SUBSCRIPTION AGREEMENT
This subscription agreement dated 15 December, 1998 is entered into between
Interiors, Inc., a Delaware corporation ("Interiors"), and _________________, an
individual, the investor executing this Subscription Agreement (the "Investor").
1. General. This subscription agreement sets forth the terms on which the
Investor shall purchase a 12% Convertible Promissory Note in a principal amount
of $____________ ("Note"). (In the form of Exhibit A Attached.) The total dollar
amount to be sold by Interiors, pursuant to this Subscription Agreement shall
not exceed $1,500,000. The Investor may convert at his option, the Notes into
shares of Class A Common Stock of Interiors, at a conversion price of $1.125 a
share.
2. Terms. The Note shall bear interest at the rate of 12% per annum, payable at
the earlier 120 days from date above or quarterly thereafter if the Investor
chooses not to convert, commencing March 1st, June 1st, September 1st, January
1st.
3. Offer and Acceptance. The Investor confirms that he or she has received and
reviewed a copy of the Confidential Business Plan, recent 10K and 10Q of
Interiors, Inc. If the Investor elects to subscribe for the Note, then execution
of this Subscription Agreement by the Investor shall constitute an offer by the
Investor to subscribe for the Note in the amount and on the terms and conditions
specified in this Subscription Agreement. Interiors shall have the right to
reject such offer, or, by executing a copy of this Subscription Agreement for
Interiors, to accept such offer in whole or in part by Interiors only when a
copy of the signature page of this Subscription Agreement is executed by an
officer of Interiors. If the Investor's subscription is rejected in whole or in
part, Interiors shall notify such person of such rejection after receipt of the
completed Subscription Agreement. Interiors reserves the right to terminate the
offering of the Unit at any time.
4. Subscription Amount and Payment. The Investor subscribes for a note in the
amount of $____________ payable by wire transfer or in the form of acceptable
funds at the time of subscription. The Investor must be an "accredited investor"
as defined in section 4(a) of this Subscription Agreement. To demonstrate
qualification as an "accredited investor", the Investor must complete and return
with this Subscription Agreement and Investor Questionnaire. Interiors may
reject any subscription for any reason whatsoever.
5. Investor's Representation and Warranties. The Investor represents and
warrants, certifies and covenants to Interiors as follows:
(a) the Investor is an "accredited investor" within the meaning of the
Rule 501(a) Regulation [ILLEGIBLE] promulgated by the Securities and
Exchange Commission. An accredited investor includes (i) any natural
person whose individual net worth, or joint net worth with that
person's spouse, at the time of his/her purchase, exceeds
$1,000,000.00 or (ii) any natural person who had an individual
income in excess of $200,000.00 in each of 2 most recent years, or
joint income with that person's spouse in excess of $300,000.00 in
each of those years and has a reasonable expectation of reaching
that same level of income in the current, or (iii) any entity, such
as a partnership, corporation or trust, in which all of the equity
owners are accredited investors under either of the foregoing
paragraphs;
(b) the Investor is (i) a natural person at least 21 years of age, and
(ii) a permanent resident of the jurisdiction set forth on the
signature page of this Subscription Agreement and has no present
intention of becoming a resident of any other jurisdiction;
(c) the Investor has fully considered the business, investment and other
risks set forth in the Confidential Business Plan;
(d) The Investor (i) understands that the purchase of this Note is a
speculative investment and may result in the complete loss of his or
its investment, (ii) is able to bear the economic risks of his or
its investment, (iii) is able to hold his or its investment as
defined in the terms of this Subscription Agreement, (iv) is
presently able to afford a complete loss of the investment, (v) has
adequate means of providing for his or its current needs and
possible personal contingencies, (vi) has no need for liquidity in
his or its investment, and (vii) does not know of any circumstances
which might result in a change in the preceding representations and
warranties;
(e) the Investor has such knowledge and experience in financial and
business matters that he or its is capable of evaluating the merits
and risks of his or its investment and of making an informed
investment decision;
(f) the Investor confirms that in making his or its investment decision,
he or it has relied upon (a) the Confidential Business Plan (b)
Interiors Annual Report on form 10-KSB for the year ended June 30,
1998, (b) Interiors Quarterly Reports dated, September 1998, March
31, 1998, and December 31, 1997 (d) independent investigations made
by him, (e) that he or it has been given the opportunity to ask
questions of and to receive answers from, Interiors concerning the
information provided to him as described in Section 4(f)(I) of this
Subscription Agreement, (f) all documents pertaining to his or its
purchase of the Note have been made available upon reasonable notice
for inspection by him;
(g) the Note subscribed for will be acquired in good faith solely for
his or its own personal account for investment purposes only and
will not be purchased with a view to or for the resale,
fractionalization or distribution of this Subscription Agreement.
