EXHIBIT 10.16
UTG COMMUNICATIONS INTERNATIONAL, INC.
SUBSCRIPTION AGREEMENT
UTG Communications International, Inc.
c/o Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
I. SUBSCRIPTION. The undersigned, intending to be legally bound, hereby
irrevocably agrees to purchase from UTG Communications International, Inc. a
Delaware corporation (the "Company"), the number of shares of the Company's
Common Stock, par value $.00001 ("Shares") set forth on the signature page
hereof, at a purchase price of $4.00 per Share. This subscription is submitted
to the Company in accordance with and subject to the terms and conditions
described in this Subscription Agreement and the Confidential Private Placement
Memorandum of the Company dated November 21, 1996, as amended or supplemented
from time to time, including all exhibits thereto (the "Memorandum"), relating
to the offering by the Company of up to 250,000 Shares.
II. PAYMENT. The undersigned will pay for the subscription by check payable in
U.S. dollars or by wire transfer in U.S. dollars to the Company's designated
account.
III. ACCEPTANCE OF SUBSCRIPTION. The undersigned understands and agrees that the
Company in its sole discretion reserve the right to accept or reject this or any
other subscription for Shares, in whole or in part, notwithstanding prior
receipt by the undersigned of notice of acceptance of this subscription. The
Company shall have no obligation hereunder until the Company shall execute and
deliver to the undersigned an executed copy of this Subscription Agreement. If
this subscription is rejected in whole, this Subscription Agreement and all
funds received from the undersigned will be returned without interest or
deduction, and this Subscription Agreement shall thereafter be of no further
force or effect. If this subscription is rejected in part, the funds for such
rejected portion of this subscription will be returned without interest or
deduction, and this Subscription Agreement shall continue in force and effect to
the extent this subscription was accepted.
IV. REPRESENTATIONS AND WARRANTIES. The undersigned hereby acknowledges,
represents, warrants to and agrees with each of the Company as follows:
(a) None of the Shares are registered under the Securities Act of
1933 (the "Securities Act") or any state securities laws. The
undersigned understands that the offering and sale of the Shares is
intended to be exempt from registration under the Securities Act of
1933 (the "Securities Act"), by virtue of Section 4(2) and the
provisions of Regulation D promulgated thereunder, based, in part,
upon the representations, warranties and agreements contained in this
Subscription Agreement;
(b) The undersigned has received the Memorandum, has carefully
reviewed it and understands the information contained therein, and the
undersigned has access to the same kind of information which would be
available in registration statements filed by the Company under the
Securities Act;
(c) Neither the Securities and Exchange Commission nor any state
securities commission has approved any of the securities included in
the Shares offered or passed upon or endorsed the merits of the
offering or confirmed the accuracy or determined the adequacy of the
Memorandum. The Memorandum has not been reviewed by any Federal, state
or other regulatory authority;
(d) The undersigned acknowledges that all documents, records, and
books pertaining to the investment in the Shares (including, without
limitation, the Memorandum) have been made available for inspection by
him, his attorney, accountant, purchaser representative or tax advisor
(collectively, the "Advisors");
(e) The undersigned and the Advisors have had a reasonable
opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the offering of the
Shares and all such questions have been answered to the full
satisfaction of the undersigned and his Advisors;
(f) In evaluating the suitability of an investment in the Company,
the undersigned has not relied upon any representation or other
information (oral or written) other than as stated in the Memorandum
or as contained in documents or answers to questions so furnished to
the undersigned or his Advisors by the Company;
(g) The undersigned is unaware of, and in no way relying on, any form
of general solicitation or general advertising in connection with the
offer and sale of the Shares;
(h) The undersigned has such knowledge and experience in financial,
tax, and business matters so as to enable him to utilize the
information made available to him in connection with the offering of
the Shares to evaluate the merits and risks of an investment in the
Shares and to make an informed investment decision with respect
thereto;
(i) The undersigned is not relying on the Company respecting the tax
and other economic considerations of an investment in the Shares, and
the undersigned has relied on the advice of, or has consulted with,
only his own Advisors;
(j) The undersigned is acquiring the Shares solely for his own
account for investment and not with a view to resale or distribution
and the Subscriber will not sell or transfer the Shares until they are
registered for resale under the Securities Act;
(k) The undersigned must bear the economic risk of the investment
indefinitely because none of the Shares may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Act and
applicable state securities laws or an exemption from registration is
available. Legends shall be placed on the Shares to the effect that
they have not been registered under the Securities Act or applicable
state securities laws and appropriate notations thereof will be made
in each of the Company' stock books;
(l) The undersigned has adequate means of providing for the
undersigned's current needs and foreseeable personal contingencies and
has no need for the undersigned's investment in the Shares to be
liquid;
(m) The undersigned is aware that an investment in the Shares
involves a number of very significant risks and has carefully read and
considered the matters set forth under the caption "Risk Factors" in
the Memorandum.
