SECURITIES PURCHASE AGREEMENT
This
SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of _______, 2009, is made and
entered into by and between Ethos Environmental, Inc., a Nevada corporation,
with its principal executive offices located at 0000 Xxxxxxx Xxxx Xxxxx Xxx
Xxxxx, Xxxxxxxxxx 00000 (the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and
assigns, a “Purchaser” and
collectively the “Purchasers”).
WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D promulgated thereunder, the Company desires to issue
and sell to Purchaser, and Purchaser desires to purchase from the Company,
securities of the Company as more fully described in this Agreement;
and,
WHEREAS, the Purchasers,
severally and not jointly, desire to purchase and the Company desires to issue
and sell to the Purchasers, in each case upon the terms and subject to the
conditions set forth in this Agreement: (i) 12% secured convertible promissory
notes of the Company in the aggregate principal amount of up to One Million
Dollars ($1,000,000) (a “Note” or the “Notes”), and (ii) common stock
purchase warrants to purchase shares of the Company’s par value $.001 common
stock (a “Warrant” or the “Warrants”).
NOW THEREFORE, in
consideration of the foregoing and the representations, warranties, covenants
and agreements herein contained, the Company and each of the Purchasers
severally (and not jointly) hereby agree as follows:
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1.
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Purchase and Sale of
Units.
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(a) Sale and
Issuance of Units. Subject to the
terms and conditions of this Agreement, each Purchaser agrees to purchase at the
Closing (as defined below), and upon payment of the Purchase Price (as defined
below), the Company agrees to sell and issue to each Purchaser a unit or units
(the “Units”). Each Unit shall consist of the following:
(i) a
convertible promissory note in substantially the form attached to this Agreement
as Exhibit A
(the “Note”),
with a term of two year, which may be convertible into common stock of the
Company on the terms stated therein;
(ii) a
common stock purchase warrant, in the form of Exhibit B (the “Warrant”), for the
right to purchase that number of shares of Company Common Stock equal to 100,000
shares per Unit purchased, which shall be exercisable immediately and have a two
year term of exercise at an exercise price of $0.25 per share; and,
(iii) an
incentive bonus allotment of 33,000 shares of the Company’s common stock (the
“Incentive Shares”).
(b) Form of
Payment. On the Closing Date: (i) each Purchaser shall
pay the Purchase Price (as hereinafter defined) for each Unit at the Closing (as
defined below) by wire transfer of immediately available funds to the Company,
in accordance with the Company’s written wiring instructions, and (ii) the Company shall
deliver such Notes and Warrants duly executed on behalf of the Company, to such
Purchaser, against delivery of such Purchase Price.
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(c) Closing
Date. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 5 and Section 6 below, the date and time
of the issuance and sale of the Notes and the Warrants pursuant to this
Agreement (the “Closing Date”) shall be 10:00 a.m., Pacific time, on the date
first written above, or such other mutually agreed upon time. The
closing of the transactions contemplated by this Agreement (the “Closing”) shall
occur on the Closing Date at such location as may be agreed to by the parties
and may be undertaken remotely by facsimile or other electronic
transmission.
(d) Separate Agreements and
Sales. The Company’s agreements with each of the Purchasers
are separate agreements, and the sales of the Units to each of the Purchasers
are separate sales.
(e) Purchase Price; Minimum and
Maximum. The Purchase Price per Unit is $50,000.00 (the
“Purchase
Price”) and the Company is offering 20 Units for gross proceeds of
$1,000,000.00.
(f) Security Interest.
Each Unit sold shall be collateralized by a security interest in Company
property as fully set forth in the Security Agreement as attached hereto as
Exhibit
C.
2. Representations
and Warranties of the Purchasers. Each Purchaser severally
(and not jointly) represents and warrants to the Company solely as to such
Purchaser that:
(a) Investment
Purpose. As of the date hereof, the Purchaser is purchasing
the Notes and the Warrants and the shares of Common Stock issuable upon exercise
thereof (the “Warrant Shares” and, collectively the Notes, Warrants,
and Bonus Shares the “Securities”) for its own account and not with a view
towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the Securities Act; provided, however, that by
making the representations herein, the Purchaser does not agree to hold any of
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act.
