PPI's
Business Plan including three year cash flow projections and assumptions. The
Subscriber also fully understands this Agreement and the risks associated with
this offering, the Company's complete lack of operating history since 1990, and
confirms that all documents, records and books pertaining to the Subscriber's
investment in the Units and requested by the Subscriber have been made available
or delivered to the Subscriber by the Company;
(e) The Subscriber hereby specifically acknowledges and
accepts that the Subscriber is fully aware of the following HIGH RISK FACTORS:
(i) The Company is a "shell corporation" with no
operations since 1990;
(ii) The Company is presently delinquent in its
reporting obligations under the 34 Act and has been so delinquent since 1991;
(iii) Unless the Company becomes current under the 34
Act, the Subscriber will not be able to take advantage of Rule 144 under the
Act, as a means of selling the Shares;
(iv) Even if the Company is successful in becoming
current in its reporting obligations under the 34 Act, the Subscriber will be
unable to take advantage of Rule 144 under the Act, as a means of selling the
Shares until and unless the Subscriber has held the Shares for 12 months;
(v) There is currently no market for the Shares.
Although the Company intends to initiate a trading market in the shares of the
Company's common stock following the closing of the Reorganization, there can be
absolutely no assurance thereof;
(vi) There can be no assurance whatsoever that the
Company will be successful in consummating the Reorganization with PPI or that
even if the Reorganization is completed, that PPI will be successful in
implementing its proposed Internet based business plan;
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(vii) Even if the Reorganization is completed, there
can be no assurance that PPI, a development stage company without income from
operations, will be successful in implementing its proposed Internet business
plan without the need for additional capital to satisfy its projected working
capital needs through the next 12 months. The failure of PPI to raise the
requisite capital may have a material adverse effect upon the value of the
Shares and its ability to remain in business.
(viii) As of the closing of the Reorganization and
the Company's acquisition of PPI, the Company will succeed to the business of
PPI. PPI must be considered as a start up company. A purchaser of the Shares
should be aware of the difficulties, delays and expenses normally encountered by
a start up operation. Furthermore, there can be no assurance that PPI's proposed
Internet business plans as described in the exhibits annexed hereto will either
materialize or prove successful. Accordingly, there can be no assurance that PPI
will ever operate profitably.
(ix) For all of the reasons set forth above, the
Subscriber should be prepared to lose his entire investment in the Units.
(f) The Subscriber has had an opportunity to ask questions of
and receive answers from the Company or a person or persons acting on its
behalf, concerning the terms and conditions of this investment and confirms that
all documents, records and books pertaining to the investment in the Units and
requested by the Subscriber has been made available or delivered to the
Subscriber;
(g) The Subscriber will be acquiring the Shares solely for the
Subscriber's own account, for investment and are not with a view to or for the
resale, distribution, subdivision or fractionalization thereof; and the
Subscriber has no present plans to enter into any such contract, undertaking,
agreement or arrangement;
(h) The funds tendered to the Company in payment of the Units
subscribed for hereby belong to the Subscriber, and no other individual or
entity has any interest in such funds. Furthermore, and regardless of the nature
of such funds (i.e., whether in cash, personal, cashiers, bank or certified
check) the same represent legal income of the Subscriber;
(i) The Subscriber understands that the Shares must be held
for a minimum of 12 months prior to any public sale thereof;
(j) The Subscriber understands that the Company is under no
obligation to register the Shares under the Act or to comply with the
requirements for any exemption which might otherwise be available, or to supply
the Subscriber with any information necessary to enable the Subscriber to make
routine sales of the Shares under Rule 144 or any other rule of the Rules and
Regulations of the Securities and Exchange Commission adopted under the Act;
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(k) The Subscriber's compliance with the terms and conditions
of this Agreement will not conflict with any instrument or agreement pertaining
to the Units or the Shares or the transactions contemplated herein; and will not
conflict in, result in a breach of, or constitute a default under any instrument
to which the Subscriber is a party or the Units or the Shares is the subject;
(l) The Subscriber will seek his own legal and tax advice
concerning tax implications attendant upon the purchase of the Units and
understands and accepts that the Company is relying upon this representation
insofar as disclosure of tax matters is concerned;
(m) The Subscriber hereby acknowledges and represents that the
Subscriber is aware of the following:
(i) The Units are speculative investments which
involve a high degree of risk; and
(ii) The closing of the Reorganization is
specifically conditioned upon the Company satisfying all of the conditions
precedent set forth in the LOI including the preparation of audited financial
statement, the filing of all delinquent 34 Act filings, and the sale of all of
the Units by April 1, 1999. There can be no assurance that the Company will be
able to satisfy the conditions precedent by April 1, 1999.
The foregoing representations and warranties are true and accurate as
of the date hereof and shall be true and accurate as of the date of delivery of
the subscription to the Company and shall survive such delivery. If, in any
respect, such representations and warranties shall not be true and accurate, the
Subscriber shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
6. RESPONSIBILITY. The Company or its officers and directors shall not
be liable, responsible or accountable in damages or otherwise to Subscriber for
any act or omission performed or omitted by them in good faith and in a manner
reasonably believed by them to be within the scope of the authority granted to
them by this Agreement and in the best interests of the Company provided they
were not guilty of gross negligence, willful or wanton misconduct, fraud, bad
faith or any other breach of fiduciary duty with respect to such acts or
omissions.
