SUBSCRIPTION AGREEMENT AND
CONFIDENTIAL INVESTOR QUESTIONNAIRE
-----------------------------------
THIS SUBSCRIPTION AGREEMENT is entered into as of this ------ day of
--------, 1999, between CAVION TECHNOLOGIES, INC., a Colorado corporation
with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue 700,000 shares (the "Shares")
of its Convertible Preferred Stock, Series A, par value $0.0001 per Share
(the "Convertible Preferred Stock"), in a private placement, convertible
into the Company's Class A Common Stock, $0.0001 par value per Share (the
"Common Stock"), as described in the Articles of Amendment to the Amended
and Restated Articles of Incorporation of Cavion Technologies, Inc.
setting forth the Statement of Designation of Series and Determination of
Rights and Preferences of Convertible Preferred Stock, Series A, included
as Exhibit A to the Memorandum (defined below) on the terms and conditions
hereinafter set forth;
WHEREAS, the Company has retained Neidiger, Tucker, Bruner, Inc. (the
"Placement Agent") to serve as the Company's exclusive placement agent in
connection with the offer and sale of the Shares; and
WHEREAS, the Subscriber desires to acquire that number of Shares set
forth on the signature page hereof;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree
as follows:
I. SUBSCRIPTION FOR SHARES AND REPRESENTATIONS BY AND COVENANTS OF
SUBSCRIBER
1.1 Subject to the terms and conditions hereof, the Subscriber
hereby subscribes for and agrees to purchase from the Company such number
of Shares as is set forth upon the signature page hereof at a price equal
to $3.00 per Share, and the Company agrees to sell such Shares to the
Subscriber for said purchase price. The purchase price is payable to
American Securities Transfer Trust, Inc. - Escrow Agent for Cavion
Technologies Inc., or by wire transfer of funds, contemporaneously with
the execution and delivery of this Subscription Agreement. The
certificates for the Shares will be delivered by the Company to the
Subscriber not later than ten (10) days following the consummation of this
offering as set forth in Article II hereof. The Subscriber understands
however, that this purchase of Shares is contingent upon the Company
making sales of at least 425,000 Shares prior to the Termination Date as
defined in Article II hereof.
1.2 The Subscriber recognizes that the purchase of Shares
involves a high degree of risk in that (i) the Company is in the
development stage, has not completed development of all of its proposed
products and services and will require substantial funds in addition to
the proceeds of this private placement; (ii) an investment in the Company
is highly speculative, and only investors who can afford the loss of their
entire investment should consider investing in the Company and the Shares;
(iii) investors may not be able to liquidate their investment; (iv)
transferability of the Shares is extremely limited; and (v) in the event
of a disposition of Shares, an investor could sustain the loss of his
entire investment, as well as other risk factors as more fully set forth
herein and in the Confidential Private Placement Memorandum dated February
3, 1999, relating to the Company and the Shares (the "Memorandum").
1.3 The Subscriber represents that he or she is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated
under the United States Securities Act of 1933, as amended (the "Act"), as
indicated by the Subscriber's responses to the Confidential Investor
Questionnaire contained in Article VI hereof, and that the Subscriber is
able to bear the economic risk of an investment in the Shares.
1.4 The Subscriber acknowledges that Subscriber either has a
preexisting personal or business relationship with the Company or with one
or more of its officers, directors or controlling persons, or by reason of
the Subscriber's business or financial experience, including investment in
non-listed and non-registered securities, or the business or financial
experience of the Subscriber's professional advisors who are unaffiliated
with and who are not compensated by the Company or any affiliate or
selling agent of the Company, directly or indirectly, could be reasonably
assumed to have the capacity to protect the Subscriber's own interests in
connection with an investment in the Shares. The Subscriber further
acknowledges that he or she has the capacity to evaluate the merits and
risks of such an investment and that the Subscriber recognizes the highly
speculative nature of this investment.
