To: SMART ENERGY SOLUTIONS, INC.
SMART ENERGY SOLUTIONS, INC.
REGULATION S SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
SECTION 1.
1.1 Subscription.
(a) The undersigned, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase ____________ shares (the "Shares") of the
common stock (the "Common Stock") of Smart Energy Solutions, Inc., a Nevada
corporation (the "Company").
1.2 Purchase of Shares.
The undersigned understands and acknowledges that the purchase price
to be remitted to the Company in exchange for the Shares shall be ____________
dollars ($_________) or thirty cents ($0.30) per Share. The Company shall
deliver the Shares to the undersigned promptly after the acceptance of this
Subscription Agreement by the Company.
1.3 Acceptance or Rejection.
(a) The undersigned understands and agrees that the Company reserves the
right to reject this subscription for the Shares if, in its reasonable judgment,
it deems such action in the best interest of the Company, at any time prior to
the Closing, notwithstanding prior receipt by the undersigned of notice of
acceptance of the undersigned's subscription.
(b) The undersigned understands and agrees that its subscription for the
Shares is irrevocable.
(c) In the event the sale of the Shares subscribed for by the undersigned
is not consummated by the Company for any reason (in which event this
Subscription Agreement shall be deemed to be rejected), this Subscription
Agreement and any other agreement entered into between the undersigned 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 undersigned
the purchase price remitted to the Company by the undersigned, without interest
thereon or deduction therefrom, in exchange for the Shares.
SECTION 2.
2.1 Closing. The closing (the "Closing") of the purchase and sale of the Shares,
shall occur simultaneously with the acceptance by the Company of the
undersigned's subscription, as evidenced by the Company's execution of this
Subscription Agreement.
SECTION 3.
3.1 Investor Representations and Warranties. The undersigned hereby
acknowledges, represents and warrants to, and agrees with, the Company and its
affiliates as follows:
(a) Investment Purposes. The undersigned is acquiring the Shares for his
own account as principal, not as a nominee or agent, for investment purposes
only, and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part and no other person has a direct or indirect
beneficial interest in such Shares or any portion thereof. Further, the
undersigned does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to the Shares for which the undersigned is
subscribing or any part of the Shares.
(b) Authority. The undersigned has full power and authority to enter into
this Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the undersigned.
(c) No General Solicitation. The undersigned is not subscribing for the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by person previously not known to the
undersigned in connection with investment securities generally.
(d) No Obligation to Register Shares. The undersigned understands that the
Company is under no obligation to register the Shares under the Securities Act,
or to assist the undersigned in complying with the Securities Act or the
securities laws of any state of the United States or of any foreign
jurisdiction.
(e) Investment Experience. The undersigned is (i) experienced in making
investments of the kind described in this Agreement, (ii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
(iii) able to afford the entire loss of its investment in the Shares.
(f) Exemption from Registration. The undersigned acknowledges his
understanding that the offering and sale of the Shares is intended to be exempt
from registration under the Securities Act. In furtherance thereof, in addition
to the other representations and warranties of the undersigned made herein, the
undersigned further represents and warrants to and agrees with the Company and
its affiliates as follows:
(1) The undersigned realizes that the basis for the exemption may
not be present if, notwithstanding such representations, the undersigned has in
mind merely acquiring the Shares for a fixed or determinable period in the
future, or for a market rise, or for sale if the market does not rise. The
undersigned does not have any such intention;
(2) The undersigned has the financial ability to bear the economic
risk of his investment, has adequate means for providing for his current needs
and personal contingencies and has no need for liquidity with respect to his
investment in the Company; and
(3) The undersigned has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of the
prospective investment in the Shares. The undersigned also represents it has not
been organized for the purpose of acquiring the Shares; and
(4) The undersigned has been provided an opportunity for a
reasonable period of time prior to the date hereof to obtain additional
information concerning the offering of the Shares, the Company and all other
information to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense.
(g) Economic Considerations. The undersigned is not relying on the
Company, or its affiliates or agents with respect to economic considerations
involved in this investment. The undersigned has relied solely on its own
advisors.
(h) No Other Company Representations. No representations or warranties
have been made to the undersigned by the Company, or any officer, employee,
agent, affiliate or subsidiary of the Company, other than the representations of
the Company contained herein, and in subscribing for Shares the undersigned is
not relying upon any representations other than those contained herein.
