SUBSCRIPTION AGREEMENT
|
To:
|
000
Xxxx Xxxxxx Xxxxx
Xxxxx
000-000
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
Attn:
________________,
_________________
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This
Subscription Agreement (this “Agreement”)
is
being delivered to the purchaser identified on the signature page to this
Agreement (the “Subscriber”)
in
connection with its investment in Customer Acquisition Network Holdings, Inc.,
a
Delaware corporation (the “Company”).
The
Company is conducting a private placement (the “Offering”)
of
_______ shares of its common stock, par value $0.001 per share (the
“Shares”)
and
(ii) a warrant to purchase _______ shares of common stock at $2.50 per share,
(the “Warrant”)
for a
purchase price of $2.00 per Unit (the “Purchase
Price”).
The
Shares and the Warrant are collectively referred to herein as “Units”. For
purposes of this Agreement, the term “Securities”
shall
refer to the Shares, the Warrants, and the shares of common stock underlying
the
Warrants (the “Warrant
Shares”).
1. SUBSCRIPTION
AND PURCHASE PRICE
(a) Subscription.
Subject
to the conditions set forth in Section 2 hereof, the Subscriber hereby
subscribes for and agrees to purchase the number of Shares and Warrants on
the
terms and conditions described herein.
(b) Purchase
of Shares and Warrants.
The
Subscriber’s delivery of this Agreement to the Company shall be accompanied by
payment of the Purchase Price for the Shares and Warrants subscribed for
hereunder, payable in United States dollars, by wire transfer of immediately
available funds delivered contemporaneously with the Subscriber’s delivery of
this Agreement to the Company in accordance with the instructions provided
on
Exhibit
A.
The
Subscriber understands and agrees that, subject to Section 2 and applicable
laws, by executing this Agreement, it is entering into a binding
agreement.
2. ACCEPTANCE
AND CLOSING PROCEDURES
(a) Acceptance
or Rejection.
The
obligation of the Subscriber to purchase the Shares and Warrants shall be
irrevocable, and the Subscriber shall be legally bound to purchase the Shares
and Warrants subject to the terms set forth in this Agreement. The Subscriber
understands and agrees that the Company reserves the right to reject this
subscription for Shares and Warrants in whole or part, at any time prior to
the
Closing, for any reason, notwithstanding the Subscriber’s prior receipt of
notice of acceptance of the Subscriber’s subscription. In the event of rejection
of this subscription by the Company in accordance with this Section 2, or if
the
sale of the Shares and Warrants is not consummated by the Company for any
reason, this Agreement and any other agreement entered into between the
Subscriber and the Company relating to this subscription shall thereafter have
no force or effect, and the Company shall promptly return or cause to be
returned to the Subscriber the purchase price, without interest thereon or
deduction therefrom.
(b) Omitted.
(c) Closing.
The
closing shall take place at the offices of the Company at 000 Xxxx Xxxxxx Xxxxx,
Xxxxx 000-000, Xxx Xxxx, Xxx Xxxx 00000, or such other place as determined
by
the Company. The Closing shall take place on a Business Day promptly following
the satisfaction of the conditions set forth in Section 9 below, as determined
by the Company. “Business
Day”
shall
mean from the hours of 9:00 a.m. (Eastern Standard Time) through 5:00 p.m.
(Eastern Standard Time) of a day other than a Saturday, Sunday or other day
on
which commercial banks in New York are authorized or required to be closed.
The
Securities purchased by the Subscriber will be delivered by the Company promptly
following the Closing.
3. INVESTOR’S
REPRESENTATIONS AND WARRANTIES
The
Subscriber hereby acknowledges, agrees with and represents and warrants to
the
Company and its affiliates, as follows:
(a) The
Subscriber has full power and authority to enter into this Agreement, the
execution and delivery of which has been duly authorized, if applicable, and
this Agreement constitutes a valid and legally binding obligation of the
Subscriber.