7. MISCELLANEOUS.
(a) This Agreement shall be deemed to have been made in and
shall be governed by and interpreted under and construed in all respects in
accordance with the laws of the State of New Jersey, irrespective of the place
of domicile or residence of any party. In the event of a controversy arising out
of the interpretation, construction, performance or breach of this Agreement,
the Company and the Subscriber hereby agree
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and consent to the jurisdiction and venue of the Superior Court of the State of
New Jersey, Xxxxxx County and/or the United States District Court for the
District of New Jersey; and further agree and consent that personal service or
process in any such action or proceeding outside of the State of New Jersey and
Xxxxxx County shall be tantamount to service in person within the State of New
Jersey and Xxxxxx County and shall confer personal jurisdiction and venue upon
either of the said courts.
(b) The Company and the Subscriber hereby covenant that this
Agreement is intended to and does contain and embody herein all of the
understandings and Agreements, both written or oral, of the Company and the
Subscriber with respect to the subject matter of this Agreement, and that there
exists no oral agreement or understanding, express or implied liability, whereby
the absolute, final and unconditional character and nature of this Agreement
shall be in any way invalidated, empowered or affected. There are no
representations, warranties or covenants other than those set forth herein.
(c) The headings of this Agreement are for convenient
reference only and they shall not limit or otherwise affect the interpretation
or effect of any terms or provisions hereof.
(d) This Agreement shall not be changed or terminated orally
except as set forth herein. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by and
against the successors and assigns of the Company and the heirs, executors,
administrators and assigns of the Subscriber.
(e) In addition to the investment representations made by the
Subscriber in Paragraph 5 of this Agreement, the Subscriber hereby agrees that
simultaneously with the execution of this Agreement, he will execute and deliver
to the Company the form of Investment Letter attached hereto. The Subscriber
hereby consents to the issuance by the Company of a stop transfer order against
any and all certificates representing the Shares on the books and records of the
Company and/or its transfer agent.
(f) A modification or waiver of any of the provisions of this
Agreement shall be effective only if made in writing and executed with the same
formality as this Agreement. The failure of either the Company or the Subscriber
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature, or of any other nature or kind.
8. BLUE SKY STATEMENTS.
(a) FOR NEW YORK RESIDENTS ONLY. The Subscriber agrees that
this Unit (or Shares) is being purchased for my own account for investment, and
not for distribution or resale to others. The Subscriber represents that the
Subscriber has adequate means of providing for the Subscriber's current needs
and possible personal contingencies, and that the Subscriber has no need for
liquidity of this investment.
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It is understood that all documents, records and books pertaining to
this investment have been made available for inspection by the Subscriber and/or
any representative thereof, and that the books and records of the Company will
be available upon reasonable notice, for inspection by Subscriber during
reasonable business hours at the Company's principal place of business. The
Attorney General of the State of New York does not pass upon or endorse the
merits of this or any private offering. Any representation to the contrary is
unlawful.
(b) FOR NEW JERSEY RESIDENTS ONLY. The Subscriber hereby
acknowledges to the New Jersey Bureau of Securities (the "Bureau") that the
Subscriber intends to purchase the Units in the Company on or before the
Termination Date. The Subscriber further acknowledges that the Subscriber is
aware that the Units are not registered with the Bureau and that the Bureau has
not passed upon or endorsed the merits of this offering.
The Subscriber warrants to the Bureau that the Subscriber shall not
promote, offer for sale, sell or otherwise transfer the securities at any time
unless they are registered with or expressly exempt from registration by the
Bureau.
THE SUBSCRIBER HEREBY REPRESENTS, WARRANTS, AGREES AND ACKNOWLEDGES
THAT THE SUBSCRIBER HAS RECEIVED, READ, UNDERSTOOD AND IS FAMILIAR WITH THE
RISKS ASSOCIATED WITH THE SUBSCRIBER'S INVESTMENT IN THE COMPANY AS SET FORTH IN
THIS AGREEMENT AND THE OFFERING PURSUANT TO WHICH THIS SUBSCRIPTION IS BEING
MADE. THE SUBSCRIBER FURTHER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN THIS
AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE TO IT, OR TO ITS
ADVISORS, BY THE COMPANY, OR BY ANY PERSON ACTING ON BEHALF OF THE COMPANY, WITH
RESPECT TO THE SHARES, THE PROPOSED BUSINESS OF THE COMPANY, THE DEDUCTIBILITY
OF ANY ITEM FOR TAX PURPOSES, AND/OR THE ECONOMIC, TAX, OR ANY OTHER ASPECTS OR
CONSEQUENCES OF A PURCHASE OF A UNIT AND/OR ANY INVESTMENT IN THE COMPANY, AND
THAT IT HAS NOT RELIED UPON ANY INFORMATION CONCERNING THE OFFERING, WRITTEN OR
ORAL, OTHER THAN THAT CONTAINED IN THIS AGREEMENT.
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9. APPLICATION FOR INDIVIDUAL SUBSCRIBERS. The Subscriber hereby offers
to purchase and subscribe to _____ Units and encloses payment of $25,000 per
Unit or an aggregate investment of $___________.
SIGNATURE PAGE
For Individuals
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Signature of Individual Subscriber
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Name of Individual Subscriber
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(Print) Xxxxxx Xxxxxxx - Xxxxxxxxx
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(Xxxxx) Xxxx, Xxxxx and Zip Code
Social Security Number:
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AGREED TO AND ACCEPTED:
As of April 12, 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ XXXXX X. XXXX
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Xxxxx X. Xxxx, President
BY: /s/ XXXXX X. XXXX
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Xxxxx X. Xxxx, President
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