SUBSCRIPTION AGREEMENT
EXHIBIT
4.31
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED OR UNDER ANY STATE ACTS AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACTS OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED.
THIS
AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO.
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To
the Board of Directors
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Dated
as of
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Baywood
International, Inc.
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December
____, 2005
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00000
Xxxxx 00xx Xxxxx, Xxxxx 0
Xxxxxxxxxx,
Xxxxxxx 00000
Ladies
and Gentlemen:
1. Subscription
and Payment. The undersigned hereby subscribes for and
agrees to accept the issuance of the number of shares of Series H
Preferred Stock (the “Shares”) of Baywood International, Inc., a
Nevada corporation (the “Company”), at the price of $1.00 per Share or an
aggregate purchase price as set forth on the signature page hereof (“Purchase
Price”). Additionally, if the subscription agreement is accepted
by the Company, the undersigned will receive a three-year warrant entitling
the
undersigned to purchase up to that number of shares of the Company’s common
stock that is equal to the number of such shares of common stock that could
be
purchased under the following graduated exercise price schedule and equal to
50%
of the Purchase Price:
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·
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25%
of warrant shares at exercise price of
$0.02
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·
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25%
of warrant shares at exercise price of
$0.04
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·
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25%
of warrant shares at exercise price of
$0.08
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·
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25%
of warrant shares at exercise price of
$0.12
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For
example, if the undersigned subscribes for $200,000 of Shares, the undersigned
would receive 200,000 Shares and a warrant entitling the undersigned to purchase
1,250,000 shares of common stock at an exercise price of $0.02 per share (50%
x
$200,000 x 25% / $0.02), 625,000 shares of common stock at $0.04 per share
(50%
x $200,000 x 25% / $0.04), 312,500 shares of common stock at $0.08 per share
(50% x $200,000 x 25% / $0.08) and 208,333 shares of common stock at $0.12
per
share (50% x $200,000 x 25% / $0.12).
The
common stock underlying the warrants would be redeemable in tranches for $0.01
per share of common stock by the Company at the Company’s discretion if the
Company’s common stock as listed on the OTCBB or another national exchange has a
closing price equal to 300% of the then-current exercise price for 30
consecutive trading days for that particular tranche of the common shares
underlying the warrant. Using the same example above, if the
Company’s closing price on the OTCBB was $0.12 for 30 consecutive trading days,
the Company would be entitled, if not previously exercised, to redeem 50% of
the
total common shares underlying the warrant (i.e., the 25% at $0.02 exercise
price tranche and the 25% at $0.04 exercise price tranche) for a total
redemption price of $18,750 (1,250,000 + 625,000 x $0.01).
The
undersigned is delivering, with this subscription agreement, payment for the
Shares by check payable to “Baywood International, Inc.” or by wire transfer
payable against delivery of the certificate representing the
Shares. The undersigned understands and agrees that the Company has
the right to accept or reject this subscription, in whole or in part, and this
subscription shall be deemed accepted only when signed by a representative
of
the Company. The undersigned agrees that the Company need not accept
subscriptions in the order received. If the Company learns after the
undersigned has been admitted as a stockholder of the Company that the
undersigned has misrepresented any information in any of the documents the
undersigned submitted to the Company in connection with this subscription,
then
in addition to other rights available to the Company, the Company will have
the
right to acquire the undersigned’s Shares for a price equal to the undersigned’s
subscription payment.
2. Cancellation
of Subscription Agreement. The undersigned has no right to
cancel, revoke or withdraw this subscription, except as may be provided under
applicable securities laws.
3. Conditions. This
offer is made subject to the condition that the Shares, when issued, will be
validly issued, fully paid, and non-assessable and that the Company is duly
organized, validly existing, and in good standing under the laws of
Nevada.
4. Representations,
Warranties, Covenants, and Acknowledgements. To induce the
Company to accept this subscription and to issue the Shares to the undersigned
and knowing that the Company is relying upon the truth and accuracy of the
following in issuing the Shares and establishing compliance with applicable
federal, provincial and state securities laws, the undersigned hereby
represents, warrants, covenants, and acknowledges to the Company
that:
(A) The
undersigned has full power and capacity to execute, deliver, and perform under
this subscription agreement. This subscription agreement is the legal
and binding obligation of and is enforceable against the undersigned in
accordance with its terms. The execution and delivery of this
subscription agreement, the consummation of the transactions contemplated
hereby, and the fulfillment of the terms hereof, will not result in the breach
of any term or provision of, or constitute a default under, or conflict with,
or
cause the acceleration of any obligation under, any agreement or other
instrument of any description to which the undersigned is a party or by which
the undersigned is bound, or any judgment, decree, order or award of any court,
governmental body, or arbitrator, or any applicable law, rule or
regulation.