(b) The
Subscriber acknowledges its understanding that the Offering and sale of the
Securities is intended to be exempt from registration under the Securities
Act
of 1933, as amended (the “Securities
Act”),
by
virtue of Section 4(2) of the Securities Act and the provisions of Regulation
D
promulgated thereunder (“Regulation
D”).
In
furtherance thereof, the Subscriber represents and warrants to the Company
and
its affiliates as follows:
(i) The
Subscriber realizes that the basis for the exemption from registration may
not
be available if, notwithstanding the Subscriber’s representations contained
herein, the Subscriber is merely acquiring the Securities for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. The Subscriber does not have any such
intention.
(ii) The
Subscriber realizes that the basis for exemption would not be available if
the
Offering is part of a plan or scheme to evade registration provisions of the
Securities Act or any applicable state or federal securities laws.
(iii) The
Subscriber is acquiring the Securities solely for the Subscriber’s own
beneficial account, for investment purposes, and not with view towards, or
resale in connection with, any distribution of the Securities.
(iv) The
Subscriber has the financial ability to bear the economic risk of the
Subscriber’s investment, has adequate means for providing for its current needs
and contingencies, and has no need for liquidity with respect to an investment
in the Company.
(v) The
Subscriber and the Subscriber’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, the “Advisors”)
has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of a prospective investment in the
Securities. If other than an individual, the Subscriber also represents it
has
not been organized solely for the purpose of acquiring the
Securities.
(vi) The
Subscriber (together with its Advisors, if any) has received all documents
requested by the Subscriber, if any, has carefully reviewed them and understands
the information contained therein, prior to the execution of this
Agreement.
(c) The
Subscriber is not relying on the Company or any of its employees, agents,
sub-agents or advisors with respect to economic considerations involved in
this
investment. The Subscriber has relied on the advice of, or has consulted with,
only its Advisors. Each Advisor, if any, is capable of evaluating the merits
and
risks of an investment in the Securities, and each Advisor, if any, has
disclosed to the Subscriber in writing (a copy of which is annexed to this
Agreement) the specific details of any and all past, present or future
relationships, actual or contemplated, between the Advisor and the Company
or
any affiliate or sub-agent thereof.
(d) The
Subscriber has carefully considered the potential risks relating to the Company
and a purchase of the Securities, and fully understands that the Securities
are
a speculative investment that involve a high degree of risk of loss of the
Subscriber’s entire investment. Among other things, the Subscriber has carefully
considered each of the risks described under the heading “Risk Factors” in the
Company’s SEC Filings (as defined in Section 4(d) below), which risk factors are
incorporated herein by reference.
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(e) The
Subscriber represents, warrants and agrees that it will not sell or otherwise
transfer the Securities without registration under the Securities Act or an
exemption therefrom, and fully understands and agrees that the Subscriber must
bear the economic risk of its purchase because, among other reasons, the
Securities have not been registered under the Securities Act or under the
securities laws of any state and, therefore, cannot be resold, pledged, assigned
or otherwise disposed of unless they are subsequently registered under the
Securities Act and under the applicable securities laws of such states, or
an
exemption from such registration is available. In particular, the Subscriber
is
aware that the Securities are “restricted securities,” as such term is defined
in Rule 144 promulgated under the Securities Act (“Rule
144”),
and
they may not be sold pursuant to Rule 144 unless all of the conditions of Rule
144 are met. The Subscriber also understands that the Company is under no
obligation to register the Securities on behalf of the Subscriber or to assist
the Subscriber in complying with any exemption from registration under the
Securities Act or applicable state securities laws. The Subscriber understands
that any sales or transfers of the Securities are further restricted by state
securities laws and the provisions of this Agreement.
(f) No
oral
or written representations or warranties have been made to the Subscriber by
the
Company or any of its officers, employees, agents, sub-agents, affiliates,
advisors or subsidiaries, other than any representations of the Company
contained herein, and in subscribing for the Shares and Warrants, the Subscriber
is not relying upon any representations other than those contained
herein.