(i) Compliance with Laws. Any resale of the Shares during the
`distribution compliance period' as defined in Rule 902(f) to Regulation S shall
only be made in compliance with exemptions from registration afforded by
Regulation S. Further, any such sale of the Shares in any jurisdiction outside
of the United States will be made in compliance with the securities laws of such
jurisdiction. The Investor will not offer to sell or sell the Shares in any
jurisdiction unless the Investor obtains all required consents, if any.
(j) Regulation S Exemption. The undersigned understands that the Shares
are being offered and sold to him in reliance on an exemption from the
registration requirements of United States federal and state securities laws
under Regulation S promulgated under the Securities Act and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth herein
in order to determine the applicability of such exemptions and the suitability
of the Investor to acquire the Shares. In this regard, the undersigned
represents, warrants and agrees that:
(1) The undersigned is not a U.S. Person (as defined below) and is
not an affiliate (as defined in Rule 501(b) under the Securities Act) of the
Company and is not acquiring the Shares for the account or benefit of a U.S.
Person. A U.S. Person means any one of the following:
(A) any natural person resident in the United States of
America;
(B) any partnership or corporation organized or incorporated
under the laws of the United States of America;
(C) any estate of which any executor or administrator is a
U.S. person;
(D) any trust of which any trustee is a U.S. person;
(E) any agency or branch of a foreign entity located in the
United States of America;
(F) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;
(G) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized, incorporated
or (if an individual) resident in the United States of America; and
(H) any partnership or corporation if:
(i) organized or incorporated under the laws of any
foreign jurisdiction; and
(ii) formed by a U.S. person principally for the purpose
of investing in securities not registered under the Securities Act, unless it is
organized or incorporated, and owned, by accredited investors (as defined in
Rule 501(a) under the Securities Act) who are not natural persons, estates or
trusts.
(2) At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement, the
undersigned was outside of the United States.
(3) The undersigned will not, during the period commencing on the
date of issuance of the Shares and ending on the first anniversary of such date,
or such shorter period as may be permitted by Regulation S or other applicable
securities law (the "Restricted Period"), offer, sell, pledge or otherwise
transfer the Shares in the United States, or to a U.S. Person for the account or
for the benefit of a U.S. Person, or otherwise in a manner that is not in
compliance with Regulation S.
(4) The undersigned will, after expiration of the Restricted Period,
offer, sell, pledge or otherwise transfer the Shares only pursuant to
registration under the Securities Act or an available exemption therefrom and,
in accordance with all applicable state and foreign securities laws.
(5) The undersigned was not in the United States, engaged in, and
prior to the expiration of the Restricted Period will not engage in, any short
selling of or any hedging transaction with respect to the Shares, including
without limitation, any put, call or other option transaction, option writing or
equity swap.
(6) Neither the undersigned nor or any person acting on his behalf
has engaged, nor will engage, in any directed selling efforts to a U.S. Person
with respect to the Shares and the Investor and any person acting on his behalf
have complied and will comply with the "offering restrictions" requirements of
Regulation S under the Securities Act.
(7) The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with a U.S. Person,
and are not part of a plan or scheme to evade the registration requirements of
the Securities Act.
(8) Neither the undersigned nor any person acting on his behalf has
undertaken or carried out any activity for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States, its territories or possessions, for any of the Shares. The
undersigned agrees not to cause any advertisement of the Shares to be published
in any newspaper or periodical or posted in any public place and not to issue
any circular relating to the Shares, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its territories, and only in compliance with any local
applicable securities laws.
(9) Each certificate representing the Shares shall be endorsed with
the following legends, in addition to any other legend required to be placed
thereon by applicable federal or state securities laws:
(A) "THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("THE SECURITIES ACT")) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT."
(B) "TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER
THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.
HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT."
(10) The undersigned consents to the Company making a notation on
its records or giving instructions to any transfer agent of the Company in order
to implement the restrictions on transfer of the Shares set forth in this
Section 2.
(k) Accredited Investor. The undersigned is an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations under the
Securities Act by reason of Rule 501(a)(3).
(l) Potential Loss of Investment; Risk Factors. The undersigned
understands that an investment in the Shares is a speculative investment which
involves a high degree of risk and the potential loss of his entire investment.
The undersigned understands that the following factors, among others, could
cause the loss of any or all of his investment.
