EXHIBIT 10.22
RECENT STOCK PURCHASE AGREEMENTS
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and Exchange
Commission Regulation D promulgated under authority of the Securities Act
of 1933, as amended ("Rule 501", "Regulation D" and the "Act",
respectively) for the acquisition of an aggregate of up to 1,500,000 shares
of the common stock of Equity Growth Systems, inc., a publicly held
Delaware corporation with a class of securities currently registered under
Section 12 of the Securities Exchange Act of 1934, as amended, (the
"Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
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(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 435,000 shares
of the Stock in consideration for $8,700 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
55
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
56
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's transfer
agent will be instructed not to transfer the subject Stock unless it has been
registered pursuant to Section 5 of the Securities Act of 1933, as amended, or
an opinion of counsel satisfactory to legal counsel to the Company and the
Company's president has been provided, to the effect that the proposed
transaction is exempt from registration requirements imposed by the Securities
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and
any applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act of 1933,
as amended, or comparable state laws in reliance on the provisions of Section
4(6) of such act, and comparable state law provisions. These securities may not
be transferred pledged or hypothecated unless they are first registered under
applicable federal, state or foreign laws, or the transaction is demonstrated to
be exempt from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best judgment
in the con- duct of all matters arising under this Subscription Agreement;
provided, however, that this provision shall not enlarge, limit or
otherwise affect the liability of the Company or its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the Company;
any cor- poration or entity affiliated with the Company; the officers,
directors and employees of any of the foregoing; or any professional
adviser thereto, from and against any and all loss, damage, liability or
expense, including costs and reasonable attorney's fees at trial or on
appeal, to which said entities and persons may be subject or which said
entities and persons incur by reason of or in connection with any
misrepresentation made by the Accredited Subscriber, any breach of any of
the Accredited Subscriber's warranties or the Accredited Subscriber's
failure to fulfill any of the covenants or agreements under this
Subscription Agreement.
57
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: The Yankee Companies, Inc.
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, President
Accredited Subscriber's Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ▇▇-▇▇▇▇▇▇▇
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
58
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
The Yankee Companies, Inc.
(Print or Type Name)
By: _________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, President
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President & Director
Attest: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
59
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
60
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 435,000 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
61
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
The Yankee Companies, Inc.
--------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, President
62
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
re- quirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and Exchange
Commission Regulation D promulgated under authority of the Securities Act of
1933, as amended ("Rule 501", "Regulation D" and the "Act", respectively) for
the acquisition of an aggregate of up to 1,750,000 shares of the common stock of
Equity Growth Systems, inc., a publicly held Delaware corporation with a class
of securities currently registered under Section 12 of the Securities Exchange
Act of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
63
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1998, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($35,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 62,500 shares of
the Stock in consideration for $1,250 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
64
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
65
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best judgment
in the con- duct of all matters arising under this Subscription Agreement;
provided, however, that this provision shall not enlarge, limit or
otherwise affect the liability of the Company or its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the Company;
any cor- poration or entity affiliated with the Company; the officers,
directors and employees of any of the foregoing; or any professional
adviser thereto, from and against any and all loss, damage, liability or
expense, including costs and reasonable attorney's fees at trial or on
appeal, to which said entities and persons may be subject or which said
entities and persons incur by reason of or in connection with any
misrepresentation made by the Accredited Subscriber, any breach of any of
the Accredited Subscriber's warranties or the Accredited Subscriber's
failure to fulfill any of the covenants or agreements under this
Subscription Agreement.
66
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set forth
at the end of this Agreement, or to the address appearing on the books of the
Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: ▇▇▇▇▇ Field
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇ Field
Accredited Subscriber's Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ###-##-####
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
67
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
--------------------
▇▇▇▇▇ Field
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President & Director
68
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
69
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 62,500 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
70
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
--------------------
▇▇▇▇▇ Field
71
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
re- quirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,750,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
72
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1998, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
(c) ( 1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($35,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 62,500 shares of
the Stock in consideration for $1,250 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
73
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
74
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best judgment
in the con- duct of all matters arising under this Subscription Agreement;
provided, however, that this provision shall not enlarge, limit or
otherwise affect the liability of the Company or its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the Company;
any cor- poration or entity affiliated with the Company; the officers,
directors and employees of any of the foregoing; or any professional
adviser thereto, from and against any and all loss, damage, liability or
expense, including costs and reasonable attorney's fees at trial or on
appeal, to which said entities and persons may be subject or which said
entities and persons incur by reason of or in connection with any
misrepresentation made by the Accredited Subscriber, any breach of any of
the Accredited Subscriber's warranties or the Accredited Subscriber's
failure to fulfill any of the covenants or agreements under this
Subscription Agreement.
