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Exhibit 10.34
ALLOY DESIGNS, INC.
STOCK SUBSCRIPTION AGREEMENT
December _______, 1997
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH, OR APPROVED OR
DISAPPROVED BY, THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY, NOR HAVE THE FOREGOING
AUTHORITIES PASSED UPON THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE SECURITIES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS". INVESTORS MUST BE PREPARED TO BEAR THE RISK OF THEIR
INVESTMENT FOR AN INDEFINITE PERIOD AND BE ABLE TO WITHSTAND A TOTAL LOSS OF
THEIR INVESTMENT.
THE SECURITIES ARE OFFERED ONLY TO PERSONS WHOM THE COMPANY BELIEVES TO HAVE THE
QUALIFICATIONS NECESSARY TO PERMIT THE SECURITIES TO BE OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT.
PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THE MEMORANDUM OR ANY
PRIOR OR SUBSEQUENT COMMUNICATION FROM OR WITH THE COMPANY OR ANY PROFESSIONAL
ASSOCIATED WITH THE OFFERING AS LEGAL OR PROFESSIONAL TAX ADVICE. THE OFFEREE
SHOULD CONSULT HIS OR HER OWN COUNSEL, ACCOUNTANT OR BUSINESS ADVISOR AS TO
LEGAL, TAX AND OTHER MATTERS, RESPECTIVELY, CONCERNING HIS OR HER PURCHASE OF
THE SECURITIES OFFERED HEREBY.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
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FOR FLORIDA RESIDENTS ONLY
PURSUANT TO SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES ACT, YOU HAVE A
RIGHT TO RESCIND YOUR SUBSCRIPTION BY GIVING NOTICE OF SUCH RESCISSION BY
TELEPHONE, TELEGRAPH OR LETTER, WITHIN THREE DAYS AFTER YOU FIRST TENDER
CONSIDERATION, TO THE COMPANY. IF NOTICE IS NOT RECEIVED BY SUCH TIME, THE
FOREGOING RIGHT OF RESCISSION SHALL BE NULL AND VOID.
FOR PENNSYLVANIA RESIDENTS ONLY
EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM
REGISTRATION BY SECTION 203(d) DIRECTLY FROM AN ISSUER OR AFFILIATE OF AN ISSUER
SHALL HAVE THE RIGHT TO WITHDRAW HIS OR HER ACCEPTANCE WITHOUT INCURRING ANY
LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON, WITHIN TWO
BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS OR HER WRITTEN
BINDING CONTRACT OF PURCHASE, OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS
NO WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE OR
SHE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED.
YOUR WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO
ACCOMPLISH THIS WITHDRAWAL, YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE
ISSUER INDICATING YOUR INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE
SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY.
IF YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME
WHEN IT WAS MAILED. SHOULD YOU MAKE THE REQUEST ORALLY, YOU SHOULD ASK FOR
WRITTEN CONFIRMATION THAT YOUR REQUEST HAS BEEN RECEIVED.
FOR MASSACHUSETTS RESIDENTS ONLY
THE SECURITIES DIVISION OF THE OFFICE OF THE SECRETARY OF STATE OF THE
COMMONWEALTH OF MASSACHUSETTS HAS STATED IN A WRITTEN POLICY THAT IT VIEWS
FORWARD-LOOKING FINANCIAL INFORMATION AS "HIGHLY SUSPECT" AS A BASIS FOR MAKING
INVESTMENT DECISIONS. THE SECURITIES ARE BEING OFFERED IN MASSACHUSETTS ONLY TO
ACCREDITED INDIVIDUAL INVESTORS AND TO CERTAIN OTHER INSTITUTIONAL ACCREDITED
INVESTORS. EACH MASSACHUSETTS PURCHASER WILL BE REQUIRED TO REPRESENT TO THE
COMPANY THAT SUCH PURCHASER IS, BY REASON OF HIS OR HER INVESTMENT EXPERIENCE
AND SOPHISTICATION,
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FULLY CAPABLE OF UNDERSTANDING AND EVALUATING ANY PROJECTED FINANCIAL
INFORMATION PROVIDED TO THE PURCHASER.