The Investor has no agreement or arrangement, formal or informal,
with any person to sell, transfer, or pledge to any person the Note
or any part of this Subscription Agreement and the Investor has no
present plans to enter into any such agreement or arrangement;
(h) the Investor understands that the legal consequences of the
representations and warranties set forth in this Subscription
Agreement are that he or it must bear the economic risks of his or
its investment for the period an indefinite period of time because
the Note and the Securities underlying same have not been registered
under the Securities Act of 1933, as amended or the securities law
of any state or other jurisdiction and, therefore, cannot be sold
unless they are subsequently so registered or an exemption from such
registration is available (which Interiors is not obligated to make
available.);
(i) the Investor consents to the placement of a legend on any
certificate or other documents evidencing the Note and the
Securities underlying the Note, which legend shall be in
substantially following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER ANY STATE SECURITIES LAW OR UNDER
ANY STATE SECURITIES LAWS OR UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE ACT). THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR
SALE, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THE SECURITIES
UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES LAW,
OR (ii) IN A TRANSACTION AS TO WHICH INTERIORS HAS
RECEIVED AN OPINION OF COUNSEL WHICH OPINION AND COUNSEL
ARE SATISFACTORY TO INTERIORS, THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACTS AND APPLICABLE STATE SECURITIES
LAWS.
6. Indemnification. The Investor shall indemnify and hold Interiors and any
person, corporation or entity affiliated with Interiors, the officers,
directors, and the employees of any of the foregoing and any professional
advisors to Interiors (the "Affiliates") harmless from and against any and all
loss, damage, liability, and expense, including costs and reasonable attorneys'
fees, to which Interiors or such Affiliate may be put or which it may incur by
reason of, or in connection with, any misrepresentation made by the Investor,
any breach of any of his or its representations or warranties or his or its
failure to fulfill any of his or its covenants or agreements under this
Subscription Agreement.
7. Interiors' Covenant of Continuous Registration Rights. Interiors agrees:
(a) to register a sufficient amount of Class A Common Shares of
Interiors underlying the Note to enable the conversion of all the
notes within 120 days or earlier, with the SEC (Securities and
Exchange Commission) which shall be declared effective by the SEC
within 120 days from the date of this Subscription Agreement
("Registration Statement") and
(b) Interiors shall keep such Registration Statement effective until
such time as all the Registered Securities are sold.
(c) In any event or for any reason the underlying stock or Registration
Statement of the underlying stock is delayed beyond the 120 days as
outlined in 6(a), Interiors agrees to redeem the Investors' Note
plus interest that would have accrued at a rate of 12% per annum or,
(d) At the option of the Investor, be allowed to convert the note into
the underlying Common Stock of Interiors at the rate of $1.125 per
share as outlined in the Subscription Agreement and have such shares
of stock fully registered for sale to the public. Interiors will use
its best efforts possible to register the underlying shares as soon
as practicable.
(e) The Investor and Interiors agree, provided a sufficient amount of
Class A Common Shares of Interiors underlying the "Note" have been
declared effective by the SEC and the Investor has not elected to
convert the "Note" as outlined in 6(d), Interiors shall have the
right 120 days from the date of this subscription Agreement to repay
the Note in full, plus accrued and any unpaid interest and void any
rights of conversion by the Investor after giving the Investor a 10
day written notice of intent to do so.
8. Miscellaneous. This Subscription Agreement shall be governed by and construed
in accordance with New York State Law. Defined terms used, but not otherwise
defined in this Subscription Agreement shall have the meaning assigned to such
terms in the Confidential Business Plan. The provisions of this Subscription
Agreement may not be modified or waived except in writing executed by each of
the parties of this Subscription Agreement. This Subscription Agreement and the
rights, powers, and duties set forth in this Subscription Agreement shall,
except as set forth in this Subscription Agreement, bind and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and permitted assigns of the parties of this Subscription Agreement.
If any term of this Subscription Agreement shall be held to be incomplete,
invalid illegal or unenforceable, the validity of all other terms of this
Subscription Agreement shall, in way, be affected by this.
The undersigned has executed this Subscription Agreement as the Investor on
December 15th, 1998.
Investor's Soc. Sec./Fed ID Number ______________________
Witnessed by:
______________________________ __________________________________
Investor's Name
______________________________ __________________________________
Investor's Address:
