EXHIBIT 10.15 - SUBSCRIPTION AGREEMENT AND WARRANT BETWEEN ▇▇▇▇▇▇▇▇▇ VENTURE
CAPITAL, LLC AND ▇▇▇▇▇▇▇▇.▇▇▇, INC. DATED MARCH 22, 2000, AS AMENDED BY THAT
CERTAIN LETTER AGREEMENT DATED JULY 17, 2000.
July 17, 2000
▇▇▇▇▇▇▇▇▇ Venture Capital, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Managing Member
Dear ▇▇▇▇▇▇:
Reference is made to that certain Subscription Agreement between
▇▇▇▇▇▇▇▇▇ Venture Capital, LLC ("SVC") and ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation (the "Company") dated March 22, 2000 ("Agreement") and that certain
Stock Purchase Warrant issued to SVC by the Company and evidencing the right to
purchase 700,000 shares of common stock of the Company ("Warrant"). Pursuant to
the Agreement SVC is entitled to 500,000 shares of the Company's common stock
which are "restricted securities" within the meaning of Rule 144 under the
Securities Act of 1933, as amended ("Act"). A stockholder of the Company, who
the Company represents to you is not an "affiliate" of the Company, has agreed
to transfer to SVC 500,000 shares of the Company's common stock which are not
"restricted securities" within the meaning of Rule 144, upon receipt of which
SVC's entitlement to the 500,000 shares of common stock of the Company pursuant
to the Agreement will terminate.
In addition and in consideration of the foregoing, and for other good
and valuable consideration, receipt of which is acknowledged, the provisions of
Section 5(b)(i) (Registration of Shares) and 5(b)(ii) (Additional Registration
Rights) are hereby terminated and SVC hereby releases the Company and its
officers and directors from any claims it may have under such Sections,
including without limitation, for any additional shares of common stock of the
Company. Section 5(b)(iii) (Sale of Additional Investor Shares) of the Agreement
is hereby amended to change the reference to "$1.00" to "$0.50". The Company is
currently in final negotiations to acquire certain assets of another company
whose business is related to that of the Company (the "Acquisition"). This will
confirm that the agreement for the Acquisition prohibits the Company from taking
any action to cause a reverse stock split prior to the first anniversary of the
closing of the transaction, without the consent of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and
the other party to the Acquisition. This transaction is confidential. SVC hereby
waives solely in connection with the Acquisition any rights it would have
pursuant to Section 5(b)(iii) (Sale of Additional Investor Shares) and Section
5(b)(iv) (Co-sale Rights) of the Agreement as a result of the consummation of
the Acquisition and related transactions. The provisions of Section 5(b)(vi)
(Stock Splits) are hereby terminated and the Warrant and the related purchase
rights are hereby terminated. In consideration of the foregoing and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
Company shall issue SVC an additional 200,000
shares of Common Stock (which shall be "restricted securities"). In the event
that SVC has not received the 500,000 unrestricted shares within five (5)
business days of the execution and delivery of this Agreement to the Company,
the Company shall issue SVC an additional 200,000 shares of Common Stock of the
Company (which shall be "restricted securities").
If you agree with the foregoing, please execute this letter agreement
where indicated below and return a copy to the undersigned.
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman
▇▇▇▇▇▇▇▇▇ Venture Capital, LLC
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
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By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Managing
Member
NAME: ▇▇▇▇▇▇▇▇▇ VENTURE CAPITAL, L.L.C
SUBSCRIPTION AGREEMENT
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned understands that ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the
"Company"), is offering for sale up to 500,000 shares of its common stock,
$0.00001 par value per share (the "Common Stock"), and a warrant to purchase up
to 700,000 shares of common stock of the Company (the "Warrant"), for the
Purchase Price set forth in Section 4 hereof.
The undersigned further understands that the offering is being made without
registration of the Common Stock under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance on an exemption for transactions by an
issuer not involving a public offering and further understands that the
undersigned is purchasing the Common Stock without being furnished any
prospectus setting forth all of the information that would be required to be
furnished under the Securities Act, and understands further that the offering is
being made only to "accredited investors" (as defined in Rule 501 of Regulation
D under the Securities Act).