1.5 The Subscriber acknowledges receipt and careful review of
the Memorandum and the attachments thereto (the "Offering Documents") and
hereby represents that the Subscriber has been furnished by the Company
during the course of this transaction with all information regarding the
Company which the Subscriber had requested or desired to know; that all
documents which could be reasonably provided, including the Company's
internal business plans, operating projections, etc. (all of which
Subscriber acknowledges and agrees are qualified by and subject to the
forward-looking statements disclaimer in the Offering Documents), have
been made available for the Subscriber's inspection and review; that such
information and documents have, in Subscriber's opinion, afforded the
Subscriber generally with the same substantive information that would be
provided to the Subscriber in a registration statement filed under the
Act; that the Subscriber has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the terms and conditions of the
offering and the Offering Documents; and that Subscriber has been provided
any additional information which the Subscriber had requested.
1.6 The Subscriber acknowledges that this offering may involve
tax consequences, and that the contents of the Offering Documents do not
contain tax advice or information. The Subscriber acknowledges that the
Subscriber must retain the Subscriber's own professional advisors to
evaluate the tax and other consequences of an investment in the Shares.
1.7 The Subscriber acknowledges that this offering has not been
reviewed by the United States Securities and Exchange Commission ("SEC")
because of the Company's representations that this is intended to be a
nonpublic offering pursuant to Sections 4(2) or 4(6) of the Act. The
Subscriber represents that the Shares being purchased by the Subscriber
are being purchased for the Subscriber's own account, for investment and
not for distribution or resale to others. The Subscriber agrees that the
Subscriber will not sell or otherwise transfer the Shares unless they are
registered under the Act or unless an exemption from such registration is
available.
1.8 The Subscriber understands that the Shares have not been
registered under the Act by reason of a claimed exemption under the
provisions of the Act which depends, in part, upon the Subscriber's
investment intention. In that connection, the Subscriber understands that
it is the position of the SEC that the statutory basis for such exemption
would not be present if the Subscriber's representation merely meant that
the Subscriber's present intention was to hold such securities for a short
period, such as the capital gains period of tax statutes, for a deferred
sale, for a market rise, assuming that a market develops, or for any other
similarly fixed period. The Subscriber realizes that, in the view of the
SEC, a purchase now with an intent to resell would represent a purchase
with an intent inconsistent with the Subscriber's representation to the
Company, and the SEC might regard such a sale or disposition as a sale to
which such exemptions are not available.
1.9 The Subscriber understands that there is no public market
for the Shares or the underlying Common Stock into which Shares are
convertible. The Subscriber understands that even if a public market
develops for the Common Stock issuable upon conversion of the Shares, Rule
144 (the "Rule") promulgated under the Act requires, among other
conditions, a one-year holding period prior to the resale (in limited
amounts) of securities acquired in a non-public offering without having to
satisfy the registration requirements under the Act. The Subscriber
understands that the Company makes no representation or warranty regarding
its fulfillment in the future of any reporting requirements under the
Securities Exchange Act of 1934, as amended, or its dissemination to the
public of any current financial or other information concerning the
Company, as is required by the Rule as one of the conditions of its
availability. The Subscriber understands and hereby acknowledges that the
Company is under no obligation to register the Shares or the Common Stock
issuable upon conversion of the Shares under the Act, with the exception
of certain limited registration rights set forth in Article IV hereof.
The Subscriber consents that the Company may, if it desires, permit the
transfer of the Shares out of the Subscriber's name only when the
Subscriber's request for transfer is accompanied by an opinion of counsel
reasonably satisfactory to the Company that neither the sale nor the
proposed transfer results in a violation of the Act or any applicable
state "blue sky" laws (collectively "Securities Laws") and subject to the
provisions of Section 1.10 hereof. The Subscriber agrees to hold the
Company and its directors, officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by
them as a result of any misrepresentation made by the Subscriber contained
herein or in the Confidential Investor Questionnaire contained in Article
VI hereof or any sale or distribution by the undersigned Subscriber in
violation of any Securities Laws.
