EXHIBIT 10.29
------------------------
Name of Subscriber
IMPORTANT:
INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK.
PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
STRONGHOLD TECHNOLOGIES, INC.
SUBSCRIPTION AGREEMENT
Stronghold Technologies, Inc., a Nevada corporation (the "Company"),
desires to issue and sell to the undersigned (the "Subscriber"), and the
Subscriber desires to purchase from the Company, the aggregate dollar amount of
shares (the "Shares") of common stock, par value $0.0001 per share (the "Common
Stock"), of the Company, as set forth below next to such Subscriber's name on
the signature pages hereto.
1. Purchase.
(a) Subject to the terms and conditions hereof, the Subscriber
agrees to purchase from the Company, and the Company agrees to issue and sell to
the Subscriber, the Shares at a purchase price equal to $1.50 (the "Purchase
Price") per Share.
(b) The Company has authorized the issuance and sale of up to
500,000 Shares.
(c) In reliance upon the Subscriber's representations and warranties
contained herein, and subject to the terms and conditions set forth herein, the
Company hereby agrees to sell to each Subscriber the aggregate number of Shares
at the aggregate Purchase Price, each as set forth beside such Subscriber's
signature on the signature page bearing such Subscriber's name.
(d) In reliance upon the representations and warranties of the
Company contained herein, and subject to the terms and conditions set forth
herein, on the Closing Date (as defined herein) each Subscriber hereby agrees to
tender to the Company the amount set forth beside such Subscriber's name as the
aggregate Purchase Price in the manner described in Section 7(c) herein.
2. Delivery of Agreements. The Subscriber hereby delivers to the
Company executed counterparts of this Subscription Agreement and the Investor
Qualification Statement, substantially in the form attached hereto as Exhibit A.
3. Acceptance by the Company. The Company has the right to accept or
reject any or all of Subscriber's subscription, for any reason whatsoever or for
no reason. The Subscriber's subscription shall be deemed accepted by the Company
when the Company executes a counterpart of this Subscription Agreement or
provides notice of such execution. Promptly after accepting the Subscriber's
subscription, the Company will cause a certificate evidencing the
Subscriber's Shares (the "Certificate") to be issued in the name of and
delivered to the Subscriber, together with executed counterparts of this
Subscription Agreement and the Stockholders Agreement.
4. Registration Rights With Respect to the Shares.
(a) The Company will file a registration statement on Form SB-2 (the
"Registration Statement") with the Securities and Exchange Commission to
register the Shares in conjunction with the registration statement that the
Company intends to file to register shares of Common Stock held by certain
outstanding security holders. The Company will use its best efforts to cause the
Registration Statement including the Shares to become effective.
(b) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under this Section 4 and in complying with applicable
securities and blue sky laws (including, without limitation, all attorneys' fees
of the Company) shall be borne by the Company. All fees, disbursements and
out-of-pocket expenses and costs incurred by the Subscribers in connection with
the filing of the Registration Statement shall be borne by the Subscribers.
(c) The Company shall not be required by this Section 4 to include
the Shares in any Registration Statement which is to be filed if, in the opinion
of counsel for the Company, the proposed offering or other transfer as to which
such registration is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not "restricted securities," as defined in Rule 144.
5. Termination Date. This offering will terminate on Thursday,
September 5, 2002 (the "Termination Date").
6. Rejection of Agreement. In the event that the Company rejects this
Subscription Agreement for any reason whatsoever or for no reason, the Company
shall, promptly after such rejection, notify the Subscriber of such rejection
and return the aggregate Purchase Price to the Subscriber. If the Company does
not accept Subscriber's subscription in the manner provided in Section 3 hereof
prior to the Termination Date, the Company shall be deemed to have rejected this
Subscription Agreement. Upon rejection of this Subscription Agreement, the
Company and the Subscriber shall have no further obligations under this
Subscription Agreement, except that the Company shall have the obligation to
return the aggregate Purchase Price to the Subscriber.
7. Closing; Closing Date; Initial Closing; Subsequent Closing
(a) The initial closing of the sale and purchase of the Shares under
this Subscription Agreement (the "Closing") shall be held at the offices of Xxxx
and Xxxx LLP located at 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx on or
before August 30, 2002 (the "Closing Date"), and will occur at the decision of
the Company's directors, assuming that the Subscription Requirement has been
attained.
