xXXXXXXXXXX.XXX, INC.
SUBSCRIPTION AGREEMENT
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1. General:
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This Subscription Agreement sets forth the terms under which
the undersigned investor, ________________________________________ (the
"Investor"), will invest $______ as evidenced by a Convertible Debenture (the
"Debenture") of xXXXXXXXXXX.XXX, INC., a Nevada corporation (the "Company").
The Company is offering the Debenture to a suitable Investor
pursuant to Rules 504, 505 or 506 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended. Execution of this Subscription Agreement by
the Investor shall constitute an offer by the Investor to subscribe for the
Debenture on the terms and conditions specified herein. The Company reserves the
right to accept or reject such subscription offer. If the Investor's offer is
accepted, the Company will execute this Subscription Agreement and issue the
Debenture. If the Investor's offer is rejected, the payment accompanying this
Subscription Agreement will be returned to the Investor, with no interest
thereon, together with a notice of rejection.
2. Acceptance of Subscription Agreement:
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It is understood and agreed by the undersigned that the
Company will have the unconditional right to reject this subscription, in whole
or in part, if it believes that the undersigned is not a qualified purchaser
under Regulation D promulgated under the Securities Act of 1933, as amended, or
for any other reason.
3. Investor's Representations, Warranties and Covenants:
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The Investor represents, warrants and covenants to the Company
as follows:
a. He acknowledges that he has been furnished with and has
been given access to all underlying documents in connection with this
transaction as well as such other information as he deems necessary or
appropriate as a prudent and knowledgeable investor in evaluating his investment
in the Debenture. He further acknowledges that the Company has given him the
opportunity to obtain additional information and to evaluate the merits and
risks of his investment. He acknowledges that he has had the opportunity to ask
questions of, and receive satisfactory answers from, the officers and directors
of the Company concerning the terms and conditions of the offering.
b. He acknowledges that this transaction has not been
scrutinized by the United States Securities and Exchange Commission (the 'SEC")
or by any state securities commissions.
c. He has adequate means of providing for his current
and future needs and foreseeable personal contingencies, and has no need for
liquidity of his investment in the Debenture.
d. He can bear the economic risk of losing his entire
investment in the Debenture.
e. He is acquiring the Debenture for his own account, for
investment only and not with a view toward the resale, fractionalization,
division or distribution thereof and he has no present plans to enter into any
contract, undertaking, agreement or arrangement for any such resale,
distribution, division or fractionalization thereof.
f. He does not have an overall commitment to investments that
are not readily marketable, including the Debenture and other similar
investments, disproportionate to his net worth or gross income.
g. He understands that the offer and sale of the Debenture is
being made by means of a private placement of Debentures to a small group of
prospective investors and that he has read or reviewed and is familiar with this
Subscription Agreement.
h. He was previously informed that all documents, records and
books pertaining to this investment were at all times available at the offices
of the Company, 0000 Xxx. 00 X., Xxxxx 000, Xxxx Xxxxxx, XX 00000; that all such
documents, records and books pertaining to this investment requested by the
Investor have been made available to him and any persons he has retained to
advise him; and that he has no questions concerning any aspect of the investment
for which he has not previously received satisfactory answers.
i. He and his agents or advisers have 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 Subscription
Agreement and the transactions contemplated hereby and thereby, as well as the
affairs of the Company and related matters.
j. He has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to in
subparagraph (i) hereof.
k. HE UNDERSTANDS THAT THE COMPANY HAS A LIMITED FINANCIAL AND
OPERATING HISTORY AND THAT THE COMPANY HAS INCURRED OPERATING LOSSES AND IS
CURRENTLY OPERATING AT A LOSS.
l. HE UNDERSTANDS THAT THE DEBENTURE IS A SPECULATIVE
INVESTMENT WHICH INVOLVES A HIGH DEGREE OF RISK OF LOSS BY HIM OF HIS ENTIRE
INVESTMENT.
m. He understands all aspects of this investment and the risks
associated therewith, or have consulted with his own financial adviser who has
advised with respect to this investment and neither he nor his advisor, if any,
has any further questions with respect thereto.
n. He is knowledgeable and experienced in financial
and business matters. He and/or his financial or business advisers, if any, are
capable of evaluating the merits and risks of an investment in the Debenture.
o. All information which he has provided to the Company
concerning his financial position and knowledge of financial and business
matters is correct and complete as of the date set forth at the end of this
Subscription Agreement, and if there should be any material change in such
information prior to acceptance of this Subscription Agreement by the Company,
he will immediately provide the Company with such information.
