SUBSCRIPTION AGREEMENT
EXHIBIT 99.1
Name of Subscriber ____________________
Ladies and Gentlemen:
1. Subscription.
I (sometimes referred to herein as the “Investor”) hereby subscribe for and agree to purchase the
number of Unit(s)(as defined below) of Diamondhead Casino Corporation, a Delaware corporation (the
“Company”) as stated below, on the terms and conditions described herein and in the Private
Placement Memorandum of the Company dated March 1, 2010 and the Appendixes and Exhibits thereto
(collectively, the “Offering Documents”), together with all supplements, if any, relating to this
offering. Terms not defined herein are as defined in the Offering Documents. The purchase price
per Unit is $25,000. The Minimum Offering is $250,000 and the Maximum Offering is $750,000.
THE AGGREGATE AMOUNT SUBSCRIBED FOR HEREBY IS __________ UNITS (AT $25,000 PER UNIT) FOR A PURCHASE
PRICE OF $_______________.
2. Description of Units; Lock-Up.
(a) Each Unit consists of (i) a 12% interest bearing, unsecured convertible promissory note in the
principal amount of Twenty-Five Thousand Dollars ($25,000) convertible into 50,000 shares of the
Company’s common stock, par value $.001 (the “Note”), and (ii) a five-year warrant to
purchase 50,000 shares of the Company’s common stock, par value $.001 per share (“Common
Stock”) at an exercise price of $1.00 per share (the “Warrants”) (collectively, the
Note and Warrant are referred to as a “Unit”). The shares issuable upon exercise of the
Warrant are eligible for certain registration rights as set forth in the Warrant to Purchase Common
Stock. (See Unsecured Promissory Note and Warrant to Purchase Common Stock for full terms and
conditions.)
2. Purchase.
| (a) | I hereby tender to the Company the following: |
| a) | a cash or a check or wire transfer made payable to the order of “Diamondhead Casino Corporation Escrow Account” in the amount indicated above; | ||
| b) | an executed copy of this Subscription Agreement and | ||
| c) | an executed copy of my Accredited Investor Questionnaire. |
The wire transfer information is as follows:
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Wachovia Bank
Largo Mall Financial Center Branch
For credit to: Diamondhead Casino Corporation Escrow Account
Account Number: XXXXXXXXXXX
Routing Number: XXXXXXXXXXX
Largo Mall Financial Center Branch
For credit to: Diamondhead Casino Corporation Escrow Account
Account Number: XXXXXXXXXXX
Routing Number: XXXXXXXXXXX
(b) This offering will continue until the later of (a) the sale of 30 Units or (b) April 30, 2010,
unless extended by us, without notice, for up to two additional 30-day periods (the “Termination
Date”). Prior to the Termination Date or an initial closing of at least the Minimum Offering,
whichever occurs earlier, payments delivered herewith will be held in an escrow account subject to
the terms and conditions herein. If less than $250,000 of Units offered pursuant to the Offering
Documents are subscribed and paid for by the Termination Date, my payment will be returned to me
without interest or deduction. Upon the earlier of a closing for my subscription or completion of
the offering, I will be notified promptly by the Company as to whether my subscription has been
accepted by the Company.
3. Acceptance or Rejection of Subscription.
(a) I understand and agree that the Company reserves the right to reject this subscription for
the Units, in whole or in part, for any reason and at any time prior to the Closing,
notwithstanding the prior receipt by me of notice of acceptance of my subscription.
(b) In the event of the rejection of this subscription, my subscription payment will be promptly
returned to me without interest or deduction and this Subscription Agreement shall have no force or
effect. In the event my subscription is accepted and the offering is completed, the funds specified
above shall be released to the Company.
4. Closing.
The Closing of this offering may occur only after the Company has received and accepted
subscriptions for at least the Minimum Offering before the Termination Date. The Units subscribed
for herein shall not be deemed issued to or owned by me until one copy of this Subscription
Agreement has been executed by me and countersigned by the Company and the Closing with respect to
such Units has occurred.
5. Disclosure.
Because this offering is limited to accredited investors as defined in Section 2(15) of
the Securities Act of 1933, as amended, (hereafter “the Securities Act”), and Rule 501
promulgated thereunder, in reliance upon the exemption contained in Section 4(2) of the
Securities Act and applicable state securities laws, the Units are being sold without registration
under the Securities Act. I acknowledge receipt of the Offering Documents and all related documents
and represent that I have carefully reviewed and understand the Offering Documents and appendixes
and exhibits. I have received all information and materials regarding the Company that I have
requested.