1. SUBSCRIPTION. Subject to the terms and conditions of this
Subscription Agreement (this "Agreement"), the undersigned hereby irrevocably
subscribes for that number of shares of Common Stock and a Warrant to purchase
that number of shares of common stock set forth in APPENDIX A hereto.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is
understood and agreed that the Company has the right to accept or reject this
subscription, in whole or in part, and that this subscription is accepted by the
Company only when it is signed by a duly authorized officer of the Company and
delivered to the undersigned at the Closing referred to in Section 3.
3. THE CLOSING. The closing of the purchase and sale of the
Common Stock and the Warrant (the "Closing") shall take place at the offices of
the Company or such other mutually acceptable place on or before March 23, 2000
or at such time and place as the Company and the undersigned shall mutually
agree upon. The Company may, at its option, elect to close the purchase and sale
of the shares in one or more Closings.
4. PAYMENT. The undersigned shall make payment in the sum of Five
Hundred Thousand and No/100 Dollars ($500,000.00) (the "Purchase Price"), for
the Common Stock and the Warrant, less a reasonable amount necessary to cover
all costs and expenses, including reasonable attorneys' and professional fees,
of the undersigned incurred in connection with this Agreement. The Purchase
Price shall be paid to the Company via wire transfer to the account
designated by the Company. The Purchase Price, less any and all deductions
therefrom as provided for herein, shall be paid in full to the Company not later
than the Closing Date (as defined below).
5. REPRESENTATIONS OF THE COMPANY. As of the date of the Closing
(the "Closing Date"), the Company represents as follows:
(a) VALID ISSUANCE. The Common Stock and the shares of common
stock of the Company underlying the Warrant, when issued and paid for, will
represent validly authorized, duly issued and fully paid and non-assessable
shares of the Company, and the issuance thereof will not conflict with the
Certificate of Incorporation or Bylaws of the Company nor with any outstanding
warrant, option, call, preemptive right or commitment of any type relating to
the Company's capital stock.
(b) OTHER REPRESENTATIONS AND AGREEMENTS.
(i) REGISTRATION OF SHARES. Not later than ninety (90)
days following the Closing Date (the "Demand Registration Date"), the
Company shall cause to become effective a registration statement under
the Securities Act registering for resale all of the Common Stock and
registering for issuance all of the shares of common stock underlying
the Warrant. The Company will bear all registration expenses,
including, but not limited to, any underwriting discounts and
commissions attributable to the sale of the shares of the undersigned,
of all registrations of the securities owned by the undersigned.
If the Company intends to distribute any of the registered shares of
the undersigned and/or any other shareholder and/or the Company
pursuant to the underwriting and the underwriter advises the Company in
writing that marketing factors require a limitation of shares to be
underwritten, the number of shares of the undersigned to be included in
such underwriting shall not be reduced, pro rata or otherwise, unless
all other securities are first entirely excluded from the underwriting
or upon receipt of the written consent of the undersigned waiving such
right, which consent may be withheld for any or no reason. If despite
the best efforts of the Company, the total number of shares requested
by the undersigned to be registered cannot be so included, the Company
shall purchase from the undersigned that number of shares which was
unable to be included in the underwritten offering at the price per
share received in this offering.
If the Company shall furnish to the undersigned a certificate signed by
the President of the Company providing that in the good faith judgement
of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to deter the filing
of such registration statement, the Company shall have the right to
defer taking action with respect to such filing for a period not to
exceed ninety (90) days following the Demand Registration Date;
provided, however, in the event that the Company shall fail to have a
registration statement declared effective by the United States
Securities and Exchange Commission ("SEC") by the Demand Registration
Date for any reasons whatsoever, including pursuant to the terms of
this paragraph, as compensation for the breach of the terms of this
Agreement by the Company, the Company shall immediately transfer to the
undersigned 200,000 shares of common stock of the Company. For each
successive thirty (30) day period commencing on the Demand Registration
Date that the Company does not have an effective registration statement
filed with the SEC, the Company shall transfer to the undersigned an
additional 200,000 shares of common stock of the Company. The Company
shall not have the right to defer registration more than once in any
twelve (12) month period.
