EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made as of this 19th
day of June, 2006, by and among Alternative Energy Sources, Inc., a Delaware
corporation (the "Company"), Xxxxxx Energy, Inc., a Delaware corporation
("Xxxxxx") and the investor identified on the signature page to this Agreement
(the "Investor").
RECITALS:
WHEREAS, the Company and Xxxxxx have agreed to enter into an Agreement
and Plan of Merger and Reorganization, pursuant to which Xxxxxx Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Company, will
merge with and into Xxxxxx, with Xxxxxx being the surviving entity and a
wholly-owned subsidiary of the Company (the "Merger"), upon the effective date
of the Merger (the "Merger Effective Date");
WHEREAS, as a condition to the consummation of the Merger, and to
provide the capital required by Xxxxxx for working capital purposes, the Company
is offering in compliance with Rule 506 of Regulation D of the Securities Act of
1933, as amended (the "Securities Act"), to accredited investors in a private
placement transaction (the "Offering"), a minimum (the "Minimum") of 5,000,000
units (the "Units") and a maximum (the "Maximum") of 10,000,000 Units, each Unit
consisting of one share of the Company's common stock, par value $0.0001 per
share ("Common Stock") and a warrant (the "Investor Warrants") to purchase one
share of Common Stock for five years at the exercise price of $2.00 per share of
Common Stock; par value $0.0001 per share;
WHEREAS, in the event the Offering is over subscribed and the Maximum
amount is sold to Investors on the Closing Date, the Company shall have the
right, in its discretion, to sell an additional 2,000,000 Units at the Purchase
Price (as defined below) in the 30 day period following the Closing Date;
WHEREAS, the Investor desires to subscribe for, purchase and acquire
from the Company and the Company desires to sell and issue to the Investor the
number of Units, set forth on the signature page of this Agreement (the
"Investor's Units") upon the terms and conditions and subject to the provisions
hereinafter set forth;
WHEREAS, in connection with the purchase of the Investor's Units, the
Company and the Investor will execute a Registration Rights Agreement dated as
of the same date as this Agreement pursuant to which the Company will provide
certain registration rights to the Investor (the "Registration Rights
Agreement"); and
WHEREAS, the Company, Xxxxxx and McGuireWoods LLP (the "Escrow Agent")
have entered into an Escrow Agreement (the "Escrow Agreement") to provide for
the safekeeping of funds received and documents executed in connection with the
Offering.
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby, the parties hereto agree as follows:
1. Purchase and Sale of the Units. Subject to the terms and conditions
of this Agreement and the satisfaction of the Closing Conditions, the Investor
subscribes for and agrees to purchase and acquire from the Company and the
Company agrees to sell and issue to the Investor the Investor's Units at the
purchase price of $1.00 per share (the "Purchase Price").
2. The Closing. The Offering will terminate upon the earlier of i) the
receipt of acceptable subscriptions totaling $10,000,000 or such greater amount
as the Company may determine, or ii) the election of the Company upon receipt of
subscriptions totaling at least $5,000,000; provided however, that the initial
closing of the Offering shall be concurrent with the close of the Merger (the
"Closing Date") at the offices of the Escrow Agent. On the Closing Date, the
Escrow Agent shall deliver the funds and Transaction Documents (as defined
herein) held in escrow as of the Closing Date pursuant to the terms of the
Escrow Agreement. As soon as practicable after the Closing Date, the Company
shall issue and deliver, or shall cause the issuance and delivery of, a stock
certificate, registered in the name of the Investor and representing the shares
of Common Stock underlying the Investor's Units and an Investor Warrant
registered in the name of the Investor representing the Investor's right to
purchase the number of shares of Common Stock underlying the Investor's Warrant.
3. Subscription Procedure. To complete a subscription for Units, the
Investor must fully comply with the subscription procedure provided in this
Section on or before 5:00 p.m. eastern time on the Closing Date.
(a) Transaction Documents. Prior to 5:00 p.m. eastern time on the
Closing Date, the Investor shall review, complete and execute this Agreement,
the Investor Questionnaire attached hereto as Appendix A and the Registration
Rights Agreement, and deliver such agreements and questionnaire to the Escrow
Agent at the address provided below. Executed agreements and questionnaires may
be delivered to the Escrow Agent by facsimile using the facsimile number
provided below if the Investor immediately thereafter confirms receipt of such
transmission with the Escrow Agent and delivers the original copies of the
agreements and questionnaire to the Escrow Agent as soon as practicable
thereafter.