(1) The Company is a development stage company with no operating
history for the undersigned to evaluate its business. The Company was
incorporated in the State of Nevada in June 2006, and as a result is only in the
very early stages of development. Because the Company has no operating history,
it is difficult to evaluate its business and future prospects. The undersigned
has also considered the uncertainties and difficulties frequently encountered by
companies, such as the Company, in their early stages of development. The
Company's revenue and income potential is unproven and its business model is
still emerging. If its business model does not prove to be profitable, the
undersigned may lose all of his investment.
(2) The Company currently does not have enough working capital to
satisfy its capital needs. The Company is dependent upon its management team to
fund its ongoing operations, and cannot be certain that future financing will be
available to it on acceptable terms when it needs it. The Company can give no
assurances that it will be able to sell any portion of this offering or that
management will continue to fund its ongoing operations. This, along with the
possibility of other factors and circumstances the Company cannot predict, may
require it to seek additional financing faster than anticipated. If the Company
is unable to obtain financing to meet its needs, the undersigned may lose of his
investment.
(3) The Company's officers and directors will only devote a limited
amount of time to the Company. Their divided interests may hinder the Company's
ability to generate revenue. This could result in missed business opportunities
and worse-than-expected operating results. The undersigned may lose his entire
investment.
(4) Management has never operated in the industry in which it
intends to operate. This lack of experience may result in the Company's needing
to employ outside experts that have such experience. The additional cost could
result in a net operating loss and, ultimately, could result in the Company's
failure. Management's inexperience may limit the Company's ability to generate
revenues. The Company may never achieve successful operations, and the
undersigned may lose his entire investment.
(m) Investment Commitment. The undersigned's overall commitment to
investments which are not readily marketable is not disproportionate to the
undersigned's net worth, and an investment in the Shares will not cause such
overall commitment to become excessive.
(n) Receipt of Information. The undersigned has received all documents,
records, books and other information pertaining to the undersigned's investment
in the Company that has been requested by the undersigned.
(o) Investor Questionnaire. The undersigned represents and warrants to the
Company that all information that the undersigned has provided to the Company,
including, without limitation, the information in the Investor Questionnaire
attached hereto or previously provided to the Company (the "Investor
Questionnaire"), is correct and complete as of the date hereof.
(p) No Reliance. Other than as set forth herein, the undersigned is not
relying upon any other information, representation or warranty by the Company or
any officer, director, stockholder, agent or representative of the Company in
determining to invest in the Shares. The undersigned has consulted, to the
extent deemed appropriate by the undersigned, with the undersigned's own
advisers as to the financial, tax, legal and related matters concerning an
investment in the Shares and on that basis believes that his or its investment
in the Shares is suitable and appropriate for the undersigned.
(q) No Governmental Review. The undersigned is aware that no federal or
state agency has (i) made any finding or determination as to the fairness of
this investment, (ii) made any recommendation or endorsement of the Shares or
the Company, or (iii) guaranteed or insured any investment in the Shares or any
investment made by the Company.
(r) Price of Shares. The undersigned understands that the price of the
Shares offered hereby bear no relation to the assets, book value or net worth of
the Company and were determined arbitrarily by the Company. The undersigned
further understands that there is a substantial risk of further dilution on his
or its investment in the Company.
SECTION 4.
4.1 Company's Representations and Warranties. The Company represents and
warrants to the undersigned as follows:
(a) Organization of the Company. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Nevada.
(b) Authority. (a) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the Shares; (b) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required; and (c) this Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
(c) Exemption from Registration; Valid Issuances. The sale and issuance of
the Shares, in accordance with the terms and on the bases of the representations
and warranties of the undersigned set forth herein, may and shall be properly
issued by the Company to the undersigned pursuant to any applicable federal or
state law. When issued and paid for as herein provided, the Shares shall be duly
and validly issued, fully paid, and nonassessable. Neither the sales of the
Shares pursuant to, nor the Company's performance of its obligations under, this
Agreement shall (a) result in the creation or imposition of any liens, charges,
claims or other encumbrances upon the Shares or any of the assets of the
Company, or (b) entitle the other holders of the Common Stock of the Company to
preemptive or other rights to subscribe to or acquire the Common Stock or other
securities of the Company. The Shares shall not subject the undersigned to
personal liability by reason of the ownership thereof.
(d) No General Solicitation or Advertising in Regard to this Transaction.