(ii) ADDITIONAL REGISTRATION RIGHTS. The undersigned shall
be entitled to unlimited "piggyback" registration rights in connection
with all registrations of securities by the Company under the
Securities Act or in connection with any demand registration of any
shareholder of the Company (except for registrations on Form S-8 or
Form S-4). The Company will bear all registration expenses, including
but not limited to, all underwriting discounts and commissions
attributable to the sale of the shares of the undersigned, of all
piggyback registrations by the undersigned.
(iii) SALE OF ADDITIONAL INVESTOR SHARES. From and after
the Closing Date, in the event, that the Company in any non-public
offering sells any common stock at a price per share, or any warrant
with an exercise price per share, that is less than $1.00, then for no
additional consideration, the Company shall immediately transfer to the
undersigned that number of shares of common stock of the Company equal
to the difference between (1) the number of shares which would have
been subscribed to hereunder, inclusive of the shares underlying the
Warrant, at the lesser price per share of such subsequently sold
securities and (2) the number of the shares subscribed to hereunder,
inclusive of the shares underlying the Warrant.
(iv) CO-SALE RIGHTS. ▇▇▇▇▇▇ ▇. ▇▇▇▇, founder, Chairman of
the Board, President and Chief Operating Officer of the Company, and
▇▇▇▇▇ ▇▇▇▇, Vice President and member of the Board of Directors of the
Company (▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ collectively referred to for
purposes of this Section 5(b)(iv) as "Grantors"), individually grant to
the undersigned a right of co-sale (on a pro rata basis) such that upon
notice to the undersigned of any non-public sale or disposition of
shares of the Company, including any redemption by the Company, by
either Grantor, the undersigned, upon written notice to such selling
Grantor, shall be entitled to participate, pro rata as determined by
each party's percentage ownership in the Company, in such sale of
shares of the Company on the same terms and conditions as the selling
Grantor.
In the event either Grantor sells any shares in contravention of the
co-sale rights of the undersigned contained herein (a "Prohibited
Transfer"), the undersigned, in addition to such other remedies as may
be available at law, in equity or hereunder, shall have the "put"
option provided below, and Grantors, jointly, shall be bound by the
applicable provisions of such option.
In the event of a Prohibited Transfer, the undersigned shall have the
right to sell to Grantors, jointly, the number of shares equal to the
number of shares the undersigned would have been entitled to transfer
to the purchaser hereunder had the Prohibited Transfer been effected
pursuant to and in compliance with the terms hereof. Such sale shall be
made on the following terms and conditions:
(1) The price per share at which the shares are
to be sold to Grantors shall be equal to the price per share
paid by the purchaser to such selling Grantor in the
Prohibited Transfer. Grantors shall also reimburse the
undersigned for any and all fees and expenses, including
reasonable legal fees and expenses, incurred pursuant to the
exercise or the attempted exercise of the undersigned's rights
hereunder.
(2) Within ninety (90) days after the later of
the dates on which the undersigned either (A) received notice
of the Prohibited Transfer or (B) otherwise became aware of
the Prohibited Transfer, the undersigned shall, if exercising
the option created hereby, deliver to Grantors the certificate
or certificates representing shares to be sold, each
certificate to be properly endorsed for transfer.
(3) Grantors shall, upon receipt of the
certificate or certificates for the shares to be sold by the
undersigned pursuant to this Subsection, pay the aggregate
purchase price therefore and the amount of reimbursable fees
and expense in cash or by other means acceptable to the
undersigned.
(v) MARKETABILITY. The Company shall at all times be in
full and complete compliance with its reporting requirements under the
Securities Exchange Act of 1934, as amended.
(VI) STOCK SPLITS. In order to induce the undersigned to
enter into this subscription agreement and to facilitate the closing of
the transaction contemplated hereby, the Company represents and
warrants to the undersigned that from and after the Closing Date, the
Company will not engage in any manner of reverse split without the
prior written consent of the undersigned, which consent may not be
unreasonably withheld.
6. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. The
undersigned hereby represents and warrants to the Company and to each officer,
director and agent of the Company that:
(a) AUTHORITY. The undersigned has all requisite authority to
enter into this Agreement and to perform all obligations required to be
performed by the undersigned hereunder.
