Legal Forms
To search for a particular term please use the following search box.
Important Notice : Lawyerintl.com strongly recommends that you seek independent legal advice from a qualified lawyer before using any of the forms on this site, in order that you can verify the forms are suitable for your needs.
Subscription Agreement
SUBSCRIPTION AGREEMENT-PRIVATE PLACEMENT OF STOCK
[Name of Issuer]
[Address of Issuer]
Date: [Date of Notice]
[First Name of Recipient] [Last Name of Recipient]
[Company Name of Recipient]
[Street Address of Recipient]
[City of Recipient], [State of Recipient]
[Zip Code of Recipient]
[Country of Recipient]
Dear [Mr./Mrs.] [Last Name of Recipient]:
This Subscription Agreement has been executed by the undersigned in connection with the private placement of units consisting of
[Number of Common Stock Shares] shares of Common Stock and [Number of Preferred Stock Shares] shares of Preferred Stock (the "Shares") of, [Name of Company] a [State of Company] corporation (the "Company"). The undersigned, herein referred to as the "Investor" hereby represents and warrants to, and agrees with, the Company as follows:
1. Agreement to Subscribe; Payment; Subscription Irrevocable
The undersigned hereby subscribes for Unit(s) at a price of $ [Price per unit] per Unit payable to the Company in accordance with the terms of the offering described in the Company's Confidential Private Placement Memorandum dated [Date of Memorandum], under the caption "Plan of Distribution". Enclosed herewith is the undersigned's certified check in the amount of $ [Amount of Check]. The undersigned understands that he must subscribe for a minimum of one Unit, unless he receives the prior consent of the Company.
The undersigned understands that, except as provided under any applicable state securities laws or as expressly provided herein, this subscription may not be revoked by the undersigned for six months from the date hereof, and that the execution and delivery of this Agreement will not constitute an agreement between the undersigned and the Company until this Agreement has been accepted by the Company, and then subject to the terms and conditions of this Agreement.
THE UNDERSIGNED UNDERSTANDS THAT THIS INVESTMENT IN THE COMPANY IS ILLIQUID AND INVOLVES A HIGH DEGREE OF SPECULATIVE RISK.
2. Qualifications of Investor
(a) Accredited Investor Status. The undersigned hereby represents and warrants to the Company that the Investor is an accredited investor inasmuch as the Investor is:
Please check all applicable descriptions
[ ] A bank or savings and loan association, as defined in the Securities Act, whether acting in its individual or fiduciary capacity.
[ ] A broker or dealer registered pursuant to the Securities Exchange Act of 1934.
[ ] An insurance company, as defined in the Securities Act.
[ ] An investment company registered under the Investment Company Act of 1940.
[ ] A business development company, as defined in the Investment Company Act of 1940.
[ ] A Small Business Investment Company licensed by the U.S. Small Business Administration.
[ ] A plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $ [Total assets of plan].
[ ] An employee benefit plan within the meaning of Title I of the Employment Retirement Income Security Act of 1974 [ERISA], if the investment decision with respect to this investment is made by a plan fiduciary, as defined in ERISA, which is either a bank, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $ [Total assets of plan].
[ ] A private business development company, as defined in the Investment Advisors Act of 1940.
[ ] A tax exempt organization defined in Section 501(c)(3) of the Internal Revenue Code, or a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000.
[ ] A director or executive officer of the Company.
[ ] A natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $ [Net worth of Individual].
[ ] A natural person who had an individual income in excess of $ [Income of Individual] in each of the two most recent years and who reasonably expects an income in excess of $ [Income of Individual] in the current year.
[ ] A trust, with total assets in excess of $ [Minimum amount of trust], not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act.
[ ] An entity all the equity owners of which may respond affirmatively to any of the preceding paragraphs.
[ ] None of the above.
(b) Sophisticated Investor Status. The undersigned hereby represents and warrants to the Company that:
Please check if applicable
[ ] Alone, or with his purchaser representative, if any, the Investor has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of this transaction and of an investment in the Corporation as provided for in the Memorandum.
[NOTE: In certain cases, it may be appropriate for the Issuer to obtain a detailed purchaser questionnaire and/or purchaser representative questionnaire to support this representation.]