Neither the Company nor any of its affiliates nor any person acting on its or
their behalf (a) has conducted or will conduct any general solicitation (as that
term is used in Rule 502(c) of Regulation D) or general advertising with respect
to any of the Shares, or (b) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Common Stock under the Securities Act.
SECTION 5.
5.1 Indemnity. The undersigned agrees to indemnify and hold harmless the
Company, its officers and directors, employees and its affiliates and their
respective successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the undersigned to
comply with any covenant or agreement made by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.
5.2 Modification. Neither this Agreement nor any provisions hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
5.3 Notices. Any notice, demand or other communication which any party hereto
may be required, or may elect, to give to anyone interested hereunder shall be
sufficiently given if (a) deposited, postage prepaid, in a United States mail
letter box, registered or certified mail, return receipt requested, addressed to
such address as may be given herein, or (b) delivered personally at such
address.
5.4 Counterparts. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts and by facsimile, and each of
such counterparts shall, for all purposes, constitute one agreement binding on
all parties, notwithstanding that all parties are not signatories to the same
counterpart. Signatures may be facsimiles.
5.5 Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligation of the undersigned shall be
joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators and successors.
5.6 Entire Agreement. This Agreement and the documents referenced herein contain
the entire agreement of the parties and there are no representations, covenants
or other agreements except as stated or referred to herein and therein.
5.7 Assignability. This Agreement is not transferable or assignable by the
undersigned.
5.8 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of law principles.
5.9 Pronouns. The use herein of the masculine pronouns "him" or "his" or similar
terms shall be deemed to include the feminine and neuter genders as well and the
use herein of the singular pronoun shall be deemed to include the plural as
well.
5.10 Further Assurances. Upon request from time to time, the undersigned shall
execute and deliver all documents, take all rightful oaths and do all other acts
that may be necessary or desirable, in the reasonable opinion of the Company or
its counsel, to effect the subscription for the Shares in accordance herewith.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the
_____ day of ________________, 2006.
Amount of Investment:
$
---------------------
INDIVIDUAL INVESTOR:
----------------------
Name:
PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER INVESTOR
------------------------------
(Name of Entity)
By:
-------------------
Name:
Title:
Address:
Taxpayer Identification Number:_____________
ACCEPTANCE OF SUBSCRIPTION
(to be filed out only by the Company)
The Company hereby accepts the above application for subscription for Shares on
behalf of the Company.
Dated: ____________ ___, 2006
SMART ENERGY SOLUTIONS, INC.
By:______________________________
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
SMART ENERGY SOLUTIONS, INC.
INVESTOR QUESTIONNAIRE
A. General Information.
1. Print Full Name of Investor: Individual:
--------------------------------
First, Middle, Last
Partnership, Corporation, Trust,
Custodial Account, Other:
--------------------------------
--------------------------------
Name of Entity
2. Address for Notices: --------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
3. Name of Primary Contact Person:
--------------------------------
Title:
--------------------------------
4. Telephone Number:
--------------------------------
5. E-Mail Address:
--------------------------------
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6. Facsimile Number:
--------------------------------
7. Permanent Address:
--------------------------------
(if different from Address for
Notices above) --------------------------------
8. Authorized Signatory:
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Title:
--------------------------------
Telephone Number:
--------------------------------
Facsimile Number:
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B. Accredited Investor Status
The Investor represents and warrants that the Investor is an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act"), and has checked the box or boxes
below which are next to the categories under which the Investor qualifies as an
accredited investor:
FOR INDIVIDUALS:
|_| A natural person with individual net worth (or joint net worth with
spouse) in excess of $1 million. For purposes of this item, "net
worth" means the excess of total assets at fair market value,
including home, home furnishings and automobiles (and including
property owned by a spouse), over total liabilities.
|_| A natural person with individual income (without including any
income of the Investor's spouse) in excess of $200,000, or joint
income with spouse of $300,000, in each of the two most recent years
and who reasonably expects to reach the same income level in the
current year.