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I fully understand that the Units are speculative investments which involve a high degree of risk
of the loss of my entire investment. I fully understand the nature of the risks involved in
purchasing the Units and I am qualified by my knowledge and experience to evaluate investments of
this type. I have carefully considered the potential risks relating to the Company and purchase of
its Units and have, in particular, reviewed each of the risks set forth in the Offering Documents.
Both my advisors and I have had the opportunity to ask questions of and receive answers from
representatives of the Company or persons acting on its behalf concerning the Company and the terms
and conditions of a proposed investment in the Company and my advisors and I have also had the
opportunity to obtain additional information necessary to verify the accuracy of information
furnished about the Company. Accordingly, I have independently evaluated the risks of purchasing
the Units.
6. Investor Representations and Warranties.
I acknowledge, represent, agree, and warrant to the Company as follows:
(a) I am aware that my investment involves a high degree of risk as disclosed in the Offering
Documents and that I have carefully read the Offering Documents.
(b) I acknowledge and am aware that there is no assurance as to the future performance of the
Company.
(c) I understand and acknowledges that the Notes are unsecured obligations of the Company. I
acknowledge that there may be certain adverse tax consequences to me in connection with my purchase
of Units, including those associated with original issue discounts, and the Company has advised me
to seek the advice of experts in such areas prior to making this investment.
(d) I represent that I am purchasing the Units for my own account for investment purposes and not
with a view to or for sale in connection with the distribution of the Units, the Notes, the
Warrants, or the shares of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants, nor with any present intention of selling or otherwise disposing of all or any part of
the foregoing securities. I agree that I must bear the entire economic risk of my investment for an
indefinite period of time because, among other reasons, the Units have not been registered under
the Securities Act or under the securities laws of any state and, therefore, cannot be resold,
pledged, assigned or otherwise disposed of unless they are subsequently registered under the
Securities Act and under applicable securities laws of certain states or an exemption from such
registration is available. Furthermore, I hereby acknowledge and agree that I will not sell,
transfer, pledge, encumber, give or otherwise dispose of, either publicly or privately, the Units,
the Notes, or the shares of Common Stock issuable upon conversion of the Notes or exercise of the
Warrants. I hereby authorize the Company to place a legend denoting the restrictions on the Units
that may be issued to me, as well as the Notes, Warrants, and shares of Common Stock issuable upon
conversion of the Notes or exercise of the Warrants.
(e) Except as described in my Accredited Investor Questionnaire, I am not a member of the
National Association of Securities Dealers, Inc. (“NASD”); I am not and have not, for a period
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of twelve (12) months prior to the date of this Subscription Agreement, been affiliated or associated
with any company, firm, or other entity which is a member of the NASD; and I do not own any stock
or other interest in any member of the NASD (other than interests acquired in open market
purchases).
(f) I recognize that the Units, as an investment, involve a high degree of risk including, but
not limited to, the total loss of my investment and that the Units include risks associated with
the business of the Company and the Diamondhead project in particular. I believe that the
investment in the Units is suitable for me based upon my investment objectives and financial needs,
and I have adequate means for providing for my current financial needs and contingencies and have
no need for liquidity with respect to my investment in the Company.
(g) I have been given access to full and complete information regarding the Company and have
utilized such access to my satisfaction for the purpose of obtaining information in addition to, or
verifying information included in, the Offering Documents and related documents, and I have either
met with or been given reasonable opportunity to meet with officers of the Company for the purpose
of asking questions of, and receiving answers from, such officers concerning the terms and
conditions of the offering of the Units, the business and operations of the Company, and the
Diamondhead project, and to obtain any additional information, to the extent reasonably available.
(h) I have such knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Units and have obtained, in my judgment,
sufficient information from the Company to evaluate the merits and risks of an investment in the
Company. I have not utilized any person as my purchaser representative as defined in Regulation D
under the Securities Act in connection with evaluating such merits and risks.
(i) I have relied solely upon my own investigation in making a decision to invest in the Company.