(c) Investor Suitability; Illiquidity; Ability to Bear Loss. The Investor has a net worth of at least $ [Net worth exclusive of home, furnishings and automobiles], or during the past taxable year the Investor had, and during the present taxable year the Investor will have, an annual gross income of at least $ [Gross Income] and a net worth of at least $ [Net worth exclusive of home, furnishings and automobiles].
The overall commitment of the undersigned to securities which are not readily marketable is not disproportionate to the Investor's net worth, and his investment in the Shares will not cause his overall commitment to become excessive.
The undersigned has adequate means of providing for his current needs and personal
contingencies, has no need for liquidity in his investment in the Shares, and can sustain a complete loss of his investment in the Shares.
[Note: Tie Section 2(c) representations to State Blue Sky Law suitability requirements.]
(d) Entity Investors. If the undersigned is other than a natural person, the undersigned represents and warrants that:
(i) The undersigned has not been formed, reformed or recapitalized for the specific purpose of purchasing the Shares;
(ii) The undersigned has been duly formed and is validly existing in good standing under the laws of the jurisdiction of its formation, with full power and authority to enter into the transactions contemplated by this Agreement; and
(iii) This Agreement has been duly and validly authorized, executed, and delivered by the undersigned and when executed and delivered by the Company, will constitute the valid, binding and enforceable agreement of the undersigned.
3. Access to Information; Independent Investigation
(a) Private Placement Memorandum. The undersigned has received and carefully reviewed a numbered copy of the Company's Confidential Private Placement Memorandum dated [Date of Memorandum] (the "Memorandum").
The undersigned has carefully reviewed and fully considered the contents of the Memorandum, including, without limitation, the material set forth under "RISK FACTORS".
[In addition, the undersigned has been furnished with copies of the Company's most recent Annual Report to the Securities and Exchange Commission on Form l0and its most recent Proxy Statement and Quarterly Report on Form l0[collectively the "SEC Filings"], and certain other documents and information appended to the Memorandum. The Memorandum, the SEC Filings, and such other documents and information appended to the Private Placement Memorandum, as the same may be amended or supplemented from time to time, are collectively referred to herein as the "Memorandum."]
(b) Independent Investigation; Access. The undersigned, in making the decision to purchase the Shares subscribed for, has relied upon independent investigations made by him and his purchaser representatives (if any), and the undersigned and such representatives (if any) have, prior to any sale to him, been given access and the opportunity to examine all material books and records of the Corporation, all material contracts and documents relating to this offering and an opportunity to ask questions of, and to receive answers from, the Corporation or any person acting on its behalf concerning the terms and conditions of this offering or any other matter set forth in the Memorandum, and to obtain any additional information to the extent the Corporation possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information set forth in the Memorandum.
The undersigned and the undersigned's advisors, if any, have been furnished with all materials relating to (i) the business, finances and operation of the Company and materials relating to the offer and sale of the Shares or (ii) anything set forth in the Memorandum, that has been requested. The undersigned and the undersigned's advisors, if any, have received complete and satisfactory answers to any such Inquiries.
(c) No Other Representations. No representations have been made to the undersigned or such purchaser representative, if any, concerning the Shares, the Corporation, its business or prospects, or other matters, except as set forth in the Memorandum.
(d) Adequacy of Investigation. The undersigned acknowledges that the undersigned is subscribing for the Shares after what the undersigned deems to be adequate investigation of the business, finances and prospects of the Company by the undersigned and the undersigned's advisors, if any.
(e) No Governmental Recommendation or Approval. The undersigned understands that no federal or state agency has passed on or made any recommendation or endorsement of the Shares.
4. Investment Representations
(a) Shares Not Registered; Indefinite Holding. The undersigned has been advised by the Company, and understands, that the undersigned must bear the economic risk of an investment in the Shares for an indefinite period of time because the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and the Company is under no obligation to register the Shares. Therefore, the Shares must be held by the undersigned unless they are subsequently registered under the Securities Act or an exemption from such registration is available for the transfer of the Shares.
(b) Purchase for own Account. The undersigned represents that the Shares are being acquired solely for the undersigned's own account for investment and not with a view toward, or for resale in connection with, any "distribution", as that term is used in the Securities Act and the Rules and Regulations thereunder, of all or any portion thereof.