(g) The
Subscriber’s overall commitment to investments that are not readily marketable
is not disproportionate to the Subscriber’s net worth, and an investment in the
Securities will not cause such overall commitment to become
excessive.
(h) The
Subscriber understands and agrees that the certificates for the Securities
shall
bear substantially the following legend until (i) such Securities shall have
been registered under the Securities Act and effectively disposed of in
accordance with a registration statement that has been declared effective or
(ii) in the opinion of counsel for the Company, such Securities may be sold
without registration under the Securities Act, as well as any applicable “blue
sky” or state securities laws:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
(i) Neither
the Securities and Exchange Commission (the “SEC”)
nor
any state securities commission has approved the Securities or passed upon
or
endorsed the merits of the Offering. There is no government or other insurance
covering any of the Securities.
(j) The
Subscriber and its Advisors, if any, have had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf
of
the Company concerning the Offering and the business, financial condition,
results of operations and prospects of the Company, and all such questions
have
been answered to the full satisfaction of the Subscriber and its Advisors,
if
any.
(k) The
Subscriber is unaware of, is in no way relying on, and did not become aware
of
the Offering through or as a result of, any form of general solicitation or
general advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or electronic mail over
the
Internet, in connection with the Offering and is not subscribing for Shares
and
Warrants and did not become aware of the Offering through or as a result of
any
seminar or meeting to which the Subscriber was invited by, or any solicitation
of a subscription by, a person not previously known to the Subscriber in
connection with investments in securities generally.
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(l) The
Subscriber has taken no action that would give rise to any claim by any person
for brokerage commissions, finders’ fees or the like relating to this Agreement
or the transactions contemplated hereby.
(m) The
Subscriber is not relying on the Company or any of its employees, agents, or
advisors with respect to the legal, tax, economic and related considerations
of
an investment in the Securities and the Subscriber has relied on the advice
of,
or has consulted with, only its own Advisors.
(n) The
Subscriber acknowledges that any estimates or forward-looking statements or
projections furnished by the Company to the Subscriber, were prepared by
management of the Company in good faith, but that the attainment of any such
projections, estimates or forward-looking statements cannot be guaranteed by
the
Company or its management and should not be relied upon.
(o) No
oral
or written representations have been made, or oral or written information
furnished, to the Subscriber or its Advisors, if any, in connection with the
Offering that are in any way inconsistent with the information contained
herein.
(p) (For
ERISA plans only) The fiduciary of the ERISA plan (the “Plan”)
represents that such fiduciary has been informed of and understands the
Company’s investment objectives, policies and strategies, and that the decision
to invest “plan assets” (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Subscriber or Plan
fiduciary (i) is responsible for the decision to invest in the Company; (ii)
is
independent of the Company and any of its affiliates; (iii) is qualified to
make
such investment decision; and (iv) in making such decision, the Subscriber
or
Plan fiduciary has not relied primarily on any advice or recommendation of
the
Company or any of its affiliates.
(q) This
Agreement is not enforceable by the Subscriber unless it has been accepted
by
the Company, and the Subscriber acknowledges and agrees that the Company
reserves the right to reject any subscription for any reason.
(r) The
Subscriber will indemnify and hold harmless the Company and, where applicable,
their respective directors, officers, employees, agents, advisors, affiliates
and shareholders, and each other person, if any, who controls any of the
foregoing, from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs
and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) (a “Loss”)
arising out of or based upon any representation or warranty of the Subscriber
contained herein or in any document furnished by the Subscriber to the Company
in connection herewith being untrue in any material respect or any breach or
failure by the Subscriber to comply with any covenant or agreement made by
the
Subscriber herein or therein; provided,
however,
that
such Subscriber shall not be liable for any Loss that
in
the aggregate exceeds the amount such Subscriber would receive if Subscriber
were to sell the Securities
on the
date the amount of the Loss was determined (based on the closing price of a
share of Common Stock on its principal market on such date).