(b) After the Closing Date, the Company may accept subscriptions and
hold additional closings ("Subsequent Closings") at any time prior to the
Termination Date.
2
(c) At the Closing or any Subsequent Closing, each Purchaser shall
have delivered to the Company, by wire transfer, payment of the aggregate
Purchase Price of the Shares for which it subscribed, unless other means of
payment have been agreed upon by the Company and the Subscriber which payment,
subject to the terms and conditions hereof, shall be delivered to the Company at
the Closing against delivery of the Shares. Subject to the terms and conditions
hereof, the Company will deliver to each Subscriber a Certificate, registered in
the name of the Subscriber, representing the Shares purchased by the Subscriber
from the Company against delivery to the Company of payment of the aggregate
Purchase Price. Wire transfer instructions for the Company are attached hereto
as Exhibit B.
8. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Subscriber as of the date hereof as follows, and
all such representations and warranties shall be true and correct as of the
Closing Date as if then made and shall survive the Closing:
(a) Immediately prior to the issuance of any of the Shares
hereunder, the authorized number of shares of capital stock of the Company
consists of 50,000,000 shares of Common Stock and 5,000,000 shares of blank
check preferred stock, par value $0.0001 per share (the "Preferred Stock"), of
which 2,017,200 have been designated as Series A $1.50 Convertible Preferred
Stock of the Company. As of the date hereof, ____________ shares of Common Stock
are issued and outstanding, warrants to purchase 2,002,750 shares of the
Company's Common Stock are issued and outstanding and 2,002,750 shares of Series
A $1.50 Convertible Preferred Stock are issued and outstanding. The Company has
committed to grant up to 169,531 options to certain automobile dealerships. In
addition, ________ shares underlying options have been granted pursuant to the
Company's 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan, and
the option plan of the Company's wholly-owned subsidiary which was assumed upon
acquisition of such subsidiary.
(b) All of the issued and outstanding shares of the Company's Common
Stock have been duly authorized, validly issued and are fully paid and
non-assessable. Other than as set forth above, there are no outstanding options,
warrants, calls, commitments, agreements, conversion or other.
(c) The Shares, when issued pursuant to the terms of this
Subscription Agreement, will be duly and validly authorized and issued, fully
paid and non-assessable.
(d) The Company has made all required filings with the Shares and
Exchange Commission (the "SEC").
(e) The execution, delivery and consummation of this Subscription
Agreement and the transactions contemplated hereby will not (a) conflict with
any provisions of the Articles of Incorporation or By-laws of the Company or (b)
result in any violation of or default or loss of a benefit, or permit the
acceleration of any obligation, under, in each case, upon the giving of notice,
the passage of time, or both, any mortgage, indenture, lease, agreement, or
other instrument, permit, franchise, license, judgment, order, decree, law,
ordinance, rule or regulation applicable to the Company or any of its
properties, except with respect to clause (b), if such violation, default or
loss would not have a material adverse effect on the business, operations or
financial condition of the Company.
3
9. Representations and Warranties of the Subscriber. The Subscriber
hereby represents, warrants and agrees as follows:
(a) If a natural person, the Subscriber is 21 years of age or over.
If a corporation, limited liability company, partnership, trust or other entity,
the Subscriber is authorized, empowered and qualified to execute this
Subscription Agreement and to make an investment in the Company as herein
contemplated. The Subscriber represents to the Company that this Subscription
Agreement has been duly and validly executed and delivered by the Subscriber,
and upon acceptance by the Company, will constitute valid, binding and
enforceable obligations of the Subscriber in accordance with the terms therein.
(b) The Subscriber is either (i) an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), or (ii) a non-United States
resident. If the Subscriber is not a United States resident, the Subscriber
represents and warrants that the Subscriber has not subscribed for the Shares
for the account of any person who is a United States resident. The attached
Investor Qualification Statement that the Subscriber has completed and all of
the statements, answers and information thereon are true and correct as of the
date hereof and will be true and correct as of the date of the closing of this
subscription.
(c) All information which the Subscriber has provided (or will
provide) concerning itself and its financial position, is correct and complete
as of the Closing Date (or will be correct and complete as of the date when
provided) and, if there should be any material change in such information prior
to having made its investment in the Company, it will immediately provide such
information to the Company.