(B) The
undersigned understands and has been advised by the Company that the business
activities of the Company and an investment in the Company is speculative and
subject to substantial risks, including the risks set forth in the Company’s
Securities and Exchange Commission (“SEC”) filings, including, without
limitation, the Company’s Form 10-KSB dated May 12, 2005 and Form 10-QSB dated
November 21, 2005 (the “SEC Filings”) and there can be no guaranty of the
amount of or type of profit or loss to be realized, if any, as a result in
an
investment in the shares.
(C) The
undersigned has been given access to full and complete information regarding
the
Company and has utilized such access to the undersigned’s satisfaction for the
purpose of obtaining such information regarding the Company as the undersigned
has reasonably requested. In particular, the undersigned has received
and thoroughly read and evaluated the (i) Company’s SEC Filings, including the
exhibits thereto, and (ii) has been given reasonable opportunity to review
such
documents as the undersigned has requested and to ask questions of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the Shares and the business and affairs of the Company and to
obtain any additional information concerning the Company’s business to the
extent reasonably available so as to understand more fully the nature of the
investment and to verify the accuracy of the information supplied.
(D) The
undersigned represents that they have consulted with a qualified attorney,
tax
advisor, or accountant or have elected not to do so, and understands the income
tax aspects of its investment in the Shares. The undersigned, in
determining to purchase the Shares, and if the undersigned consulted the
undersigned’s legal counsel, tax advisor, accountants or other advisors (i) has
been encouraged and has had the opportunity to rely upon the advice of the
undersigned’s legal counsel, accountants, tax advisor and other advisors with
respect to the purchase of the Shares, and (ii) has relied solely upon the
advice of the undersigned’s legal counsel, accountants, tax advisors or other
financial advisors with respect to the financial, tax, and other considerations
relating to the purchase of the Shares. The undersigned acknowledges
that neither the Company nor anyone on behalf of the Company has made any
representations to the undersigned regarding the tax consequences of an
investment in the Shares.
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(E) The
undersigned and his, her, or its personal advisors have received from the
Company all requested documents, records, and books pertaining to the investment
in the Shares so as to enable them to evaluate the merits and risks of this
investment. The undersigned understands and acknowledges that all
documents were prepared by the Company and that no independent legal counsel,
accountant, or financial advisor has passed upon or assumed any responsibility
for the accuracy, completeness or fairness of information provided to the
undersigned and no independent legal counsel, accountant, or financial advisor
has independently verified or investigated in any way the accuracy, completeness
or fairness of such information.
(F) The
undersigned was not offered or sold the Shares, directly or indirectly, by
means
of any form of general advertising or general solicitation, including, but
not
limited to (i) any advertisement, article, notice, or other communication
published in a newspaper, magazine, or similar medium of communication or
broadcast over television or radio; or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(G) The
undersigned (i) can bear the economic risk of the purchase of the Shares,
including the total loss of the undersigned’s investment; (ii) has such
knowledge and experience in business and financial matters as to be capable
of
evaluating the merits and risks of an investment in the Shares, or the
undersigned is being advised by others (acknowledged by the undersigned as
being
the “Purchaser Representative(s)” of the undersigned) such that they and the
undersigned together are capable of making such evaluation; and (iii)
understands the non-liquid nature of an investment in the Shares. The
undersigned acknowledges and understands that the Shares are a speculative
investment that involves a high degree of risk and there can be no guarantee
of
the amount of or type of consideration, profit or loss to be realized, if any,
as a result of an investment in the Shares.
(H) The
undersigned is presently a bona fide resident of the state listed below and
has
no present intention of becoming a resident of any other state or jurisdiction,
and the address and Social Security Number or Employer Identification Number
set
forth below are the undersigned’s true and correct residential or business
address and Social Security Number or Employer Identification
Number.
(I) The
undersigned (i) if an individual, is at least 21 years of age; (ii) if an
individual, is a resident of the United States; (iii) has adequate means of
providing for the undersigned’s current needs and personal contingencies; (iv)
has no need for liquidity in the undersigned’s investments; (v) maintains the
undersigned’s principle residence or business at the address shown below; (vi)
warrants that all investments in and commitments to non-liquid investments
are,
and after the undersigned’s purchase of the Shares will be, reasonable in
relation to the undersigned’s net worth and current needs; and (vii) warrants
that any financial information that is provided herewith by the undersigned,
or
is subsequently submitted by the undersigned at the request of the Company,
does
or will accurately reflect the undersigned’s financial condition with respect to
which the undersigned does not anticipate any material adverse
change.
(J) The
undersigned acknowledges that the Company, based upon representations made
by
the undersigned, is relying on exemptions from the registration requirements
of
the Securities Act of 1933, as amended (the “Securities Act”), and
afforded by applicable state statutes and regulations.