(s) The
Subscriber is, and on each date on which the Subscriber continues to own
restricted securities from the Offering will be, an “Accredited Investor” as
defined in Rule 501(a) under the Securities Act. In general, an “Accredited
Investor” is deemed to be an institution with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with his or her spouse.
(t) The
Subscriber, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the Offering, and has so
evaluated the merits and risks of such investment. The Subscriber has not
authorized any person or entity to act as its Purchaser Representative (as
that
term is defined in Regulation D of the General Rules and Regulations under
the
Securities Act) in connection with the Offering. The Subscriber is able to
bear
the economic risk of an investment in the Securities and, at the present time,
is able to afford a complete loss of such investment.
(u) The
Subscriber has reviewed, or had an opportunity to review, all of the SEC
Filings.
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4. THE
COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS
The
Company hereby acknowledges, agrees with and represents, warrants and covenants
to the Subscriber, as follows:
(a) The
Company has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement has been
duly
authorized, executed and delivered by the Company and is valid, binding and
enforceable against the Company in accordance with its terms.
(b) The
Securities to be issued to the Subscriber pursuant to this Agreement, when
issued and delivered in accordance with the terms of this Agreement, will be
duly and validly issued and will be fully paid and non-assessable.
(c) Neither
the execution and delivery nor the performance of this Agreement by the Company
will conflict with the Company’s organizational materials, as amended to date,
or result in a breach of any terms or provisions of, or constitute a default
under, any material contract, agreement or instrument to which the Company
is a
party or by which the Company is bound.
(d) The
Company is subject to, and in full compliance with, the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).
The
Company has made available to each Subscriber through the XXXXX system true
and
complete copies of the Company’s Quarterly Reports on Form 10-QSB and each of
the Company’s Current Reports on Form 8-K (collectively, the “SEC
Filings”),
and
all such SEC Filings are incorporated herein by reference. The SEC Filings,
including the financial statements included therein, when they were filed with
the SEC (or, if any amendment with respect to any such document was filed,
when
such amendment was filed), complied in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder and
did not, as of such date, contain an untrue statement of a material fact or
omit
to state a material fact required to be stated therein or necessary in order
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading. All reports and statements required to be filed
by
the Company under the Securities Act and the Exchange Act have been filed,
together with all exhibits required to be filed therewith. The Company is
engaged in all material respects only in the business described in the SEC
Filings, and the SEC Filings contain a complete and accurate description in
all
material respects of the business of the Company.
(e) Any
information furnished by the Company in connection with the Offering is true
and
correct in all material respects as of its date.
(f) The
Company acknowledges and agrees that the Subscriber is acting solely in the
capacity of an arm’s length purchaser with respect to the Securities and the
transactions contemplated hereby. The Company further acknowledges that the
Subscriber is not acting as a financial advisor or fiduciary of the Company
(or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Subscriber or any of their
respective representatives or agents in connection with this Agreement and
the
transactions contemplated hereby is merely incidental to the Subscriber’s
purchase of the Shares and Warrants. The Company further represents to the
Subscriber that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(g) The
Company will indemnify and hold harmless the Subscriber and, where applicable,
its directors, officers, employees, agents, advisors and shareholders, from
and
against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against any claim,
lawsuit, administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or warranty of
the
Company contained herein or in any document furnished by the Company to the
Subscriber in connection herewith being untrue in any material respect or any
breach or failure by the Company to comply with any covenant or agreement made
by the Company to the Subscriber in connection therewith.
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5. MOST
FAVORED NATION PROTECTION
From
the
date hereof until such time as no Subscriber holds any of the Securities, in
the
event the Company issues or sells any shares of Common Stock in the Company’s
next private placement (the “Private Placement”) (or any securities of the
Company which would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt preferred stock, rights, options,
warrants or other instrument that is ant any time convertible into or
exercisable or exchangeable for, or otherwise entitled the holder thereof to
receive, Common Stock (the “Common
Stock Equivalent”)),
if a
Subscriber reasonably believes that any of the terms and conditions thereunder
are more favorable to such investors as the terms and conditions granted
hereunder, upon notice to the Company by such Subscriber the Company shall
amend
the terms of this transaction as to such Subscriber only so as to give such
Subscriber the benefit of such more favorable terms and conditions in the
Private Placement. The Subscriber shall be entitled to rely on the Company’s
representations and warranties set forth in any agreement that the Company
shall
enter into with respect to the Private Placement.