(b) Accredited Investor
Status. The Purchaser is an “accredited investor,” as that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act (an “Accredited
Investor”), and Purchaser has completed the “Investor Questionnaire” as
attached hereto as Annex B.
(c) Reliance on
Exemptions. The Purchaser understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Securities.
(d) Information. The
Purchaser and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
the Purchaser or its advisors. The Purchaser and its advisors, if
any, have been afforded the opportunity to ask questions of the Company.
Notwithstanding the foregoing representations, neither such inquiries nor any
other due diligence investigation conducted by Purchaser or any of its advisors
or representatives shall modify, amend or affect Purchaser’s right to rely on
the Company’s representations and warranties contained in Section 3
below.
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(e) No Governmental
Review. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the
Securities.
(f) Transfer or
Resale. The Purchaser understands that:
(i) the
sale or resale of the Securities has not been and is not being registered under
the Securities Act or any applicable state securities laws, and the Securities
may not be transferred unless:
(A) the
Securities are sold pursuant to an effective registration statement under the
Securities Act,
(B) the
Purchaser shall have delivered to the Company, at the cost of the Company, a
customary opinion of counsel that shall be in form, substance and scope
reasonably acceptable to the Company, to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an exemption from
such registration,
(C) the
Securities are sold or transferred to an “affiliate” (as defined in Rule 144
promulgated under the Securities Act (or a successor rule) (“Rule 144”)) of the
Purchaser who agrees to sell or otherwise transfer the Securities only in
accordance with this Section 2(f) and who is an Accredited
Investor,
(D) the
Securities are sold pursuant to Rule 144, or
(E) the
Securities are sold pursuant to Regulation S under the Securities Act (or a
successor rule) (“Regulation S”),
and, in
each case, the Purchaser shall have delivered to the Company, at the cost of the
Company, a customary opinion of counsel, in form, substance and scope reasonably
acceptable to the Company;
(ii) neither
the Company nor any other person is under any obligation to register such
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
(g) Legends. The
Purchaser understands that the Securities shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended. The securities may not be sold,
transferred or assigned in the absence of an effective registration statement
for the securities under said Act, or an opinion of counsel, in form, substance
and scope customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold pursuant to Rule 144
or Regulation S under said Act.”
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The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws: (i)
such Security is registered for sale under an effective registration statement
filed under the Securities Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold or (ii) such holder provides
the Company with a reasonable and customary opinion of counsel to the effect
that a public sale or transfer of such Security may be made without registration
under the Securities Act. The Purchaser agrees to sell all
Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery
requirements, if any.
(h) Authorization;
Enforcement. Each document to which the Purchaser
is a party: (i) has been duly and validly authorized, (ii) has been duly
executed and delivered on behalf of the Purchaser, and (iii) will constitute,
upon execution and delivery by the Purchaser thereof and the Company, the valid
and binding agreements of the Purchaser enforceable in accordance with their
terms, except to the extent limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors’ rights and general principles of equity that restrict
the availability of equitable or legal remedies.
(i) Residency. The
Purchaser is a resident of the jurisdiction set forth immediately below such
Purchaser’s name on the signature pages hereto.
3. Representations
and Warranties of the Company. The Company hereby represents
and warrants to each Purchaser as of the date hereof (unless the context
specifically indicates otherwise) that:
(a) Organization and
Qualification. The Company is a corporation or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated and
conducted.
(b) Authorization. All
corporate action on the part of the Company, its officers and directors
necessary for the authorization, execution and delivery of this Agreement and
the authorization, sale, issuance and delivery of the Units, and the performance
of all obligations of the Company hereunder and thereunder has been taken or
will be taken prior to the Closing. This Agreement when executed and
delivered by the Company, shall constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies.
(c) SEC Documents; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to herein as the “SEC
Documents”). The SEC Documents are in the form available to
the public via the SEC’s XXXXX system. As of the date hereof the
Company has informed Purchaser that the Company’s previously filed SEC
Documents, specifically, all financial statements filed since and including the
Annual Report on Form 10-KSB for the year ended December 31, 2006 may not be
relied upon and that presently the Company is undertaking to have all of such
previously filed financial statements restated to accurately reflect the
Company’s financial situation. Such restatement may have an adverse effect on
the Company.