1.10 The Subscriber agrees not to sell, transfer, assign, or
otherwise publicly dispose of the Shares or the Class A Common Stock
issued upon conversion thereof for a period of nine months following the
effective date of the registration statement with respect to any public
offering of the Company's Common Stock in respect of which such Shares or
shares are registered without the underwriter's prior consent.
1.11 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Shares stating that they have
not been registered under the Act and setting forth or referring to the
restrictions on transferability and sale thereof.
1.12 The Subscriber understands that the Company will review
this Subscription Agreement and the Confidential Investor Questionnaire
contained herein and is hereby given authority by the undersigned, if an
individual, to call his or her bank or place of employment or otherwise
review the financial standing of the Subscriber insofar as is relevant to
the Subscriber's representations herein; and it is further agreed that the
Company reserves the unrestricted right to reject or limit any
subscription and to close any offer of Shares at any time.
1.13 The Subscriber hereby represents that the address of
Subscriber furnished by the Subscriber at the end of this Subscription
Agreement is the undersigned's principal residence if the Subscriber is an
individual or its principal business address if the Subscriber is a
corporation or other entity.
1.14 THE SUBSCRIBER HEREBY REPRESENTS AND WARRANTS THAT, EXCEPT
AS SET FORTH IN THE OFFERING DOCUMENTS, NO REPRESENTATIONS OR WARRANTIES
HAVE BEEN MADE TO THE SUBSCRIBER BY THE COMPANY OR ANY AGENT, EMPLOYEE,
REPRESENTATIVE OR AFFILIATE OF THE COMPANY AND THAT, IN ENTERING INTO THIS
TRANSACTION AND SUBSCRIBING FOR SHARES, THE SUBSCRIBER IS NOT RELYING ON
ANY INFORMATION, OTHER THAN THAT CONTAINED IN THE OFFERING DOCUMENTS AND
THE RESULTS OF SUBSCRIBER'S INDEPENDENT INVESTIGATION.
1.15 The Subscriber acknowledges that at such time, if ever, as
the shares of Common Stock issuable upon conversion of Shares are
registered, sales of such securities will be subject to Securities Laws,
which may require, among other requirements, any securities sold to be
sold through a registered broker-dealer or in reliance upon an exemption
from registration.
II. TERMS OF SUBSCRIPTION
2.1 The subscription period will begin on the date of the
Memorandum and will terminate at 5:00 p.m. Denver time sixty (60) days
thereafter, unless extended by the Company and the Placement Agent for up
to an additional sixty (60) days (the "Termination Date"). The minimum
subscription per subscriber shall be 10,000 Shares for an aggregate price
of $30,000.
2.2 Placement of the Shares will be made by the Placement
Agent, which will receive (i) a placement fee in the amount of 10% of the
purchase price of the Shares placed; (ii) a non-accountable expense
allowance of 2% of the purchase price of the Shares placed; (iii) warrants
to purchase a number of shares of the Convertible Preferred Stock equal to
10% of the Shares placed; and (iv) other compensation as summarized in the
Memorandum.
2.3 Pending the sale of the Shares, all funds paid hereunder
shall be deposited by the Company in escrow with American Transfer Trust,
Inc. and if the Company shall not have obtained subscriptions (including
this subscription) for purchases of 425,000 Shares for an aggregate
purchase price of $1,275,000 on or before the Termination Date, then this
subscription shall be void and all funds paid hereunder by the Subscriber,
without interest, shall be promptly returned to the Subscriber, subject to
paragraph 2.5 hereof. If 425,000 Shares are subscribed and the price
therefor received on or prior to the Termination Date, then all
subscription proceeds shall be paid over to the Company at the mutual
consent of the Company and the Placement Agent.
2.4 The Subscriber hereby authorizes and directs the Company to
deliver the securities to be issued to such Subscriber pursuant to this
Subscription Agreement to the residential or business address indicated in
the Confidential Investor Questionnaire included herein.
2.5 The Subscriber hereby authorizes and directs the Company to
return any funds for unaccepted subscriptions to the same account from
which the funds were drawn, including any customer account maintained with
the Placement Agent.