(d) The Subscriber has received and carefully reviewed this
Subscription Agreement and any other materials relating to the Company that it
has requested, and the Subscriber has relied on nothing other than this
Subscription Agreement in deciding whether to make an investment in the Company.
In addition, the Subscriber acknowledges that the Subscriber has been given the
opportunity to (i) ask questions and receive satisfactory answers concerning the
terms and conditions of the offering and (ii) obtain additional information in
order to evaluate the merits and risks of an investment in the Company and to
verify the accuracy of the information contained in this Subscription Agreement.
(e) The Subscriber understands that the Shares subscribed for
hereunder have not been registered under the Securities Act or any state
securities laws, and are being offered and sold in reliance upon Federal and
state exemptions for transactions not involving any public offering. The
Subscriber recognizes that reliance upon such exemptions is based in part upon
the representations of the Subscriber contained herein. The Subscriber
represents and warrants that the Shares will be acquired by the Subscriber
solely for the account of the Subscriber, for investment purposes only and not
with a view to the distribution thereof. The Subscriber represents and warrants
that the Subscriber (i) is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable the Subscriber to
evaluate the
4
merits and risks of investment in the Company, (ii) is able to bear the economic
risk and lack of liquidity of an investment in the Company and (iii) is able to
bear the risk of loss of its entire investment in the Company.
(f) The Subscriber understands that the Company will not be
registered as an investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(g) The Subscriber recognizes that (i) an investment in the Company
involves certain risks, (ii) the Shares have not been registered under the
Securities Act or any state securities laws, and (iii) as a result of the
foregoing, the marketability of the Shares will be severely limited. The
Subscriber agrees that it will not transfer, sell or otherwise dispose of the
Shares in any manner that will violate, the Securities Act or any state
securities laws or subject the Company to regulation under the Investment
Company Act, the rules and regulations of the Securities and Exchange Commission
or the laws and regulations of the States of Nevada, New Jersey, or any other
state or municipality having jurisdiction thereof.
(h) Further Representations by Foreign Investors. If the Subscriber
is not a United States Person, the Subscriber hereby represents that 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 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's subscription and payment for, and his or her continued beneficial
ownership of the Shares, will not violate any applicable securities or other
laws of the Subscriber's jurisdiction.
(i) The Subscriber is aware that: (i) the Company has a limited
financial and operating history, (ii) the officers of the Company (which may be
stockholders or affiliates thereof) may receive substantial compensation in
connection with the management of the Company as approved from time to time by
the Compensation Committee of the Company's Board of Directors, (iii) no
federal, state, local or foreign agency has passed upon the Shares or made any
finding or determination as to the fairness of this investment, (iv) the
Subscriber is not entitled to cancel, terminate or revoke this subscription or
any of the powers conferred herein, and (v) returns set forth in any
supplemental materials provided to the Subscriber are not necessarily comparable
to the returns, if any, which may be achieved on operations of the Company.
(j) The execution and delivery of this Subscription Agreement, the
consummation of the transactions contemplated hereby by the Subscriber and the
performance of the Subscriber's obligations hereunder and under the will not
conflict with, or result in any violation of or default under, any provision of
any governing instrument applicable to the Subscriber, or any agreement or other
instrument to which the Subscriber is a party or by which the Subscriber or any
of its properties are bound, or any foreign or domestic permit, franchise,
judgment, decree, statute, rule or regulation applicable to the Subscriber or
the Subscriber's business or properties.
5
(k) The Subscriber is not subject to the attribution rules under
Section 3(c)(1) of the Investment Company Act in a way that would result in more
than one person being deemed the beneficial owner of the Subscriber's Shares.
(l) If the Subscriber is a partnership, a limited liability company
treated as a partnership for federal income tax purposes, a grantor trust
(within the meaning of ss.ss.671-679 of the Internal Revenue Code of 1986, as
amended (the "Code")) or an S corporation (with the meaning of Code ss.1361)
(each a "flow-through entity"), the Subscriber represents and warrants either
that:
(i) no person will own, directly or indirectly through one or
more flow-through entities, an interest in the Subscriber where more than 70% of
the value of the person's interest in the Subscriber is attributable to the
Subscriber's investment in the Company; or
(ii) if one or more persons will own, directly or indirectly
through one or more flow-through entities, an interest in the Subscriber where
more than 70% of the value of the person's interest in the Subscriber is
attributable to the Subscriber's investment in the Company, neither the
Subscriber nor any such person has or had any intent or purpose to cause such
person or persons to invest in the Company indirectly through the Subscriber in
order to enable the Company to qualify for the 100-partner safe harbor under
Treasury Regulation ss.1.7704-1(h).