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(d) No General
Solicitation. Neither the Company nor any person participating on the
Company’s behalf in the transactions contemplated hereby has conducted any
“general solicitation,” as such term is defined in Regulation D promulgated
under the Securities Act, with respect to any of the Securities being offered
hereby.
(e) Finder’s
Fee. The Company may pay, where applicable, a
reasonable finder's fee (the “Fee”), not to exceed 10% of the Purchase
Price.
4. Covenants. In
addition to the other agreements and covenants set forth herein, the applicable
parties hereto hereby covenant as follows:
(a) Stop
Orders. The Company will advise each Purchaser promptly after
it receives notice of issuance by the SEC, any state securities commission or
any other regulatory authority of any stop order or of any order preventing or
suspending any offering of the Securities, or of the suspension of the
qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such
purpose.
(b) Form D; Blue Sky
Laws. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Purchaser promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Purchasers at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to each
Purchaser on or prior to the Closing Date.
(c) Authorization and
Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion or exercise of the
outstanding Notes and Warrants and issuance of the Warrant Shares in connection
therewith (based on the Exercise Price of the Warrants in effect from time to
time) and as otherwise required by the Notes (collectively, the “Reserved
Amount”). The Company shall not reduce the number of shares of Common
Stock reserved for issuance upon exercise of the Warrants. If at any
time the number of shares of Common Stock authorized and reserved for issuance
(“Authorized and Reserved Shares”) is below the Reserved Amount, the Company
will promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a special
meeting of stockholders to authorize additional shares to meet the Company’s
obligations under this Section 4(d), in the case of an insufficient number of
authorized shares, obtain stockholder approval of an increase in such authorized
number of shares, and voting the shares of the Company’s officer’s and directors
in favor of an increase in the authorized shares of the Company to ensure that
the number of authorized shares is sufficient to meet the Reserved
Amount. The Company shall use its best efforts to obtain such
stockholder approval within thirty (30) days following the date on which the
number of Reserved Amount exceeds the Authorized and Reserved
Shares.
(d) Corporate
Existence. So long as a Purchaser beneficially owns any Notes
or Warrants, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company’s assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company’s
assets, where the surviving or successor entity in such transaction: (i) assumes
the Company’s obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly-traded corporation
whose Common Stock is listed for trading on the OTCBB, Nasdaq National Market,
Nasdaq Capital Market, American Stock Exchange or New York Stock
Exchange.
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5. Conditions
to the Company’s Obligation to Sell. The obligation of the
Company hereunder to issue and sell the Notes and Warrants to a Purchaser at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:
(a) The
applicable Purchaser shall have executed this Agreement, and delivered the same
to the Company.
(b) The
applicable Purchaser shall have delivered the Purchase Price in accordance with
Section 1(b) above.
(c) The
representations and warranties of the applicable Purchaser shall be true and
correct in all material respects, and the applicable Purchaser shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the applicable Purchaser at or prior to the Closing
Date.
(d) No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
6. Conditions
to Each Purchaser’s Obligation to Purchase. The obligation of
each Purchaser hereunder to purchase the Notes and Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for such Purchaser’s
sole benefit and may be waived by such Purchaser at any time in its sole
discretion:
(a) to
such Purchaser duly executed Notes (in such denominations as the Purchaser shall
request) and Warrants in accordance with Section 1(b) above.
(b) The
representations and warranties of the Company shall be true and correct in all
material respects, and the Company shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company at
or prior to the Closing Date. (c)No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
7. Governing
Law; Jurisdiction. This agreement shall be enforced, governed
by and construed in accordance with the laws of the state of California
applicable to agreements made and to be performed entirely within such state,
without regard to the principles of conflicts of law.
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8. Miscellaneous.
(a) Counterparts; Signatures by
Facsimile. This Agreement may be executed in one or more
counterparts (with the Purchasers each executing the counterpart in the form of
Annex A
hereto. Each of such counterparts shall be deemed an original, and
all of which shall, when taken together, constitute one and the same agreement,
and shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a
party (including in the manner described above), may be delivered to the other
party hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(b) Headings. The
headings of this Agreement are for convenience of reference only and shall not
form part of, or affect the interpretation of, this Agreement.