(K) The
undersigned certifies that he, she or it is an “accredited investor” as that
term is defined under Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933. At the option of the Company, the undersigned
agrees to complete and deliver to the Company evidence in order to enable the
Company to verify the undersigned’s status as an accredited investor under the
Securities Act.
(L) The
undersigned understands that the Shares have not been and will not be registered
under the Securities Act or the securities laws of any state and are subject
to
substantial restrictions on transfer.
(M) The
undersigned
acknowledges and agrees that the Shares are being acquired for the undersigned’s
own account without a view to public distribution, transfer, resale, or
assignment and that the undersigned has no contract, undertaking, agreement,
or
arrangement to sell or otherwise transfer or dispose of the Shares or any
portion thereof to any other person.
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(N) The
undersigned (i) agrees that the undersigned will not sell or otherwise transfer
or dispose of the Shares or any portion thereof unless such Shares are
registered under the Securities Act and any applicable state securities laws
or
the undersigned obtains an opinion of counsel that is satisfactory to the
Company that such Shares may be sold in reliance on an exemption from such
registration requirements, and (ii) understands that the certificate(s)
evidencing the Shares, if any, will be endorsed with a legend to that
effect.
(O) The
undersigned understands that (i) the Company has no obligation or intention
to
register the Shares for resale or transfer under the Securities Act or any
state
securities laws, or to take any action (including the filing of reports or
the
publication of information as required by Rule 144 under the Securities Act)
which would make available any exemption from the registration requirements
of
any such laws; and (ii) the undersigned therefore may be precluded from selling
or otherwise transferring or disposing of the Shares for an indefinite period
of
time or at any particular time.
(P) The
undersigned understands that, except upon certain limited circumstances, the
restrictions on the sale, transfer, and disposition of the Shares will also
apply to any and all shares of capital stock or other securities issued or
otherwise acquired with respect to the Shares including, without limitation,
any
other shares or securities issued or acquired as a result of any stock dividend,
stock split or exchange or any distribution of shares or securities pursuant
to
any corporate reorganization, reclassification or similar event.
(Q) The
undersigned understands that no federal or state agency, including the SEC
or
the securities commission or authorities of any other state, has approved or
disapproved the Shares, passed upon or endorsed the merits of the offering,
or
made any finding or determination as to the fairness of the Shares for
investment.
(R) The
undersigned is not subject to back-up withholding provisions of Section
3406(a)(1) of the Internal Revenue Code.
(S) If
subject to the Employee Retirement Income Security Act (“ERISA”), the
undersigned is aware of and has taken into consideration the diversification
requirements of Section 404(a)(3) of ERISA in determining to purchase the Shares
and the undersigned has concluded that the purchase of the Shares is
prudent.
(T) The
undersigned represents, warrants and agrees that, if the undersigned is
acquiring the Shares in a fiduciary capacity, (i) these representations,
warranties, agreements, acknowledgments, and understandings shall be deemed
to
have been made on behalf of the person or persons for whose benefit such Shares
are being acquired, (ii) the name of such person or persons is indicated below
under the subscriber’s name, and (iii) such further information as the Company
deems appropriate shall be furnished regarding such person or
persons.
(U) Neither
the Company nor any person representing or acting on behalf of the Company,
or
purportedly representing or acting on behalf of the Company, has made any
representations, warranties, agreements or statements other than those contained
herein that influenced or affected the undersigned’s decision to purchase the
Shares, nor has the undersigned relied on any representations, warranties,
agreements or statements in the belief that they were made on behalf of any
of
the forgoing, nor has the undersigned relied on the absence of any such
representations, warranties, agreements or statements in reaching the decision
to purchase the Shares.
(V) The
foregoing representations and warranties are true and accurate as of the date
hereof and shall survive the delivery of payment for the Shares. The
undersigned understands that the Shares are being offered and sold in reliance
on specific exemptions from the registration requirements of federal and state
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings
set
forth herein in order to determine the suitability of the undersigned to acquire
Shares. The undersigned agrees promptly to notify the Company of any
changes to any of the foregoing.
(W) The
undersigned acknowledges that the Company has the unconditional right to accept
or reject this subscription and that (i) if Company accepts this subscription,
the funds received by the Company will be deposited into an ordinary checking
account of the Company and not an escrow account and may become commingled
with
other funds of the Company and the Company has the unconditional right to apply
the proceeds thereof in any manner, and (ii) if the Company rejects this
subscription or if the offering is terminated or withdrawn prior to acceptance
of this subscription, the funds deposited by the undersigned will be refunded
promptly without interest.
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5. Covenants
and Indemnity.