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ALLOY DESIGNS, INC.
STOCK SUBSCRIPTION AGREEMENT
Alloy Designs, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Gentlemen:
Subject to the terms and conditions set forth below, the undersigned
hereby offers to purchase from Alloy Designs, Inc., a Delaware corporation (the
"Company"), _____________ shares of the Company's Common Stock, $0.01 par value
per share ("Common Stock"), for the aggregate purchase price of $_______________
in cash, or $____________ per share. The shares of Common Stock purchased
hereunder are together referred to herein as the "Securities".
In connection with the execution of this Agreement and to induce the
Company to sell the Securities to the undersigned, the undersigned hereby
represents, warrants and agrees as follows:
1. Accredited Investor. I am an "accredited investor" as such term is
defined in Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), for the following reason [Please initial one or more]:
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|_| My individual income was in excess of $200,000 in each of the past
two years, or my joint income with my spouse was in excess of
$300,000 in each of those years, and I reasonably expect my income
to reach the same level in the current year.
|_| My individual net worth or joint net worth with my spouse exceeds
$1,000,000.
|_| The undersigned is a trust, corporation or partnership with total
assets in excess of $5,000,000, not formed for the specific purpose
of acquiring the Securities, whose purchase of the Securities will
be directed by a person whose knowledge and experience in financial
and business matters is such that he or she is capable of evaluating
the merits and risks of the investment in the Securities.
|_| The undersigned is an entity in which all of the equity owners are
accredited investors.
|_| I am a director or executive officer of the Company.
|_| The undersigned is a bank, savings and loan association, broker,
dealer, insurance company, investment company, business development
company, or small business investment company.
|_| The undersigned is an employee benefit plan with assets greater than
$5,000,000 or where the investment decision is made by a bank,
savings and loan association, insurance company, or registered
investment advisor.
|_| The undersigned is a self-directed employee benefit plan where the
investment decisions are made solely by accredited investors.
2. Experience and Suitability. I am qualified by my own knowledge and
experience in financial and business matters, or by such knowledge and
experience on the part of any advisors who are advising in connection herewith,
to evaluate the merits and risks of an investment in the Securities and to make
an informed decision relating thereto. I have the financial capability for
making the investment and protecting my interests, and I can afford a complete
loss of the investment. The investment is a suitable one for me.
3. No Need for Liquidity. I am aware that I will be unable to liquidate my
investment readily in case of an emergency or other exigent instance or on
demand and that the Securities being purchased may have to be held for an
indefinite period of time. My overall commitment to investments which are not
readily marketable is not excessive in view of my net worth and financial
circumstances and the purchase of the Securities will not cause such commitment
to become excessive. In view of such facts, I acknowledge that I have adequate
means of providing for my current needs, anticipated future needs and possible
contingencies and emergencies and have no need for liquidity in the investment
in the Securities. I am able to bear the economic risk of this investment.
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4. Opportunity to Investigate. Prior to the execution of this Agreement,
my advisors and I have had the opportunity to ask questions of, and receive
answers from, representatives of the Company concerning the terms and conditions
of this transaction, and the finances, operations, business and prospects of the
Company. My advisors and I have also had the opportunity to obtain additional
information necessary to verify the material accuracy and completeness of
information furnished about the Company. Accordingly, I have independently
evaluated the risks of purchasing the Securities, and I am satisfied that I have
received information with respect to all matters which I consider material to my
decision to make this investment.