(c) Severability. In
the event that any provision of this Agreement is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.
(d) Entire Agreement;
Amendments. This Agreement, the other Transaction Documents
and the instruments, documents and schedules referenced herein contain the
entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the
Company nor any Purchaser makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the Company and a majority in interest of the Purchasers.
(e) Notices. Any
notices required or permitted to be given under the terms of this Agreement
shall be sent by certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile transmission and shall be effective five days after
being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile transmission, with printed confirmation of
receipt, in each case addressed to a party. The addresses for such
communications shall be:
If to the
Company: Ethos
Environmental, Inc.
0000
Xxxxxxx Xxxx Xxxxx
Xxx
Xxxxx, Xx 00000
Attention:
Xx. Xxxxx Xxxxxxxxxxx, Chairman and CEO
Telephone:
000-000-0000
Facsimile: 619.575.9300
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If
to a Purchaser:
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To
the address and fax number set forth immediately below such Purchaser’s
name on the counterpart signature pages
hereto.
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Each
party shall provide notice to the other party of any change in address,
telephone or facsimile number.
(f) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. Neither the
Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
other. Notwithstanding the foregoing, but subject to the provisions
of Section 2(f) hereof, any Purchaser may, without the consent of the Company,
assign its rights hereunder to any person that purchases Securities in a private
transaction from a Purchaser or to any of its “affiliates,” as that term is
defined under the Exchange Act.
(g) Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
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(h) Survival; Indemnification;
Limitation on Liability.
(i) The
representations and warranties of the Purchasers and the Company set forth in
Sections 2 and 3 hereof shall survive for 18 months following the Closing Date
notwithstanding any due diligence investigation conducted by or on behalf of the
Purchasers or the Company, as applicable. The agreements and covenants of the
Company set forth in Section 4 shall survive for so long as any Purchaser
beneficially owns any Securities.
(ii) The
Company agrees to indemnify and hold harmless each of the Purchasers and all of
their respective officers, directors, employees, agents and representative from
and against any and all claims, costs, expenses, liabilities, obligations,
losses or damages (including reasonable legal fees) of any nature (“Losses”),
incurred by or imposed upon any such party arising as a result of or
related to any actual or alleged breach by the Company of any of its
representations, warranties and covenants set forth in Sections 3 and 4 hereof
or any of its covenants, agreements and obligations under this Agreement or any
other Transaction Document.
(iii) Each
Purchaser agrees, severally but not jointly, to indemnify and hold harmless the
Company and its officers, directors, employees and agents for Losses arising
arising as a result of or related to any actual or alleged breach any breach by
such Purchaser of any of its representations or warranties set forth in Section
2 hereof or any of its covenants, agreements and obligations under this
Agreement or any other Transaction Document.
(i) Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(j) No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
IN WITNESS WHEREOF, the
undersigned Purchasers and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first above written.
By:
________________________________
Name:
Xxxxx Xxxxxxxxxxx
Title:
CEO
PURCHASERS:
The
Purchasers executing the Signature Page in the form attached hereto as Annex A and
delivering the same to the Company or its agents shall be deemed to have
executed this Agreement and agreed to the terms hereof.
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Annex A
Purchaser
Counterpart Signature Page
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name of
Purchaser:
_____________________________________________________________
Signature of Authorized Signatory of
Purchaser: ______________________________________
Name of
Authorized Signatory:
____________________________________________________
Title of
Authorized Signatory:
_____________________________________________________
Email
Address of Purchaser:
______________________________________________________
Fax
Number of Purchaser:
________________________________________________________
Address
for Notice of Purchaser:
______________________________________________________________________________
______________________________________________________________________________
Address
for Delivery of Securities for Purchaser (if not same as above):
______________________________________________________________________________
______________________________________________________________________________
Subscription
Amount: $______________________________________
Number of
Units Purchased: __________________________________
Principal
Amount of Note: $__________________________________
Warrant
Shares: ____________________________________________
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Annex
B
PURCHASER
QUALIFICATION QUESTIONNAIRE
(Confidential)
a
Nevada Corporation
This
Questionnaire is being given to each individual who has expressed an interest in
purchasing Shares and becoming a security-holder in the Company. The
proposed sale of the Units is a “Private Placement” proposed to be effective
without registration under the Securities Act of 1933 (the “Act”) on the basis
of the exemption set forth in section 4(2) of the Act and the standards imposed
by Regulation D promulgated by the Securities and Exchange Commission under the
Act.