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p. He is purchasing the Debenture without relying on any
offering literature or prospectus other than the information set forth herein,
information furnished by the Company and the information incorporated herein by
reference. The Company has furnished him with copies of the term sheet
summarizing the terms of the Debentures, and the Company's Quarterly Report on
Form 10-QSB as filed with the SEC on June 14, 2001. In addition to the foregoing
documents, the Company incorporates by reference all filings it has made with
the SEC. The complete forms of such filings are available for review at
xxx.xxx.xxx, or may be obtained from the Company at the address shown above.
q. He is a bona fide resident of the State of
___________________, maintains his principal residence there, and is at least
eighteen (18) years of age.
r. If he is executing this Subscription Agreement on behalf of
a corporation, partnership, trust or other entity, he has been duly authorized
by such entity to execute this Subscription Agreement and all other instruments
in connection with the purchase of the Debenture, his signature is binding upon
such corporation, partnership, trust or other entity and he represents and
warrants that such corporation, partnership, trust or other entity was not
organized for the purpose of acquiring the Debenture subscribed for pursuant to
this Subscription Agreement and that the acquisition of the Debenture is an
authorized investment of the corporation, partnership, trust or other entity.
s. This Subscription Agreement shall be binding
upon the heirs, estate, legal representatives, successors and assigns of the
undersigned.
4. Conversion, Registration and Lock-Up Provisions:
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The Debentures are subject to voluntary conversion at the
option of the Investor or the Company and mandatory conversion under certain
circumstances, all as described in the Debenture. The Investor has certain
registration rights with respect to the shares of the Company's Common Stock
received by the Investor upon conversion of the Debenture, as described in the
Debenture.
5. Responsibility and Indemnification:
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The Company will exercise its best judgment in the conduct of
all matters arising under this Subscription Agreement. The undersigned
acknowledges that he understands the meaning and legal consequences of the
representations and warranties contained herein, and he hereby agrees to
indemnify and hold harmless the Company, its officers, directors, shareholders
and employees, and any of their affiliates and their officers, directors,
shareholders and employees, or any professional advisor or entity thereto, from
and against any and all loss, damage, liability or expense, including costs and
reasonable attorney's fees, to which said entities and persons may be put or
which they may incur by reason of, or in connection with, any misrepresentation
made by the Investor, any breach of any of his warranties, or his failure to
fulfill any of his covenants or agreements under this Subscription Agreement.
6. Company Solely Responsible for Disclosure;
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No Independent Review or Opinions.
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The Company has assumed sole responsibility for compliance
with the disclosure requirements of federal and state securities laws in
connection with the offer and sale of the Debenture. No law firm, accounting
firm, securities broker/ dealer or other third party has conducted any due
diligence review of the Company and its business and affairs or any disclosures
with respect thereto, written or oral, made by the Company or others. The
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Company's law firm has not rendered any legal opinions concerning any aspect of
the Company's business and affairs, including but not limited to, the validity
or enforceability of any contracts, agreements, obligations or security
interests related to an investment in the Company. By execution of this
Subscription Agreement, the undersigned acknowledges that the Company is solely
responsible for all disclosures to potential Investors concerning the Company
and its business and affairs and that the Company's law firm has rendered no
legal opinions described above. For value received, the undersigned does hereby
release the Company's law firm and its officers, directors, shareholders and
employees from any claim, loss, liability or damage with respect to the
foregoing.
7. Survival of Representations, Warranties, Covenants and
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Agreements:
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The representations, warranties, covenants and agreements
contained herein shall survive the delivery of, and the payment for, the
Debenture.
8. Notices:
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Any and all notices, designations, consents, offers,
acceptances or any other communication provided for herein shall be given in
writing by registered or certified mail which shall be addressed to, in the case
of the Company, 0000 Xxx. 00 X., Xxxxx 000, Xxxx Xxxxxx, Xxxxxxx 00000, and in
the case of the Investor, to the address set forth in this Subscription
Agreement.
9. Miscellaneous:
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This Subscription Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida, both
substantive and remedial. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Subscription Agreement, the Debenture, or any other
agreement referred to herein or delivered in connection with this investment.
This Subscription Agreement shall be enforceable in accordance with its terms
and be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns, executors and administrators, but this
Subscription Agreement and the respective rights and obligations of the parties
hereunder shall not be assignable by any party hereto without the prior written
consent of the other. This Subscription Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof; supersedes all prior negotiations, letters and
understandings relating to the subject matter hereof; and cannot be amended,
supplemented or modified except by an instrument in writing signed by the party
against whom enforcement of any such amendment, supplement or modification is
sought. In the event of any litigation between the parties to this Subscription
Agreement relating to, or arising out of, this Subscription Agreement, the
prevailing party shall be entitled to an award of reasonable attorney's fees and
costs, whether incurred before, during or after trial or at the appellate level.
