SUBSCRIPTION AGREEMENT
This SUSCRIPTION AGREEMENT ("Subscription Agreement") dated as of
____________________, 2000, is entered into by and between I crystal, Inc., a
Delaware corporation, and the individual or entity (the "Purchaser") whose
signature, name and address are set forth on the Purchaser's signature line of
this Subscription Agreement.
ARTICLE I
PURCHASE
Purchaser hereby purchases ____________________ fully paid and
non-assessable newly issued shares of the common stock (the "Common Stock"),
$0.01 par value per share, of the Company (the "Shares") at a price of
____________________ per share of Common Stock for an aggregate purchase price
of ____________________ payable in cash, immediately available funds or
________________________________________ upon the delivery of this Subscription
Agreement. Purchaser understands that this subscription is subject to acceptance
by the Company and that subscriptions not accepted shall be returned together
with amounts tendered.
ARTICLE II.
PURCHASER'S REPRESENTATIONS AND WARRANTIES
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
represents and warrants to the Company as follows:
2.1 EXEMPTION FROM REGISTRATION. The Purchaser acknowledges that the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and are being issued to Purchaser in reliance upon the
exemptions from such registration provided by Section 4(2) of the Securities Act
and Regulation D promulgated thereunder.
2.2 INVESTMENT INTENT. The Shares are being acquired by Purchaser for
investment purposes for Purchaser's own account only and not for sale or with a
view to distribution of all or any part of such Shares. No other person will
have any direct or indirect beneficial interests in the Shares.
2.3 ABILITY TO BEAR RISK. Purchaser can afford to bear the economic
risk of holding the Shares for an indefinite period and can afford to suffer the
complete loss of the investment.
2.4 ACCESS TO INFORMATION. Purchaser has been granted the opportunity
to ask questions of, and has received answers from, representatives of the
Company concerning the business, properties and condition of the Company and the
terms and conditions of the purchase of the Shares and has been granted the
opportunity to obtain any information that it deems necessary to undertake this
investment.
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2.5 REVIEW OF MATERIALS. By execution of this Subscription Agreement,
Purchaser acknowledges having read, understood and agreed to each and every
provision of the Subscription Agreement and EXHIBIT 1 hereto, which sets forth
the definition of an "Accredited Investor" under the Securities Act. Purchaser
acknowledges that no other materials have been provided.
2.6 RESTRICTED SECURITIES. Purchaser hereby confirms that it has been
informed that the Shares will be, when issued, restricted securities under the
Securities Act and may not be resold or transferred unless first registered
under the federal securities laws or unless an exemption from such registration
is available with respect to a resale in the United States or in an "offshore
transaction" (as such term is defined in Regulations S under the Securities
Act). Accordingly, Purchaser hereby acknowledges that it is prepared to hold the
Shares for an indefinite period. Purchaser is aware that Rule 144 promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act is
not presently available to exempt the sale of the Shares from the registration
requirements of the Securities Act. Purchaser is aware that Rule 144 and
Regulation S, promulgated under the Securities Act, permit limited public
resales of securities acquired in non-public offerings, subject to the
satisfaction of certain conditions. Purchaser understands that under Rule 144
the conditions include, among other things: the availability of certain current
public information about the issuer, the resale occurring not fewer than one (1)
year or two (2) years, as applicable, after the party has purchased and paid for
the securities to be sold, the sale being through a broker in an unsolicited
"broker's transaction" and the amount of securities being sold during any
three-month period not exceeding specified volume limitations. Purchaser
acknowledges and understands that the Company may not be satisfying the current
public information requirement of Rule 144 at the time Purchaser wishes to sell
the Shares, or other conditions under Rule 144 which are required of the
Company. Purchaser understands that Regulation S, as currently in effect, allows
resales in private and public transactions in certain circumstances, only in
qualified offshore transactions and only when certain holding periods of at
least one (1) year have been fulfilled. Purchaser understands that he or she may
be precluded from selling any of the Shares under Rule 144 or Regulation S even
if the holding periods have been satisfied either because the other conditions
may not have been fulfilled or because markets for resales do not exist. Prior
to its acquisition of the Shares, Purchaser acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire the
Shares. Purchaser has such knowledge and experience in financial and business
matters as to make it capable of utilizing said information to evaluate the
risks of the prospective investment and to make an informed investment decision.