The
purpose of this Questionnaire is to assure the Company, that each of the
proposed Purchasers meets the standards imposed for application of that
exemption including, but not limited to, whether the proposed Purchaser
qualifies as an “accredited investor” as defined in rule 501 under the
Act. Your answers will at all times be kept strictly confidential.
However, by signing this Questionnaire you agree that the Company may present
this Questionnaire to such parties as they deem appropriate if called upon under
the law to establish the availability under the Act of an exemption from
registration of the private placement or if the contents thereof are relevant to
any issue in any action, suit or proceeding to which the Company is a party or
by which it may be bound. The undersigned realizes that this
Questionnaire does not constitute an offer by the Company or any sales agent to
sell Shares but is a request for information.
Please
print your response to each question, and where the answer to any question is
“none” or “not applicable”, please so state.
Please
complete and return this Questionnaire to:
0000
Xxxxxxx Xxxx Xxxxx
Xxx
Xxxxx, Xx 00000
Attention:
Xx. Xxxxx Xxxxxxxxxxx, Chairman and CEO
Telephone:
000.000.0000
Facsimile: 619.575.9300
If you
are in doubt as to the meaning or implication of any of the terminology used in
the Questionnaire, or as to the significance of any particular question, please
call the telephone number above.
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PURCHASER
QUALIFICATION QUESTIONNAIRE
(Confidential)
a
Nevada Corporation
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Name:
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Marital
Status:
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Social
Security No.
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Profession:
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Check
preferred mailing address
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Residence:
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Phone:
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Business:
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Phone:
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CAPACITY:
1. Are
you acting as an individual purchasing the
Units for your own personal account?
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Yes o
No (If Yes Then Skip to
#8)
2. If
you are not
acting as an individual purchasing for your own personal account, please specify
the capacity in which you are acting (e.g. agent, trustee, partner, corporate
officer, joint tenant or tenant in common).
3. If
you represent an entity, when was the entity formed? (Please provide
the filing date of the articles of incorporation, trust formation date or the
agreement or certificate of partnership, where applicable).
4. In
what state, territory, possession or foreign country was the entity
formed?
5. If
you represent an entity such as a corporation, partnership, trust, association,
Joint Stock Company or other incorporated association, was such entity organized
for the purpose of acquiring the Units?
o
Yes o
No (If No Then Skip to
#8)
6. If
the answer to question (5) is yes, please list in the space provided below the
names, addresses and telephone numbers of each beneficial owner of the entity
and supply the information requested in the remaining questions below with
respect to each beneficial owner of the entity. You may have each such
beneficial owner complete and sign a photocopy of this form.
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Name
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Address
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City
State Zip
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Telephone
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7. If
you are not
purchasing as an individual, then are you any one of the following?
a. Any
of the following institutions: bank (whether acting in its individual or
fiduciary capacity); insurance company; registered investment company or
business development company; licensed Small Business Investment Company; an
employee benefit plan subject to the Employee Retirement Income Security Act of
1974, if the investment decision is made by a “plan fiduciary” which is either a
bank, insurance company or investment advisor, or if the employee benefit plan
has total assets in excess of $5,000,000;
o
Yes o
No
b. Any
private business development company as defined in the Investment Advisors Act
of 1940;
o
Yes o
No
c. Any
tax-exempt organization described in section 501(c)(3) of the Internal Revenue
Code with total assets in excess of $5,000,000.
o
Yes o
No
8. Individual
gross income for most two most recent tax years:
Year:
_________ Income:
$_______________
Year:
________ Income:
$_______________
Joint
income, with spouse, for two most recent tax years:
Year:
_________ Income:
$_______________
Year:
________ Income:
$_______________
9. Estimated
gross income, individual or combined with spouse, for current tax
year:
$_____________________
10. Will
your individual net worth, independently or jointly with your spouse, exceed
$1,000,000 at the time of purchase?