(j) I have received no representation or warranty from the Company or any of its officers,
directors, employees or agents in respect to my investment in the Company and I have received no
information (written or otherwise) from them relating to this Offering other than as set forth in
the Offering Documents. I am not participating in the offer as a result of or subsequent to: (i)
any advertisement, article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or (ii) any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(j) I have had full opportunity to ask questions and to receive satisfactory answers concerning
the offering, the Company, the Diamondhead project and other matters pertaining to my investment
and all such questions have been answered to my full satisfaction.
(k) I have been provided an opportunity to obtain any additional information concerning the
offering, the Company, and the Diamondhead project and all other information to the extent the
Company possesses such information or can acquire it without unreasonable effort or expense.
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(l) I am an “accredited investor” as defined in Section 2(15) of the Securities Act and in Rule
501 promulgated thereunder. I can bear the entire economic risk of the investment in the Units for
an indefinite period of time and I am knowledgeable about and experienced in investments in the
equity securities of publicly traded companies. I am acquiring the Units for my own account for
investment purposes only and not with a view to the resale or distribution of such securities
within the meaning of the Securities Act of 1933, as amended. I am not acting as an underwriter or
a conduit for sale to the public or to others of unregistered securities, directly or indirectly,
on behalf of the Company or any person with respect to such securities.
(m) I understand that (i) the Units and the underlying securities have not been registered under
the Securities Act or the securities laws of certain states in reliance on specific exemptions from
registration, (ii) no securities administrator of any state or the federal government has
recommended or endorsed this offering or made any finding or determination relating to the fairness
of an investment in the Company and (iii) the Company is relying on my representations and
agreements for the purpose of determining whether this transaction meets the requirements of the
exemptions afforded by the Securities Act and certain state securities laws.
(n) I understand that (i) since neither the offer nor sale of the Units has been registered under
the Securities Act or the securities laws of any state, the Units may not be sold, assigned,
pledged or otherwise disposed of unless they are so registered or an exemption from such
registration is available, and (ii) it is not anticipated that there will be any market for the
resale of the Units.
(o) I have been urged to seek independent advice from my professional advisors relating to the
suitability of an investment in the Company in view of my overall financial needs and with respect
to the legal and tax implications of such investment.
(p) If the Investor is a corporation, company, trust, employee benefit plan, individual
retirement account, Xxxxx Plan, or other tax-exempt entity, it is authorized and qualified to
become an Investor in the Company and the person signing this Subscription Agreement on behalf of
such entity has been duly authorized by such entity to do so.
(q) The information contained in my Accredited Investor Questionnaire, as well as any information
which I have furnished to the Company with respect to my financial position and business
experience, is correct and complete as of the date of this Subscription Agreement and, if there
should be any material change in such information prior to the Closing of the offering, I will
furnish such revised or corrected information to the Company.
(r) I hereby acknowledge and am aware that, except for any rescission rights that may be provided
under applicable laws, I am not entitled to cancel, terminate or revoke this subscription, and any
agreements made in connection herewith shall survive my death or disability.
7. Indemnification.
I hereby agree to indemnify and hold harmless the Company and its officers, directors,
stockholders, employees, agents, and counsel against any and all losses, claims, demands,
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liabilities, and expenses (including reasonable attorneys’ fees) incurred by each such person in
connection with defending or investigating any such claims or liabilities, whether or not resulting
in any liability to such person, to which any such indemnified party may become subject under the
Securities Act, under any other statute, at common law or otherwise, insofar as such losses,
claims, demands, liabilities and expenses (a) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact made by me and contained in this Subscription
Agreement or my Accredited Investor Questionnaire, or (b) arise out of or are based upon any breach
by me of any representation, warranty, or agreement made by me contained herein or therein.
8. Severability.
In the event any parts of this Subscription Agreement are found to be void, the remaining
provisions of this Subscription Agreement shall nevertheless be binding with the same effect as
though the void parts were deleted.
9. Governing Law and Jurisdiction.
The parties expressly agree that all the terms and provisions hereof shall be construed in
accordance with and governed by the laws of the State of Delaware. The parties hereby agree that
any dispute which may arise between them arising out of or in connection with this Agreement shall
be adjudicated before a court of competent jurisdiction in the State of Delaware and they hereby
submit to the exclusive jurisdiction of the courts of the State of Delaware with respect to any
action or legal proceeding commenced by any party and irrevocably waive any objection they now or
hereafter may have respecting the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum.