Escrow Agent - Mailing Address and Facsimile Number:
McGuireWoods LLP
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
Telephone Number: (000) 000-0000
(b) Purchase Price. Simultaneously with the delivery of the
Transaction Documents to the Escrow Agent as provided herein, and in any event
on or prior to 5:00 p.m. eastern time on the Closing Date, the Investor shall
deliver to the Escrow Agent the full Purchase Price for the Investor's Units by
wire transfer of immediately available funds pursuant to wire transfer
instructions provided below:
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Escrow Agent - Wire Transfer Instructions:
BANK OF AMERICA - Jacksonville, FL
ABA: 000000000 (Domestic Wires)
Swift Code: XXXXXX0X (International Wires)
Credit: McGuireWoods LLP IOLTA Account
Account Number: 2101206537
Reference: Xxxxx Xxxxx -Alternative Energy Sources, Inc.
Escrow - 2048362-0001
McGuireWoods Accounting Contact: Xxxxx Xxxxx (000) 000-0000
Bank Contact: Xxxxxxx Xxxxx (000) 000-0000, Opt. 2, Ext. 2160
(c) Purchaser Representative. If the Investor has retained the
services of a purchaser representative to assist in evaluating the merits and
risks associated with investing in the Units, the Investor must deliver along
with the Transaction Documents a purchaser representative certificate in a form
acceptable to the Company.
4. Representations and Warranties of the Company and Xxxxxx. In order
to induce the Investor to enter into this Agreement, the Company and, as
applicable, Xxxxxx represent and warrant to the Investor the following:
(a) Authority. The Company and Xxxxxx each is an entity duly
organized, validly existing, and in good standing under the laws of the state in
which it was incorporated or otherwise formed, and has all requisite right,
power, and authority to execute, deliver and perform this Agreement.
(b) Subsidiaries. The Company has no direct or indirect
subsidiaries (each a "Subsidiary" and collectively the "Subsidiaries") other
than those set forth in the Exchange Act Documents (as defined in Section 3(f)),
or as are necessary or desirable to consummate the Merger and the transactions
contemplated in the Merger Agreement. Except as disclosed in the Exchange Act
Documents, the Company owns, directly or indirectly, all of the capital stock of
each Subsidiary free and clear of any and all liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights.
(c) Enforceability. The execution, delivery, and performance of
this Agreement by the Company have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by each of
the Company and Xxxxxx, and, upon its execution by the Investor, shall
constitute the legal, valid, and binding obligation of each of the Company and
Xxxxxx, enforceable in accordance with its terms, except to the extent that its
enforceability is limited by bankruptcy, insolvency, reorganization, or other
laws relating to or affecting the enforcement of creditors' rights generally and
by general principles of equity.
(d) No Violations. The execution, delivery, and performance of
this Agreement by the Company or by Xxxxxx does not, and will not, violate or
conflict with any provision of the Company's or Xxxxxx'x respective Certificate
of Incorporation or Bylaws, or other charter documents, and does not and will
not, with or without the passage of time or the giving of notice, result in the
breach of, or constitute a default, cause the acceleration of performance, or
require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of the Company, or as applicable of
Xxxxxx, pursuant to, any material instrument or agreement to which the Company,
or Xxxxxx, is a party or by which the Company, or Xxxxxx, or its properties are
bound.
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(e) Capitalization. The authorized capital stock of the Company
consists of: 75,000,000 shares of Common Stock, of which 38,437,500 shares were
issued and outstanding as of May 22, 2006. Upon issuance in accordance with the
terms of this Agreement against payment of the Purchase Price therefore, the
shares of Common Stock underlying the Investor's Units will be duly and validly
issued, fully paid, and nonassessable and free and clear of all liens imposed by
or through the Company, and, assuming the accuracy of the representations and
warranties of the Investor and all other purchasers of Units in the Offering,
will be issued in accordance with a valid exemption from the registration or
qualification provisions of the Securities Act, and any applicable state
securities laws (the "State Acts").
(f) Exchange Act Filing. During the 12 calendar months immediately
preceding the date of this Agreement, all reports and statements required to be
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder, have been timely
filed. Such filings, together with all documents incorporated by reference
therein, are referred to as "Exchange Act Documents." Each Exchange Act
Document, as amended, conformed in all material respects to the requirements of
the Exchange Act and the rules and regulations thereunder, and no Exchange Act
Document, as amended, at the time each such document was filed, included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(g) Company Financial Statements. The audited financial
statements, together with the related notes of the Company at December 31, 2005,
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2005 as filed with the Commission (the "Company Financial
Statements"), fairly present in all material respects, on the basis stated
therein and on the date thereof, the financial position of the Company at the
respective dates therein specified and its results of operations and cash flows
for the periods then ended. Such statements and related notes have been prepared
in accordance with generally accepted accounting principles in the United States
applied on a consistent basis except as expressly noted therein.
