SUBSCRIPTION AGREEMENT FOR BAYWOOD INTERNATIONAL, INC.
Exhibit
4.9
FOR
BAYWOOD
INTERNATIONAL, INC.
Baywood
International, Inc., a Nevada corporation (the “Company”), and
____________________________________ (“Investor”), in consideration of
the mutual promises contained in this Subscription Agreement (this “Agreement”)
and the performance and payment described in this Agreement, the sufficiency
of
which is hereby acknowledged, mutually agree as follows:
1. Subscription. (a)
Investor hereby subscribes for and offers to purchase units of the Company’s
securities described below in exchange for the consideration set forth on
the
signature page below. Each unit consists of (i) 10% Senior
Convertible Notes (the “Notes”) and (ii) for no additional
consideration, a certain number of five-year warrants to purchase shares
of
common stock, $0.001 par value per share, of the Company (each a
“Warrant,” collectively the “Warrants” and together with the
Notes, the “Securities”). The definitive terms for the
Securities shall be set forth in the following agreements and other documents,
which are being provided by the Company to Investor with this Agreement
(together with this Agreement, the “Definitive Agreements”): (x) the
Note, (y) the Warrant, and (y) the Registration Rights Agreement.
(b) Upon
execution and delivery hereof, the Investor shall deliver to the Company
either
a check or evidence that a wire transfer has been made to the Company in
accordance with its instructions, in the full amount of the purchase price
of
the Securities for which the Investor is subscribing (the
“Payment”). In the event that the undersigned shall elect to
deliver the Payment in the form of a check, such check should be made payable
to
“Baywood International, Inc.” and have a notation thereon that indicates that
such check relates to the “Baywood Bridge Financing”.
(c) The
Company will hold a closing of the sale of the Securities to Investor (the
“Closing”) at such time as the Company and Northeast Securities, Inc.
(“NESC”) may determine. Upon receipt by the Company of the
Payment for Securities to be purchased hereunder by Investor, the Investor
will
be registered on the books and records of the Company as the record owner
of the
securities underlying the Securities so purchased and the Company shall deliver
to the Investor final, executed copies of the Definitive
Agreements.
(d) The
Company has agreed to pay NESC, as placement agent of this offering, an amount
equal to ten percent (10%) of the gross proceeds received by the Company
from
the offering of the Securities. The Company has also agreed to
reimburse NESC for certain out-of-pocket expenses incurring in connection
with
this offering, up to a maximum amount of $15,000. The Company shall
also pay other expenses associated with completing this offering, including
without limitation expenses of its counsel and expenses incurred in the
qualification of the Securities under the blue sky laws of the states where
the
Securities will be offering and sold. Investor understands that O.
Xxx Xxxxx, III, a shareholder and member of the Board of Directors of the
Company, is an employee of NESC and may also make an investment in
Securities.
1
2. Representations
and Warranties of Investor. Investor hereby represents and
warrants to the Company and NESC as follows:
|
|
(a)
|
Investor
has full power and authority to enter into this Agreement and the
other
Definitive Agreements, and such agreement constitutes the valid
and
legally binding obligation of the Investor, enforceable against
the
Investor in accordance with its terms, subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium
and other similar laws relating to or affecting creditors’ rights
generally and (ii) general equitable principles (whether considered
in a proceeding in equity or at
law)
|
|
|
(b)
|
Investor
is experienced in evaluating and investing in securities such as
the
Securities and in companies such as the Company. Investor has
substantial knowledge regarding, and experience in, financial and
business
matters, including knowledge and experience in investing in and
evaluating
private placement transactions of securities in companies similar
to the
Company. Investor is capable of evaluating the risks and merits
of its investment in the Securities and in the Company and has
the
capacity to protect his, her or its own interests. Investor has
been furnished all information it has requested to enable it to
evaluate
the merits and risks of an investment in the Securities and in
the
Company.
|
|
|
(c)
|
Investor
is acquiring the Securities for investment for his, her or its
own
account, not as a nominee or agent, and not with a view to, or
for resale
in connection with, any distribution thereof, and Investor has
no present
intention of selling or distributing the Securities. By
executing this Agreement, Investor further represents that Investor
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 any of the Securities. Investor understands
that as of the date of this Agreement the Securities have not been
registered under the Securities Act of 1933, as amended (the
“Securities Act”). Investor will not sell or
distribute the Securities, except in compliance with applicable
securities
laws.