(b) ACCESS TO INFORMATION. The undersigned is familiar with the
business and financial condition, properties, operations and prospects to the
Company. The undersigned has been furnished copies of the financial statements
of the Company and all other documents requested by it and has had an
opportunity to discuss the Company's business and financial condition,
properties, operations and prospects with the Company's management. The
undersigned has also had an opportunity to ask questions of officers of the
Company, which questions were answered to his satisfaction. The undersigned
understands that such discussions
were intended to describe certain aspects of the Company's business and
financial condition, properties, operations and prospects, but were not a
thorough or exhaustive description.
(c) REPRESENTATIONS AND WARRANTIES AS OF CLOSING. The undersigned
understands that, unless it notifies the Company in writing to the contrary at
or before the Closing all the undersigned's representations and warranties
contained in this Agreement will be deemed to have been reaffirmed and confirmed
as of the Closing, taking into account all information received by the
undersigned.
(d) RISK FACTORS. The undersigned understands that the purchase of
the Common Stock involves substantial risks.
(e) KNOWLEDGE, SKILL AND EXPERIENCE. The undersigned has such
knowledge, skill and experience in business, financial and investment matters so
that it is capable of evaluating the merits and risks of an investment in the
Common Stock and the Warrant. To the extent necessary, the undersigned has
retained, at its own expense, and relied upon, appropriate professional advice
regarding the investment, tax and legal merits and consequences of this
Agreement and owning the Common Stock and the Warrant.
(f) ACCREDITED INVESTOR. The undersigned is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
(g) INVESTMENT INTENT. The undersigned is acquiring the Common
Stock and the Warrant solely for its own beneficial account, for investment
purposes, and not with a view to, or for immediate resale in connection with,
any improper distribution of the Common Stock or the shares underlying the
Warrant. The undersigned has not offered or sold any portion of its shares of
the Common Stock or the shares underlying the Warrant and has no present
intention of dividing its shares of the Common Stock or the shares underlying
the Warrant with others or of reselling its shares of the Common Stock or the
shares underlying the Warrant. The undersigned understands that the Common Stock
and the shares underlying the Warrant have not been registered under the
Securities Act or any state securities laws by reason of specific exemptions
under the provisions thereof which depend in part upon the investing intent of
the undersigned and of the other representations made by the undersigned in this
Agreement. The undersigned understands that the Company is relying upon the
representations and agreements contained in this Agreement (and any supplemental
information) for the purpose of determining whether this transaction meets the
requirements for such exemptions.
(h) STOCK TRANSFER RESTRICTIONS. The undersigned agrees: (i) that
it will not sell, assign, pledge, give, transfer or otherwise dispose of the
Common Stock or the shares underlying the Warrant or any interest therein, or
make any offer or attempt to do any of the foregoing, except pursuant to a
registration of the Common Stock and/or the shares underlying the Warrant under
the Securities Act and all applicable state securities laws or in a transaction
which is exempt from the registration provisions of the Securities Act and all
applicable state securities laws; and (ii) that the Company and any transfer
agent or the Company shall not be required to give effect to any purported
transfer of any of the Common Stock or the shares underlying the Warrant except
upon compliance with the foregoing provisions.
7. CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED AND THE COMPANY.
The obligations of the undersigned to purchase and pay for the number of shares
of the Common Stock specified herein and the Warrant and of the Company to sell
the Common Stock and the Warrant are subject to the satisfaction at or before
the Closing of the following condition precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 5 and of the undersigned
contained in Section 6 shall be true and correct on and as of the Closing in all
respects with the same effect as though such representations and warranties had
been made on and as of the Closing.
(b) ISSUANCE OF WARRANT. Upon acceptance of this Subscription
Agreement by the Company and payment of the Purchase Price by the undersigned,
the issuance of a warrant in substantially the form attached hereto as APPENDIX
C.
8. OBLIGATIONS IRREVOCABLE. The obligations of the undersigned
hereunder shall be irrevocable, except with the consent of the Company, until
3:00 p.m. Central Standard Time, March 23, 2000.