(n) The undersigned has completed accurately the Subscriber
Questionnaire attached hereto as Annex A and meets the requirements of
at least one of the suitability standards for an "accredited
investor;"
(o) The undersigned:1. if a natural person represents that the
undersigned has reached the age of 21 and has full power and authority
to execute and deliver this Subscription Agreement and all other
related agreements or certificates and to carry out the provisions
hereof and thereof;2. if a corporation, partnership, association,
joint stock company, trust, unincorporated organization or other
entity represents that such entity was not formed for the specific
purpose of acquiring the Shares, such entity is validly existing under
the laws of the state of its organization, the consummation of the
transactions contemplated hereby is authorized by, and will not result
in a violation of state law or its charter or other organizational
documents, such entity has full power and authority to execute and
deliver this Subscription Agreement and all other related agreements
or certificates and to carry out the provisions hereof and thereof,
this Subscription Agreement has been duly authorized by all necessary
action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding
obligation of such entity; and 3. if executing this Subscription
Agreement in a representative or fiduciary capacity, represents that
it has full power and authority to execute and deliver this
Subscription Agreement in such capacity and on behalf of the
subscribing individual, xxxx, partnership, trust, estate, corporation,
or other entity for whom the undersigned is executing this
Subscription Agreement, and such individual, xxxx, partnership, trust,
estate, corporation, or other entity has full right and power to
perform pursuant to this Subscription Agreement and make an investment
in the Company, and that this Subscription Agreement constitutes a
legal, valid and binding obligation of such entity; and
V. INDEMNIFICATION. The undersigned agrees to indemnify and hold harmless each
of the Company, their respective officers, directors, employees, agents, and
affiliates against all losses, liabilities, claims, damages, and expenses
(including, but not limited to, any and all expenses incurred in investigating,
preparing, or defending against any litigation commenced or threatened) arising
out of any false representation or warranty or breach by the undersigned of any
agreement herein or in any other document delivered in connection with this
Subscription Agreement.
VI. IRREVOCABILITY; BINDING EFFECT. The undersigned hereby acknowledges and
agrees that the subscription hereunder is irrevocable by the undersigned, except
as required by applicable law, and that this Subscription Agreement shall
survive the death or disability of the undersigned and shall be binding upon and
inure to the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns. If the undersigned is
more than one person, the obligations of the undersigned hereunder shall be
joint and several and the agreements, representations, warranties, and
acknowledgments herein shall be deemed to be made by and be binding upon each
such person and his heirs, executors, administrators, successors, legal
representatives, and permitted assigns.
VII. MODIFICATION. This Subscription Agreement shall not be modified or
waived except by an instrument in writing signed by the party against whom
any such modification or waiver is sought.
VIII. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to either of the Company, at the address set forth above,
or (b) if to the undersigned, at the address set forth on the signature page
hereof (or, in either case, to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section IX). Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.
IX. ASSIGNABILITY. This Subscription Agreement and the rights and
obligations hereunder are not transferable or assignable by the undersigned.
X. APPLICABLE LAW. This Subscription Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
without regard to its conflicts of laws principles.
XI. BLUE SKY QUALIFICATION. My right to purchase Shares under this
Subscription Agreement are expressly conditioned upon the exemption from
qualification of the offer and sale of the Shares from applicable Federal and
state securities laws. The Company shall not be required to qualify this
transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in
the jurisdiction.
XII. REGISTRATION OF THE SHARES.
(a) The Company hereby agrees that, by June 30, 1997, it will file a
registration statement (the "REGISTRATION STATEMENT") under the Securities Act
with the SEC, naming the Subscriber as a selling stockholder. The Subscriber is
referred to herein as the "HOLDER."
