EXHIBIT 99.1
SUBSCRIPTION AGREEMENT FOR PROMISSORY NOTE AND COMMON STOCK
THIS SUBSCRIPTION AGREEMENT is submitted by the undersigned person (the
"Subscriber") to Xxxxxx Financial Group, Inc., a Delaware corporation with
principal offices located at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx
Xxxxxxxx 00000 (the "Company") and, when accepted by the Company, shall
represent the agreement of the parties to the following:
SECTION 1. SUBSCRIPTION.
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1.1 The Company has offered to the undersigned the opportunity to
purchase a promissory note to be issued by the Company in the principal amount
of $_______________ in the form attached hereto as Exhibit A (the "Bridge
Note"), together with Common Stock of the Company (the "Common Shares" and
collectively with the Bridge Note, the "Securities").
1.2 The Subscriber hereby subscribes for the purchase of the Securities
(the "Purchased Securities") for a price (the "Purchase Price") of
_______________________________ ($_______________) (such subscription referred
to herein as the "Subscription").
1.3 The Subscriber has fully completed this Agreement, including
Appendices A and B attached hereto. Upon the execution hereof, the Subscriber
has delivered to the Company (i) two executed copies of this Agreement, and (ii)
the Purchase Price by a certified or bank check payable to the order of Xxxxxx
Financial Group, Inc. or by wire transfer to the account specified by the
Company.
1.4 Upon receipt of the foregoing items and acceptance of this
Agreement by the Company's affixing its signature hereto, this Agreement shall
become effective, and the Company shall promptly deliver to the Subscriber one
fully-executed copy of this Agreement, countersigned by the Company, and cause
the issuance to Subscriber of the Purchased Securities as provided herein. If
the Subscription is not accepted, the Purchase Price will be promptly refunded
to Subscriber, without interest.
SECTION 2. AGREEMENTS RESPECTING ISSUANCE OF BRIDGE NOTE AND COMMON SHARES.
---------------------------------------------------------------
2.1 Effective immediately upon acceptance of the Subscription and the
Company's receipt of the Purchase Price, the Company shall issue to Subscriber
the Bridge Note.
2.2 Following the issuance of the Bridge Note to Subscriber, Common
Shares shall be issued to Subscriber in accordance with the following:
(a) Upon retirement of the Bridge Note at its Normal Maturity
Date (as defined therein), the Company shall issue to Subscriber a
number of Common Shares representing _______________percent ( ______ %)
of the Common Stock of the Company outstanding immediately following
such issuance.
(b) In the event that, under its terms, the Bridge Note
becomes subject to Extended Maturity and is to be retired in accordance
with the Amortization Schedule (each, as defined therein), the Company
shall issue Common Shares to Subscriber as follows:
DATE OF ISSUANCE NUMBER OF SHARES
---------------- ----------------
Commencement of Extended Maturity _____ % of outstanding
Each 6 month anniversary thereof until _____% of outstanding
retirement of Bridge Note
The number of Common Shares constituting the percentage so provided
shall be computed taking into account the number of outstanding shares
of Common Stock as of the applicable date, plus the Common Shares to be
issued to Subscriber as of such date as provided herein. Subscriber's
entitlement to be issued Common Shares under this Section 2.2(b) shall
terminate upon retirement of the Bridge Note, including by prepayment
prior to the applicable 6 month anniversary of the commencement of the
Extended Maturity.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
-----------------------------------------------
The Company represents and warrants to the Subscriber that:
3.1 This Agreement has been duly authorized, executed and delivered by
the Company, and constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
3.2 The Company has the power and authority to issue the Purchased
Securities, and, when issued in accordance herewith, the Purchased Securities
shall be fully paid and non-assessable.
3.3 The Company has reserved for issuance in accordance herewith, and
at all times during which the Bridge Note remains outstanding, shall maintain in
reserve for issuance in accordance herewith, a number of Common Shares
sufficient to fully satisfy the obligations of the Company pursuant to Section 2
of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER.
-------------------------------------------------
The Subscriber represents and warrants to the Company that:
4.1 This Agreement has been duly authorized, executed and delivered by
the Subscriber, and constitutes a legal, valid and binding obligation of the
Subscriber, enforceable in accordance with its terms.
4.2 The Subscriber understands the confidential nature of the subject
matter of this Agreement and agrees not to disclose the name of the Company or
any matters associated therewith
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prior to the public announcement by the Company of the transactions effected
hereby. Further, Subscriber understands that trading in the Common Stock of the
Company based upon information derived from the Company in the process of this
Subscription is strictly prohibited and subject to legal prohibitions and
sanctions under federal securities laws.
4.3 The Subscriber has had the opportunity to review the Bridge Note
and this Agreement with its counsel or other financial advisors.
4.4 The Subscriber has knowledge and experience in financial and
business matters sufficient to enable it to evaluate the merits and risks of an
investment in the Purchased Securities.
4.5 The Subscriber is acquiring the Purchased Securities hereunder for
its own account, solely for investment and not with a view to the resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
4.6 The Subscriber understands that its acquisition of the Purchased
Securities is an illiquid and may be a long-term investment; and, without
impairing its financial condition, it is able to hold the Purchased Securities
for an indefinite period of time and would be able to suffer a complete loss of
its investment without undue financial hardship.
4.7 The Subscriber has had an opportunity to ask questions of and
receive answers from the Company and its officers concerning the Company and the
terms and conditions of the Purchased Securities and has had an opportunity to
obtain additional information from the Company to the extent deemed necessary or
advisable by the Subscriber in order to verify the accuracy of the information
obtained. The Subscriber has, to the extent deemed necessary by the Subscriber,
consulted with its own advisors (including the Subscriber's attorney, accountant
or investment advisor) regarding the Subscriber's investment in the Purchased
Securities and understands the significance and effect of its representations,
warranties, acknowledgments and agreements set forth in this Agreement.
4.8 The Subscriber has reviewed copies of the public filings of the
Company, including those on Forms 10-KSB and 10-QSB. The Subscriber has, to the
extent deemed necessary by the Subscriber, completed due diligence and such
independent investigation concerning the Company and the terms and conditions of
the sale of the Purchased Securities contemplated hereby as it has deemed
advisable.
4.9 The Subscriber acknowledges that neither the Company, nor any of
its officers, representatives or affiliates, nor any other person or entity, has
made any representations or warranties with respect to the Company, its business
or the Purchased Securities other than as set forth herein.
4.10 The Subscriber understands that the Purchased Securities have not
been registered under the Securities Act in reliance upon an exemption from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof, that the Purchased Securities have not been registered under applicable
state securities laws, and that the Purchased Securities may not be sold or
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otherwise disposed of unless registered under the Securities Act and applicable
state securities laws (the Company being under no obligation to so register such
Purchased Securities) or exempted from registration. The Subscriber further
understands that the exemption from registration afforded by Rule 144
promulgated under the Securities Act is not presently available with respect to
the Purchased Securities.
4.11 The Subscriber is an "Accredited Investor" as such term is defined
in Rule 501 of Regulation D promulgated under the Securities Act and has
accurately completed Appendix A to this Agreement.
4.12 The Subscriber acknowledges that neither the Company nor any
person or entity acting on its behalf has offered to sell any of the Purchased
Securities to the Subscriber by means of any form of general solicitation or
advertising, including without limitation (i) any advertisement, article, notice
or other communication published in any newspaper, magazine or similar media, or
broadcast over television or radio, and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
SECTION 5. GENERAL.
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5.1 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered to the parties at the addresses set forth below or on Appendix B, as
applicable, as same may be modified from time to time. Each such notice, request
or other communication shall be effective (a) if given by facsimile or e-mail,
when electronic confirmation that such facsimile or e-mail is received at the
facsimile number or e-mail address set forth below or on Appendix B, as
applicable, if such facsimile or e-mail is transmitted on a business day, and if
not, then on the next business day thereafter, or (b) if given by mail, three
(3) days after mailed by registered or certified mail (return receipt requested)
or (c) if given by express courier, on the day delivered by an express courier
(with confirmation from recipient) to the following addresses:
(a) if to the Company, to:
Xxxxxx Financial Group, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
(b) if to the Subscriber, to its mailing address and facsimile
number or e-mail address as shown on the Appendix B to this Agreement.
Notice of any change in any address or facsimile number shall also be given in
the manner set forth above. Whenever the giving of notice is required, the
giving of such notice may be waived by the party entitled to receive such
notice.
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5.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the purchase and sale of the
Purchased Securities and supersedes all prior agreements or understandings among
the parties related to such matters.
5.3 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
5.4 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms or covenants
hereof may be waived, only by a written instrument executed by all of the
parties hereto or, in the case of a waiver, by the party waiving compliance.
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar provision or condition at the same or at any
prior or subsequent time.
5.5 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of West Virginia, without giving effect to the principles of conflicts
of laws thereof.
5.6 HEADINGS. Headings of the sections in this Agreement are intended
solely for convenience, and no provision of this Agreement is to be construed by
reference to the heading of any section.
5.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.
5.8 FEES AND EXPENSES. The Company, on the one hand, and the
Subscriber, on the other hand, shall pay the respective fees and expenses
incurred by them in connection with the transactions contemplated herein.
5.9 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction.
5.10 FURTHER ACTIONS. The parties hereto agree to execute such further
instruments and to take such further actions as may reasonably be necessary to
carry out the intent of this Agreement.
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IN WITNESS WHEREOF, the Subscriber and the Company have executed this
Subscription Agreement.
SUBSCRIBER:
Name (print)
______________________________
Signature:
______________________________
If an entity, name and title of signatory:
Name: ________________________
Title: _______________________
Date: ________________________
COMPANY:
XXXXXX FINANCIAL GROUP, INC.
______________________________
Xxxx X. Xxxxxx, President
Date: ________________________
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APPENDIX A
ACCREDITED INVESTOR STATUS
Please xxxx the appropriate box next to each description applicable to you.
[___] A corporation or a partnership, not formed for the specific purpose of
acquiring Securities, with total assets in excess of $5,000,000.
[___] A natural person whose individual net worth, or joint net worth with that
person's spouse, exceeds $1,000,000.
[___] A natural person who had individual income in excess of $200,000 in each
of the most recent two years, or joint income with that person's spouse in
excess of $300,000 in each of the most recent two years and who has a reasonable
expectation of reaching the same income level in the current year.
[___] A director or executive officer (as defined in Rule 501(f) of Regulation D
promulgated under the Securities Act) of the Company.
[___] A bank (as defined in Section 3(a)(2) of the Securities Act) or a savings
and loan association or other institution (as defined in Section 3(a)(5)(A) of
the Securities Act) whether acting in its individual or fiduciary capacity.
[___] A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended.
[___] An insurance company (as defined in Section 2(13) of the Securities Act).
[___] An investment company registered under the Investment Company Act of 1940
(the "Investment Company Act") or a business development company (as defined in
Section 2(a)(48) of the Investment Company Act).
[___] A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958.
[___] A plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions, for
the benefit of its employees, if such plan has total assets in excess of
$5,000,000.
[___] An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA") if (A) the investment decision is made by
a plan fiduciary (as defined in Section 3(21) of ERISA) which is either a bank,
savings and loan association, insurance company or registered investment
advisor, or (B) the employee benefit plan has total assets in excess of
$5,000,000, or (C) if the plan is a self-directed plan, its investment decisions
are made solely by persons who are accredited investors.
[___] An individual retirement account the beneficiary of which is an accredited
investor under the standards for natural persons set forth above (I.E.
$1,000,000 net worth or $200,000 individual income or $300,000 joint income with
spouse).
[___] A private business development company (as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940).
[___] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of
A-1
acquiring Securities, whose acquisition is directed by a person who, either
alone or with his or her purchaser representative(s), has such knowledge and
experience in financial business matters that such person is capable of
evaluating the merits and risks of acquiring Securities.
[___] An organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, or a Massachusetts or similar business trust, not
formed for the specific purpose of acquiring Securities, with total assets in
excess of $5,000,000.
