SUBSCRIPTION AGREEMENT AND LETTER OF INVESTMENT INTENT
EXHIBIT
A
AND
LETTER
OF INVESTMENT INTENT
The
Small
Business Company, Inc.
000
Xxx
xx Xx Xxxxx, Xxxxx 000
Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
Gentlemen:
The
undersigned irrevocably subscribe(s) for and agrees to purchase the number
of
investment units (“Units”) indicated below (above the signature(s) of the
undersigned) of The Small Business Company, Inc., an Delaware corporation
(“Company”), each Unit consisting of a $25,000 subordinated convertible
debenture (“Debenture”) and a warrant (“Warrant”) to purchase 25,000 shares of
common stock of the Company, par value $0.0001 per share (“Common Stock”), upon
the terms and conditions set forth below. A check payable to “The Small Business
Company, Inc. Escrow Account” in the amount of the full purchase price of the
Units subscribed for is enclosed herewith. The undersigned agree(s) that the
Company has the right to reject any subscription for Units for any reason and
will promptly return the funds delivered herewith in the event that this
subscription is rejected. The undersigned acknowledge(s) that the Company and
any placement agent will rely upon the accuracy and completeness of the
representations contained herein in complying with applicable securities laws
and agrees to notify the Company immediately of any material change in such
information.
Each
of
the undersigned acknowledges and represents as follows:
(a) That
the
undersigned has conducted his/her/its own due diligence investigation of the
Company and its Stock, and has received and reviewed the private placement
memorandum of the Company, dated February 16, 2007 (“Memorandum”), relating to
the offering, and reviewed such books, financial statements, records, business
plans, resumes of officers and directors, and other information as the
undersigned deems relevant and desirable to aid in his/her/its evaluation of
opportunities and risks of investing in the Units;
(b) That
the
undersigned (i) believes that he/she/it, either alone or with the assistance
of
his/her/its professional advisor(s), has the knowledge and experience in
financial and business matters necessary to evaluate the merits and risks of
an
investment in the Units and (ii) has obtained, to the extent he/she/it deems
necessary, his/her/its own personal professional advice with respect to the
risks associated with (and suitability of) an investment in the Units in light
of his/her/its economic condition and financial needs;
(c) That
the
undersigned has been given access to full and complete information regarding
the
Company and has utilized such access to his/her/its satisfaction for the purpose
of obtaining information in addition to, or verifying information included
in,
the Memorandum; and particularly, the undersigned has either met or been given
a
reasonable opportunity to meet with representatives of the Company for the
purpose of asking questions of, and receiving answers from, such representatives
concerning the terms and conditions of the offering of Units and to obtain
any
additional information to the extent reasonably available, necessary to verify
the accuracy of information provided in the Memorandum;
(d) That
the
undersigned (i) recognizes that the Units (including the Debentures and the
Warrants) as an investment involve a high degree of risk, including, but not
limited to, the risks described in the Memorandum under the caption “Risk
Factors,” and (ii) is in financial position to be able to bear the economic risk
and withstand a complete loss of his/her/its investment;
(e) That
the
undersigned realizes that (i) the Units (including the Debentures, the Warrants
and Common Stock issued upon the conversion of Debentures or the exercise of
Warrants) are an illiquid investment; (ii) purchasers of Units must bear the
economic risk of investment indefinitely because such securities have not been
registered under the Securities Act and, therefore, cannot be sold unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available; (iii) there is presently no public market for the
Units (including the Debentures, the Warrants and Common Stock issued upon
the
conversion of Debentures or the exercise of Warrants) and the undersigned may
not be able to liquidate his/her/its investment in the event of an emergency
or
pledge securities as collateral security for loans; and (iv) the transferability
of Units (including the Debentures, the Warrants and Common Stock issued upon
the conversion of Debentures or the exercise of Warrants ) and (A) requires
conformity with the restrictions contained in paragraph 2, below, and (B) will
be further restricted by a legend placed on the certificates representing
Debentures, the Warrants and Common Stock issued upon the conversion of
Debentures or the exercise of Warrants), stating that the securities represented
thereby have not been registered under the Securities Act and referencing the
restrictions on the transferability of such securities.