9. EQUITABLE REMEDIES. Each party hereto acknowledges that a
refusal without just cause by such party to consummate the transactions
contemplated hereby will cause irreparable harm to the other party, for which
there may be no adequate remedy at law. A party not in default at the time of
such refusal shall be entitled, in addition to other remedies at law or in
equity, to specific performance of this Agreement by the party that so refused
or failed to consummate the transactions contemplated hereby. In any action to
enforce the terms of this Agreement, the successful party shall be entitled to
recover its reasonable attorneys' fees, all costs and expenses from the party
who refused or failed to perform this Agreement.
10. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
of this Agreement shall be modified, changed, discharged or terminated except by
an instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought.
11. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason of this Agreement shall
be assignable by the Company without the prior written consent of the
undersigned. The undersigned may assign, transfer, pledge, encumber, mortgage or
otherwise alienate any of the rights afforded to it hereunder and the Company
shall be bound by the terms hereof to such assignee or transferee; provided,
however, that any assignment, transfer, or other alienation of any right
hereunder by the undersigned shall be in compliance with all federal and state
securities laws.
12. EXPENSES. The Company shall pay all actual expenses incurred
in connection with this Agreement and the transactions contemplated hereby,
including, but not limited to, any and all reasonable legal costs and expenses
of the undersigned. In any action to enforce the terms of this Agreement, the
successful party shall be entitled to recover its reasonable costs and
expenses, including reasonable attorneys' fees, from the party who refused or
failed to perform this Agreement.
13. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the federal laws of the United States of America
and the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
If to the Company, to it at the following address:
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to the undersigned:
▇▇▇▇▇▇▇▇▇ Venture Capital, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy, which shall not constitute notice, to:
Lock Liddell & ▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party shall have specified by notice in
writing to the other.
17. BINDING EFFECT. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties and their respective
successors and permitted assigns.
18. SURVIVAL. All representations contained in this Agreement
shall survive the closing of the issuance and sale of the shares of Common Stock
and the Warrant.
19. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event before the closing
of the purchase of the Common Stock pursuant to this Agreement which would cause
any representation, warranty, or covenant of the undersigned contained in this
Agreement to be false or incorrect.
20. CONSTRUCTION. The parties hereto acknowledge that the parties
and their counsel have reviewed this Agreement and that the normal rule of legal
construction, to the effect that any ambiguities are to be resolved against the
drafting party, will not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
21. SEVERABILITY. The parties hereto intend all provisions of this
Agreement to be enforced to the fullest extent permitted by law. Accordingly,
should a court of competent jurisdiction determine that the scope of any
provision is too broad to be enforced as written, the parties intend that the
court should reform the provision to such narrower scope as it determines to be
enforceable. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, such provision shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision or by its severance, except to the
extent such remaining provisions constitute obligations of another party to this
Agreement corresponding to the unenforceable provision.
22. INTERVENTION. ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, in their
individual capacities, hereby intervene in this Subscription Agreement and each
does hereby (a) acknowledge and agree that he has read this Subscription
Agreement in its entirety, (b) acknowledge, agree and affirm the rights granted
to the undersigned and the obligations imposed on each of them by Section
5(b)(iv) hereinabove, and (c) agree to be subject to and bound by the terms
thereof.
[The immediately following page contains the signatures of the parties]
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 27 day of March, 2000.
Name: Shoemann Venture Capital, LLC
BY:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Managing Member
INTERVENORS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
Individually
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
Individually
Accepted as of
March 22, 2000
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
President and
Chairman of the Board of Directors
APPENDIX A
CONSIDERATION TO BE DELIVERED
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SECURITIES TO BE ACQUIRED AGGREGATE AMOUNT TO BE PAID AT CLOSING
------------------------- --------------------------------------
(1) 500,000 shares of common stock $500,000.00 less the amount of any expenses of the
(2) Warrant to purchase 700,000 shares of subscriber incurred in connection with the
common stock subscription agreement
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APPENDIX B
ACCREDITED INVESTOR CERTIFICATE
The undersigned Investor hereby certifies that it is an Accredited
Investor as that term is defined in Regulation D adopted pursuant to the
Securities Act of 1933. The specific category(s) of Accredited Investor
applicable to the undersigned is checked below.