6. SUBSEQUENT
EQUITY SALES
(a) Until
the
earlier of (i) twenty-four (24) months following the Closing Date or (ii) such
date that there is an effective registration statement on file with the SEC
covering the resale of all of the Shares and Warrant Shares, in the event that
the Company issues or sells any shares of Common Stock or any Common Stock
Equivalent pursuant to which shares of Common Stock may be acquired at a price
less than $2.00 per Unit, then the Company shall promptly issue additional
shares of Common Stock to the Subscriber in an amount sufficient that the
actual price per Unit paid hereunder (which is $2.00) (the
"Per
Unit Purchase Price"),
when
divided by the total number of shares issued will result in an actual Per
Unit Purchase Price paid by the Subscriber hereunder equal to such
lower price (this is intended to be a “full ratchet” adjustment). Such
adjustment shall be made successively whenever such an issuance is made.
Notwithstanding the foregoing, this Section 6(a) shall not apply in respect
of
an Exempt Issuance.
(b)
For
purposes of this Agreement, an "Exempt Issuance" shall mean the issuance of
(i)
shares of Common Stock or options to employees, officers, directors or
consultants of the Company pursuant to any stock or option plan duly adopted
by
the Board of Directors of the Company, (ii) securities (including shares of
Common Stock) upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date
of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities, (iii) shares
issuable upon exercise of the Warrants and (iv) securities issued pursuant
to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company.
7. USE
OF PROCEEDS
The
Company shall use the net proceeds from the Offering for general working capital
purposes.
8. XXXXXXX
XXXXXXX PROHIBITION; INDEMNITY
Until
the
earlier of the effectiveness of the Registration Statement or the date on which
sales are permitted under Rule 144 of the Securities Act, the Subscriber hereby
agrees to (i) refrain from (A) engaging in any transactions with respect to
the
capital stock of the Company or securities exercisable or convertible into
or
exchangeable for any shares of capital stock of the Company, and (B) entering
into any transaction that would have the same effect, or entering into any
swap,
hedge or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of the capital stock of the Company and
(ii)
indemnify and hold harmless the Company and its respective officers and
directors, employees, agents, sub-agents, advisors and affiliates and each
other
person, if any, who controls any of the foregoing, against any Loss arising
out
of or based upon any violation of this Section 8 by the Subscriber; provided,
however,
that
such Subscriber shall not be liable for any Loss that
in
the aggregate exceeds the amount such Subscriber would receive if Subscriber
were to sell the Securities on the date the amount of the Loss was determined
(based on the closing price of a share of Common Stock on its principal market
on such date).
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9. CONDITIONS
TO ACCEPTANCE OF SUBSCRIPTION
The
Company’s right to accept the subscription of the Subscriber, on the one hand,
and a Subscriber’s right to withdraw its funds, on the other hand, is
conditioned upon satisfaction of the following conditions precedent on or before
the date the Company accepts such subscription (any or all of which may be
waived by the other party):
(a) As
of the
Closing, no legal action, suit or proceeding shall be pending which seeks to
restrain or prohibit the transactions contemplated by this Agreement; provided
that neither party hereto shall directly or indirectly initiate any such action,
suit or proceeding.
(b) The
representations and warranties of the Company and the Subscriber contained
in
this Agreement shall have been true and correct on the date of this Agreement
and shall be true and correct as of the Closing as if made on the date of the
Closing.
(c) The
Common Stock shall continue to be listed on The OTC Bulletin Board.
(d) There
are
no stop orders preventing or suspending any offering of securities by the
Company, or suspension of the qualification of the Common Stock for offering
or
sale in any jurisdiction.