5. Risk Factors. I have carefully considered the potential risks relating
to the Company and a purchase of the Securities. I fully understand that the
Company has limited financial and operating history and that the Securities are
speculative investments which involve a high degree of risk of loss of my entire
investment. I am familiar with the general risks of investment in companies with
a limited operating history. I understand that the Company is subject to all of
such risks, and to all of the risks inherent in any catalogue, online/Internet
shopping and/or apparel retailing company. I am aware that no public market
exists for the Securities and that the Securities may not be sold without
compliance with applicable federal and state securities laws. I understand that
the Company has made no assurances that a public market will ever exist for the
Securities and that, even if a public market exists in the future, I may not
readily be able to sell the Securities. I have considered each of these risks
regarding an investment in the Company and the Securities. I understand that the
risks described to me by the Company are not a complete list of risks involved
in an investment in the Company. Among others, I have considered each of the
following risks regarding an investment in the Company and the Securities:
A. Limited Operating History. The Company was formed in January 1996 and
has a only limited history of operations from which to evaluate market
acceptance of the Company's concept or the ability of the Company to implement
and manage the concept or on which to base projections as to the future
performance of the Company. Consequently, the Company must be evaluated after
consideration of the potential problems, delays, uncertainties and complications
often connected with a company at this relatively early stage of development. As
a result of the Company's operations thus far, the Company has generated modest
revenues from the sale of products and has incurred significant operating
losses. There can be no assurance that the Company will be able to achieve
market acceptance or achieve or sustain meaningful sales increases or profitable
operations in the future.
B. Capital Needs. The Company has limited capital with which to operate
and must raise substantial funds in order to meet its business goals. For the
past eighteen months, the Company has operated using the proceeds of previous
private placements of stock and warrants to purchase Common Stock which provided
$_____________ in operating capital. The Company anticipates using funds from
the sale of the Securities to continue to fund its operating expenses and for
general working capital purposes. There can be no assurance that the Company
will be able to raise additional capital if and when needed or that such funds
will be available on terms and conditions which will permit a reasonable rate of
return to investors in the Company. The failure to raise needed funds on
sufficiently favorable terms could have a material adverse effect on the
Company's operations, financial condition and future prospects.
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C. Catalogue Design and Sales; Online/Internet. The Company has produced
and mailed two catalogues thus far and has generated a modest level of sales as
a result of these mailings. Each of these initial catalogues have required, and
any subsequent catatogues will require, significant design and development prior
to printing and mailing or online/Internet availability. There can be no
assurance that the products offered via the Company's catalogues and
online/Internet offerings will be successfully marketed or obtain acceptance
from customers. There can be no assurance that the software to be used by the
Company for online/Internet sales will perform its intended functions, or that
the customers will find these functions satisfactory. Even if such software
performs its intended functions, and customers desire to purchase the Company's
products online or via the Internet, there can be no assurance that such
customers will purchase the Company's products in any particular volume.
D. Changes in Fashion Trends and Industry Risks. The Company's success
depends, in part, on management's ability to anticipate the fashion tastes of
its targeted consumers and to offer merchandise that appeals to their
preferences. The theme of activity-oriented apparel could go out of favor with
the Company's targeted consumers or the activities selected or emphasized by the
Company may not be the ones found most appealing by such consumers at any
particular time. The inability of the Company successfully to anticipate,
identify or react to changes in styles, trends or brand preferences of its
customers could lead to, among other things, excess inventories and price
markdowns, which could have a material adverse effect on the Company. In
addition, misjudgments in apparel selection could adversely affect the Company's
image with its customers, which could have a material adverse effect on the
Company. There can be no assurance the Company will be able to achieve or
maintain a high rate of growth, particularly if the retail environment declines.
A recession in the national or regional economies or uncertainties regarding
future economic prospects, among other things, could affect consumer spending
habits and have a material adverse effect on the Company. The Company's business
is sensitive to consumer spending patterns and preferences. Shifts in the
targeted consumers' discretionary spending away from the Company's products to
other consumer goods also could have a material adverse effect on the Company.