|
|
|
(d)
|
Investor
understands that the Securities it is purchasing are characterized
as
“restricted securities” under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving
a
public offering and that under such laws and applicable regulations
such
Securities may be resold without registration under the Securities
Act,
only in certain limited circumstances. In the absence of an
effective registration statement covering the Securities (or any
securities of the Company issued upon conversion thereof) or an
available
exemption from registration under the Securities Act, the Securities
(and
any securities of the Company issued upon conversion thereof) must
be held
indefinitely. Investor further represents that it is familiar
with Rule 144 under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act, including the Rule 144 condition that current information about
the Company be available to the public. Such information is not
now available and the Company has no present plans to make such
information available.
|
2
|
|
(e)
|
Investor
has read, understood, and is familiar with the Definitive Agreements,
and
has had an opportunity to discuss in detail the Company’s business,
management and financial affairs with, and to ask questions of,
the
Company’s managers and employees with regard to the Company, its
businesses and other information relevant to Investor, and has
reviewed
all documents and records of the Company which the Company has
provided in
response to Investor’s request and has had an opportunity to request and
review all documents necessary to fully evaluate the investment
decision. In this regard, Investor understands that while NESC
will receive compensation in connection with such offering, it
is not
guaranteeing or assuming any responsibility for compliance by the
Company
of the terms of the offering of the Securities or the Definitive
Agreements.
|
|
|
(f)
|
Investor
is financially able to bear the economic risk of investment in
the
Securities, including a total loss of investment. Investor has
adequate means of providing for its current needs and has no need
for
liquidity in its investment in the Securities and has no reason
to
anticipate any material change in its financial condition in the
foreseeable future. Investor understands that the acquisition
of the Securities is an investment involving a risk of loss and
there is
no guarantee that Investor will realize any gain from such investment,
and
that he, she or it could lose the total amount of such
investment. Investor understands that neither the Securities
and Exchange Commission (the “SEC”) nor any other U.S. federal or
state agency has reviewed the proposed offering of Securities or
made any
finding or determination of fairness of the offering of Securities
or any
recommendation or endorsement of such
investment.
|
|
|
(g)
|
No
representations or warranties have been made to Investor by the
Company,
NESC or any of their respective agents, managers, employees or
affiliates,
except for those representations and warranties of the Company
set forth
in this Agreement or the Definitive Agreements, and in entering
into the
present transaction Investor is not relying on any information,
other than
from the results of independent investigation by Investor and as
contained
in such agreements. Investor understands that the Securities are
being
offered to him, her or it in reliance on specific exemptions from
the
registration requirements of U.S. federal and state securities
laws and
that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and
understandings of Investor set forth herein in order to determine
the
applicability of such exemptions and the suitability of Investor
to
acquire the Securities.
|
|
|
(h)
|
Investor
has its principal residence in the state or jurisdiction set forth
on the
signature page to this Agreement, and the address and social security
number or federal tax identification number, if any, set forth
below is
the true and correct address and social security number or federal
tax
identification number of Investor. Investor has no present
intention of becoming a resident of another state or
jurisdiction.
|
|
|
(i)
|
Investor
has accurately and fully completed the Investor Questionnaire,
which is
incorporated in this Agreement by this reference. Investor
represents that the information contained in the Investor Questionnaire
is
complete and accurate and may be relied upon by the Company and
its
officers, directors, and control persons, as well as
NESC. Investor hereby covenants to notify the Company and NESC
immediately of any material change in any of the information contained
in
the Investor Questionnaire.
|
3
|
|
(j)
|
Investor
understands that his, her or its subscription for the Securities
is
subject to acceptance by the Company, in whole or in part, and
understands
that his, her or its subscription offer may not be withdrawn or
revoked. Further, Investor understands that there is no minimum
amount of investment required in the Company’s offering of the Securities
and, accordingly, the Company might elect to accept and close the
purchase
contemplated by this Agreement even if no minimum amount of Securities
is
sold.