2.6 If the Subscriber is not a United States person, such
Subscriber hereby represents that he, she or it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Shares or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the
purchase of the Shares, (ii) any foreign exchange restrictions applicable
to such purchase, (iii) any governmental or other consents that may need
to be obtained, and (iv) the income tax and other tax consequences, if
any, that may be relevant to the purchase, holding, redemption, sale or
transfer of the Shares. The Subscriber represents and warrants that the
Subscriber's subscription and payment for, and the Subscriber's continued
beneficial ownership of the Shares, will not violate any applicable
securities or other laws of the Subscriber's jurisdiction.
III. REGISTRATION RIGHTS
3.1 CERTAIN DEFINITIONS. For purposes of this Section, the
following definitions shall apply:
(a) The terms "register," "registered," and "registration"
refer to a registration under the Act effected by preparing and filing a
registration statement in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or amendment
thereto.
(b) The term "Registrable Securities" means any shares of
Common Stock issued or issuable upon exercise of the Convertible Preferred
Stock.
3.2 REGISTRATION RIGHTS.
(a) If the Company shall determine to proceed with the
actual preparation and filing of a registration statement under the Act in
connection with the proposed offer and sale of any of its Common Stock by
it or any of its security holders, subject to the lock-up provisions of
Section 1.10 hereof, the Company will, except as herein provided, cause
all such Registrable Securities to be included in such registration
statement, all to the extent required to permit the sale or other
disposition by the prospective seller or sellers of the Registrable
Securities to be so registered; provided, further, that nothing herein
shall prevent the Company from, at any time, abandoning or delaying any
registration. Registrable Securities included in any registration
pursuant to this Section 3.2 shall be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through
the underwriters thereof. If in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of the
Registrable Securities (the "Requested Stock") would reduce the number of
shares to be offered by the Company or interfere with the successful
marketing of the shares of stock offered by the Company, the number of
shares of Requested Stock otherwise to be included in the underwritten
public offering may be reduced pro rata (by number of shares) among the
holders thereof or excluded in their entirety if so required by the
underwriter. To the extent only a portion of the Requested Stock is
included in the underwritten public offering, those shares of Requested
Stock which are thus excluded from the underwritten public offering shall
be withheld from the market by the holders thereof for a period, not to
exceed 270 days, which the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering. The
obligation of the Company under this Section 3.2 shall not apply to
Registrable Securities that at such time are eligible for immediate resale
pursuant to the Rule (without regard to volume limitations).
(b) The Company may suspend the effectiveness of any such
registration effected pursuant to this Section 3.2 in the event, and for
such period of time as, such a suspension is required by the rules and
regulations of the SEC and may suspend use of the prospectus included in
the Registration Statement if such prospectus ceases to meet the
requirements of Section 10 of the Act. The Company will immediately
advise the security holders participating in such registration of any such
suspension, and will use its best efforts to cause such suspension to
terminate at the earliest possible date. The Subscriber agrees that
following receipt of any such notice, and until such suspension is
terminated, the Subscriber will not make use of the suspended prospectus
and will make no sales requiring delivery of such prospectus.
3.3 REGISTRATION PROCEDURES. If and when the Company is
required by the provisions of Section 3.2 to effect the registration of
Registrable Securities under the Act, the Company will:
(a) prepare and file with the SEC a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective until the
Registrable Securities are freely salable without the volume limitations
of the Rule;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective until
the Registrable Securities are freely salable without regard to the volume
limitations of the Rule;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the
securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating
holders may reasonably request in writing within twenty (20) days
following the original filing of such registration statement, except that
the Company shall not for any purpose be required to execute a general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify the security holders participating in such
registration, promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to
any prospectus forming a part of such registration statement has been
filed;
(f) notify such holders promptly of any request by the SEC
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) prepare and file with the SEC, promptly upon the
request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for
such holders (and concurred in by counsel for the Company), is required
under the Act or the rules and regulations thereunder in connection with
the distribution of Common Stock by such holder;
(h) prepare and promptly file with the SEC and promptly
notify such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading; and
(i) advise such holders, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued.