10. NOTICES
TO SUBSCRIBERS
(a) THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES
LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR
THE
ACCURACY OR ADEQUACY OF ANY INFORMATION FURNISHED IN CONNECTION WITH THIS
OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(b) THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
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11.
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MISCELLANEOUS
PROVISIONS
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(a) Counsel.
All
parties hereto have been represented by counsel, and no inference shall be
drawn
in favor of or against any party by virtue of the fact that such party’s counsel
was or was not the principal draftsman of this Agreement. The Company and the
Subscriber each have requested that attorneys at Xxxxxx and Xxxxx, LLP
(“Counsel”) assist in documenting the terms of the agreement of the parties
contained in this Agreement and related agreements. The parties acknowledge
that
Counsel may have previously represented the Subscriber and currently is counsel
to Company in connection with this Agreement and related matters, and may
continue to represent each of the parties in the future. Each of the parties
has
been provided the opportunity to be represented by counsel of its choice and
has
been encouraged by Counsel to seek separate representation to the extent that
it
deems such desirable, but the absence of such shall not be asserted as a basis
for the enforceability or interpretation of any of the terms or provisions
of
this Agreement, or as a reason to seek disqualification of Counsel in any
controversy or proceeding.
(b) Legal
Fees.
Each of
the parties hereto shall be responsible to pay the costs and expenses of their
own legal counsel in connection with the preparation and review of this
Agreement and related documentation.
(c) Modification.
Neither
this Agreement, nor any provisions hereof, shall be waived, modified, discharged
or terminated except by an instrument in writing signed by the party against
whom any waiver, modification, discharge or termination is sought.
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(d) Survival.
The
representations, warranties and agreements of the Subscriber and the Company
made in this Agreement shall survive the execution and delivery of this
Agreement and the delivery of the Securities.
(e) Notices.
Any
party may send any notice, request, demand, claim or other communication
hereunder to the Subscriber at the address set forth on the signature page
of
this Agreement or to the Company at the address set forth above using any means
(including personal delivery, expedited courier, messenger service, fax,
ordinary mail or electronic mail), but no such notice, request, demand, claim
or
other communication will be deemed to have been duly given unless and until
it
actually is received by the intended recipient. Any party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties written notice in the manner
herein set forth.
(f) Binding
Effect.
Except
as otherwise provided herein, this Agreement shall be binding upon, and inure
to
the benefit of, the parties to this Agreement and their heirs, executors,
administrators, successors, legal representatives and assigns. If the Subscriber
is more than one person or entity, the obligation of the Subscriber shall be
joint and several and the agreements, representations, warranties and
acknowledgments contained herein shall be deemed to be made by, and be binding
upon, each such person or entity and his or its heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as to
the
subject matter thereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
(g) Assignability.
This
Agreement is not transferable or assignable by the parties hereto.
(h) Governing
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.
(i) Jurisdiction
and Venue.
The
Company and the Subscriber hereby agree that any dispute which may arise between
them arising out of or in connection with this Agreement shall be adjudicated
before a court located in New York City, New York, and they hereby submit to
the
exclusive jurisdiction of the federal and state courts of the State of New
York
located in New York City with respect to any action or legal proceeding
commenced by any party, and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought
in such a court or respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Agreement or any acts or omissions relating
to the sale of the securities hereunder, and consent to the service of process
in any such action or legal proceeding by means of registered or certified mail,
return receipt requested, postage prepaid, in care of the address set forth
herein or such other address as either party shall furnish in writing to the
other.