(c) No Disposition of Shares Without Securities Law Compliance. The undersigned agrees not to subdivide the Shares or to offer, sell, pledge, hypothecate or otherwise transfer or dispose of any of the Shares in the absence of an effective registration statement under the Securities Act covering such disposition, or an opinion of counsel, satisfactory to the Company and its counsel, to the effect that registration under the Securities Act is not required in respect of such transfer or disposition.
(d) Stop-Transfer and Legends on Certificates. The undersigned further understands that a stop-transfer order will be placed on the stock-transfer books of the Company respecting the certificates evidencing the Shares, and such certificates shall bear, until such time as the Shares shall have been registered under the Securities Act or shall have been transferred in accordance with such an opinion of counsel, the following legends or ones substantially similar thereto
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR AN AVAILABLE EXEMPTION THEREUNDER .
plus any legend that may be required under any applicable state law.
(e) "Private Offering" Exemption; Reliance on Representations. The undersigned understands that the offer and sale of the Shares are not being registered under the Securities Act in reliance on the so-called "private offering" exemption provided by Section 4(2) of the Securities Act and/or Regulation D promulgated pursuant to the Securities Act, and that the Company is basing its reliance on that exemption in part on the representations, warranties, statements and agreements contained herein and those of other investors contained in similar subscription agreements.
The undersigned further understands that other investors are making their investment in reliance on the representations, warranties, statements and agreements contained herein, as the undersigned is making this investment in reliance on theirs, and the undersigned invites both the Company and other investors so to rely.
5. Indemnification
The undersigned agrees to indemnify and hold the Company, its officers, directors and stockholders or any other person who may be deemed to control the Company harmless from any loss, liability, claim, damage or expense, arising out of the inaccuracy of any of the above representations, warranties or statements or the breach of any of the agreements contained herein, and this indemnification shall survive the purchase and sale of the Shares subscribed for herein.
6. Blue Sky Notices
A. If a resident of [State of Residence 1], the undersigned acknowledges the following
[State securities law notices, restrictions and/or rights for State 1]
B. If a resident of [State of Residence 2], the undersigned acknowledges that
[State securities law notices, restrictions and/or rights for State 2]
C. If a resident of [State of Residence 3], the undersigned understands that
[State securities law notices, restrictions and/or rights for State 3]
7. Closing Date
The date of the closing of the sale of the Shares (the "Closing Date") shall be the date specified in a written notice from the Company to the undersigned, which date shall be no sooner than 15 days after the date of such notice. The Closing shall take place at the offices of , or at such other place as may be designated by the Company in the above notice and shall be at such time specified in such notice.
8. Conditions to the Company's Obligation to Sell
Investor understands that the Company's obligation to sell the Stock is conditioned upon:
(a) the receipt and acceptance by the Company of satisfactory Subscription Agreements for all of the Shares to be offered pursuant to the Memorandum;
(b) the receipt by the Company of a certificate from each subscriber certifying that the representations and information set forth in the subscription agreement executed by such subscriber are true and correct as of the Closing Date;
(c) the simultaneous or substantially simultaneous sale of all of the Shares offered pursuant to the Memorandum; and
(d) the offering not being sooner terminated by the Company pursuant to Section 10 hereof.
9. Conditions to Investor's Obligation to Purchase
Investor's obligation to purchase the Stock in accordance with the terms of this Subscription Agreement is conditioned upon:
(i) the simultaneous or substantially simultaneous sale of all the Shares offered pursuant to the Memorandum.
10. Termination of the Offering
Investor acknowledges that the offering of the Stock can be terminated at any time by the Company prior to the Closing regardless of whether this Subscription Agreement had theretofore been accepted by the Company. In the event of such termination, the Purchase Price for the Shares previously remitted by Investor, together with interest
thereon, shall be refunded to Investor and this Subscription Agreement, and the parties' obligations hereunder, shall terminate.
11. Governing Law
This Agreement shall be governed by and interpreted in accordance with the laws of the State of [State of Jurisdiction]
IN WITNESS WHEREOF, this Subscription Agreement was duly executed on [Date Signed].
0 Very truly yours,
Witness
(Print Individual or Firm Name)