|
|
|
(k)
|
Investor
is an “accredited investor,” as such term is defined under Rule 501 of
Regulation D promulgated under the Securities Act, as currently
in effect,
and under state securities or “blue sky”
laws.
|
|
|
(l)
|
Investor
understands that it shall not be entitled to seek any remedies
with
respect to its purchase of Securities from any party other than
the
Company. Further, Investor acknowledges that NESC has been
represented by Hand Baldachin & Xxxxxxxx LLP, and that such counsel
has not represented and is not representing
Investor.
|
3. Security
Certificate Restrictions. All certificates representing
Securities subject to this Agreement shall bear a legend in substantially
the
following form:
“NEITHER
THE SECURITIES REPRESENTED HEREBY NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND
ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY (AS DEFINED BELOW) RECEIVES
AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES
MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR APPLICABLE STATE SECURITIES LAWS.”
4. Representations
and Warranties of the Company. The Company hereby
represents and warrants to Investor as follows:
|
|
(a)
|
The
Company is a corporation duly formed, validly existing and in good
standing under the laws of the State of Nevada, is duly qualified
to do
business, and is in good standing as a foreign company, in each
jurisdiction in which its ownership or lease of property or the
conduct of
its businesses requires such qualification, and has all company
power and
authority necessary to own, lease or hold its properties and to
conduct
the businesses in which it is presently
engaged.
|
4
|
|
(b)
|
There
are no actions, suits, proceedings, inquiries or investigations
before or
by any court, public board, self-regulatory organization or body
or
governmental agency to which the Company is a party or of which
any
property or assets of any of the Company is subject which, if determined
adversely to the Company, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the
business,
condition or prospects (financial or other) of the Company (a
“Material Adverse Effect”), and, to the best of the Company’s
knowledge, no such proceedings are threatened or contemplated by
any
person, entity or governmental
authority.
|
|
|
(c)
|
The
Company has all necessary company power and authority to execute,
issue
and deliver the Securities and any securities issued upon the conversion
or exercise of the Securities (“Other Securities”); the
Securities and the Other Securities have been duly and validly
authorized,
and, when the Other Securities are duly issued and delivered to
the
Investor in accordance with the terms of the applicable Definitive
Agreement, the Other Securities will be duly and validly authorized
and
issued, fully paid and non-assessable and will be free and clear
of any
preemptive rights and liens.
|
|
|
(d)
|
The
Company has all necessary power and authority to execute and deliver
this
Agreement and each of the other Definitive Agreements to which
it is a
party, and to perform its obligations hereunder and thereunder,
to issue
the Securities and the Other Securities and to consummate the
Closing.
|
|
|
(e)
|
This
Agreement and each of the other Definitive Agreements has been
duly
authorized, executed and delivered by the Company and, when executed
and
delivered by the Company, assuming that such Definitive Agreements
are or
will be the valid and binding agreements of the other parties thereto,
will constitute a valid and binding obligation of the Company,
enforceable
against the Company in accordance with its respective terms, subject
to
(i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting
creditors’ rights generally and (ii) general equitable principles
(whether considered in a proceeding in equity or at
law).
|
|
|
(f)
|
The
Company is not currently (i) in violation of its Articles of Incorporation
or By-laws or (ii) in default in any material respect, and no event
has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term,
covenant
or condition contained in any indenture, mortgage, deed of trust,
loan
agreement, note, lease, license, franchise agreement, permit, certificate,
contract or other agreement or instrument to which it is a party
or by
which it is bound or to which any of its properties or assets is
subject,
except, in the case of clause (ii), as would not, individually
or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
|
5
|
|
(g)
|
The
financial statements, including the related notes and supporting
schedules, included in the Company’s filings with the SEC comply in all
material respects with the applicable accounting requirements of
the SEC
and present fairly the financial condition, results of operations
and
changes in financial position of the Company on the basis stated
therein
at the respective dates or for the respective periods to which
they apply;
such statements and related schedules and notes have been prepared
in
accordance with generally accepted accounting principles in the
United
States (“GAAP”) consistently applied throughout the periods
involved.
|
|
|
(h)
|
None
of the materials provided by the Company to the Investor contains
any
untrue statement of a material fact or omits to state a material
fact
necessary in order to make the statements therein, in the light
of the
circumstances under which they were made, not
misleading.