(h) No Material Liabilities. Except for liabilities or obligations
not individually in excess of $100,000.00, or as set forth in the Exchange Act
Documents, since December 31, 2005, the Company has not incurred any material
liabilities or obligations, direct or contingent, except in the ordinary course
of business and except for liabilities or obligations reflected or reserved
against on the Company's balance sheet as of December 31, 2005, and there has
not been any change, or to the knowledge of the Company, development or effect
(individually or in the aggregate) that is or is reasonably likely to be,
materially adverse to the condition (financial or otherwise), business,
prospects, or results of operations of the Company and the Subsidiaries
considered as a whole (a "Material Adverse Effect") or any change in the capital
or material increase in the long-term debt of the Company, nor has the Company
declared, paid, or made any dividend or distribution of any kind on its capital
stock.
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(i) No Disputes Against Company. There is no material pending or,
to the knowledge of the Company, threatened (i) action, suit, claim, proceeding,
or investigation against the Company, at law or in equity, or before or by any
Federal, state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding against the Company, (iii) governmental inquiry against the Company
or (iv) any action or suit by or on behalf of the Company pending or threatened
against others.
(j) Approvals. The execution, delivery, and performance by the
Company of this Agreement and the offer and sale of the Units require no consent
of, action by or in respect of, or filing with, any person, governmental body,
agency, or official other than those consents that have been obtained prior to
the Closing and those filings required to be made pursuant to the Securities Act
and any State Acts which the Company undertakes to file within the applicable
time period.
(k) Compliance. Neither the Company nor Xxxxxx, nor any their
respective Subsidiaries, (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company nor Xxxxxx, or any of their
respective Subsidiaries under), nor has the Company nor Xxxxxx, or any of their
respective Subsidiaries received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement, or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any Court, arbitrator, or
governmental body or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. The Company is in compliance with the applicable requirements of the
Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations
thereunder, except where such noncompliance could not have or reasonably be
expected to result in a Material Adverse Effect.
(l) Patents and Trademarks. The Company and Xxxxxx, or any of
their respective Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses, and other similar rights that are necessary or material
for use in connection with their respective businesses as described in the
Exchange Act Documents and which the failure to so have could, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect (collectively, the "Intellectual Property Rights"). Neither the Company
nor Xxxxxx, or any of their respective Subsidiaries, has received a written
notice that the Intellectual Property Rights used by the Company or Xxxxxx, or
any of their respective Subsidiaries, violates or infringes upon the rights of
any person. Except as set forth in the Exchange Act Documents, to the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another person of any of the Intellectual
Property Rights, except where such infringement could not have or reasonably be
expected to result in a Material Adverse Effect.
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(m) Transactions With Affiliates and Employees. Except as set
forth in the Exchange Act Documents, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director, or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee, or partner.
(n) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company and its Subsidiaries
is made known to the Company's certifying officers by others within those
entities, particularly during the period in which the Company's Form 10-KSB or
10-QSB, as the case may be, are being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's controls and
procedures as of the end of the reporting period covered by the Company's Form
10-KSB and each of the Company's Forms 10-QSB filed with the Commission (each
such date, the "Evaluation Date") and presented in each such report their
conclusions about the effectiveness of the Company's disclosure controls and
procedures based on their evaluations as of the applicable Evaluation Date.
Since the Evaluation Date of the Company's most recently filed Form 10-KSB or
Form 10-QSB, there have been no significant changes in the Company's disclosure
controls and procedures, the Company's internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) or 15d-15(f) or, to the Company's
knowledge, in other factors that could significantly affect the Company's
internal controls over financial reporting.
(o) Solvency. Based on the financial condition of the Company as
of the Closing Date (and assuming that the Closing shall have occurred), (i) the
Company's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
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(p) Certain Fees. Other than (i) the cash commission payable on
the closing and (ii) the 600,000 shares of Common Stock to be issued on the
closing, no brokerage or finder's fees or commissions are or will be payable by
the Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank, or other person with respect to the transactions
contemplated by this Agreement. The Investor shall have no obligation with
respect to any claims (other than such fees or commissions owed by an Investor
pursuant to written agreements executed by the Investor which fees or
commissions shall be the sole responsibility of such Investor) made by or on
behalf of other persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.
