CREDIT ONE FINANCIAL, INC.
SUBSCRIPTION AGREEMENT
AND INVESTMENT REPRESENTATION
SECTION 1
1.1 Subscription.
The undersigned, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase 1,800,000 shares (the "Shares") of the
common stock (the "Common Stock") of Credit One Financial Inc., a Florida
corporation (the "Company") in a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act").
1.2 Purchase of Shares.
The undersigned understands and acknowledges that the purchase price to
be remitted to the Company in exchange for the Shares shall be Ninety Thousand
Dollars ($90,000) or $0.05 per Share. The Company shall deliver the Shares to
the undersigned promptly after the acceptance of this Subscription Agreement by
the Company.
SECTION 2
Closing. The closing (the "Closing") of the purchase and sale of the
Shares, shall occur simultaneously with the acceptance by the Company of the
undersigned's subscription, as evidenced by the Company's execution of this
Subscription Agreement.
SECTION 3
Investor Representations and Warranties. The undersigned hereby
acknowledges, represents and warrants to, and agrees with, the Company and its
affiliates as follows:
(a) Investment Purposes. The undersigned is acquiring the Shares for
his own account as principal, not as a nominee or agent, for investment purposes
only, and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part and no other person has a direct or indirect
beneficial interest in such Shares or any portion thereof. Further, the
undersigned does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to the Shares for which the undersigned is
subscribing or any part of the Shares.
(b) Authority. The undersigned has full power and authority to enter
into this Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the undersigned.
(c) No General Solicitation. The undersigned is not subscribing for the
Shares as a result of or subsequent 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, or
any solicitation of a subscription by person previously not known to the
undersigned in connection with investment securities generally.
(d) No Obligation to Register Shares. The undersigned understands that
the Company is under no obligation to register the Shares under the Securities
Act, or to assist the undersigned in complying with the Securities Act or the
securities laws of any state of the United States or of any foreign
jurisdiction.
(e) Investment Experience. The undersigned is (i) experienced in making
investments of the kind described in this Agreement, (ii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
(iii) able to afford the entire loss of its investment in the Shares.
(f) Exemption from Registration. The undersigned acknowledges his
understanding that the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act. In furtherance thereof, in addition
to the other representations and warranties of the undersigned made herein, the
undersigned further represents and warrants to and agrees with the Company and
its affiliates as follows:
(1) The undersigned realizes that the basis for the exemption
may not be present if, notwithstanding such representations, the undersigned has
in mind merely acquiring the Shares for a fixed or determinable period in the
future, or for a market rise, or for sale if the market does not rise. The
undersigned does not have any such intention;
(2) The undersigned has the financial ability to bear the
economic risk of his investment, has adequate means for providing for his
current needs and personal contingencies and has no need for liquidity with
respect to his investment in the Company; and
(3) The undersigned has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the prospective investment in the Shares. The undersigned also
represents it has not been organized for the purpose of acquiring the Shares;
and
(4) The undersigned has been provided an opportunity for a
reasonable period of time prior to the date hereof to obtain additional
information concerning the offering of the Shares, the Company and all other
information to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense.
(g) Economic Considerations. The undersigned is not relying on the
Company, or its affiliates or agents with respect to economic considerations
involved in this investment. The undersigned has relied solely on his own
advisors.
(h) No Other Company Representations. No representations or warranties
have been made to the undersigned by the Company, or any officer, employee,
agent, affiliate or subsidiary of the Company, other than the representations of
the Company contained herein, and in subscribing for Shares the undersigned is
not relying upon any representations other than those contained herein.
(i) Compliance with Laws. Any resale of the Shares during the
`distribution compliance period' as defined in Rule 902(f) to Regulation S shall
only be made in compliance with exemptions from registration afforded by
Regulation S. Further, any such sale of the Shares in any jurisdiction outside
of the United States will be made in compliance with the securities laws of such
jurisdiction. The Investor will not offer to sell or sell the Shares in any
jurisdiction unless the Investor obtains all required consents, if any.
(j) Regulation S Exemption. The undersigned understands that the Shares
are being offered and sold to him in reliance on an exemption from the
registration requirements of United States federal and state securities laws
under Regulation S promulgated under the Securities Act and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth herein
in order to determine the applicability of such exemptions and the suitability
of the Investor to acquire the Shares. In this regard, the undersigned
represents, warrants and agrees that:
(1) The undersigned is not a U.S. Person (as defined below)
and is an affiliate (as defined in Rule 501(b) under the Securities Act) of the
Company and is not acquiring the Shares for the account or benefit of a U.S.