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(f) The
undersigned has been advised that the Units (including the Debentures, the
Warrants and Common Stock issued upon the conversion of Debentures or the
exercise of Warrants) have not been registered under the Securities Act or
applicable state securities laws, but are being offered and sold pursuant to
exemptions from such registration, and that your reliance upon such exemptions
is predicated in part on the representations and warranties of the undersigned
that (i) any Units (including the Debentures, the Warrants and Common Stock
issued upon the conversion of Debentures or the exercise of Warrants) purchased
are for his/her/its own account, for investment, and without the intention
of
reselling or redistributing the same, (ii) he/she/it has made no agreement
with
others regarding any Units (including the Debentures, the Warrants and Common
Stock issued upon the conversion of Debentures or the exercise of Warrants)
purchased and (iii) his/her/its financial condition is such that it is not
likely that it will be necessary to dispose of any Units (including the
Debentures, the Warrants and Common Stock issued upon the conversion of
Debentures or the exercise of Warrants) in the foreseeable future. The
undersigned is aware that, in the view of the Securities and Exchange
Commission, the purchase of Units (including the Debentures, the Warrants and
Common Stock issued upon the conversion of Debentures or the exercise of
Warrants) with an intent to resell by reason of any foreseeable specific
contingency or anticipated change in market values, or any change in the
condition of the Company, or in connection with a contemplated liquidation
or
settlement of any loan obtained for the acquisition of Units (including the
Debentures, the Warrants and Common Stock issued upon the conversion of
Debentures or the exercise of Warrants) and for which such securities are
pledged as security, would represent an intent inconsistent with the foregoing
representations. The undersigned further represents and agrees that if, contrary
to his/her/its foregoing intentions, he/she/it should later desire to dispose
of
or transfer any Units (including the Debentures, the Warrants and Common Stock
issued upon the conversion of Debentures or the exercise of Warrants) in any
manner, he/she/it shall not do so without first obtaining (i) opinion of counsel
satisfactory to the Company that such proposed disposition or transfer lawfully
may be made insofar as Company's liability is concerned without registration
of
such securities for such purpose under the Securities Act and applicable state
securities laws, or (ii) such registration.
ALL
INFORMATION SUPPLIED IN RESPONSE TO PARAGRAPHS 2 THROUGH
10
WILL
BE TREATED AS CONFIDENTIAL.
1. This
offering is limited to subscribers who are “accredited investors” (as defined in
Rule 501 of Regulation D promulgated by the Common Stock and Exchange Commission
under the Securities Act). The undersigned represents and warrants that
he/she/it or the purchaser named in this Agreement comes within each category
marked below. The undersigned agrees to promptly furnish any additional
information which the Company deems necessary to form a reasonable belief as
to
the status of the undersigned as an accredited or non-accredited
investor.
2.
INDICATE
EACH INVESTOR CATEGORY WHICH DESCRIBES THE UNDERSIGNED
BY
PLACING AN “X” IN THE APPROPRIATE BOX(ES).
The
undersigned is an “accredited investor” as defined in Rule 502(b) of Regulation
D, promulgated under the Securities Act of 1933 because (select all that
apply):
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a
natural person (not a partnership, corporation, etc.) whose individual
net
worth, or joint net worth with his/her spouse, presently and at the
time
of purchase exceeds $1,000,000.
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Note.
Calculate net worth to include equity in personal property and real estate,
including your principal residence, cash, short-term investments, stocks and
securities. Equity in personal property and real estate should be based on
the
fair market value less debt secured by such property.