3.4 EXPENSES.
(a) With respect to each inclusion of Registrable
Securities in a registration statement pursuant to Section 3.2 hereof, all
fees, costs and expenses of and incidental to such registration, inclusion
and public offering (as specified in paragraph (b) below) in connection
therewith shall be borne by the Company; provided, however, that any
security holders participating in such registration shall bear their pro
rata share of underwriting discounts and commissions and transfer taxes.
(b) The fees, costs and expenses of registration to be
borne by the Company as provided in paragraph (a) above shall include,
without limitation but subject to paragraph (a) above, all registration,
filing, and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered
are to be registered and qualified. Fees and disbursements of counsel,
other advisors and accountants for the holders of Registrable Securities
and any other expenses incurred by the holders not expressly included
above shall be borne by the holders.
3.5 INDEMNIFICATION.
(a) The Company will indemnify and hold harmless each
holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Section 3.1 or 3.2 hereof, its
directors and officers, and any underwriter (as defined in the Act) for
such holder and each person, if any, who controls such holder or such
underwriter within the meaning of the Act, from and against, and will
reimburse such holder and each such underwriter and controlling person
with respect to, any and all loss, damage, liability, cost and expense to
which such holder or any such underwriter or controlling person may become
subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by such
holder, such underwriter or such controlling person in writing
specifically for use in the preparation thereof.
(b) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Section 3.2 hereof will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will
reimburse the Company, its directors and officers, any controlling person
and any underwriter with respect to, any and all loss, damage, liability,
cost or expense to which the Company or any controlling person and/or any
underwriter may become subject under the Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance
upon and in strict conformity with written information furnished by or on
behalf of such holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 3.5 of
notice of the commencement of any action involving the subject matter of
the foregoing indemnity provisions such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the indemnifying
party of the commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 3.5. In
case such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are
different from or in addition to those available to the indemnified party,
or if there is a conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party, the
indemnified party or parties have the right to select separate counsel to
participate in the defense of such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant
to the provisions of paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless (i)
the indemnified party shall have employed counsel in accordance with the
provisions of the preceding sentence, (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after the
notice of the commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
IV. MISCELLANEOUS
4.1 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or certified mail,
return receipt requested. Notices sent to the Company shall be addressed
to the Company's office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇: Attention: President. Notices sent to the Subscriber shall be
addressed to the Subscriber's address indicated on the last page of this
Subscription Agreement. Notices shall be deemed to have been given on the
date of mailing, except notices of change of address, which shall be
deemed to have been given when received.
4.2 This Subscription Agreement shall not be changed, modified
or amended except by a writing signed by the parties to be charged, and
this Subscription Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be
charged.
4.3 This Subscription Agreement shall be binding upon and inure
to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets
forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
4.4 Notwithstanding the place where this Subscription Agreement
may be executed by any of the parties hereto, the parties expressly agree
that all the terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of Colorado.
4.5 Each of the Company and the Subscriber agree that any
action or proceeding based hereon, or arising out of the Memorandum
hereunder, shall be brought and maintained exclusively in the courts of
the State of Colorado located in the City and County of Denver or in the
United States District Court for the District of Colorado. The Company
and the Subscriber each hereby irrevocably submit to the jurisdiction of
the courts of the State of Colorado located in the City and County of
Denver and of the United States District Court for the District of
Colorado for the purpose of any such action or proceeding as set forth
above and irrevocably agree to be bound by any judgment rendered thereby
in connection with such action or proceeding. Each of the Company and the
Subscriber hereby irrevocably waive, to the fullest extent permitted by
law, any objection which it may have or hereafter may have to the laying
of venue of any such action or proceeding brought in any such court
referred to above and any claim that any such action or proceeding has
been brought in an inconvenient forum.
4.6 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription
Agreement by the Subscriber, this Subscription Agreement shall become a
binding obligation of the Subscriber with respect to the purchase of
Shares as herein provided; subject, however, to the right hereby reserved
to the Company to enter into the same agreements with other subscribers
and to add and/or to delete other persons as subscribers.