Person. A U.S. Person means any one of the following:
(A) any natural person resident in the United States
of America;
(B) any partnership or corporation organized or
incorporated under the laws of the United States of America;
(C) any estate of which any executor or administrator
is a U.S. person;
(D) any trust of which any trustee is a U.S. person;
(E) any agency or branch of a foreign entity located
in the United States of America;
(F) 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;
(G) 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 United States of America; and
(H) any partnership or corporation if:
(i) organized or incorporated under the
laws of any foreign jurisdiction; and
(ii) 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.
(2) At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement, the
undersigned was outside of the United States.
(3) The undersigned will not, during the period commencing on
the date of issuance of the Shares and ending on the first anniversary of such
date, or such shorter period as may be permitted by Regulation S or other
applicable securities law (the "Restricted Period"), offer, sell, pledge or
otherwise transfer the Shares in the United States, or to a U.S. Person for the
account or for the benefit of a U.S. Person, or otherwise in a manner that is
not in compliance with Regulation S.
(4) The undersigned will, after expiration of the Restricted
Period, offer, sell, pledge or otherwise transfer the Shares only pursuant to
registration under the Securities Act or an available exemption therefrom and,
in accordance with all applicable state and foreign securities laws.
(5) The undersigned was not in the United States, engaged in,
and prior to the expiration of the Restricted Period will not engage in, any
short selling of or any hedging transaction with respect to the Shares,
including without limitation, any put, call or other option transaction, option
writing or equity swap.
(6) Neither the undersigned nor or any person acting on his
behalf has engaged, nor will engage, in any directed selling efforts to a U.S.
Person with respect to the Shares and the Investor and any person acting on his
behalf have complied and will comply with the "offering restrictions"
requirements of Regulation S under the Securities Act.
(7) The transactions contemplated by this Agreement have not
been pre-arranged with a buyer located in the United States or with a U.S.
Person, and are not part of a plan or scheme to evade the registration
requirements of the Securities Act.
(8) Neither the undersigned nor any person acting on his
behalf has undertaken or carried out any activity for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States, its territories or possessions, for any of the Shares. The
undersigned agrees not to cause any advertisement of the Shares to be published
in any newspaper or periodical or posted in any public place and not to issue
any circular relating to the Shares, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its territories, and only in compliance with any local
applicable securities laws.
(9) Each certificate representing the Shares shall be endorsed
with the following legends, in addition to any other legend required to be
placed thereon by applicable federal or state securities laws:
(A) "THE SECURITIES ARE BEING OFFERED TO INVESTORS
WHO ARE NOT U.S. PERSONS (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES
ACT")) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED
UNDER THE SECURITIES ACT."
(B) "TRANSFER OF THESE SECURITIES IS PROHIBITED,
EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT
TO AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
(10) The undersigned consents to the Company making a notation
on its records or giving instructions to any transfer agent of the Company in
order to implement the restrictions on transfer of the Shares set forth in this
Section 2.
(k) Accredited Investor. The undersigned is an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations under the
Securities Act by reason of the fact that the undersigned is the Chief Executive
Officer and a director of the Company.
(l) Potential Loss of Investment; Risk Factors. The undersigned
understands that an investment in the Shares is a speculative investment which
involves a high degree of risk and the potential loss of his entire investment.
SECTION 4
4.1 Indemnity. The undersigned agrees to indemnify and hold harmless the
Company, its officers and directors, employees and its affiliates and their
respective successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the undersigned to
comply with any covenant or agreement made by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.
4.2 Modification. Neither this Agreement nor any provisions hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
4.3 Notices. Any notice, demand or other communication which any party hereto
may be required, or may elect, to give to anyone interested hereunder shall be
sufficiently given if (a) deposited, postage prepaid, in a United States mail
letter box, registered or certified mail, return receipt requested, addressed to
such address as may be given herein, or (b) delivered personally at such
address.
4.4 Counterparts. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts and by facsimile, and each of
such counterparts shall, for all purposes, constitute one agreement binding on
all parties, notwithstanding that all parties are not signatories to the same
counterpart. Signatures may be facsimiles.
4.5 Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligation of the undersigned shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.
4.6 Entire Agreement. This Agreement and the documents referenced herein contain
the entire agreement of the parties and there are no representations, covenants
or other agreements except as stated or referred to herein and therein.
4.7 Assignability. This Agreement is not transferable or assignable by the
undersigned.
4.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of law principles.
4.9 Pronouns. The use herein of the masculine pronouns "him" or "his" or similar
terms shall be deemed to include the feminine and neuter genders as well and the
use herein of the singular pronoun shall be deemed to include the plural as
well.
4.10 Further Assurances. Upon request from time to time, the undersigned shall
execute and deliver all documents, take all rightful oaths and do all other acts
that may be necessary or desirable, in the reasonable opinion of the Company or
its counsel, to effect the subscription for the Shares in accordance herewith.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on 5th
day of September, 2006.
/s/ Xxx Xxxx
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XXX XXXX
CREDIT ONE FINANCIAL, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