o
Yes o No
11. Are
you a director or executive officer of Ethos Environmental, Inc.?
o
Yes o No
12. Indicate
the company employing you and, if less than five years please list previous
business activity or other employment during the last five years.
|
Employer
|
Date
Employed
|
Your
Title
|
12
13. Please
circle the highest level of education you have achieved.
|
Elementary
|
High
School
|
College/Graduate
Level
|
Degrees
|
|
1 2
3 4 5 6 7 8
|
1 2 3 4
|
1 2
3 4 /1 2 3
|
15. Has
your business activity and/or employment experiences or other positions
previously or currently held by you provided you with sufficient knowledge and
experience in financial and business matters so that you are capable of
evaluating the merits and risks of this proposed investment?
o
Yes o
No
14. Have
you previously purchased securities, which were sold in reliance on the private
offering exemption from registration under the Securities Act of 1933, or
invested in limited partnerships or tax shelters?
o
Yes
o
No
15. Please
indicate the nature and extent of your present holdings in limited partnerships
or other private investment vehicles:
|
Number
of investments:
|
||
|
Total
Dollar Value:
|
Over $20,000
|
|
|
Over $50,000
|
||
|
Over
$100,000
|
||
|
Over
$200,000
|
||
|
No
investments
|
16. Indicate
tax shelter investments, if any, to date:
17. In
making the investments listed in answers 16 and 17, have you relied on the
advice of a Purchaser Representative (e.g. lawyer, accountant, investment
advisor)?
o
Yes o No
If yes, please indicate the name,
address and telephone number of your Purchaser Representative and the respective
investments for which they give advice.
|
Name:
|
|
|
Address:
|
|
|
Telephone
Number:
|
|
|
Investment:
|
13
18. Does
the above-named investment advisor have such knowledge and experience in
financial and business matters that he, she or they are capable of evaluating
the merits and risks of an investment in the Company?
o
Yes o No
20. Please
indicate how long you have dealt with each advisor professionally and the
attributes, which qualify them to knowledgeably evaluate the merits and risks of
this investment. (education, accounting certificates, SEC
registration, etc.).
21. If
in connection with the proposed investment, you will receive advice from
bankers, lawyers, accountants, investment advisors, or other persons please give
the following information with respect to such person or persons:
o
Yes o No
|
Name
|
Profession
|
Address
|
Telephone
|
Contact
?
|
|
o
Yes o
No
|
||||
|
o
Yes o
No
|
||||
|
o
Yes o
No
|
22. Can
you bear the economic risks in and afford a complete loss of any investment you
may make by virtue of an investment in the Company and can you afford to hold
any investment therein for an indefinite period?
o
Yes o No
23. Do
you understand the nature of this particular investment in the Company and the
risks associated with such an investment?
o
Yes o No
24. Are
you purchasing these securities for investment and not with the intent to resell
them?
o
Yes o
No
25. In
making your investment decision you have relied on your own examination of the
company and the terms of the Offering, including the merits and risks involved
and acknowledge that the Units have not been recommended by any federal or state
securities commission or regulatory authority or any securities commission of
any other country.
o
Yes o No
14
PURCHASER
ACKNOWLEDGMENT
I
understand that the Company will be relying on the accuracy and completeness of
my responses to the foregoing questions and I represent and warrant to the
Company as follows:
|
|
1)
|
The
answers contained in the Questionnaire are complete and correct and may be
relied upon by the Company in determining whether this offering in
connection with which I have executed this Questionnaire is exempt from
registration under the Securities Act of 1933, pursuant to Rule 506 or
otherwise;
|
|
|
2)
|
I
will notify the Company immediately of any material change in any
statement made herein occurring prior to the closing of any purchase by me
of an interest in the investment;
|
|
|
3)
|
I
personally have knowledge and experience in financial and business
matters, either alone or together with my professional advisors, to be
capable of evaluating the merits and risks of my investment in the
Company.
|
IN WITNESS WHEREOF, I have
executed this Questionnaire this _______ day of ____________, 2008.
______________________________
(signature)
______________________________
(print
name)
15
Form
of Note
16
Exhibit
B
Form
of Warrant
17
Exhibit
C
Form
of Security Agreement
18