|
|
|
(i)
|
Since
December 31, 2004, the Company has filed all reports, schedules,
statements and other documents required to be filed by it with
the
SEC. Such documents, when they became effective or were filed
with the SEC, as the case may be, conformed in all material respects
to
the requirements of the Securities Exchange Act of 1934, as amended,
and
the rules and regulations of the SEC thereunder (collectively,
the
“Exchange Act”); and none of such documents contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein,
in the light of the circumstances under which they were made, not
misleading.
|
|
|
(j)
|
The
execution, delivery and performance by the Company of this Agreement
and
the other Definitive Agreements, the performance of the obligations
of the
Company hereunder and thereunder, the issuance of the Securities
and the
Other Securities, and the consummation of the closing of this offering
will not, as of the Closing, (i) conflict with or result in a breach
or
violation of any of the terms or provisions of, or constitute a
default
under, any indenture, mortgage, deed of trust, loan agreement,
note,
lease, license, franchise agreement, permit, certificate, contract
or
other agreement or instrument to which the Company is a party or
by which
the Company is bound or to which any of the property or assets
of the
Company is subject, (ii) result in any violation of the provisions
of the
Company’s Articles of Incorporation or By-laws or any statute or any
order, rule or regulation of any court or governmental agency or
body
having applicable to or jurisdiction over the Company or any of
its
respective properties or assets, (iii) result in the imposition
or
creation of (or the obligation to create or impose) any lien under
any
agreement or instrument to which the Company is a party or by which
any of
the Company or its properties or assets are bound or (iv) result
in the
suspension, termination or revocation of any permit, license, consent,
exemption, franchise, authorization or other approval (each, an
“Authorization”) of the Company or any other impairment of the
rights of the holder of any such Authorization, except, in the
case of
clauses (i), (iii) and (iv), as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
|
|
|
(k)
|
No
consent, approval, authorization or order of, or filing or registration
with, any court or governmental agency or body is required for
the
execution, delivery and performance of the Definitive Agreements
by the
Company, the issuance of the Securities and the Other Securities,
the
performance of the obligations of the Company hereunder and thereunder
and
the consummation of the closing of the transactions contemplated
hereby
and thereby.
|
6
|
|
(l)
|
The
capitalization of the Company outstanding immediately prior to
the Closing
is set forth on Exhibit A hereto. No capital stock of the
Company or capital stock of the Company issuable upon exercise
or exchange
of any outstanding options, warrants or rights, are subject to
any
preemptive rights, rights of first refusal or other rights to purchase
capital stock of the Company (whether in favor of the Company or
any other
person).
|
5. Further
Agreement by the Company. In addition to the other agreements of
the Company in this Agreement, the Company agrees to conduct this offering
of
Securities in compliance with the requirements of Regulation D under the
Securities Act and not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act) that would be integrated with the sale of the Securities to the Investor
in
a manner that would require the registration of any such sale of any of the
Securities under the Securities Act.
6. Headings. Paragraph
headings are not to be considered as part of this Agreement, are included
solely
for convenience, and are not intended to be full or accurate descriptions
of the
contents thereof.
7. Construction. Unless
the context requires otherwise, words denoting the singular may be construed
as
denoting the plural, and words of one gender may be construed as denoting
such
other gender as is appropriate. The word including (and variations
thereof) is used in an illustrative sense rather than a limiting
sense.
8. Succession
and Assignment. All of the terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and
their respective successors and assigns. Neither party may assign
this Agreement or any of their rights, interests or obligations in this
Agreement without the prior written consent of the other party.
9. Notices. All
notices that are required or permitted hereunder shall be in writing and
shall
be sufficient if personally delivered, sent by facsimile in the case of notice
to the Company only, or sent by registered or certified mail or Federal Express
or other nationally recognized overnight delivery service. Any
notices shall be deemed given upon the earlier of the date when received
at, the
day when delivered via facsimile or the third day after the date when sent
by
registered or certified mail or the day after the date when sent by Federal
Express to, the address set forth below, unless such address is changed by
notice to the other party hereto:
To
the
Company:
Baywood
International, Inc.