_____ a. any natural person whose individual net
worth, or joint net worth with that person's spouse, at the
time of his purchase exceeds $1,000,000;
_____ b. any natural person who had an individual
income in excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in excess of
$300,000 and has a reasonable expectation of reaching the same
income level in the current year;
_____ c. any bank as defined in section 3(a)(2) of
the Securities Act of 1933, as amended (the "Act"), or any
savings and loan association or other institution as defined
in section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in section 2(13)
of the Act; any investment company registered under the
Investment Company Act of 1940 (the "1940 Act") or a business
development company as defined in Section 2(a)(48) of the 1940
Act; any Small Business Investment Company licensed by the
U.S. Small Business Administration under section 301(c) or (d)
of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political
subdivisions for the benefit of its employees, if such plan
has total assets in excess of $5,000,000; any employee benefit
plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA"), if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of
ERISA, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of
$5,000,000; or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors;
_____ d. any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act
of 1940;
_____ e. any organization described in section
501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
_____ f. any director, executive officer, or general
partner of the Company;
X g. any entity in which all of the equity owners
_____ are accredited investors; or
_____ h. any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring
the securities offered, whose purchase is directed by a
sophisticated person as described in section 230.506(b)(2)(ii)
of Regulation D under the Act.
IN WITNESS WHEREOF, the undersigned has executed this
Accredited Investor Certificate as of the ___ day of March, 2000.
▇▇▇▇▇▇▇▇▇ VENTURE CAPITAL, LLC
BY:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Managing Member
APPENDIX C
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR STATE SECURITIES LAWS. NO SALE, TRANSFER OR OTHER
DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE
SECURITIES LAWS, OR (II) AN EXEMPTION FROM REGISTRATION UNDER SUCH LAWS
IS AVAILABLE.
WARRANT NO. STOCK PURCHASE WARRANT NO. OF SHARES 700,000
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To Subscribe for an Purchase Common Stock of
▇▇▇▇▇▇▇▇.▇▇▇, INC.
THIS CERTIFIES that, for value received, ▇▇▇▇▇▇▇▇▇ VENTURE CAPITAL,
L.L.C. (together with any subsequent transferees of all or any portion of this
Warrant, the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, to subscribe for and purchase from
▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation (hereinafter called the "Company"),
at the price hereinafter set forth in Section 2, up to 700,000 fully paid and
non-assessable shares (the "Shares") of the Company's Common Stock, $0.00001 par
value per share (the "Common Stock").
1. DEFINITIONS. As used herein the following term shall have the
following meaning:
"ACT" means the Securities Act of 1933, as amended, or a successor
statute thereto and the rules and regulations of the Securities and Exchange
Commission issued under that Act, as they each may, from time to time, be in
effect.
2. PURCHASE RIGHTS. The purchase rights represented by this
Warrant shall be exercisable by the Holder in whole or in part commencing on
date thereof. The purchase rights represented by this Warrant shall expire five
(5) years from the date hereof. This Warrant may be exercised for Shares at a
price of One and No/100 United States dollars (US$1.00) per share, subject to
adjustment as provided in Section 6 (the "Warrant Purchase Price").
3. EXERCISE OF WARRANT. Subject to Section 2 above and the
further provisions of this Section 3, the purchase rights represented by this
Warrant may be exercised, in whole or in part and from time to time, by the
surrender of this Warrant and the duly executed Notice of Exercise (the form of
which is attached as EXHIBIT A) at the principal office of the Company and by
the payment to the Company, by check, of an amount equal to the Warrant Purchase
Price per share
multiplied by the number of Shares then being purchased or via "cashless
exercise" as provided hereinafter. Upon exercise, the Holder shall be entitled
to receive, within a reasonable time, but in no event later than ten (1)
business days from the date of exercise, a certificate or certificates, issued
in the Holder's name or in such name or names as the Holder may direct, for the
number of Shares so purchased. The Shares so purchased shall be deemed to be
issued as of the close of business on the date on which this Warrant shall have
been exercised.
The Company has agreed to, and does hereby covenant to, have all of the
Shares registered under the Act such that upon exercise of this Warrant, the
Holder shall receive the Shares free from any and all restrictions on transfer
or sale, including, but not limited to, restrictions imposed by Rule 144 under
the Securities Act of 1933, as amended.