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a
natural person (not a partnership, corporation, etc.) who had an
individual income in excess of $200,000, or joint income of more
than
$300,000 when income of his/her spouse is included, in each of the
last
two years (including foreign income, tax exempt income and full amount
of
capital gains against losses) and reasonably expects the same level
of
income in the current year.
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an
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 (i) with investment decisions
made
by a plan fiduciary which is a bank, savings and loan association,
insurance company or registered investment advisor, or (ii) with
total
assets in excess of $5,000,000, or (iii) which is a self-directed
plan
with investment decisions made solely by accredited
investors.
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a
corporation, business trust, or partnership, not formed for the purpose
of
acquiring the securities subscribed for, with total assets in excess
of
$5,000,000.
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(Description
of Entity)
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a
director or an executive officer of the
Company.
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A-2
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a
trust, with total assets in excess of $5,000,000, whose investment
decisions are made by sophisticated persons as described in Rule
506 of
Regulation D promulgated by the Securities and Exchange Commission
under
the Securities Act.
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other
category defined as an “accredited investor” under Item 502(b) of
Regulation D.
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(Description
of Entity)
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Note.
If
relying upon this category, please specify the category relied
upon.
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an
entity all the equity owners of which are “accredited investors” within
one or more of the above
categories.
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(Description
of Entity)
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ALL
INFORMATION SUPPLIED IN RESPONSE TO PARAGRAPHS 2 THROUGH
10
WILL
BE TREATED AS CONFIDENTIAL.
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INFORMATION
REQUIRED OF ALL PROSPECTIVE INVESTORS.
(If a particular question is not applicable, insert "N/A." Attach
additional pages as needed.)
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Name:
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Soc.
Sec. No.:
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Name:
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Soc.
Sec. No.:
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Street:
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Telephone:
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City:
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Cell
Phone:
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State:
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Fax
No.:
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Zip:
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E-Mail:
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REGISTRATION
OF SECURITIES.
(Fill
out if different than above, e.g. for trusts, pension plans,
etc.):
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Name
of Registered Holder(s)
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Federal
I.D. No.
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Street
Address
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Telephone
Number
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City,
State, Zip Code
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Web
Site
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OWNERSHIP:
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o Individually
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o
Marital
Prop
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o
JtTenRtSurv
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o TenCom
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o Other
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o Corporation
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o Partnership
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o
Trust
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o XXX
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o Qualified
Plan
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Notice
to the Undersigned: If
Units
(including the Debentures, the Warrants and Common Stock issued upon the
conversion of Debentures or the exercise of Warrants) are to be registered
jointly, all owners must sign. For IRAs/Qualified Plans, the trustee must sign.
Any registration in the names of two or more co-owners will, unless otherwise
specified, be as joint tenants with rights of survivorship and not as tenants
in
common. Each subscriber certifies that he/she/it has full capacity to enter
into
this Agreement. This subscription is subject to acceptance by the Company and
will not be accepted unless accompanied by payment in full.
A-3
WITHHOLDING
CERTIFICATION
Each
of
the undersigned certifies under penalty of perjury that:
(1) The
Social Security Number or other Federal Tax I.D. Number entered above is
correct.
(2) The
undersigned is not subject to backup withholding because:
(a) The
IRS
has not informed the undersigned that he/she/it is subject to backup
withholding.
(b) The
IRS
has notified the undersigned that he/she/it is no longer subject to backup
withholding.
Note:
If this
statement is not true and you are subject to backup withholding, strike out
section (2).
FURTHER
REPRESENTATIONS OF EACH SUBSCRIBER
Investment
Experience
3. The
undersigned has sufficient knowledge and experience in financial and business
matters to evaluate the merits and risks of an investment in the securities
offered in the Memorandum without the assistance of a purchaser
representative.
4. The
undersigned has sufficient knowledge and experience in making “investment
decisions” to invest in this offering.
Investment
Goals
5. The
investment needs and objectives of the undersigned include speculation in the
hope for capital appreciation from this investment. Any prior instructions
to a
broker dealer or on a new account form are deemed amended consistent with this
goal.