(q) Certain Registration Matters. Assuming the accuracy of the
Investor's representations and warranties set forth in this Agreement and the
Transaction Documents and the representations and warranties made by all other
purchasers of Units in the Offering, no registration under the Securities Act is
required for the offer and sale of the Investor's Units by the Company to the
Investor hereunder.
(r) Listing and Maintenance Requirements. The Company is, and has
no reason to believe that it will not in the foreseeable future continue to be,
in compliance with the listing and maintenance requirements for continued
listing of the Common Stock on the NASD Over the Counter Bulletin Board.
(s) Investment Company. The Company and Xxxxxx are not, and are
not an "affiliate" of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(t) No Additional Agreements. The Company and Xxxxxx do not have
any agreement or understanding with any other purchasers of the Units in the
Offering with respect to the transactions contemplated by this Agreement on
terms that differ substantially from those set forth in this Agreement.
(u) Disclosure. The Company and Xxxxxx confirm that neither they
nor any person acting on their behalf has provided the Investor, or its agents
or counsel, with any information that the Company or Xxxxxx believes would
constitute material, non-public information following the announcement of the
Closing and the transactions contemplated thereby. The Company understands and
confirms that the Investor will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Investor regarding the Company and Xxxxxx, their respective
businesses and the transactions contemplated hereby, furnished by or on behalf
of the Company or, as applicable, Xxxxxx (including the Company's and Xxxxxx'x
representations and warranties set forth in this Agreement) are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
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5. Representations and Warranties of the Investor. In order to induce
the Company to enter into this Agreement, the Investor represents and warrants
to the Company and Xxxxxx the following:
(a) Authority. If a corporation, partnership, limited partnership,
limited liability company, or other form of entity, the Investor is duly
organized or formed, as the case may be, validly existing, and in good standing
under the laws of its jurisdiction of organization or formation, as the case may
be. The Investor has all requisite individual or entity right, power, and
authority to execute, deliver, and perform this Agreement.
(b) Enforceability. The execution, delivery, and performance of
this Agreement by the Investor have been duly authorized by all requisite
partnership, corporate or other entity action, as the case may be. This
Agreement has been duly executed and delivered by the Investor, and, upon its
execution by the Company, shall constitute the legal, valid, and binding
obligation of the Investor, enforceable in accordance with its terms, except to
the extent that its enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
(c) No Violations. The execution, delivery, and performance of
this Agreement by the Investor do not and will not, with or without the passage
of time or the giving of notice, result in the breach of, or constitute a
default, cause the acceleration of performance, or require any consent under, or
result in the creation of any lien, charge or encumbrance upon any property or
assets of the Investor pursuant to, any material instrument or agreement to
which the Investor is a party or by which the Investor or its properties may be
bound or affected, and, do not or will not violate or conflict with any
provision of the articles of incorporation or bylaws, partnership agreement,
operating agreement, trust agreement, or similar organizational or governing
document of the Investor, as applicable.
(d) Knowledge of Investment and its Risks. The Investor has
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of Investor's investment in the Units. The
Investor understands that an investment in the Company represents a high degree
of risk and there is no assurance that the Company's business or operations will
be successful. The Investor has considered carefully the risks attendant to an
investment in the Company, and that, as a consequence of such risks, the
Investor could lose Investor's entire investment in the Company.
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(e) Investment Intent. The Investor hereby represents and warrants
that (i) the Investor's Units are being acquired for investment for the
Investor's own account, and not as a nominee or agent and not with a view to the
resale or distribution of all or any part of the Investor's Units, and the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing any of the Investor's Units within the meaning of the
Securities Act, (ii) the Investor's Units are being acquired in the ordinary
course of the Investor's business, and (iii) the Investor does not have any
contracts, understandings, agreements, or arrangements, directly or indirectly,
with any person and/or entity to distribute, sell, transfer, or grant
participations to such person and/or entity with respect to, any of the
Investor's Units. The Investor is not purchasing the Investor's Units as a
result of any advertisement, article, notice or other communication regarding
the Investor's Units published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(f) Investor Status. The Investor is an "accredited investor" as
that term is defined by Rule 501 of Regulation D promulgated under the
Securities Act and the information provided by the Investor in the Investor
Questionnaire, attached hereto as Appendix A, is truthful, accurate, and
complete. The Investor is not registered as a broker-dealer under Section 15 of
the Exchange Act or an affiliate of such broker-dealer.