2.7 ACCREDITED INVESTOR. Purchaser hereby makes the following
representations and warranties to the Company:
(a) He, she or it is an "Accredited Investor" as defined in
Regulation D promulgated under the Securities Act and defined in
EXHIBIT 1 hereto. The specific category or categories of
Accredited Investor applicable to Purchaser are as follows:
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(PLEASE INITIAL APPLICABLE BLANKS)
I am a natural person and have a net worth, either alone or with
---- my spouse, in excess of US$1,000,000.
I am a natural person and had individual income in excess of
---- US$200,000 (or joint income in excess of US$300,000 including
income of my spouse) during each of the previous two calendar
years and expect to have individual income in excess of such
amount during the current calendar year.
He, she or it is an authorized signatory for a partnership,
---- trust, corporation or other entity with a net worth of more than
US$5,000,000, or of which all the equity owners are Accredited
Investors.
The Shares are being acquired through an employee benefit plan
---- within the meaning of the Employee Retirement Income Security Act
of 1974 ("ERISA") that either (i) has its investment decisions
made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which is a bank, savings and loan association, insurance company
or a registered investment advisor, (ii) has total assets in
excess of US$5,000,000 or (iii) if a self-directed plan, with its
investment decisions made solely by Accredited Investors as
described herein (Accredited Investors making investment
decisions for self-directed plans must also check one of the
first three items of this Section 2.7(a)).
I am a director and/or executive officer of the Company.
----
I have a continuing relationship with the Company because of
----
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(b) Purchaser has the ability to evaluate the risks and merits of the
investment and thus is able to protect his, her or its interests
as a result of:
(1) his, her or its business or financial experience;
----
(2) the business or financial experience of his, her or its
---- professional advisors who are unaffiliated with and who are
not compensated by the Company either directly or
indirectly; and/or;
(3) his, her or its pre-existing business relationship with the
---- Company or its officers, directors or controlling persons.
(c) Purchaser (i) has such knowledge and experience in financial
and business matters which enables Purchaser to evaluate the
merits and risks of the investment represented by the
Shares, and to protect his, her or its own
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interests in connection with the investment and/or (ii) has
a preexisting personal or business relationship with the
Company or its officers, directors and/or principal
stockholders of a nature and duration which would enable a
reasonably prudent investor to be aware of the character,
business acumen and general business and financial
circumstances of the person with whom such relationship
exists. Purchaser recognizes that the acquisition of the
Shares involves special risks.
(d) Purchaser is not relying on the Company for advice with
respect to tax considerations, the suitability of his, her
or its investment in the Company or legal or economic
considerations.
(e) If Purchaser is a corporation, partnership, trust or other
entity, Purchaser represents and warrants that the
corporation, partnership, trust or other entity, is
authorized and qualified to become a stockholder of the
Company; and such entity and Purchaser signatory hereto for
such stockholder further represents and warrants that such
signatory has been duly authorized by the prospective
stockholder to execute this Subscription Agreement.
(f) If Purchaser is an employee benefit plan (a "Plan"), the
person signing this Subscription Agreement on behalf of such
Plan represents and warrants that (i) he or she is a
fiduciary of the Plan, (ii) he or she understands the
investment objectives, strategies and policies of the Plan,
(iii) he or she acknowledges that he or she is aware of the
provision of Section 404 of ERISA relating to the
requirements for investment and diversification of assets of
ERISA-governed Plans, (iv) he or she has given appropriate
consideration to such Plan's investment in the Company and
has determined that such investment furthers the purposes of
such Plan and (v) he or she has determined that, taking into
account other investments in such Plan's portfolio, the
Plan's investment in the Company is consistent with the
requirements of Section 404 and other provisions of ERISA
and is consistent with such Plan's cash flow requirements
and funding objectives.
2.8 ACKNOWLEDGMENT OF RISK. Purchaser acknowledges and is aware
that the Shares are speculative illiquid investments which involve a high degree
of risk of loss by Purchaser of his, her or its investment in the Company.