E. Competition. The apparel industry is highly competitive. The Company
expects to compete with general and specialty store retailers, winter sports
destination retailers, as well as catalogue retailers and other direct
marketers. Many of the Company's expected competitors are larger and have
substantially greater financial, distribution and marketing resources than the
Company. Competitors could enter into exclusive distribution arrangements with
the Company's vendors and deny the Company access to their products. Increased
competition could result in pricing pressures, marketing expenditures and loss
of market share, and could have a material adverse effect on the Company. The
Company believes its success will depend, in part, on its ability to adapt to
new marketing and sales technologies (such as online malls and shopping sites
and its own site on the World Wide Web and links with others Websites, including
those of product manufacturers and sponsors or other advertisers) and to respond
to competitors' actions in these areas. Adapting to new technologies could
require significant capital expenditures by the Company, and there can be no
assurance that the Company will remain competitive in response to technological
changes. The Company's success may be dependent in part on its being an early
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entrant into the market for products of the kind anticipated to be offered. If
multiple entrants precede the Company in the market, the marketing efforts of
the Company and its ability to compete could be severely impaired.
F. Ability to Develop and Maintain Proprietary Customer Lists. The Company
must first develop, and then will mail catalogues to names in, its proprietary
database (which are primarily derived from word-of-mouth inquiries and responses
to the Company's advertising) and to potential customers whose names are
obtained from purchased and rented lists. Names derived from purchased or rented
lists may generate lower response rates than names derived from word-of mouth
requests. The Company must constantly update its mailing lists to identify new,
prospective customers in the target group for the Company's products. Proposed
legislation, or other similar laws or regulations that may be enacted, could
impair the Company's ability to collect customer names or profit from future
plans to sell demographic information relating to the population. Furthermore,
additional legislation or regulations could limit the Company's ability to
continue to compile personal information on customers and customer prospects in
the target group for the Company's products or to use that information in the
course of its business, which could have a material adverse effect on the
Company.
G. Risks of Growth Strategy. The Company intends to pursue an aggressive
growth strategy and its future operating results will largely depend on its
ability to manage a growing business. Managing its growth will require the
Company to implement and improve its operations and financial and management
information systems and to build, expand, motivate and effectively manage its
workforce. The Company may maintain high inventory levels in certain categories
in an effort to maintain satisfactory fulfillment rates for its catalogue
customers. This may expose the Company to risk of excess inventories and
inventory obsolescence, which could have a material adverse effect on the
Company.
H. Attraction of and Dependence on Key Vendors; Mix of Products. The
Company's business depends, in part, on the Company's ability to purchase
current-season brand-name apparel at competitive prices, in sufficient
quantities and of acceptable quality. The Company does not have long-term
contracts with any vendors and may experience reluctance on the part of leading
apparel vendors to do business with the Company, or to do so on terms acceptable
to the Company. Such vendors may avoid or limit doing business with the Company
out of concern that they will harm other channels of distribution of their
products. The failure of key vendors to expand with the Company, the loss of one
or more key vendors, a material change in the Company's current purchase terms
or a limitation on the Company's ability to procure products could have a
material adverse effect on the Company.
I. Need to Attract and Dependence on Key Personnel. The success of the
Company will largely depend upon the Company's ability to attract and retain
additional senior management, especially in the areas of merchandising and
catalogue design and production. An inability to attract, or the loss of, key
employees could have a material adverse effect on the Company. There can be no
assurance that the Company will be successful in attracting or retaining
additional qualified personnel.
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J. Fluctuations in Postage and Paper Expenses. Postage and paper expenses
will be a significant expense, upwards of 10% of the Company's anticipated net
sales,. Material increases in paper or catalogue delivery costs could have a
material adverse effect on the Company.