75
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall sur- vive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set forth
at the end of this Agreement, or to the address appearing on the books of the
Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ .
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Accredited Subscriber's Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇;
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ###-##-####
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
76
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President & Director
77
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
78
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 62,500 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
79
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
80
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. These
Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,750,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
81
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($35,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 125,000 shares
of the Stock in consideration for $2,500 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
82
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
83
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
84
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall sur- vive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ .
Accredited Subscriber's Authorized Signatory: * G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Accredited Subscriber's Address: ost Office Box 3370; ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ###-##-####
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
85
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By: _________________________________
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President & Director
86
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
87
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 125,000 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
88
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
--------------------
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
89
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
90
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 217,500 shares
of the Stock in consideration for $4,350 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
91
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
92
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall sur- vive the delivery of and the payment for the Stock being subscribed
for.
93
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name: The ▇▇▇▇▇ Family Spendthrift Trust
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Trustee
Accredited Subscriber's Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ▇▇-▇▇▇▇▇▇▇
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
94
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
The ▇▇▇▇▇ Family Spendthrift Trust
By: _________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President & Director
Attest: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
95
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
96
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 217,500 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
97
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
The ▇▇▇▇▇ Family Spendthrift Trust
By: _________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
98
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
99
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 630,000 shares
of the Stock in consideration for $12,600 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
100
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
101
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's transfer
agent will be instructed not to transfer the subject Stock unless it has
been registered pursuant to Section 5 of the Securities Act of 1933, as
amended, or an opinion of counsel satisfactory to legal counsel to the
Company and the Company's president has been provided, to the effect that
the proposed transaction is exempt from registration requirements imposed
by the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and any applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
102
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: Blue Lake Capital Corp.
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Accredited Subscriber's Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ▇▇-▇▇▇▇▇▇▇
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
103
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
Blue Lake Capital Corp.
By: _________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President & Director
Attest: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
104
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
105
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 630,000 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
106
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
Blue Lake Capital Corp.
By: _________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
107
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
108
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 108,750 shares
of the Stock in consideration for $2,175 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
109
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
110
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
111
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, custodian under the
UGTMA for ▇▇▇▇▇▇ ▇▇▇▇▇▇, her daughter
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Custodian
Accredited Subscriber's Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ###-##-####
------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
112
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, custodian under the UGTMA for ▇▇▇▇▇▇ ▇▇▇▇▇▇, her daughter
By: _________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Custodian
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President & Director
Attest: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
113
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
114
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 108,750 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
115
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, custodian under the UGTMA for ▇▇▇▇▇▇ ▇▇▇▇▇▇, her daughter
--------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Custodian
116
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's ▇▇▇▇▇
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
117
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 108,750 shares
of the Stock in consideration for $2,175 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
118
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
119
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained
herein shall sur- vive the delivery of and the payment for the Stock being
subscribed for.
120
6. Notices.
Any and all notices, designations, consents, offers, acceptances or
any other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the
Company to Equity Growth Systems, inc.; ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇;
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇; and, in the case of the Accredited
Subscriber, to the address set forth at the end of this Agreement, or to
the address appearing on the books of the Company or to such other address
as may be designated by the Accredited Subscriber or the Company in
writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, custodian under the
UGTMA for ▇▇▇▇▇▇ ▇▇▇▇▇▇, her daughter
Accredited Subscriber's Authorized Signatory: * ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Custodian
Accredited Subscriber's Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Accredited Subscriber's Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Accredited Subscriber's Tax ** Number: ###-##-####
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* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
121
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, custodian under the UGTMA for ▇▇▇▇▇▇ ▇▇▇▇▇▇, her daughter
By: _________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Custodian
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President & Director
Attest: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Director
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Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
123
FORM OF INVESTMENT LETTER
Date:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
President
Equity Growth Systems, inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 108,750 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
124
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, custodian under the UGTMA for ▇▇▇▇▇▇ ▇▇▇▇▇▇, her daughter
--------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Custodian
125