00000
Xxxxx 00xx
Xxxxx
Xxxxx
0
Xxxxxxxxxx,
Xxxxxxx 00000
Attn:
Chief Executive Officer
Facsimile:
(000) 000-0000
7
To
the
Investor: As set forth on the signature page hereto.
10. Governing
Law, etc. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts
made
and performed within such State, without regard to principles of conflicts
of
law. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court for the Southern District of New York, in each case sitting
in
the Borough of Manhattan, City of New York, for the purpose of any suit,
action,
proceeding or judgment relating to or arising out of this
Agreement. Service of process in connection with any such suit,
action or proceeding may be served on each party hereto anywhere in the world
by
the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and
to the
laying of venue in such court. Each party hereto irrevocably waives
any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Notwithstanding any provision hereof to the
contrary, if any dispute arises regarding this Agreement, the prevailing
party
shall, in addition to any other relief to which it is entitled, be entitled
to
an aware of its reasonable attorneys’ fees and all of its other reasonable costs
incurred in connection with such dispute.
11. Severability. Wherever
possible, each provision of this Agreement will be interpreted in such manner
as
to be effective and valid under applicable law. However, if for any
reason any one or more of the provisions of this Agreement are held to be
invalid, illegal or unenforceable in any respect, such action will not affect
any other provision of this Agreement. In such event, this Agreement
will be construed as if such invalid, illegal or unenforceable provision
had
never been contained in it.
12. Amendments
and Waivers. No amendment of any provision of this Agreement will
be valid unless it is in writing and is signed by the parties. No
waiver by any party of any default, misrepresentation or breach of warranty
or
covenant under this Agreement, whether intentional or not, will be deemed
to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant under this Agreement or will affect in any way any rights
arising by virtue of any prior or subsequent such occurrence, and no waiver
will
be effective unless set forth in writing and signed by the party against
whom
such waiver is asserted.
13. Entire
Agreement. This Agreement including the Investor Questionnaire,
which is incorporated in and constitutes a part of this Agreement, contains
the
entire agreement of the parties and supersedes all prior oral or written
agreements and understandings with respect to the subject matter.
14. Counterparts. This
Agreement may be executed in two or more counterparts (delivery of which
may
occur via facsimile), each of which shall be binding as of the date first
written above, and, when delivered, all of which shall constitute one and
the
same instrument. A facsimile signature or electronically scanned copy
of a signature shall constitute and shall be deemed to be sufficient evidence
of
a party’s execution of this Agreement, without necessity of further
proof. Each such copy shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for
more
than one such counterpart.
[Signature
page follows]
8
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT
1. Date:
September 7, 2006
2. Consideration/Principal
Amount of Notes: $__________________ in cash (must be at least
$50,000).
Investor
represents that:
|
|
(a)
|
the
representations and warranties contained in this Agreement are
complete
and accurate and may be relied upon by the Company,
and
|
|
|
(b)
|
Investor
will notify the Company immediately of any change in any of such
representations and warranties, as well as any change to the information
contained in this signature page and in the Investor Questionnaire
accompanying this Agreement.
|
IN
WITNESS WHEREOF, the undersigned has executed this Agreement and executed
the
Investor Questionnaire attached hereto on this __ day of September,
2006.
|
Signature
of Investor
|
Taxpayer
Identification or
|
|
|
Social
Security Number
|
||
|
Name
and Residence Address
|
Mailing
Address if Different
|
|
|
(Post
Office Address Not Acceptable)
|
from
Residence Address
|
Type
of
Ownership (check one):
|
Individual
Ownership
|
||
|
Community
Property (each spouse must sign)
|
||
|
Joint
Tenants with Right of Survivorship (all sign)
|
||
|
Tenants
in Common (all sign)
|
|
Trust
|
||||
|
Corporation
|
||||
|
S
Corporation
|
||||
|
C
Corporation
|
||||
|
Company
|
||||
|
Other
(please specify type of entity
|
)
|
ACCEPTANCE
This
Subscription Agreement between Investor and Baywood International, Inc. is
hereby accepted as of September 7, 2006.
|
BAYWOOD
INTERNATIONAL, INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
EXHIBIT
A
CAPITALIZATION
TABLE