Purchaser understands that the Shares are restricted and may not be liquidated,
even in the event of an emergency, until the Shares are registered pursuant to
the Securities Act. Purchaser also understands that, for the foregoing reasons
and until such time as the Shares are registered under the Securities Act, the
Shares may not be readily accepted as collateral for a loan.
2.9 FURTHER ACKNOWLEDGEMENTS. Purchaser further certifies and
acknowledges as follows:
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(a) Purchaser has adequate means of providing for Purchaser's
current needs and possible personal or other contingencies,
and Purchaser has no need for liquidity of Purchaser's
investment in the Shares;
(b) Purchaser has a net worth sufficient to bear the economic
risk of losing Purchaser's entire investment in the Shares;
(c) Each and every representation set forth herein is true and
correct; and
(d) Purchaser does not have an overall commitment to non-readily
marketable investments which is disproportionate to
Purchaser's net worth and the investment subscribed for
herein will not cause such overall commitment to become
excessive.
2.10 NO GUARANTEES OR WARRANTIES. It has never been guaranteed or
warranted to Purchaser by the Company or by any other person, expressly or by
implication, that:
(a) Purchaser will be required to remain an owner of the Shares
any approximate or exact length of time;
(b) Purchaser will receive any approximate or exact amount of
return or other type of consideration, profit or loss as a
result of an investment in the Shares, or
(c) The past performance or experience on the part of the
Company, any director, officer or any affiliate thereof,
will in any way indicate or predict future operating results
of the Company or the overall success of the Company.
2.11 INDEPENDENT ASSESSMENT. Purchaser represents and warrants
that in making the decision to acquire the securities, the Purchaser has relied
upon independent consideration and investigations made by such Purchaser and
further that no representations have been made concerning the securities, the
Company, its business, prospects, or other matters.
2.12 DISPOSITION OF THE SHARES. Purchaser hereby agrees that
Purchaser shall make no disposition of the Shares unless and until:
(a) Purchaser shall have notified the Company of the proposed
disposition and provided a written summary of the terms and
conditions of the proposed disposition; and
(b) Purchaser shall have provided the Company an opinion of
counsel in form and substance satisfactory to the Company,
that (i) the proposed disposition does not require
registration of the Shares under the Securities Act or (ii)
all appropriate action necessary for compliance with the
registration requirements of the Securities Act or of any
exemption from
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registration available under the Securities Act (including
Rule 144) has been taken.
(c) The Company shall not be required (i) to transfer on its
books any Shares that have been sold or transferred in
violation of the provisions of this Section 2.12 or (ii) to
treat as the owner of the securities, or otherwise to accord
voting or dividend rights to, any transferee to whom the
securities have been transferred in contravention of this
Subscription Agreement.
2.13 RESTRICTIVE LEGENDS. In order to reflect the restrictions on
disposition of the Shares, the stock certificates for the Shares may be endorsed
with the following restrictive legend:
(a) "THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). SUCH SECURITIES MAY NOT BE
OFFERED OR SOLD OR TRANSFERRED IN THE UNITED STATES OR TO
U.S. PERSONS IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE SECURITIES ACT WHICH, EXCEPT
IN THE CASE OF AN EXEMPTION PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT, IS CONFIRMED IN A LEGAL OPINION SATISFACTORY
TO THE COMPANY."
(b) If required by the authorities of any state or other
jurisdiction in connection with the issuance of the Shares,
the legend or legends required by such jurisdiction shall
also be endorsed on all such certificates.
2.14 ADDRESS OF PURCHASER. The address set forth below is
Purchaser's true and correct residence and/or principal place of business, and
Purchaser has no present intention of becoming a resident of any other state or
jurisdiction.
2.15 FOREIGN PERSONS. Purchaser hereby represents and warrants to
the Company that it is not a United States ("U.S.") resident. Purchaser also
hereby represents and warrants that it will not resell the Shares to a U.S.
resident, except in compliance with U.S. federal and state securities
regulations and the terms and conditions set forth in this Subscription
Agreement, including but not limited to Section 2.12 herein. The Purchaser
agrees to provide to the Company such additional representations, warranties,
covenants and undertakings as the Company may request in order to comply with
the applicable securities laws of the jurisdiction(s) in which Purchaser is
deemed to reside.