FOR ENTITIES:
|_| A 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.
|_| An insurance company as defined in Section 2(13) of the Securities
Act.
|_| A broker-dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934.
|_| An investment company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"). If an Investor has
checked this box, please contact Xxxxx Xxxxx, Esq. at (000) 000-0000
for additional information that will be required.
|_| A business development company as defined in Section 2(a)(48) of the
Investment Company Act.
|_| A small business investment company licensed by the Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
|_| A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940. If an Investor
has checked this box, please contact Xxxxx Xxxxx, Esq. at (516)
887-8250 for additional information that will be required.
|_| An organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of $5 million.
|_| A trust with total assets in excess of $5 million not formed for the
specific purpose of acquiring the Shares, whose purchase is directed
by a person with such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of an investment in the Company and the purchase of the Shares.
|_| An employee benefit plan within the meaning of ERISA if the decision
to invest in the Shares 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
if the employee benefit plan has total assets in excess of $5
million or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors.
|_| A 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 the
plan has total assets in excess of $5 million.
|_| An entity, including a grantor trust, in which all of the equity
owners are accredited investors as determined under any of the
foregoing paragraphs (for this purpose, a beneficiary of a trust is
not an equity owner, but the grantor of a grantor trust is an equity
owner).
C. Supplemental Data for Entities
1. If the Investor is not a natural person, furnish the following supplemental
data (natural persons may skip this Section C of the Investor Questionnaire):
Legal form of entity (trust, corporation,partnership, etc.): ___________________
Jurisdiction of organization: __________________________________________________
2. Was the Investor organized for the specific purpose of acquiring the Shares?
|_| Yes |_| No
If the answer to the above question is "Yes," please contact Xxxxx Xxxxx,
Esq. at (000) 000-0000 for additional information that will be required.
3. Are shareholders, partners or other holders of equity or beneficial interest
in the Investor able to decide individually whether to participate, or the
extent of their participation, in the Investor's investment in the Company
(i.e., can shareholders, partners or other holders of equity or beneficial
interest in the Investor determine whether their capital will form part of the
capital invested by the Investor in the Company)?
|_| Yes |_| No
If the answer to the above question is "Yes," please contact Xxxxx Xxxxx,
Esq. at (000) 000-0000 for additional information that will be required.
4(a). Please indicate whether or not the Investor is, or is acting on behalf of,
(i) an employee benefit plan within the meaning of Section 3(3) of ERISA,
whether or not such plan is subject to ERISA, or (ii) an entity which is deemed
to hold the assets of any such employee benefit plan pursuant to 29 C.F.R. Sec.
2510.3-101. For example, a plan which is maintained by a foreign corporation,
governmental entity or church, a Xxxxx plan covering no common-law employees and
an individual retirement account are employee benefit plans within the meaning
of Section 3(3) of ERISA but generally are not subject to ERISA (collectively,
"Non-ERISA Plans"). In general, a foreign or US entity which is not an operating
company and which is not publicly traded or registered as an investment company
under the Investment Company Act of 1940, as amended, and in which 25% or more
of the value of any class of equity interest is held by employee pension or
welfare plans (including an entity which is deemed to hold the assets of any
such plan), would be deemed to hold the assets of one or more employee benefit
plans pursuant to 29 C.F.R. Sec. 2510.3-101. However, if only Non-ERISA Plans
were invested in such an entity, the entity generally would not be subject to
ERISA. For purposes of determining whether this 25% threshold has been met or
exceeded, the value of any equity interest held by a person (other than such a
plan or entity) who has discretionary authority or control with respect to the
assets of the entity, or any person who provides investment advice for a fee
(direct or indirect) with respect to such assets, or any affiliate of such a
person, is disregarded.
|_| Yes |_| No
4(b). If the Investor is, or is acting on behalf of, such an employee benefit
plan, or is an entity deemed to hold the assets of any such plan or plans,
please indicate whether or not the Investor is subject to ERISA.
|_| Yes |_| No
4(c.) If the Investor answered "Yes" to question 4.(b) and the Investor is
investing the assets of an insurance company general account, please indicate
what percentage of the Investor's assets the purchase of the Shares is subject
to ERISA. ___________%.
5. Does the amount of the Investor's subscription for the Shares in the Company
exceed 40% of the total assets (on a consolidated basis with its subsidiaries)
of the Investor?
|_| Yes |_| No
If the question above was answered "Yes," please contact Xxxxx Xxxxx, Esq.
at (000) 000-0000 for additional information that will be required.