In lieu of any cash payment required hereunder, the Holder shall have
the right to exercise the Warrant in whole or in part by surrendering the
Warrant in exchange for the number of shares of the Company's common stock equal
to (x) the number of shares as to which the Warrant are being exercised
multiplied by (y) a fraction, the NUMERATOR of which is the Market price (as
defined below) of the common stock less the exercise price of the Warrant being
exercised, and the DENOMINATOR of which is such Market Price. The term "Market
Price" means the average of the closing sale price per share of the common stock
on the principal stock exchange or market on which the common stock is then
quoted or traded on each of the ten (10) consecutive trading days preceding the
date on which written notice of election to exercise the Warrant has been given
to the Company (a "cashless exercise"). If the Holder opts for a cashless
exercise of the Warrant, no other consideration shall be paid to the Company,
other than surrendering the Warrant itself, nor will there be paid any
commission or other remuneration to any other person or entity by the Holder. In
the event that the Holder is not permitted to "tack" the holding period of the
Warrant to the holding period of the common stock received upon the cashless
exercise for purposes of satisfaction of the holding period requirements of
Rules 144(d)(3)(ii) and 144(k) under the Securities Act of 1933, as amended, for
whatever reason and there is no presently filed registration statement effective
as to the shares received or to be received through the cashless exercise of
this Warrant, the Company shall, upon receipt of the written request of the
Holder, promptly prepare and file a registration statement with the SEC with
respect to all of the shares underlying this Warrant.
4. SHARES TO BE ISSUED; RESERVATION OF SHARES. The Company
covenants that the Shares that may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon issuance in accordance herewith,
be fully paid and non-assessable, and free from all liens and charges with
respect to the issue thereof. During the period within which the purchase rights
represented by the Warrant may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issuance upon exercise of the
purchase rights represented by this Warrant, a sufficient number of shares of
its Common Stock to provide for the exercise of the right represented by this
Warrant.
5. NO FRACTIONAL SHARES. No fractional shares shall be issued
upon the exercise of this Warrant. In lieu thereof, a cash payment shall be made
equal to such fraction multiplied by the fair market value of such shares of
Common Stock as determined in good faith by the Company's Board of Directors.
6. ADJUSTMENTS OF WARRANT PURCHASE PRICE AND NUMBER OF SHARES. If
there shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares subject to
this Warrant, and the number and kind of shares and the price per share then
applicable to shares covered by the unexercised portion of this Warrant.
7. NO RIGHTS AS SHAREHOLDERS. This Warrant does not entitle the
Holder to any voting rights or other rights as a shareholder of the Company
prior to exercise of this Warrant and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally distributed to holders of
the capital stock of the Company concurrently with the distribution thereof to
the shareholders. Upon valid exercise of this Warrant, the Holder or the
Holder's designee, as the case may be, shall be deemed a shareholder of the
Company.
8. SALE OR TRANSFER OF THE WARRANT AND THE SHARES; LEGEND. The
Warrant and the Shares shall not be sold or transferred unless either (i) they
first shall have been registered under applicable securities laws, or (ii) such
sale or transfer is exempt from the registration requirements of such laws. Each
certificate representing any Warrant shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
THE SHARES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE IMPROPER SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER
APPLICABLE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION UNDER APPLICABLE
SECURITIES LAWS.
The Warrant and Shares may be subject to additional restrictions on
transfer imposed under applicable state and federal securities law.
9. MODIFICATIONS AND WAIVERS. This Warrant may not be changed,
waived, discharged or terminated except by an instrument in writing signed by
the party against which enforcement of the same is sought.
10. NOTICES. Any notice, requires or other document required or
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
the Holder at its address shown on the books of the Company or in the case of
the Company, at the address indicated therefor on the signature page of this
Warrant, or, if different, at the principal office of the Company.
11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of this Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or
stock certificate.
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding
upon any corporation succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company relating to the Shares issuable upon exercise of this
Warrant shall survive the exercise and termination of this Warrant and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
13. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇.▇▇▇, INC. has caused this Warrant to be
executed by its officer thereunto duly authorized.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
BY/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
President
Address: ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