SUBSCRIPTION AGREEMENT
SUBSCRIPTION
AGREEMENT
This
SUBSCRIPTION AGREEMENT (this “Agreement”)
has
been executed by the undersigned subscriber. Upon its acceptance by a21, Inc.,
a
Texas corporation (the “Company”),
it
will be an agreement, dated the date of such acceptance, by and among the
undersigned subscriber (the "Investor")
and
the Company.
WHEREAS,
the Investor, the Company and certain other persons are parties to a Share
Purchase Agreement dated as of October __, 2005 (the “Effective
Date”)
relating to the whole of the issued share capital of LCJ Acquisitions Limited
(the “Purchase
Agreement”);
and
WHEREAS,
pursuant to the Purchase Agreement, the Investor is acquiring eight hundred
thousand (800,000) shares of common stock (the “Common
Shares”)
of the
Company, par value $0.001 and three thousand two hundred (3,200) shares of
preferred stock (the “Preferred
Shares”)
of the
Company, par value $0.001.
NOW,
THEREFORE, in consideration of the promises and the mutual agreements herein
contained, the Investor and the Company agree as follows:
ARTICLE
1
PURCHASE
AND SALE OF SHARES
SECTION
1.1. Covenants
of Purchase and Sale.
Subject
to the terms and conditions hereof, the Investor hereby agrees to acquire the
Common Shares and the Preferred Shares and the Company hereby agrees to issue
the Common Shares and the Preferred Shares to the Investor and issue a stock
certificate in respect of such shares within 10 business days of the date
hereof. Subject to the terms and conditions hereof, the Investor's obligation
to
acquire and the Company’s obligation to issue the Common Shares and the
Preferred Shares shall be complete and binding upon the execution and delivery
of this Agreement.
ARTICLE
2
REPRESENTATIONS
AND WARRANTIES
SECTION
2.1. Representations
and Warranties of the Investor.
The
Investor represents and warrants to and agrees with the Company that each of
the
following statements will be true on the date hereof:
(i) Such
Investor is an "accredited investor" as that term is defined in Rule 501(a)
of
Regulation D under the Securities Act of 1933, as amended (“Securities
Act”);
(ii) The
Investor is acquiring the Common Shares and the Preferred Shares for the
Investor's own account as principal;
(iii) The
Investor understands that (A) it must bear the economic risk of an investment
in
the Common Shares and the Preferred Shares for an indefinite period of time
because, among other reasons, there is currently no established market for
either the Common Shares or the Preferred Shares and the offer and sale of
the
Common Shares and the Preferred Shares are intended to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act and are intended to be exempt from registration under any
applicable state securities laws, and (B) notwithstanding the consent of the
Company, neither the Common Shares nor the Preferred Shares may be sold,
transferred, hypothecated or pledged, except pursuant to an effective
registration statement under the Securities Act and under the applicable state
securities laws or pursuant to an available exemption from the registration
requirements of the Securities Act and the applicable state securities laws
established to the satisfaction of the Company and that the Company is under
no
obligation to register the Common Shares or the Preferred Shares, except to
the
extent provided in this Agreement, or to assist such Investor in complying
with
any exemption from the registration thereof;
(iv) The
Investor (A) has been furnished with, and hereby acknowledges the receipt of,
a
copy of any documents which have been provided to the Investor upon the
Investor's request, (B) understands the risks of, and other considerations
relating to, its acquisition of the Common Shares and the Preferred Shares,
(C)
understands that, to the extent that any information set forth in any material
previously presented to it is inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall prevail and supersede such
prior information, and (D) the Investor has been given the opportunity to obtain
such additional information that it believes is necessary to verify the accuracy
of the information contained in any material previously presented to
it;
(v) The
Investor has such knowledge and experience in financial affairs that it is
capable of evaluating the merits and risks of acquiring the Common Shares and
the Preferred Shares, and the Investor has not relied in connection with this
investment upon any representations, warranties or agreements other than those
set forth in this Agreement;
(vi) With
respect to the tax and other economic considerations related to this investment,
the Investor has relied only on the advice of the Investor's own professional
advisers; and
(vii) A
legend
substantially in the following form will be placed on the certificates
representing the Common Shares and the Preferred Shares to be issued to the
Investor;
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be sold, transferred or
otherwise disposed of in the absence of an effective registration statement
under such Act or an opinion of counsel satisfactory to a21, Inc. to the effect
that such registration is not required.”
SECTION
2.2. Representations
and Warranties of the Company.