4.7 The holding of any provision of this Subscription Agreement
to be invalid or unenforceable by a court of competent jurisdiction shall
not affect any other provision of this Subscription Agreement, which shall
remain in full force and effect.
4.8 It is agreed that a waiver by either party of a breach of
any provision of this Subscription Agreement shall not operate, or be
construed, as a waiver of any subsequent breach by that same party.
4.9 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out more fully the
purposes and intent of this Subscription Agreement.
4.10 The Company agrees not to disclose the names, addresses or
any other information about the Subscriber, except as required by law,
provided, that the Company may use information relating to the Subscriber
in any registration statement under the Act.
V. CONFIDENTIAL INVESTOR QUESTIONNAIRE
5.1 SUBSCRIBER CATEGORIES. The Subscriber represents and
warrants that he, she or it comes within one category marked below, and
that for any category marked, he, she or it has truthfully set forth,
where applicable, the factual basis or reason the Subscriber comes within
that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT
STRICTLY CONFIDENTIAL. The undersigned agrees to furnish any additional
information which the Company deems necessary in order to verify the
answers set forth below.
Category A ----- The undersigned is an individual (not a
partnership, corporation, etc.) whose individual
net worth, or joint net worth with his or her
spouse, presently exceeds $1,000,000
EXPLANATION: In calculating net worth you may
include equity in personal
property and real estate,
including your principal
residence, cash, short-term
investments, stock and securities.
Equity in personal property and
real estate should be based on the
fair market value of such property
less debt secured by such
property.
Category B ----- The undersigned is an individual (not a
partnership, corporation, etc.) who had an income
in excess of $200,000 in each of the two most
recent years, or joint income with his or her
spouse in excess of $300,000 in each of those
years (in each case including foreign income, tax
exempt income and full amount of capital gains
and losses but excluding any income of other
family members and any unrealized capital
appreciation) and has a reasonable expectation of
reaching the same income level in the current
year.
Category C ----- The undersigned is a director or
executive officer of the Company which is issuing
and selling the Shares.
Category D ----- The undersigned is a bank; a savings
and loan association; insurance company;
registered investment company; registered
business development company; licensed small
business investment company ("SBIC"); or employee
benefit plan within the meaning of Title I of
ERISA and (a) the investment decision is made by
a plan fiduciary which is either a bank, savings
and loan association, insurance company or
registered investment advisor, or (b) the plan
has total assets in excess of $5,000,000 or is a
self directed plan with investment decisions made
solely by persons that are accredited investors.
------------------------------------------------
-------------------------------------
(describe entity)
Category E ----- The undersigned is a private business
development company as defined in section
202(a)(22) of the Investment Advisors Act of
1940.
------------------------------------------------
------------------------------------------------
(describe entity)
Category F ----- The undersigned is either a
corporation, partnership, Massachusetts business
trust, or non-profit organization within the
meaning of Section 501(c)(3) of the Internal
Revenue Code, in each case not formed for the
specific purpose of acquiring the Shares and with
total assets in excess of $5,000,000.
------------------------------------------------
------------------------------------------------
(describe entity)
Category G ----- The undersigned is a trust with total
assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the Shares,
where the purchase is directed by a
"sophisticated person" as defined in Regulation
506(b)(2)(ii).
Category H ----- The undersigned is an entity (other
than a trust) all the equity owners of which are
"accredited investors" within one or more of the
above categories. If relying upon this Category
alone, each equity owner must complete a separate
copy of this Agreement.
------------------------------------------------
------------------------------------------------
(describe entity)
Category I ----- The undersigned is not within any of
the categories above and is therefor not an
accredited investor.
The undersigned covenants and agrees that the undersigned will notify the
Company at any time on or prior to the Company's acceptance of this
subscription in the event that the representations and warranties in this
Agreement shall cease to be true, accurate and complete.