(A) The
foregoing representations and warranties, together with all other
representations and warranties made or given by the undersigned to the Company
in connection with the transactions contemplated hereby, shall be true and
correct in all respects on the date of closing of the purchase hereunder as
if
made on such date and shall survive such date.
(B) The
undersigned agrees to indemnify and hold harmless the Company from and against
any loss, damage or liability due to or arising out of a breach of any of the
representations and warranties set forth in Section 4 of this
subscription agreement.
6. Miscellaneous.
(A) This
subscription agreement will be deemed to have been executed and delivered in,
and will be governed by and construed in accordance with, the internal laws
of
the State of Arizona, notwithstanding any Arizona or other conflicts-of-law
provisions to the contrary. The undersigned acknowledges and agrees
that any action or proceeding of any kind against the undersigned arising out
of
or by reason of this subscription may be brought in any federal or state court
of competent jurisdiction located in the State of Arizona, and hereby
irrevocably consents to the jurisdiction of any such court.
(B) This
subscription agreement and the rights, powers and duties set forth herein will
be binding upon the undersigned, the undersigned’s heirs, estate, legal
representatives, successors, and permitted assigns and will inure to the benefit
of the Company, its successors and assigns.
(C) If
any provision of this subscription agreement is invalid or unenforceable under
any applicable statute or rule of law, then such provision will be deemed
inoperative to the extent that it may conflict therewith and will be deemed
modified to conform with such statute or rule of law, but such provision will
not affect the validity or enforceability of any other provision
hereof.
(D) This
subscription agreement may be executed through the use of separate signature
pages or in any number of counterparts, 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.
(E) This
subscription agreement contains the entire agreement of the parties with respect
to its subject matter and supersedes all prior agreements, understandings or
arrangements between the parties, whether written or oral, with respect to
the
subject matter hereof and there are no representations, warranties, covenants
or
other agreements except as stated or referred to herein with regard to its
subject matter.
7. Right
of First Offer. In the event the Company issues equity
securities, the undersigned will be permitted to participate in such issuance
in
order to maintain the undersigned’s fully-diluted percentage interest
immediately prior to the offering. This right will not apply to
equity issuances to employees or consultants for compensatory purposes pursuant
to a plan or agreement approved by the board of directors or for issuances
in
connection with strategic partnerships or any issuance that is not intended
for
capital raising purposes.
8. Registration
Rights. The Company will use its best efforts to register,
within a reasonable time following the closing of the sale of the Shares to
all
parties, the shares of common stock underlying the Shares and the warrant for
resale with the Securities and Exchange Commission using a registration
statement on Form SB-2 or a then-applicable form that the Company is eligible
to
use provided that such efforts do not subject the Company to federal or state
securities law violations.
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BAYWOOD
INTERNATIONAL, INC.
SUBSCRIPTION
AGREEMENT SIGNATURE PAGE
IN
WITNESS WHEREOF, intending to irrevocably bind the undersigned and the
personal representatives, successors, and assigns of the undersigned and to
be
bound by this, the undersigned is executing this document on December ____,
2005.
The
undersigned subscribes to purchase ____________ shares of Series H Preferred
Stock, $1.00 par value per share, of the Company, in consideration for an
aggregate purchase price of $_____________.
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Name(s)
in which Shares are to be registered:
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Check
One:
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¨
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Individual
ownership
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¨
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Corporation,
Partnership, or Limited Liability
Company
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¨
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Trust
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¨
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Other
(describe)
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Each
Co-Subscriber (other than a spouse) must complete and sign a separate
Agreement.
If
the subscriber has a United States Social Security Number or a United States
Employer Identification Number, please list the applicable number for each
such
Subscriber: _______________________________
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Country
of Residence or Principal Place of Business:
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Residence
or Principal Place of Business Address:
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PRINT
name of individual who, or entity that, is subscribing.
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Signature
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Title
(if fiduciary, etc.)
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PRINT
name of Co-Subscriber if the Shares are to be held as joint tenants,
community property, or tenants in common.
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Signature
of Co-Subscriber
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Title
(if fiduciary, etc.)
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_____
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(Please
Initial)
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By
signing above and initialing to the left, the subscriber (and any
co-subscriber) represents and warrants to the Company that they
have read,
understood and acknowledged the risks and uncertainties involved
in an
investment in the Shares as described and set forth in the Company’s SEC
Filings.
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_____
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(Please
Initial)
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By
signing above and initialing to the left, the subscriber (and any
co-subscriber) represents and warrants to the Company that they
have read
and understood the Company’s Certificate of Incorporation and the
Company’s Bylaws attached as exhibits to the Company’s SEC
Filings.
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ACCEPTED
ON __________________ ___, 200___.
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BAYWOOD
INTERNATIONAL, INC.
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By:
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Name:
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Title:
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