(j) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[SIGNATURE
PAGE FOLLOWS]
8
ALL
SUBSCRIBERS MUST COMPLETE THIS PAGE
IN
WITNESS WHEREOF, the Subscriber has executed this Agreement on the __ day of
_______ 2008.
Manner
in
which Title to Shares and Warrants is to be held (Please Check One):
|
1.
|
___
|
Individual
|
7.
|
___
|
Trust/Estate/Pension
or Profit sharing Plan
Date
Opened:______________
|
|
2.
|
___
|
Joint
Tenants with Right of Survivorship
|
8.
|
___
|
As
a Custodian for
________________________________
Under
the Uniform Gift to Minors Act of the State of
________________________________
|
|
3.
|
___
|
Community
Property
|
9.
|
___
|
Married
with Separate Property
|
|
4.
|
___
|
Tenants
in Common
|
10.
|
___
|
Xxxxx
|
|
5.
|
___
|
Corporation/Partnership/
Limited Liability Company
|
11.
|
___
|
Tenants
by the Entirety
|
|
6.
|
___
|
XXX
|
ALTERNATIVE
DISTRIBUTION INFORMATION
To
direct
distribution to a party other than the registered owner, complete the
information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN XXX
INVESTMENT.
Name
of
Firm (Bank, Brokerage, Custodian):
Account
Name:
Account
Number:
Representative
Name:
Representative
Phone Number:
Address:
City,
State, Zip:
9
EXECUTION
BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation,
Partnership, LLC, Trust, Etc.)
|
Name
of Entity (Please Print)
|
|
|
Date
of Incorporation or Organization:
|
|
|
State
of Principal Office:
|
|
|
Federal
Taxpayer Identification Number:
____________________________________________
Office
Address
____________________________________________
City,
State and Zip Code
____________________________________________
Telephone
Number
____________________________________________
Fax
Number (if available)
____________________________________________
E-Mail
(if available)
|
|
|
By:
_________________________________
Name:
Title:
|
|
|
[seal]
Attest:
_________________________________
(If
Entity is a Corporation)
|
_________________________________
_________________________________
Address
|
|
ACCEPTED
this __ day of _____ 2008, on behalf of the Company.
|
|
|
By:
_________________________________
Name:
Title:
|
|
10
INVESTOR
QUESTIONNAIRE
Instructions:
Check all boxes below which correctly describe you.
|
o
|
You
are (i)
a
bank, as defined in Section 3(a)(2) of the Securities Act of 1933,
as
amended (the “Securities
Act”),
(ii)
a
savings and loan association or other institution, as defined in
Section
3(a)(5)(A) of the Securities Act, whether acting in an individual
or
fiduciary capacity, (iii)
a
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
(iv)
an insurance company as defined in Section 2(13) of the Securities
Act,
(v)
an investment company registered under the Investment Company Act
of 1940,
as amended (the “Investment
Company Act”),
(vi)
a
business development company as defined in Section 2(a)(48) of
the
Investment Company Act, (vii)
a
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301 (c) or (d) of the Small Business
Investment Act of 1958, as amended, (viii)
a
plan established and maintained by a state, its political subdivisions,
or
an agency or instrumentality of a state or its political subdivisions,
for
the benefit of its employees and you have total assets in excess
of
$5,000,000, or (ix)
an employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)
and (1)
the decision that you shall subscribe for and purchase shares of
common
stock and warrants to purchase common stock (the “Units”),
is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which
is either a bank, savings and loan association, insurance company,
or
registered investment adviser, or (2) you have total assets in
excess of
$5,000,000 and the decision that you shall subscribe for and purchase
the
Units is made solely by persons or entities that are accredited
investors,
as defined in Rule 501 of Regulation D promulgated under the Securities
Act (“Regulation
D”)
or (3)
you are a self-directed plan and the decision that you shall subscribe
for
and purchase the Units is made solely by persons or entities that
are
accredited investors.
|
|
o
|
You
are a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as
amended.
|
|
o
|
You
are an organization described in Section 501(c)(3) of the Internal
Revenue
Code of 1986, as amended (the “Code”),
a corporation, Massachusetts or similar business trust or a partnership,
in each case not formed for the specific purpose of making an investment
in the Units and its underlying securities and with total assets
in excess
of $5,000,000.
|
|
o
|
You
are a director or executive officer of Customer Acquisition Network
Holdings, Inc.
|
|
o
|
You
are a natural person whose individual net worth, or joint net worth
with
your spouse, exceeds $1,000,000 at the time of your subscription
for and
purchase of the Units.