(m) The Subscriber represents and warrants that (i) no part of the
aggregate Purchase Price used by the Subscriber to acquire the Shares
constitutes assets of any "employee benefit plan" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other "benefit plan investor" (as defined in U.S. Department of
Labor Reg. ss.2510.3-101 et seq., as amended) or assets allocated to any
insurance company separate account or general account in which any such employee
benefit plan or benefit plan investor (or related trust) has any interest.
(n) The Company has retained Xxxx and Xxxx LLP in connection with
the offering of the Shares of the Company and expects to retain Xxxx and Xxxx
LLP as legal counsel in connection with the management and operation of the
Company, including making, holding and disposing of investments. Xxxx and Xxxx
LLP is not representing and will not represent the Subscriber in connection with
the offering of the Shares, the management and operation of the Company, or any
dispute which may arise between any stockholder on one hand and the Company on
the other hand (the "Company Legal Matters"). The Subscriber will, if it wishes
counsel on a Company Legal Matter, retain its own independent counsel. The
Subscriber agrees Xxxx and Xxxx LLP may represent the Company in connection with
any and all Company Legal Matters (including any dispute between the Company and
the Subscriber or any other stockholder of the Company).
(o) The Company may accept in its sole discretion all or any portion
of the amount set forth on the signature page hereto. Acceptance will be given
to the Subscriber either by delivery of this Subscription Agreement signed by
the Company or by notice of such execution. If so accepted, this Subscription
Agreement (a) will be binding upon the Subscriber's
6
heirs, successors, legal representatives and assigns, (b) may not be canceled,
terminated or revoked by the Subscriber and (c) will be governed by and
construed in accordance with the laws of the State of New Jersey (without giving
effect to any choice of law or conflict of law rules or provisions that would
cause the application of the laws of any jurisdiction other than the State of
New Jersey).
(p) The Subscriber agrees not to transfer or assign this
Subscription Agreement, or any interest herein.
(q) Time shall be of the essence in this Subscription Agreement. The
Subscriber agrees that this Subscription Agreement and any agreement of the
Subscriber made hereunder are irrevocable, and that this Subscription Agreement
shall survive the death or disability of the Subscriber.
10. Placement Agent. The Company may use the services of a placement
agent, broker, dealer or such other agent (the "Agent") to assist the Company in
offering and selling the Shares hereunder. The Agent may be paid commissions or
other fees in cash or in equity in the form of shares of capital stock of the
Company and/or Securities convertible into shares of capital stock of the
Company, and may be reimbursed for reasonable out-of-pocket expenses incurred in
connection herewith. Such fees and/or share amounts shall be payable as
determined by the Company's Board of Directors in its discretion.
11. Payment of Costs. The Company shall pay, whether or not the
transactions contemplated hereby are consummated or this Subscription Agreement
is prevented from becoming effective or is terminated, all costs and expenses
incident to the performance of its obligations under this Subscription
Agreement, including all expenses incident to the authorization of the Shares,
any original issue taxes in connection therewith, if any, incident to the
initial sale of the Shares, and the fees and expenses of the counsel and
accountants of the Company.
12. Reliance. The Subscriber acknowledges that the Company and its
agents are relying on the truth and accuracy of the foregoing representations
and warranties in the offering of the Shares for sale to the Subscriber without
having first registered the Shares under the Securities Act. All
representations, warranties, and covenants contained in this Subscription
Agreement shall survive the acceptance of this Subscription Agreement and the
sale of Shares. Notwithstanding the foregoing, however, no representation,
warranty, acknowledgment, or agreement made herein by the Subscriber shall in
any manner be deemed to constitute a waiver of any rights granted to it under
Federal or state securities laws.
13. Consent to Use of Information. The Subscriber hereby consents to
the utilization by the Company, as necessary in connection with dealings with
any governmental and regulatory authorities, of any information supplied to the
Company by the Subscriber or by its representatives in connection with the offer
and sale of the Shares and agrees to supply any additional information
reasonably requested by any such authority.