(g) Disclosure. The Investor has reviewed the information provided
to the Investor by the Company in connection with the Investor's decision to
purchase the Investor's Units, including the Company's publicly available
filings with the Commission and the information contained therein. The Company
has provided the Investor with all the information that the Investor has
requested in connection with the decision to purchase the Investor's Units. The
Investor further represents that the Investor has had an opportunity to ask
questions and receive answers from the Company regarding the business,
properties, prospects, and financial condition of the Company. All such
questions have been answered to the full satisfaction of the Investor. Neither
such inquiries nor any other investigation conducted by or on behalf of the
Investor or its representatives or counsel shall modify, amend, or affect the
Investor's right to rely on the truth, accuracy, and completeness of the
disclosure materials and the Company's representations and warranties contained
herein.
(h) No Registration. The Investor understands that Investor may be
required to bear the economic risk of Investor's investment in the Company for
an indefinite period of time. The Investor further understands that (i) neither
the offering nor the sale of the Investor's Units has been registered under the
Securities Act or any applicable State Acts in reliance upon exemptions from the
registration requirements of such laws, (ii) the Investor's Units must be held
by the Investor indefinitely unless the sale or transfer thereof is subsequently
registered under the Securities Act and any applicable State Acts, or an
exemption from such registration requirements is available, (iii) except as set
forth in the Registration Rights Agreement, dated as of the date hereof, between
the Company and the Investor, the Company is under no obligation to register any
of the shares of Common Stock underlying the Investor's Units on the Investor's
behalf or to assist the Investor in complying with any exemption from
registration, and (iv) the Company will rely upon the representations and
warranties made by the Investor in this Agreement and the Transaction Documents
in order to establish such exemptions from the registration requirements of the
Securities Act and any applicable State Acts.
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(i) Transfer Restrictions. The Investor will not transfer any of
the Investor's Units or the shares of Common Stock underlying the Investor's
Units or the Investor Warrants unless such transfer is registered or exempt from
registration under the Securities Act and such State Acts, and, if requested by
the Company in the case of an exempt transaction, the Investor has furnished an
opinion of counsel reasonably satisfactory to the Company that such transfer is
so exempt. The Investor understands and agrees that (i) the certificates
evidencing the shares of Common Stock underlying the Investor's Units and the
Investor's Warrants will bear appropriate legends indicating such transfer
restrictions placed upon the Units and shares of Common Stock and Investor
Warrants, (ii) the Company shall have no obligation to honor transfers of any of
the Investor's Units, Investor Warrants or shares of Common Stock underlying the
Investor's Units or Investor Warrants in violation of such transfer
restrictions, and (iii) the Company shall be entitled to instruct any transfer
agent or agents for the securities of the Company to refuse to honor such
transfers.
(j) No Solicitation. The Investor (i) did not receive or review
any advertisement, article, notice or other communication published in a
newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available, with respect to the Units or
(ii) was not solicited by any person, other than by representatives of the
Company, with respect to a purchase of the Units.
(k) Principal Address. The Investor's principal residence, if an
individual, or principal executive office, if an entity, is set forth on the
signature page of this Subscription Agreement.
6. Independent Nature of Investor's Obligations and Rights. The
obligations of the Investor under this Agreement and the Transaction Documents
are several and not joint with the obligations of any other purchaser of Units
in the Offering, and the Investor shall not be responsible in any way for the
performance of the obligations of any other purchaser of Units in the Offering
under any Transaction Document. The decision of the Investor to purchase the
Investor's Units pursuant to the Transaction Documents has been made by the
Investor independently of any other purchaser of Units in the Offering. Nothing
contained herein or in any Transaction Document, and no action taken by any
purchaser of Units pursuant thereto, shall be deemed to constitute such
purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the purchasers of Units are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Investor
acknowledges that no other purchaser of Units has acted as agent for the
Investor in connection with making its investment hereunder and that no other
purchaser of Units will be acting as agent of the Investor in connection with
monitoring its investment in the Units or enforcing its rights under the
Transaction Documents. The Investor shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other purchaser of Units to be joined as an additional party
in any proceeding for such purpose.
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7. Prospectus Delivery Requirement. The Investor hereby covenants with
the Company not to make any sale of the Investor's Units without complying with
the provisions hereof and of the Registration Rights Agreement, and without
effectively causing the prospectus delivery requirement under the Securities Act
to be satisfied (unless the Investor is selling in a transaction not subject to
the prospectus delivery requirement).