K. Reliance on Information Systems. The Company's success will depend, in
part, on its ability to provide prompt, accurate and complete service to its
customers on a competitive basis, and to purchase and promote products, manage
inventory, ship products, manage sales and marketing, and maintain efficient
operations through its telephone and management information systems. A
significant disruption in its telephone and management information systems could
adversely affect the Company's relations with its customers and vendors and its
ability to manage its operations. Furthermore, there can be no assurance that
extended or repeated reliance on back-up computer and telephone systems, which
need to be developed in the first instance, would not have a material adverse
effect on the Company.
L. Reliance on Third-Party Fulfillment and Parcel Services. All the
Company's orders for merchandise will be handled initially by third-party
fulfillment companies. Any disruption in fulfillment operations could have a
material adverse effect on the Company and its reputation with customers. In
addition, strikes or other service interruptions by the Company's shippers or
parcel services could have a material adverse effect on the Company's ability to
deliver merchandise on a timely basis. The Company will attempt to deliver its
catalogues to its customers at timely seasonal intervals. The failure of the
Company to deliver catalogues at appropriate times or postal delays or
disruptions in the mailing of catalogues, could affect the demand for the
Company's products and could have a material adverse effect on the Company.
M. Seasonal and Quarterly Fluctuations. The Company expects to be subject
to seasonal fluctuations in its merchandise sales and results of operations. The
Company expects its sales and operating results generally to be lower in the
second and third quarters than in the first and fourth quarters of each fiscal
year (which include the back-to-school and winter holiday season and also orient
toward the period of peak winter sports activity which will be emphasized
initially by the Company). Adaptation of the Company's concept to temperate
climates and around-the-year activities, such as inline skating, biking and
beach/water activities, represents a challenge and an opportunity for the
Company. The Company's quarterly results may fluctuate as a result of numerous
factors, including the timing, quantity and cost of catalog mailings (including
sale circulars); the response rates to such mailings; the timing of merchandise
deliveries; market acceptance of the Company's merchandise; the mix, pricing and
presentation of products offered and sold; the hiring and training of additional
personnel; the timing of inventory writedowns; and the incurrence of other
operating costs and factors beyond the Company's control, such as general
economic conditions and actions of competitors. Accordingly, the results of
operations in any quarter will not necessarily be indicative of the results that
may be achieved for a full fiscal year or any future quarter.
N. International Business Risks. The Company expects to distribute its
catalogues in Japan and intends to have distribution there and to explore
distribution opportunities in other international markets. The Company's
anticipated international business is subject to a number of risks generally
associated with doing business internationally. Furthermore, expansion into new
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international markets may present competitive and merchandising challenges
different from those the Company currently faces, including, but not limited to,
certain vendors that may not want their products distributed overseas outside of
exclusive distribution channels. There can be no assurance the Company will
expand internationally or that such expansion will result in profitable
operations.
O. Risk that the Company May Be Required to Collect Sales Tax. The Company
does not expect to collect sales or other similar taxes in respect of shipments
of goods into most states. However, various states have sought to impose state
sales tax collection obligations on out-of-state mail-order companies, such as
the Company. A successful assertion by one or more states that the Company
should have collected or be collecting sales taxes on the sale of products could
have a material adverse effect on the Company.
P. Unspecified Use of Proceeds. The Company expects to use the net
proceeds from this placement primarily for working capital and general corporate
purposes. The Company has no current specific plan for a significant portion of
the proceeds of this offering other than to build up its organization and to
focus on catalogue development and marketing, and, as a consequence, management
will have discretion over the use of the proceeds.
Q. Control by Principal Stockholders. After the close of this financing,
the Company's founders, Xxxx Xxxxxxx, Xxx Xxxxxxx and Xxx Xxxxxxx, will control
______ % of the Company's Common Stock. In addition, pursuant to a certain
Stockholders and Voting Agreement among all of the existing stockholders of the
Company and the founders, the founders have the right to vote all of the
stockholders' shares in the founders' sole discretion. Accordingly, the founders
can control the election of directors of the Company and the outcome of all
issues submitted to a vote for stockholders of the Company.