|
|
o
|
You
are a natural person who had an individual income in excess of
$200,000 in
each of the two most recent years or joint income with your spouse
in
excess of $300,000 in each of the two most recent years, and who
has a
reasonable expectation of reaching the same income level in the
current
year.
|
|
o
|
You
are a trust, with total assets in excess of $5,000,000, not formed
for the
specific purpose of acquiring the Units and its underlying securities,
whose subscription for and purchase of the Units is directed by
a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation
D.
|
|
o
|
You
are an entity in which all of the equity owners are persons or
entities
described in one of the preceding
paragraphs.
|
11
Check
all boxes below which correctly describe you.
With
respect to this investment in the Units and its underlying securities,
your:
|
Investment
Objectives:
|
x Aggressive
Growth
|
x Speculation
|
|
|
Risk
Tolerance:
|
o Low
Risk
|
o Moderate
Risk
|
x High
Risk
|
Are
you
associated with a NASD Member Firm? o
Yes o
No
Your
initials (purchaser and co-purchaser, if applicable) are required for each
item
below:
|
____
____
|
I/We
understand that this investment is not guaranteed.
|
|
____
____
|
I/We
are aware that this investment is not liquid.
|
|
____
____
|
I/We
are sophisticated in financial and business affairs and are able
to evaluate the risks and merits of an investment in this offering.
|
|
____
____
|
I/We
confirm that this investment is considered “high risk.” (This type of
investment is considered high risk due to the inherent risks including
lack of liquidity and lack of diversification. Success
or
failure
of private placements such as this is dependent on the corporate
issuer
of these
securities and is outside the control of the investors. While potential
loss is limited to the amount invested, such
loss is possible.)
|
The
Subscriber hereby represents and warrants that all of its answers to this
Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased the Shares and
Warrants.
|
___________________________________
Name
of Purchaser [please print]
___________________________________
Signature
of Purchaser (Entities please
provide
signature of Purchaser’s duly
authorized
signatory.)
___________________________________
Name
of Signatory (Entities only)
___________________________________
Title
of Signatory (Entities only)
|
___________________________________
Name
of Co-Purchaser [please print]
___________________________________
Signature
of Co-Purchaser
|
12
VERIFICATION
OF INVESTMENT ADVISOR/BROKER
I
state
that I am familiar with the financial affairs and investment objectives of
the
investor named above and reasonably believe that a purchase of the securities
is
a suitable investment for this investor and that the investor, either
individually or together with his or her purchaser representative, understands
the terms of and is able to evaluate the merits of this offering. I
acknowledge:
|
(a)
|
that
I have reviewed the Subscription Agreement and forms of securities
presented to me, and attachments (if any)
thereto;
|
|
(b)
|
that
the Subscription Agreement and attachments thereto have been fully
completed and executed by the appropriate party;
and
|
|
(c)
|
that
the subscription will be deemed received by the Company upon acceptance
of
the Subscription Agreement.
|
Deposit
securities from this offering directly to purchaser’s account? o Yes
o No
If
“Yes,”
please indicate the account number :
_____________________________________
|
_____________________________________
|
____________________________________
|
|
|
Broker/Dealer
|
Account
Executive
|
|
|
_____________________________________
|
____________________________________
|
|
|
(Name
of Broker/Dealer)
|
(Signature)
|
|
|
_____________________________________
|
____________________________________
|
|
|
(Street
Address of Broker/Dealer Office)
|
(Print
Name)
|
|
|
_____________________________________
|
____________________________________
|
|
|
(City
of Broker/Dealer Office) (State) (Zip)
|
(Representative
I.D. Number)
|
|
|
_____________________________________
|
____________________________________
|
|
|
(Telephone
Number of Broker/Dealer Office)
|
(Date)
|
|
|
_____________________________________
|
____________________________________
|
|
|
(Fax
Number of Broker/Dealer Office)
|
(E-mail
Address of Account
Executive)
|
13