8. Shareholder Approval. The Company represents and warrants to the
Investor that a vote of the stockholders of the Company will not be required to
approve the issuance of the Investor's Units.
9. Indemnification of Investor. In addition to the indemnity provided
in the Registration Rights Agreement, the Company will indemnify and hold the
Investor and its directors, officers, shareholders, members, managers, partners,
employees and agents (each, an "Investor Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs, and
reasonable attorneys' fees and costs of investigation (collectively, "Losses")
that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach, or inaccuracy of any representation, warranty,
covenant, or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation, and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.
10. Non-Public Information. Subsequent to the Closing, the Company
covenants and agrees that neither it nor any other person acting on its behalf
will provide Investor or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto Investor shall have executed a written agreement regarding the
confidentiality and use of such information.
11. Further Assurances. The parties hereto will, upon reasonable
request, execute and deliver all such further assignments, endorsements and
other documents as may be necessary in order to perfect the purchase by the
Investor of the Investor's Units. In addition, the Company agrees that it will
do all such acts necessary to ensure that Canadian residents holding shares will
be able to trade such securities without resale restrictions under Canadian
securities legislation within four months from the Merger Effective Date,
including, if necessary, all acts in order for the Company to become a reporting
issuer in a Canadian province or territory, which may include the filing and
receipting of a prospectus by Canadian securities regulatory authorities.
12. Entire Agreement; No Oral Modification. This Agreement and the other
Transaction Documents contain the entire agreement among the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings with respect thereto and this Agreement may not be amended or
modified except in a writing signed by both of the parties hereto.
13. Binding Effect; Benefits. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, successors
and assigns; however, nothing in this Agreement, expressed or implied, is
intended to confer on any other person other than the parties hereto, or their
respective heirs, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
11
14. Counterparts. This Agreement may be executed in any number of
counterparts, for each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
15. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the United States of America and
the State of New York, both substantive and remedial, without regard to New York
conflicts of law principles. Any judicial proceeding brought against either of
the parties to this agreement or any dispute arising out of this Agreement or
any matter related hereto shall be brought in the courts of the State of New
York, New York County, or in the United States District Court for the Southern
District of New York and, by its execution and delivery of this agreement, each
party to this Agreement accepts the jurisdiction of such courts.
16. Prevailing Parties. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party shall be entitled to receive and the
nonprevailing party shall pay upon demand reasonable attorneys' fees in addition
to any other remedy.
17. Notices. All communication hereunder shall be in writing and shall
be mailed, delivered, telegraphed or sent by facsimile or electronic mail, and
such delivery shall be confirmed to the addresses as provided below:
if to the Investor:
to the address set forth on the signature page of this
Agreement
if to the Company:
Alternative Energy Sources, Inc.
00 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxx, President and Chief Executive
Officer
Facsimile: (000) 000-0000
with copy to:
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
12
if to Xxxxxx, to:
Xxxxxx Energy, Inc.
c/o McGuireWoods LLP
1345 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, President and Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
McGuireWoods LLP
1345 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
18. Headings. The section headings herein are included for convenience
only and are not to be deemed a part of this Agreement.
[SIGNATURE PAGES FOLLOW]
13
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the date first written above.
ALTERNATIVE ENERGY SOURCES, INC.
By:
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Its: President and Chief Executive Officer
[SIGNATURE PAGES OF XXXXXX AND INVESTOR FOLLOW]
14
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the date first written above.
XXXXXX ENERGY, INC.
By:
-----------------------------------------
Name: Xxxx Xxxxxx
Its: President and Chief Executive Officer
[SIGNATURE PAGE OF INVESTOR FOLLOWS]
15
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the date first written above.
INVESTOR (individual) INVESTOR (entity)
-------------------------------------- ------------------------------------
Signature Name of Entity
-------------------------------------- ------------------------------------
Print Name Signature
Address of Principal Residence:
------------------------------------- Print Name:
------------------------------------- -------------------------
------------------------------------- Title:
------------------------------
Social Security Number: Address of Executive Offices:
-------------------------------------
------------------------------------
Telephone Number:
------------------------------------- ------------------------------------
Facsimile Number: IRS Tax Identification Number:
------------------------------------- ------------------------------------
Telephone Number:
------------------------------------
Facsimile Number:
------------------------------------
X $1.00 = $
----------------- ----------------- -----------------
Number of Units Price per Unit Purchase Price
APPENDIX A
Investor Questionnaire
(See Attached)
17