[___] An entity in which all of the equity owners meet the requirements of at
least one of the above subparagraphs for accredited investors.
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XXXXXXXX X
General Information. Please print or type the following information about you:
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PART A. (TO BE COMPLETED BY NATURAL PERSONS)
Full Name: _________________________________________
Residence Address: ____________________________________________________
Number Street
____________________________________________________
City State Zip
Telephone Number: _____________ Facsimile Number: _____________________
Email Address: ________________________________________________________
Name of Employer: _____________________________________________________
Business Address and Telephone Number: ________________________________
________________________________
Telephone Number: _____________ Facsimile Number: _____________________
Social Security Number: ______-_____-___________
PART B. (TO BE COMPLETED BY ENTITIES)
Name: _________________________________________________________________
Business Address: ____________________________________________________
Number Street
____________________________________________________
City State Zip
Telephone Number: _____________ Facsimile Number: _____________________
Email Address: ________________________________________________________
Name and Title of
Individual Executing Questionnaire: ___________________________________
Principal Business: ___________________________________________________
State and Year of Organization: _______________________________________
Tax Identification Number: ____________________________________________
B-1
EXHIBIT A
PROMISSORY NOTE
THIS PROMISSORY NOTE HAS BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), AND APPROPRIATE
EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES LAWS OF OTHER APPLICABLE
JURISDICTIONS. THIS PROMISSORY NOTE MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
THEREFROM SATISFACTORY TO THE ISSUER UNDER THE 1933 ACT AND THE APPLICABLE
SECURITIES LAWS OF ANY OTHER JURISDICTION. THE ISSUER SHALL BE ENTITLED TO
REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT WITH RESPECT TO THE
APPLICABILITY TO SUCH TRANSACTION OF AN EXEMPTION UNDER THE 1933 ACT.
$_______________ ___________ __, 0000
Xxxxxxxxxx, Xxxx Xxxxxxxx
FOR VALUE RECEIVED, XXXXXX FINANCIAL GROUP, INC., a Delaware
corporation with offices at Suite 970, 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx
Xxxxxxxx 00000, ("Maker") promises to pay to
_______________________________________, ("Holder") the sum of
_________________________________ ($_____________), together with interest on
the outstanding principal balance from time to time, in lawful money of the
United States of America as follows:
For purposes of this Note, the following terms shall have the following
meanings:
"AMORTIZATION SCHEDULE" means 20 equal quarterly installments of principal and
interest commencing on [INSERT DATE WHICH IS NINE MONTH ANNIVERSARY OF ISSUE
DATE OF THIS PROMISSORY NOTE].
"EXTENDED MATURITY" means the circumstance existing if the Company has not
consummated a Qualified Financing within 6 months following the issuance of this
Promissory Note.
"NORMAL MATURITY DATE" means the date that is 10 days following the consummation
of a Qualified Financing by the Maker.
"QUALIFIED FINANCING" means a financing involving the issuance of equity
securities that generates net proceeds to the Maker of at least $50 million.
Maker shall pay the principal of this Promissory Note on the Normal
Maturity Date, provided that, if a Qualified Financing has not occurred and thus
there is an Extended Maturity, principal shall be paid in accordance with the
Amortization Schedule.
Maker promises to pay interest on the outstanding principal amount of
this Promissory Note at the rate of 10.00% per annum. Interest on this
Promissory Note shall accrue from and including the date of issuance through and
until repayment of the principal amount of this Promissory Note and payment of
all interest in full. Interest shall be computed on the basis of a
365-day year or 366-day year, as the case may be, and the actual number of days
elapsed. Interest shall be paid, together with principal, on the Normal Maturity
Date, provided that, if a Qualified Financing has not occurred and thus there is
an Extended Maturity, all interest then accrued shall be paid on the 6 month
anniversary of the date of issuance of this Promissory Note, with interest
thereafter to be paid in accordance with the Amortization Schedule. In addition
to the principal amount of this Promissory Note, any amount of overdue interest
hereunder (to the extent permitted by law) if not paid when due shall also bear
interest from the date such payment was due until paid as set forth in this
paragraph.