No
Reliance on Forward Looking Information
6. The
undersigned acknowledges that forward looking information, such as Company
financial projections, product or service development plans, marketing plans,
financial budgets or project plans, or of any other forward looking information
obtained from the Company are at best an indication of management hopes and
aspirations, and should not be viewed as an assurance that the securities sold
herein will achieve any particular value at a future date or that they can
be
sold at a profit. No one can assure or has guaranteed ultimate success of the
business of the Company or of the investment made hereby. The undersigned agrees
to disregard and not rely on forward looking information when making an
investment decision in the securities.
Private
Character of Offering
7. The
undersigned did not learn of the availability of the offering of securities
described in the Memorandum from either the Company or any person acting on
its
behalf, through any form of general solicitation or advertising, including
by
illustration but not in limitation of the foregoing, by virtue of membership
in
any organization that communicates investment opportunities to its members
through use of one or more means of mass communication.
8. The
undersigned is informed of the significance to you of the foregoing
representations, and they are made with the intention that you and each
placement agent will rely upon them. The undersigned agrees to notify you and
your placement agent promptly of any material change in the information provided
herein. The undersigned agrees to indemnify you and your officers, directors,
controlling persons and agents against all loss, liability, costs and expenses
(including reasonable attorneys’ fees) arising as result of any
misrepresentations made by me in this Agreement, of my breach of this Agreement,
or of my transfer of the securities purchased hereunder in violation of federal
and/or applicable state securities laws. The undersigned also agrees that the
representations, certifications, and agreements set forth in this Agreement
shall survive the purchase and delivery of the Stock.
8. The
undersigned ois
ois
not
currently the holder of securities issued by the Company or its
affiliates.
9.The
undersigned, if other than a natural person, makes the following additional
representations:
| 1. |
the
undersigned was not organized for the specific purpose of acquiring
Units
(including the Debentures, the Warrants and Common Stock issued upon
the
conversion of Debentures or the exercise of Warrants)
and
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| 2. |
this
Agreement has been duly authorized by all necessary action on the part
of
the undersigned, duly executed by an authorized representative thereof,
and is a legal, valid and binding obligation of the undersigned
enforceable in accordance with its terms.
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10. All
covenants, agreements, representations and warranties made in this Agreement
shall survive the delivery of the Units (including the Debentures, the Warrants
and Common Stock issued upon the conversion of Debentures or the exercise of
Warrants) being purchased hereunder to the undersigned and the payment therefore
and, notwithstanding any prior or subsequent investigation made by the Company
or the undersigned or by others on behalf of either of them, shall continue
in
full force and effect. Whenever in this Agreement any of the parties hereto
is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements in this
Agreement contained by or on behalf of the Company, or by or on behalf of the
undersigned, shall bind and inure to the benefit of the successors and assigns
of each party.
A-4
SECURITIES
SUBSCRIBED FOR:
________
Units
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Amount
Invested: $_______________________
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SUBSCRIBER
SIGNATURES
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SIGNATURE
OF INDIVIDUAL SUBSCRIBERS
(All proposed record holders must sign).
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Date:
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(Signature)
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(Signature)
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CORPORATIONS,
PARTNERSHIPS, TRUST AND IRAS/QUALIFIED PLANS
(Certificate
of Signatory must be completed.)
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I
certify that I am fully authorized and empowered by the Entity to
execute
this Subscription Agreement and to purchase the securities described
herein, and that this Subscription Agreement has been duly executed
by me
on behalf of the Entity and constitutes a valid and binding obligation
of
the Entity in accordance with its terms.
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Date:
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(Print
or Type Name of Entity)
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(Signature
of Authorized Representative)
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(Title
or Position of Authorized Representative)
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COMPANY
ACCEPTANCE
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Subscription
Accepted
o Rejected
o
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The
Small Business Company, Inc.
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Dated:
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(Signature)
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