(b) Once filed, the Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible and, if any
stop order shall be issued by the SEC in connection therewith, to use its
reasonable efforts to obtain the removal of such order. Following the effective
date of the Registration Statement, the Company shall, upon the request of the
Holder, forthwith supply such reasonable number of copies of the Registration
Statement, prospectus and other documents necessary or incidental to the
registration as shall be reasonably requested by the Holder to permit the Holder
to make a public distribution of such Holder's Shares. The Company will use its
reasonable efforts to qualify the Shares for sale in such states as the Holder
shall reasonably request, provided that no such qualification will be required
in any jurisdiction where, solely as a result thereof, the Company would be
subject to general service of process or to taxation or qualification as a
foreign corporation doing business in such jurisdiction. The obligations of the
Company hereunder with respect to the Shares of the Holder are expressly
conditioned on the Holder furnishing to the Company such appropriate information
concerning the Holder, the Holder's Shares and the terms of the Holder's
offering of such Shares as the Company may reasonably request.
(c) The Company shall bear the entire cost and expense of the registration
of the Shares; provided, however, that the Holder shall be solely responsible
for the fees of any counsel retained by the Holder in connection with such
registration and any transfer taxes or underwriting discounts, commissions or
fees applicable to the Shares sold by the Holder pursuant thereto.
(d) Neither the filing of the Registration Statement by the Company
pursuant to this Subscription Agreement nor the making of any request for
prospectuses by any Holder shall impose upon any Holder any obligation to sell
the Holder's Shares.
(e) The Holder, upon receipt of notice from the Company that an event has
occurred which requires a post-effective amendment to the Registration Statement
or a supplement to the prospectus included therein, shall promptly discontinue
the sale of Shares until the Holder receives a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as soon as
practicable after such notice.
(f) The Company shall indemnify and hold harmless the Holder from and
against any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the Registration Statement, any other
registration statement filed by the Company under the Securities Act, any post-
effective amendment to such registration statements, or any prospectus included
therein required to be filed or furnished by reason of this Subscription
Agreement or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except, with respect to the Holder, insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission based upon
information furnished or required to be furnished in writing to the Company by
the Holder expressly for use therein, which indemnification shall include each
person, if any, who controls the Holder within the meaning of the Securities Act
and each officer, director, employee and agent of the Holder; provided, however,
that the indemnification in this paragraph (c) with respect
to any prospectus shall not inure to the benefit of the Holder (or to the
benefit of any person controlling the Holder) on account of any such loss,
claim, damage or liability arising from the sale of Shares by the Holder, if a
copy of a subsequent prospectus correcting the untrue statement or omission in
such earlier prospectus was provided to the Holder by the Company prior to the
subject sale and the subsequent prospectus was not delivered or sent by the
Holder to the purchaser prior to such sale; and provided further, that the
Company shall not be obligated to so indemnify the Holder or other person
referred to above unless the Holder or other person, as the case may be, shall
at the same time indemnify the Company, its directors, each officer signing the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, from and against any and all losses, claims,
damages and liabilities caused by any untrue statement of a material fact
contained in the Registration Statement, any registration statement or any
prospectus required to be filed or furnished by reason of this Subscription
Agreement or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission based upon information furnished in writing to the Company
by the Holder expressly for use therein.
(g) If for any reason the indemnification provided for in the preceding
subparagraph is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
XIII. FURTHER CONDITION. This Subscription Agreement shall only be
enforceable against the Subscriber when, and if, the obligations of Xxx
Xxxxxxxxx to transfer to the Subscribers in the Offering on a pro rata basis,
without further consideration, an aggregate of an additional 150,000 shares of
the Common Stock owned by Xxx Xxxxxxxxx. Until such transfer has been effected,
any amounts paid by the Subscriber to the Company shall be held in escrow. In
the event that this condition has not been satisfied on or before January 31,
1997, unless extended by the Subscriber, this Subscription Agreement shall
become null and void and all amounts paid to the Company shall be returned to
the Subscriber.
XIV. COUNTERPARTS. This Subscription Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this subscription by
signing any of such counterpart and delivering the same by telex, telecopy,
telegraph, cable or otherwise in writing (each delivery by any of such means to
be deemed to be "in writing" for purposes of this Subscription Agreement).
XV. USE OF PRONOUNS. All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 21 day of NOVEMBER, 1996.
Number of Shares Subscribed 125,000
Total Subscription Amount $500,000
If the purchaser is a PARTNERSHIP, CORPORATION, or TRUST:
Interfinance Inv. Co. Ltd.
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Name of Partnership, Corporation or Trust
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: President
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Taxpayer Identification Number
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Address
If the purchaser is an individual:
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Name (Print Below)
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Taxpayer Identification Number
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Address
ACCEPTED AND AGREED
UTG Communications International, Inc.
By: /s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title:
Date: November 21, 1996