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ARTICLE III.
MISCELLANEOUS
3.1 "PIGGY-BACK" REGISTRATION. The Purchaser shall have the
right to include the Shares as part of any registration of securities filed by
the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8) and must be
notified in writing of such filing, as set forth below; PROVIDED, HOWEVER, that
the Purchaser agrees it shall not have any piggy-back registration rights
pursuant to this Section if the Shares may be sold in the United States pursuant
to the provisions of Rule 144. The Shares, or any of them, shall cease to be
covered by this Section 3.1, (i) if they have been effectively registered under
the Securities Act and disposed of pursuant thereto or (ii) registration under
the Securities Act is no longer required for the immediate public distribution
of such Shares as a result of the provisions of Rule 144. The Company shall give
written notice to the Purchaser, as set forth in Section 3.7, at least thirty
(30) days before the filing with the SEC of such Registration Statement. Such
notice shall offer to include in such filing that number of shares of Common
Stock then held by the Purchaser as the Purchaser may request pursuant to
written notice. The Purchaser shall have five (5) business days to notify the
Company in writing as to whether the Company is to include the Purchaser or not
include the Purchaser as part of the registration; PROVIDED, HOWEVER, that if
any registration pursuant to this Section shall be underwritten, in whole or in
part, the Company may require that the Shares requested for inclusion pursuant
to this Section be included in the underwriting on the same terms and conditions
as the securities otherwise being sold through the underwriters. If in the good
faith judgment of the underwriter evidenced in writing of such offering only a
limited number of the Shares should be included in such offering, or no such
Shares should be included, the Purchaser, and all other selling stockholders,
shall be limited to registering such proportion of their respective shares as
shall equal the proportion that the number of shares of selling stockholders
permitted to be registered by the underwriter in such offering bears to the
total number of all shares then held by all selling stockholders desiring to
participate in such offering. Those Shares which are excluded from an
underwritten offering pursuant to the foregoing provisions of this Section (and
all other Shares) shall be withheld from the market by the Purchasers thereof
for a period, not to exceed one hundred eighty (180) days, which the underwriter
may reasonably determine is necessary in order to effect such underwritten
offering. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section prior to the effectiveness of
such registration. All registration expenses incurred by the Company in
complying with this Section shall be paid by the Company, exclusive of
underwriting discounts, commissions and legal fees and expenses for counsel to
the Purchaser.
3.2 SURVIVAL; INDEMNIFICATION. The foregoing representations and
warranties are made by the Purchaser with the intent that they may be relied
upon in determining its qualification and suitability to purchase the Shares,
and Purchaser hereby agrees that such representations and warranties shall
survive the acceptance of this Subscription Agreement. Purchaser hereby agrees
to indemnify, defend and save harmless the Company, its representatives and
agents and each other stockholder from and against any and all losses, claims,
damages, liabilities, expenses (including attorneys' reasonable fees and
disbursements), judgments and amounts paid in settlement or actions resulting
from the untruth of any of the warranties and representations contained herein.
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Notwithstanding the foregoing, however, no representation, warranty,
acknowledgment, covenant or agreement by Purchaser made herein shall in any
manner be deemed to constitute a waiver of any rights granted to it under the
federal or state securities laws.
3.3 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Subscription Agreement should result in litigation, the
prevailing party in such dispute shall be entitled to recover from the losing
party all fees, costs and expenses of enforcing any right of such prevailing
party under or with respect to this Subscription Agreement, including without
limitation, such reasonable fees and expenses of attorneys, which shall include,
without limitation, all fees, costs and expenses of appeals.
3.4 JOINT AND SEVERAL LIABILITY. If Purchaser is more than one
person, the obligations of Purchaser shall be joint and several, and the
representations and warranties herein contained shall be deemed to be made by
and be binding upon such persons, and ownership of the Shares subscribed for by
Purchaser shall be as set forth on the signature page attached hereto.