6(a). Is the Investor a private investment company which is not registered under
the Investment Company Act, in reliance on Section 3(c)(1) or Section 3(c)(7)
thereof?
|_| Yes |_| No
6(b). If the question above was answered "Yes," was the Investor formed prior to
April 30, 1996?
|_| Yes |_| No
If the questions set forth in (a) and (b) above were both answered "Yes,"
please contact Xxxxx Xxxxx, Esq. at (000) 000-0000 for additional information
that will be required.
7(a). Is the Investor a grantor trust, a partnership or an S-Corporation for US
federal income tax purposes?
|_| Yes |_| No
7(b). If the question above was answered "Yes," please indicate whether or not:
(i) more than 50 percent of the value of the ownership interest of any
beneficial owner in the Investor is (or may at any time during the term of
the Company be) attributable to the Investor's (direct or indirect)
interest in the Company; or
|_| Yes |_| No
(ii) it is a principal purpose of the Investor's participation in the
Company to permit the Partnership to satisfy the 100 partner limitation
contained in US Treasury Regulation Section 1.7704-1(h)(3).
|_| Yes |_| No
If either question above was answered "Yes," please contact Xxxxx Xxxxx,
Esq. at (000) 000-0000 for additional information that will be required.
8. If the Investor's tax year ends on a date other than December 31, please
indicate such date below:
------------------------------------
(Date)
D. Related Parties
1. To the best of the Investor's knowledge, does the Investor control, or is the
Investor controlled by or under common control with, any other investor in the
Company?
|_| Yes |_| No
If the answer above was answered "Yes", please identify such related
investor(s) below.
Name(s) of related investor(s):
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2. Will any other person or persons have a beneficial interest in the Shares to
be acquired hereunder (other than as a shareholder, partner, or other beneficial
owner of equity interest in the Investor)?
|_| Yes |_| No
If either question above was answered "Yes", please contact Xxxxx Xxxxx,
Esq. at (000) 000-0000 for additional information that will be required.
The Investor understands that the foregoing information will be relied upon by
the Company for the purpose of determining the eligibility of the Investor to
purchase the Shares. The Investor agrees to notify the Company immediately if
any representation or warranty contained in this Subscription Agreement,
including this Investor Questionnaire, becomes untrue at any time. The Investor
agrees to provide, if requested, any additional information that may reasonably
be required to substantiate the Investor's status as an accredited investor or
to otherwise determine the eligibility of the Investor to purchase the Shares.
The Investor agrees to indemnify and hold harmless the Company and each officer,
director, shareholder, agent and representative of the Company and their
respective affiliates and successors and assigns from and against any loss,
damage or liability due to or arising out of a breach of any representation,
warranty or agreement of the Investor contained herein.
INDIVIDUAL:
------------------------------------
(Signature)
------------------------------------
(Print Name)
PARTNERSHIP, CORPORATION,
TRUST, CUSTODIAL ACCOUNT,
OTHER:
-----------------------------------
(Name of Entity)
By:
---------------------------------
(Signature)
---------------------------------
(Print Name and Title)
Annex 1
DEFINITION OF "INVESTMENTS"
The term "investments" means:
(1) Securities, other than securities of an issuer that controls, is
controlled by, or is under common control with, the Investor that owns such
securities, unless the issuer of such securities is:
(i) An investment company or a company that would be an investment
company but for the exclusions or exemptions provided by the Investment Company
Act, or a commodity pool; or
(ii) a Public Company (as defined below);
(iii) A company with shareholders' equity of not less than $50
million (determined in accordance with generally accepted accounting principles)
as reflected on the company's most recent financial statements, provided that
such financial statements present the information as of a date within 16 months
preceding the date on which the Investor acquires Shares;
(2) Real estate held for investment purposes;
(3) Commodity Shares (as defined below) held for investment purposes;
(4) Physical Commodities (as defined below) held for investment purposes;
(5) To the extent not securities, Financial Contracts (as defined below)
entered into for investment purposes;
(6) In the case of an Investor that is a company that would be an
investment company but for the exclusions provided by Section 3(c)(1) or 3(c)(7)
of the Investment Company Act, or a commodity pool, any amounts payable to such
Investor pursuant to a firm agreement or similar binding commitment pursuant to
which a person has agreed to acquire an interest in, or make capital
contributions to, the Investor upon the demand of the Investor; and
(7) Cash and cash equivalents held for investment purposes.