The unpaid balance of this Promissory Note, including interest accrued
thereon, may be prepaid, in whole or in part, at any time after the day
following commencement of the Extended Maturity, without penalty. All payments
made hereunder shall be credited first to interest and then to principal.
This Promissory Note has been issued pursuant to that certain
Subscription Agreement for Promissory Note and Common Stock between the Holder
and the Maker of even date herewith, and the Maker hereby acknowledges its
agreements with respect to the issuance of shares of its Common Stock to Holder
as described therein.
The occurrence of any of the following shall constitute an Event of
Default hereunder (an "Event of Default"):
----------------
(a) failure by Maker to pay any of the principal or interest on or
before 14 days after the same shall become due and payable (whether at the
Normal Maturity Date or pursuant to the repayment provisions applicable to an
Extended Maturity) in accordance with this Promissory Note;
(b) Maker shall commence or institute any case, proceeding or other
actions (i) seeking relief on its behalf as debtor, or to adjudicate it a
bankrupt or insolvent, or seeking other relief with respect to it or its debts,
under any existing or future law relating to bankruptcy, insolvency or relief of
debtors, or (ii) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all/or any substantial part of its property, or
if Maker shall make a general assignment for the benefit of creditors;
(c) any case, proceeding or other action of the type described in
subsection (b) above shall be commenced against Maker which either (i) results
in entry of an order for relief, adjudication of bankruptcy, insolvency, such an
appointment or the issuance or entry of any other order having a similar effect,
which order shall not have been vacated within ninety (90) days from entry
thereof, or (ii) remains undismissed for a period of ninety (90) days, or any
case, proceeding or other action shall be commenced or instituted against Maker
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its property which results in an
order for relief which shall not have been vacated or effectively stayed within
ninety (90) days from entry thereof; or
(d) a trustee, receiver or other custodian is appointed for any
substantial part of the assets of Maker which appointment is not vacated or
effectively stayed within sixty (60) days;
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(e) one or more judgments or orders for the payment of money in excess
of $100,000 in the aggregate shall be rendered against the Maker and such
judgment(s) or order(s) shall continue unsatisfied and unstayed for a period of
30 days.
Upon the occurrence of an Event of Default: (i) in the case of an Event
of Default referred to in clauses (a) or (e) above, the Holder may, by written
notice to the Maker, declare the principal amount then outstanding of, and the
accrued interest on, this Promissory Note to be forthwith due and payable,
whereupon such amount shall be immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Maker; (ii) in the case of the occurrence of an Event of
Default referred to in clauses (b), (c) or (d) above, the principal amount then
outstanding of, and the accrued interest, if any, on, this Promissory Note shall
become automatically immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Maker, and in any case the Holder may take such action as is
permitted to enforce its rights hereunder, and (iii) the Holder may exercise
from time to time any rights and remedies available to it by law, including
those available under any agreement or other instrument relating to the amounts
owed under this Promissory Note.
Maker shall give notice promptly to the Holder of the occurrence of any
Event of Default or the giving by any person of any notice claiming or asserting
that an event has occurred which constitutes, or with the giving of notice or
the passage of time or both would constitute, an Event of Default.
Except as set forth herein, Maker hereby (i) waives demand, presentment
for payment, notice of nonpayment, protest, notice of protest, notice of
dishonor, and all other notices; and (ii) agrees that, notwithstanding the
occurrence of any of the foregoing, Maker shall be and remain directly and
primarily liable for all sums due under this Promissory Note until all monies
due on this Promissory Note have been fully paid.
The Holder shall not, by any act (except by a written instrument signed
by the Holder, and then only to the extent specifically set forth therein), be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Holder, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Holder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Holder
would otherwise have on any further occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
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This Promissory Note shall be construed in accordance with, and
governed by, the internal laws of the State of West Virginia, without giving
effect to the principles of conflicts of law thereof.
WITNESS the signature of the Maker on this Promissory Note.
XXXXXX FINANCIAL GROUP, INC.
By:_________________________
Xxxx X. Xxxxxx, President
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