5.2 SUITABILITY. (Please answer each question)
(a) For an individual Subscriber, please describe your
current employment, including the company by which you
are employed and its principal business:
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(b) For an individual Subscriber, please describe any
college or graduate degrees held by you:
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(c) For all Subscribers, please check types of prior
investments:
U.S. Government Securities ---- Private Placements ----
Publicly Traded Corporate ---- Mutual Funds ----
Securities ----
Real Estate Investments ---- Other (describe) ----
(d) For all Subscribers, please state whether you have
participated in other private placements before:
YES----- NO-----
(e) For all Subscribers, please indicate frequency of such
prior participation in private placements:
Public Companies Private Companies Companies
---------------- ----------------- ---------
Frequently ----- ----- -----
Occasionally ----- ----- -----
Never ----- ----- -----
5.3 MANNER IN WHICH TITLE TO BE HELD. (Circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of Survivorship (both parties
must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
*IF SHARES ARE BEING SUBSCRIBED FOR BY AN ENTITY, THE
ATTACHED CERTIFICATE OF SIGNATORY MUST ALSO BE COMPLETED.
5.4 NASD AFFILIATION:
Are you associated with an NASD member firm? (Please check
one)
YES----- NO-----
If Yes, please describe:-----------------------------------
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--------------------------------------------------------
(1) The NASD defines a "person associated with a member"
or "associated person of a member" as being every sole
proprietor, general or limited partner, officer,
director or branch manager of any member, or any
natural person occupying a similar status or
performing similar functions, or any natural person
engaged in the investment banking or securities
business who is directly or indirectly controlling or
controlled by such member (for example, any employee),
whether or not any such person is registered or exempt
from registration with the NASD. Thus, "person
associated with a member" or "associated person of a
member" includes a sole proprietor, general or limited
partner, officer, director or branch manager of an
organization of any kind (whether a corporation,
partnership or other business entity) which itself is
either a "member" or a "Person associated with a
member" or "associated person of a member." In
addition, an organization of any kind is a "person
associated with a member" or "associated person of a
member" if its sole proprietor or any one of its
general or limited partners, officers, directors or
branch managers is a "member," "person associated with
a member" or "associated person of a member."
(2) The NASD defines a "member" as being any individual,
partnership, corporation or other legal entity that is
a broker or dealer admitted to membership in the NASD.
*IF SUBSCRIBER IS A REGISTERED REPRESENTATIVE WITH AN NASD
MEMBER FIRM, HAVE THE FOLLOWING ACKNOWLEDGMENT SIGNED BY
THE APPROPRIATE PARTY:
The undersigned NASD member firm acknowledges receipt of
the notice required by Rule 3050 of the NASD Conduct Rules or any
successor rules or regulations.
-----------------------------------
Name of NASD Member Firm
By: -------------------------------
Authorized Officer
Date: -----------------------------
5.5 RELIANCE. The undersigned is informed of the significance
to the Company of the foregoing representations and answers contained in
the Confidential Investor Questionnaire contained in this Article V and
such answers have been provided under the assumption that the Company will
rely on them.
INDIVIDUAL INVESTOR SIGNATURE PAGE
----------------------------------
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
NUMBER OF SHARES [------] x [$--------] = [$--------]
----------------------------------- -----------------------------------
Signature Signature (if purchasing jointly)
----------------------------------- -----------------------------------
Name Typed or Printed Name Typed or Printed
----------------------------------- -----------------------------------
Address Address
----------------------------------- -----------------------------------
City, State and Zip Code City, State and Zip Code
----------------------------------- -----------------------------------
Telephone - Business Telephone - Business
----------------------------------- -----------------------------------
Telephone-Residence Telephone-Residence
----------------------------------- -----------------------------------
Facsimile - Business Facsimile - Business
----------------------------------- -----------------------------------
Facsimile - Residence Facsimile - Residence
----------------------------------- -----------------------------------
Tax ID# or Social Security # Tax ID# or Social Security #
Name in which securities should be issued: ------------------------------
Dated:----------------, 1998
This Subscription Agreement is agreed to and accepted as of ------------,
-----.
CAVION TECHNOLOGIES, INC.
By:--------------------------------
Title:-----------------------------