The
Company represents and warrants to and agrees with the Investor that each of
the
following statements will be true and correct on the date hereof:
(i) The
Company is duly organized, validly existing and in good standing under the
laws
of its state of incorporation and has all requisite power and authority to
conduct its business, to enter into and carry out this Agreement and the
transactions contemplated by the Purchase Agreement and, without limitation,
to
issue the Common Shares and Preferred Shares to the Investor.
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(ii) The
Company has complied with and shall not be in violation of its Articles of
Incorporation and By-laws.
(iii) The
transactions contemplated by this Agreement and the Purchase Agreement do not
violate any law or government regulation applicable to the Company.
SECTION
2.3. The
Company shall deliver to the Investor a certificate of its Chief Executive
Officer certifying the authenticity of the resolutions adopted by the Company
authorizing and approving this Agreement and the Purchase Agreement and any
and
all other transactions and documents entered into pursuant to the foregoing,
including without limitation the issuance of the Common Shares and Preferred
Shares to the Investor. The Company covenants and agrees to deliver to the
Investor a certificate(s) representing the Common Shares and a certificate(s)
representing the Preferred Shares within ten (10) business days of the Effective
Date.
ARTICLE
3
REGISTRATION
RIGHTS
SECTION
3.1. Rights
to Piggyback
(i) If
(and
on each occasion that) the Company proposes to register any of its securities
under the Securities Act, either for the Company’s own account or for the
account of any of its stockholders (other than pursuant to a Form S-4 or Form
S-8 or comparable form and other than pursuant to a demand registration right
granted to other persons to the extent that such rights prohibit the Company
from including securities of any other person in such registration statement)
(each such registration not withdrawn or abandoned prior to the effective date
thereof being herein called a “Piggyback
Registration”),
the
Company will give written notice to the holder of the Common Shares and
Preferred Shares (“Holder”)
of
such proposal not later than the tenth day following the receipt by the Company
of notice of exercise of any registration rights by any persons.
(ii) Subject
to the provisions contained in Section 3.2 and in the last sentence of this
paragraph (ii), (A) the Company will be obligated and required to include in
each Piggyback Registration all Common Shares (including for this purpose the
Common Shares into which the Preferred Shares may be exchanged and/or converted)
with respect to which the Company shall receive from the Holder, within 15
days
after the date on which the Company shall have given written notice of such
Piggyback Registration to the Holder, the written requests of such Holder for
inclusion in such Piggyback Registration, and (B) the Company will use
commercially reasonable efforts in good faith to effect promptly the
registration of all such Common Shares. The Holder shall be permitted to
withdraw all or any part of the Common Shares of such Holder from any Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration unless such Holder shall have entered into a written agreement
with
the Company’s underwriters establishing the terms and conditions under which
such Holder would be obligated to sell such securities in such Piggyback
Registration. The Company will not be obligated or required to include any
Common Shares in any registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 of the Securities and Exchange
Commission is applicable.
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SECTION
3.2. Priority
on Piggyback Registrations.
If a
Piggyback Registration is an underwritten registration, and the managing
underwriters shall give written advice to the Company of a number of securities
to which such registration should, in the opinion of the managing underwriters
of such registration in the light of marketing factors, be limited (the
“Underwriters’
Maximum Number”),
then:
(i) the Company shall be entitled to include in such registration that number
of
securities which the Company proposes to offer and sell for its own account
in
such registration and/or number of securities requested to be included in such
registration by persons exercising demand registration rights which does not
exceed the Underwriters’ Maximum Number; (ii) if the Underwriters' Maximum
Number exceeds the number of securities which the Company proposes to offer
and
sell for its own account in such registration, then the Company will be
obligated and required to include in such registration that number of Common
Shares requested by the Holder thereof to be included in such registration
and
which does not exceed such excess and such securities to be registered shall
be
allocated pro rata among the Holder on the basis of the number of Common Shares
requested to be included therein by the Holder and any other person to whom
the
Company has granted piggyback registration rights; (iii) if the Underwriters'
Maximum Number exceeds the sum of the number of Shares which the Company shall
be required to include in such registration pursuant to clause (ii) above and
the number of securities which the Company proposes to offer and sell for its
own account in such registration, then the Company may include in such
registration that number of other securities which persons shall have requested
be included in such registration and which shall not be greater than such
excess.
SECTION
3.3. Selection
of Underwriters.
In any
Piggyback Registration, the Company shall have the right to select the
investment bankers and managing underwriters in such registration.