R. Intellectual Property Rights. There can be no assurance that the
Company will be able to obtain adequate protection for its name, logos and other
intellectual property. Without such protection, other persons and entities may
be able to emulate or derive promotional benefit from the Company's products
more successfully. Even if the Company is successful in obtaining protection,
there can be no assurance that competing products will not be developed and
marketed.
S. Offering Price and Dilution. The price of the Securities has been
established by the Company. Such price is not based upon such established value
criteria as assets, earnings, net worth or book value. There can be no assurance
that the purchase price of the Securities reflects the true value of the
business opportunities presented by the Company's assets. Investors will suffer
immediate and substantial dilution upon the purchase of the Securities. In
addition, the Company reserves the right in its discretion to issue additional
securities from time to time in such amounts and for such consideration as it
deems appropriate and desirable at such time. Such additional securities may
have preferential rights over those of the Company's Common Stock. There can be
no assurance that any such future offering will not be at a price less than the
price paid by the undersigned for the Securities or will not cause dilution to
the Company's stockholders. Further, management reserves the right to offer,
from time to time in its discretion, equity participation in the Company to key
employees, consultants and directors in order to obtain or retain the services
of such persons. Any such subsequent issue of shares of capital stock in the
Company may have the
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effect of further diluting the value of the securities owned by the then
securities holders of the Company.
T. Use of Financial Forecasts. The financial forecasts, if any, provided
to the undersigned, are based upon various assumptions made by the Company in
the preparation of such forecasts, and are provided for illustrative purposes
only. The validity and accuracy of the assumptions underlying the forecasts
depend in large part on future events over which the Company has limited
control. Consequently, there can be no assurance that the actual operating
results of the Company will correspond to any of the financial forecasts. The
Company can give no assurance that the assumptions will prove to be valid and
therefore can give no assurance that the projected results will be realized.
Accordingly, an investment in the Company should not be made in reliance on any
such financial forecasts provided by the Company.
U. No Dividends. The Company has not paid any dividends since its
formation. It is highly unlikely that any dividends will be declared or paid in
the foreseeable future.
6. Investment Purpose. I am acquiring the Securities for my own account
for the purpose of investment and not with a view to, or for resale in
connection with, the distribution thereof, nor with any present intention of
distributing or selling the Securities. I understand that the Securities have
not been registered under the Securities Act or the securities laws of any
state, and I hereby agree not to make any sale, transfer or other disposition of
any such Securities unless either (i) the Securities first shall have been
registered under the Securities Act and all applicable state securities laws, or
(ii) an exemption from such registration is available, and the Company has
received such documents and agreements from me and the transferee as the Company
requests at such time. If I am a resident of the State of Pennsylvania, I agree
that I will not sell the Securities for a period of 12 (twelve) months from the
date hereof except in accordance with Regulation 204.011 promulgated under the
Pennsylvania Securities Act of 1972.
7. Legends. I understand that until the Securities have been registered
under the Securities Act and applicable state securities laws each certificate
representing such securities shall bear a legend substantially similar to the
following:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws, have been acquired for investment, and
may not be sold, pledged, hypothecated or otherwise transferred
unless a registration statement under the Act and applicable state
law is in effect with regard thereto or unless an exemption from
such registration is available.
8. No Regulatory Approval of Merits. I understand that neither the
Securities and Exchange Commission nor the commissioner or department of
securities or attorney general of any state has passed upon the merits or
qualifications of, nor recommended nor approved, the Securities. Any
representation to the contrary is a criminal offense.
9. Miscellaneous.
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(a) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered
by hand, (ii) made by telex, telecopy or facsimile transmission, (iii)
sent by overnight courier, or (iv) sent by registered mail, return receipt
requested, postage prepaid.
If to the undersigned:
To the address designated in Section 10 hereof.
If to the Company:
To the address set forth at the top of this Agreement.