3.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. At the request
of the Company, Purchaser will promptly execute such other instruments or
documents as may reasonably be required in connection with the purchase of the
Shares. Purchaser hereby agrees that the representations and warranties set
forth in this Subscription Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of Purchaser, but this subscription is
not voluntarily transferable or assignable by Purchaser.
3.6 SECTION HEADINGS. The section and other descriptive headings
in this Subscription Agreement are included for the convenience only and shall
not affect the construction of this Subscription Agreement.
3.7. NOTICES. Any notice pursuant to this Subscription Agreement
by the Company or by the Purchaser shall be in writing and shall be deemed to
have been duly given if delivered by (i) hand, (ii) by facsimile and followed by
mail delivery or (iii) if mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Purchaser, to its address set forth herein.
(b) If to the Company, at the Company's business address:
0000Xxxx Xxxxxx Xxx., Xxxxx 000-X, Xxxxxx, X.X., Xxxxxx X0X
0X0, Attn. Chief Executive Officer.
or to such other address as a either party may designate by written notice to
the other party. Notices shall be deemed given at the time they are delivered
personally or five (5) business days after they are mailed in the manner set
forth above. If notice is delivered by facsimile and followed by mail, delivery
shall be deemed given two (2) days after such facsimile is sent.
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IN WITNESS WHEREOF, Purchaser has executed this Subscription Agreement
dated as of ____________________, 2000.
SIGNATURE FOR INDIVIDUAL INVESTOR:
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(Signature)
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(Print Name)
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Address:
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(Social Security Number, If Applicable)
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(Telephone Number)
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(Telecopy Number)
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(Signature of Spouse, If Applicable)
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(Print Name of Spouse, If Applicable)
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(Social Security Number of Spouse, If Applicable)
If Joint Ownership. Check One:
Husband and Wife, as Community Property
Joint Tenants with Right of Survivorship
Tenants-in-Common
Note: The address given above must be the residence address of the investor.
Post office boxes and other addresses will not be accepted.
[SIGNATURE PAGE NO. 1 TO SUBSCRIPTION AGREEMENT]
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IN WITNESS WHEREOF, Purchaser has executed this Subscription Agreement as
of ____________________, 2000.
SIGNATURE FOR PARTNERSHIP, TRUST, LLC. CORPORATION OR OTHER ENTITY:
---------------------------------------------------------
(Print Name of Entity)
---------------------------------------------------------
(Signature)
---------------------------------------------------------
(Print Name of Signatory)
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(Title)
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(Print Type of Entity and Jurisdiction)
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(Address)
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(U.S. Taxpayer Identification Number, If Applicable)
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(Telephone Number)
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(Telecopy Number)
[SIGNATURE PAGE NO. 2 TO SUBSCRIPTION AGREEMENT]
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ACCEPTANCE:
The subscription of the above-named investor is hereby accepted by the
Company.
I CRYSTAL, INC.
a Delaware corporation
-------------------------
Name:
Title:
SIGNED, SEALED AND DELIVERED
in the presence of:
-------------------------------
Signature of Witness
-------------------------------
-------------------------------
Address
-------------------------------
Occupation
The Common Seal of _____________ C/S
was hereunto affixed in the presence of:
-------------------------------
Authorized Signatory
-------------------------------
Authorized Signatory
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SPOUSAL CONSENT
(To be signed by the spouse of any person who is a resident in California or any
other jurisdiction with community property marital legislation)
To the extent that the undersigned, as spouse of __________, may have a
community property or other interest in the assets owned in the name of my
spouse under the laws of the state in which I reside, I hereby consent to and
agree to be bound by Subscription Agreement, of even date herewith, between my
spouse, __________, and I crystal, Inc., a Delaware corporation, to the fullest
extent my spouse is bound thereby.
Dated as of: ------------------------------
Name:
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EXHIBIT 1
DEFINITION OF ACCREDITED INVESTOR
ACCREDITED INVESTOR. "Accredited investor" shall mean any person who comes
within any of the following categories, or who the issuer reasonably believes
comes within any of the following categories. at the time of the sale of the
securities to that person:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in section
2(13) of the Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that Act; 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; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any 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 230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited investors.
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