SECTION
3.4. Right
to Terminate Registration.
The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Article 3 prior to the effectiveness of such registration
whether or not any Holder has elected to include Shares in such
registration.
ARTICLE
4
MISCELLANEOUS
PROVISIONS
SECTION
4.1. Lock-up.
The
Investor covenants and agrees that it shall not sell, assign, transfer,
otherwise dispose of, pledge, hypothecate, whether direct or indirect, whether
voluntary, involuntary or by operation of law, and whether for value or not
any
or all of the Common Shares and the Preferred Shares except in the amounts
and
upon expiration of the time periods, in each case, as specified
below.
(i) Common
Shares (other than Common Shares which were issued in exchange for Preferred
Shares)
(a) One-third
of the Common Shares - six (6) months after the Effective Date;
(b) An
additional one-third of the Common Shares - fifteen (15) months after the
Effective Date; and
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(c) The
remaining amount of the Common Shares - twenty four (24) months after the
Effective Date.
(ii) Preferred
Shares
(a) One-third
of the Preferred Shares - upon the effective date of the exchange of Preferred
Shares for Common Shares in accordance with the terms and conditions of the
Exchange Agreement entered into as of the Effective Date by and among the
Company and the other parties thereto (the “Exchange
Agreement”);
(b) An
additional one-third of the Preferred Shares - one year after the effective
date
of the exchange of Preferred Shares for Common Shares in accordance with the
terms and conditions of the Exchange Agreement; and
(c) The
remaining amount of the Preferred Shares - eighteen (18) months after the
effective date of the exchange of the Preferred Shares for Common Shares in
accordance with the terms and conditions of the Exchange Agreement.
SECTION
4.2. Survival
of Representations and Warranties.
All
representations and warranties contained herein or made in writing by the
Investor or the Company in connection with the transactions contemplated by
this
Agreement shall survive and the issue and sale of the Common Shares and the
Preferred Shares, notwithstanding any inquiry or investigation at any time
made
by or on behalf of the Investor or the Company.
SECTION
4.3. Applicable
Law.
This
Agreement and the rights and obligations of the parties hereunder shall be
governed by and interpreted, construed and enforced in accordance with the
laws
of the State of New York without giving effect to the conflicts of laws
provisions thereof.
SECTION
4.4. Counterparts.
This
Agreement may be executed in any number of separate counterparts, each of which
shall be deemed an original, but the several counterparts shall together
constitute but one and the same agreement of the parties hereto.
SECTION
4.5. Other
Subscription Agreements.
The
Company is entering into or expects to enter into separate subscription
agreements, substantially similar in form to this Agreement with other Investors
(the "Other
Investors"),
providing for the acquisition by the Other Investors of Common Shares and
Preferred Shares.
Prospective
Investors should retain their own professional advisors to review and evaluate
the economic, tax and other consequences of an investment in the
Company.
Special
Note Regarding Forward-looking Statements
Information
included in this Agreement may contain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act
of 1934, as amended (the “Exchange
Act”).
This
information may involve known and unknown risks, uncertainties and other factors
which may cause the Company’s actual results, performance or achievements to be
materially different from future results, performance or achievements expressed
or implied by any forward-looking statements. Forward-looking statements, which
involve assumptions and describe the Company’s future plans, strategies and
expectations, are generally identifiable by use of the words
“may,”“will,”“should,”“expect,”“anticipate,”“estimate,”“believe,”“intend” or
“project” or the negative of these words or other variations on these words or
comparable terminology. These forward-looking statements are based on
assumptions that may be incorrect, and there can be no assurance that these
projections included in these forward-looking statements will come to pass.
The
Company’s actual results could differ materially from those expressed or implied
by the forward-looking statements as a result of various factors, including
the
risk factors described above and elsewhere in this Agreement. The Company
undertakes no obligation to update publicly any forward-looking statements
for
any reason, even if new information becomes available or other events occur
in
the future.
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IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of
this 12th day of October, 2005.
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INVESTOR
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U.S.A
Tax ID Number or Social Security Account Number (if
applicable):
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| /s/ Xxxxx Xxxxxx | ||
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Name:
Xxxxx Xxxxxx
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(if
none, so state)
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Title:
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Address
of Principal Executive Office:
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Address
for Notice (if different):
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TELEPHONE:
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TELEPHONE:
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FAX:
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FAX:
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Attention:
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Date
Subscription Accepted: October __, 2005.
a21,
INC.
By:
/s/
Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
CEO
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