All notices, requests, consents and other communications hereunder shall
be deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set
forth above, (ii) if made by telex, telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier
service, or (iv) if sent by mail, on the 3rd business day following the
day such mailing is made.
(b) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly
set forth in this Agreement shall affect, or be used to interpret, change
or restrict, the express terms and provisions of this Agreement.
(c) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by
the parties hereto.
(d) Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such
terms or provisions. No such waiver or consent shall be deemed to be or
shall constitute a waiver or consent with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or
consent shall be effective only in the specific instance and for the
purpose for which it was given, and shall not constitute a continuing
waiver or consent.
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(e) Assignment. This Agreement may not be transferred or assigned
without the prior written consent of the Company and any such transfer or
assignment shall be made only in accordance with applicable laws and any
such consent.
(f) Benefit. All statements, representations, warranties, covenants
and agreements in this Agreement shall be binding on the parties hereto
and shall inure to the benefit of the respective heirs, executors,
administrators, successors and permitted assigns of each party hereto.
Nothing in this Agreement shall be construed to create any rights or
obligations except among the parties hereto, and no person or entity shall
be regarded as a third-party beneficiary of this Agreement.
(g) Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed
by the law of the State of Delaware, without giving effect to the conflict
of law principles thereof.
(h) Jurisdiction and Service of Process. Any legal action or
proceeding with respect to this Agreement shall be brought in the courts
of the [State of New York] or [the United States District Court for the
Southern District of New York]. By execution and delivery of this
Agreement, each of the parties hereto accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of the parties hereto irrevocably consents to the
service of process of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by certified mail, postage
prepaid, to the party at its address set forth in Section 9(a) hereof.
(i) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court deems
it enforceable, and as so limited shall remain in full force and effect.
In the event that such court shall deem any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect.
(j) Interpretation. Each of the parties hereto acknowledge and agree
that: (i) such party and its or his counsel have reviewed the terms and
provisions of this Agreement; (ii) the rule of construction to the effect
that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to the parties
hereto and not in favor of or against any party, regardless of which party
was generally responsible for the preparation of this Agreement. Whenever
used herein, the singular number shall include the plural, the plural
shall include the singular, the use of any gender shall include all
persons.
(k) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or construction of any of
the terms or provisions hereof.
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(l) Survival of Representations and Warranties. All representations
and warranties made by the parties hereto in this Agreement or in any
other agreement, certificate or instrument provided for or contemplated
hereby, shall survive (i) the execution and delivery hereof, (ii) any
investigations made by or on behalf of the parties and (iii) the closing
of the transaction contemplated hereby, and shall remain in full force and
effect for a period of one year following the date of such closing.
(m) Expenses. Each of the parties hereto shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.
(n) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10. I am purchasing the Securities as follows (please check as
appropriate):
|_| individually |_| in trust
|_| joint tenants |_| as a partnership
|_| tenants in common |_| other:
Name:________________________________________________________________
Telephone:___________________________________________________________
Home Address:________________________________________________________
City: ______________________________________State:___________________
Zip:_________________________________________________________________
Business:____________________________________________________________
Bus. Address:________________________________________________________
City: ______________________________________State:___________________
Zip:_________________________________________________________________
Business Telephone:__________________________________________________
Communications should be sent to: (check one) business ____or
home address ____
Social Security Number_______________________________________________
11. Under penalties of perjury, I certify that:
A. The number shown above is my correct Social Security Number; and
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B. I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or the
IRS has notified me that I am no longer subject to backup withholding.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as a
sealed instrument on this day of , 1997.
(For Co-owners, if applicable)
------------------------ - -------------------- -
Signature Signature
------------------------ - -------------------- -
Print Name Print Name
(For Entities, if applicable)
Entity name:
---------------------------------
By:
------------------------------
Name:
Title:
**********************************************************
The foregoing subscription for Securities of Alloy Designs, Inc. is hereby
accepted.
ALLOY DESIGNS, INC.
By:
---------------------------
Date:
--------------------------
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