The failure or finding of invalidity of any provision of this Subscription
Agreement shall in no manner affect the right to enforce the other provisions of
same, and the waiver by any party of any breach of any provision of this
Subscription Agreement shall not be construed to be a waiver by such party of
any subsequent breach of any other provision.
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10. Subscription Amount and Payments:
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Investor hereby subscribes for the herein described
Convertible Debenture in the amount of $______________ and tenders to the
Company the Investor's check payable to the order of xXXXXXXXXXX.XXX, INC.
11. THE UNDERSIGNED HEREBY REPRESENTS THAT HE HAS READ THIS ENTIRE
SUBSCRIPTION AGREEMENT AND THE RELATED PRIVATE PLACEMENT MEMORANDUM.
12. Suitability Questions:
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Please answer completely all the following suitability
questions.
a. I am an Accredited Investor because I meet one of the
following standards:
_____ (i) An individual whose individual net worth or joint net
worth with that individual's spouse, exceeds $1,000,000 (including the
value of homes, home furnishings and personal automobiles).
_____ (ii) Natural person(s) who had an income in excess of
$200,000 (individual) or $300,000 (joint) in each of the years 1999
and 2000 and who reasonably expects an income in excess of $200,000
(individual) or $300,000 (joint) in 2001. For purposes of this
offering, individual income shall equal adjusted income, as reported
in the Investor's federal tax return, increased by the following
amounts: (i) the amount of any tax exempt interest received, (ii) the
amount of losses claimed as a limited partner in a limited
partnership, (iii) any deduction claimed for depletion, (iv) amounts
contributed to an XXX or Xxxxx retirement plan, (v) alimony paid, and
(vi) any amount by which income from long-term capital gains has been
reduced in arriving at adjusted gross income pursuant to the
provisions of Section 1202 of the Internal Revenue Code. For the
individual test, income related to a spouse is excluded.
___ (iii) Employee Benefit Plan which has total assets in excess
of $5,000,000.
___ (iv) A Self-Directed Plan with investment decisions made
solely by persons that are accredited investors.
___ (v) A Trust with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as described in
Rule 506(b) (2) (ii) of the Securities Act.
___ (vi) Any entity in which all of the equity owners are
accredited investors.
b. Do you think you have sufficient knowledge of the Company to
evaluate the risks associated with investing in the Debenture?
Yes_____ No_____ If you answered No - why?
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c. If you answered "No" to the preceding question, do you have an
Investment Advisor or Purchaser Representative upon whom you rely for investment
advice?
Yes_____ No_____ If so, please provide his name and address
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d. Do you understand the nature of the investment in the
Debenture and the risks involved?
Yes_____ No_____
e. Do you understand that you will not be able to resell the
Debenture which you purchase or the underlying shares of Common Stock into which
the Debenture is convertible, unless you do so in an exempt transaction or
unless you, or the Company, take steps to register them under the federal
Securities Act of 1933 and applicable state securities laws?
Yes_____ No_____
f. Do you understand that there is no assurance of any financial
return on this investment and that you run the risk of losing your entire
investment?
Yes_____ No_____
g. Are you aware that you have the opportunity to inspect the
Company's financial records, legal documents, and other records?
Yes_____ No_____ Did you do so? Yes____ No____
h. Do you understand that this investment is illiquid?
Yes_____ No_____
i. Are you acting for your own account?
Yes_____ No_____ If No, complete the following:
(1) Capacity in which you are acting (agent, trustee or
otherwise):_____________________________________________________________
(2) Name, address and telephone number(s) of person(s) you
represent:______________________________________________________________
(3) Nature of evidence of authority attached:
______________________________________________________________
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this ___ day of June 2001.
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Print Name:________________________
TYPE OF OWNERSHIP (Check One)
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___ INDIVIDUAL OWNERSHIP ___ COMMUNITY PROPERTY (One
(One Signature Required) Signature Required if Interest in
One Name, Two Signatures Required
if Interest Held in Both Names)
___ JOINT TENANTS WITH RIGHT ___ TENANTS IN COMMON (Both
OF SURVIVORSHIP (Both or or all Parties Must Sign)
all Parties Must Sign)
___ PARTNERSHIP (Please ___ GRANTOR TRUST
Include a Copy of the
Partnership Agreement
Authorizing Signature)
___ CORPORATION (Please In- ___ CUSTODIAN
include Certified Cor-
porate Resolution
Authorizing Signature)
___ PROFIT SHARING PLAN ___ PENSION PLAN
___ XXX ___ XXXXX
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WITNESSES:
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Print Name:_____________________ Investor Signature
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Print Name:_____________________ Print or Type Name
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Social Security Number
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Street Address
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City, State and Zip
SUBSCRIPTION ACCEPTED:
xXXXXXXXXXX.XXX, INC., a Nevada corporation
By:____________________________
Xxxx Xxxxxx, President
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