Real Estate that is used by the owner or a Related Person (as defined
below) of the owner for personal purposes, or as a place of business, or in
connection with the conduct of the trade or business of such owner or a Related
Person of the owner, will NOT be considered Real Estate held for investment
purposes, provided that real estate owned by an Investor who is engaged
primarily in the business of investing, trading or developing real estate in
connection with such business may be deemed to be held for investment purposes.
However, residential real estate will not be deemed to be used for personal
purposes if deductions with respect to such real estate are not disallowed by
section 280A of the Internal Revenue Code of 1986, as amended.
A Commodity Interest or Physical Commodity owned, or a Financial Contract
entered into, by the Investor who is engaged primarily in the business of
investing, reinvesting, or trading in Commodity Shares, Physical Commodities or
Financial Contracts in connection with such business may be deemed to be held
for investment purposes.
"Commodity Shares" means commodity futures contracts, options on commodity
futures contracts, and options on physical commodities traded on or subject to
the rules of:
(i) Any contract market designated for trading such transactions
under the Commodity Exchange Act and the rules thereunder; or
(ii) Any board of trade or exchange outside the United States, as
contemplated in Part 30 of the rules under the Commodity Exchange Act.
"Public Company" means a company that:
(i) files reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended; or
(ii) has a class of securities that are listed on a Designated
Offshore Securities Market, as defined by Regulation S of the Securities Act.
"Financial Contract" means any arrangement that:
(i) takes the form of an individually negotiated contract,
agreement, or option to buy, sell, lend, swap, or repurchase, or other similar
individually negotiated transaction commonly entered into by participants in the
financial markets;
(ii) is in respect of securities, commodities, currencies, interest
or other rates, other measures of value, or any other financial or economic
interest similar in purpose or function to any of the foregoing; and
(iii) is entered into in response to a request from a counter party
for a quotation, or is otherwise entered into and structured to accommodate the
objectives of the counterparty to such arrangement.
"Physical Commodities" means any physical commodity with respect to which
a Commodity Interest is traded on a market specified in the definition of
Commodity Shares above.
"Related Person" means a person who is related to the Investor as a
sibling, spouse or former spouse, or is a direct lineal descendant or ancestor
by birth or adoption of the Investor, or is a spouse of such descendant or
ancestor, provided that, in the case of a Family Company, a Related Person
includes any owner of the Family Company and any person who is a Related Person
of such an owner. "Family Company" means a company that is owned directly or
indirectly by or for two or more natural persons who are related as siblings or
spouse (including former spouses), or direct lineal descendants by birth or
adoption, spouses of such persons, the estates of such persons, or foundations,
charitable organizations or trusts established for the benefit of such persons.
For purposes of determining the amount of investments owned by a company,
there may be included investments owned by majority-owned subsidiaries of the
company and investments owned by a company ("Parent Company") of which the
company is a majority-owned subsidiary, or by a majority-owned subsidiary of the
company and other majority-owned subsidiaries of the Parent Company.
In determining whether a natural person is a qualified purchaser, there
may be included in the amount of such person's investments any investment held
jointly with such person's spouse, or investments in which such person shares
with such person's spouse a community property or similar shared ownership
interest. In determining whether spouses who are making a joint investment in
the Partnership are qualified purchasers, there may be included in the amount of
each spouse's investments any investments owned by the other spouse (whether or
not such investments are held jointly). There shall be deducted from the amount
of any such investments any amounts specified by paragraph 2(a) of Annex 2
incurred by such spouse.
In determining whether a natural person is a qualified purchaser, there
may be included in the amount of such person's investments any investments held
in an individual retirement account or similar account the investments of which
are directed by and held for the benefit of such person.
Annex 2
VALUATIONS OF INVESTMENTS
The general rule for determining the value of investments in order to
ascertain whether a person is a qualified purchaser is that the value of the
aggregate amount of investments owned and invested on a discretionary basis by
such person shall be their fair market value on the most recent practicable date
or their cost. This general rule is subject to the following provisos:
(1) In the case of Commodity Shares, the amount of investments shall be
the value of the initial margin or option premium deposited in connection with
such Commodity Shares; and
(2) In each case, there shall be deducted from the amount of investments
owned by such person the following amounts:
(i) The amount of any outstanding indebtedness incurred to acquire
the investments owned by such person.
(ii) A Family Company, in addition to the amounts specified in
paragraph (a) above, shall have deducted from the value of such Family Company's
investments any outstanding indebtedness incurred by an owner of the Family
Company to acquire such investments.