10. Counterparts.
This Subscription Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.
11. Benefit.
This Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto.
12. Notices and Addresses.
All notices, offers, acceptance and any other acts under this Subscription Agreement (except
payment) shall be in writing, and shall be sufficiently given if delivered to the addresses in
person, by Federal Express or similar courier delivery, or by facsimile delivery, as follows:
| The Investor: | At the address and facsimile number designated on the signature page of this Subscription Agreement. | ||
| The Company: | Diamondhead Casino Corporation 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000 Xxxxx, Xxxxxxx 00000 Telephone: 000-000-0000 Facsimile: 000-000-0000 |
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or to such other address as any of them, by written notice to the others, may designate from time
to time. The transmission confirmation receipt from the sender’s facsimile machine shall be
conclusive evidence of successful facsimile delivery. Time shall be counted to or from, as the case
may be, the delivery in person or by facsimile.
13. Entire Agreement.
This Subscription Agreement, together with the other Offering Documents, constitute the entire
agreement between the parties with respect to the subject matter hereof and supersedes all prior
oral and written agreements between the parties hereto with respect to the subject matter hereof.
This Subscription Agreement may not be changed, waived, discharged, or terminated orally but,
rather, only by a statement in writing signed by the party or parties against which enforcement or
the change, waiver, discharge or termination is sought.
14. Section Headings.
Section headings herein have been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or
provisions of this Subscription Agreement.
15. Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements contained herein shall survive the delivery of,
and the payment for, the Units.
16. Receipt of Documents
In addition to this Subscription Agreement, I hereby acknowledge receipt of the following
documents:
| a) | Private Placement Memorandum of Diamondhead Casino Corporation dated March 1, 2010; | ||
| b) | Accredited Investor Questionnaire; | ||
| c) | Form of Convertible Promissory Note; | ||
| d) | Form of Warrant to Purchase Common Stock of Diamondhead Casino Corporation; | ||
| e) | Annual Report of Diamondhead Casino Corporation on Form 10K for the year ended December 31, 2008; | ||
| f) | Quarterly Reports of Diamondhead Casino Corporation on Form 10-Q for the periods ended March 31, 2009, June 30, 2009, and September 30, 2009; |
17. Acceptance of Subscription.
The Company may accept this Subscription Agreement at any time for all or any portion of the Units
subscribed for by executing a copy hereof as provided and notifying me within a reasonable time
thereafter.
17. RESIDENTS OF ALL STATES:
THE UNITS OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY
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STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE UNITS ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT
AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY
STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Manner in Which Title is to be Held. (check one)
o Individual Ownership
o Community Property
o Joint Tenant with Right of Survivorship (both parties must sign)
o Partnership
o Tenants in common (both parties must sign)
o Corporation or Limited Liability Company
o Trust
o XXX or Xxxxxx
o Other (please indicate)
DATED: _________________________, 2010
INDIVIDUAL INVESTORS:
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(All record holders must sign) |
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Address to which correspondence should be sent: |
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Street
|
Unit/Apt Number | |||
City __________________ State _________ Zip Code __________
ENTITY INVESTORS:
Full Name of Entity
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By:
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| Signature | ||||
Its: |
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| Title | ||||
| Name Printed or Typed | ||||
| Address to which correspondence should be sent: | ||||
| Street Suite/Unit | ||||
City __________________ State _________ Zip Code __________
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If Units are being subscribed for by any entity, the Certificate of Signatory on the last page
must also be completed
The foregoing subscription is accepted and the Company hereby agrees to be bound by its terms.
| DIAMONDHEAD CASINO CORPORATION |
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| Dated: _________________ | By: | |||
| Xxxxxxx X. Xxxxxx, President | ||||
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CERTIFICATE OF SIGNATORY
(To be completed if Units are being subscribed for by an entity)
I,
|
, the | ||||
| (name of signatory) | (title) |
of
|
(“Entity”), a | |||||
| (name of entity) | (type of entity) |
hereby certify that I am empowered and duly authorized by the Entity to execute the
Subscription Agreement and to purchase the Units and certify further that the Subscription
Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this __________ day of _______________, 2010.
| (Signature) | ||||
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