14. Restrictions on Transfer of the Shares.
7
(a) Opinion of Counsel. The Subscriber acknowledges that there are
restrictions on the transferability of the Shares. Since the Shares are not
registered under the Securities Act or applicable state securities laws, the
Subscriber acknowledges and agrees that it shall have no right at any time to
sell, assign, pledge, transfer, or otherwise dispose of or encumber the Shares
(except by will or by the laws of descent and distribution), unless, the Company
shall first have been provided with an opinion of counsel acceptable to the
Company that such sale is exempt from such registration under the Securities Act
and any applicable state securities laws or until the Shares are registered
pursuant to Section 4.
(b) Restrictive Legends. The Subscriber acknowledges that the
Certificates initially will bear restrictive legends, which may refer to the
restrictions on transfer contained in this Section 14. Once the Shares have been
registered under the Securities Act, the original Certificates will be replaced
with unlegended Certificates at the option of the Subscriber.
15. Notice to Subscriber. Correspondence and notices to the Subscriber
should be sent to the address listed below in the signature page of this
Subscription Agreement until such time as the Subscriber shall notify the
Company, in writing, of a different address to which such correspondence and
notices are to be sent.
16. Miscellaneous.
(a) The Subscriber agrees that this Subscription Agreement is not
transferable or assignable.
(b) The Subscriber agrees that, except as expressly permitted by any
applicable state law, the Subscriber may not cancel, terminate or revoke this
Subscription Agreement or any agreement of the Subscriber made hereunder and
this Subscription Agreement shall survive the death or legal disability of the
Subscriber and shall be binding upon the Subscriber's heirs, executors,
administrators, successors and assigns.
(c) This Subscription Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties.
(d) Headings are for convenience only and are not deemed to be part
of this Subscription Agreement.
(e) This Subscription Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. In making proof of this
Subscription Agreement, it shall not be necessary to produce or account for more
than one such counterpart. This Subscription Agreement and the rights and
obligations of the parties hereunder shall be enforced, governed and construed
in all respects in accordance with the internal substantive laws of the State of
New Jersey (without reference to principles of conflicts or choice of law that
would cause the application of the internal laws of any other jurisdiction). The
Subscriber (i) submits to the jurisdiction of any state or federal court sitting
in the State of New Jersey in any action or proceeding arising out of or
relating to this Subscription Agreement, (ii) agrees that all claims in respect
of such action or proceeding may be heard and determined in any such court,
(iii) waives any claim of
8
inconvenient forum or other challenge to venue in such court, and (iv) agrees
not to bring any action or proceeding arising out of or relating to this
Subscription Agreement in any other court. Each party agrees to accept service
of any summons, complaint or other initial pleading made in the manner provided
for the giving of notices in Section 15, provided that nothing in this Section
17(e) shall affect the right of any party to serve such summons, complaint or
other initial pleading in any other manner permitted by law.
(f) WITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN CONNECTION WITH
THIS AGREEMENT, EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS IT MAY HAVE TO
DEMAND A JURY TRIAL. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY
MADE BY EACH PARTY HERETO AND EACH PARTY ACKNOWLEDGES THAT NONE OF THE OTHER
PARTIES NOR ANY PERSON ACTING ON BEHALF OF THE OTHER PARTIES HAS MADE ANY
REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. EACH PARTY FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED IN THE SIGNING OF THIS
AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAVIER WITH COUNSEL. EACH PARTY FURTHER ACKNOWLEDGES THAT IT HAS READ AND
UNDERSTOOD THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION.
(g) The parties to this Agreement agree to waive any right to seek
punitive damages.
(h) The Subscriber agrees to provide such information and to execute
and deliver such documents as reasonably may be necessary to comply with any and
all laws and ordinances to which the Company is subject and in order to verify
any of the information provided by or representations or warranties made by the
Subscriber to the Company.
(i) The Subscriber acknowledges that if it is a resident of any
state whose "blue sky laws" or other local securities laws require a restriction
on transferability of Shares, it will comply with such restriction requirements.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of this ____ day of __________, 2002.
Number of Shares
To Be Purchased ________
--------------------------------------------
Signature of the Subscriber
--------------------------------------------
Name (Typed or Printed)
Purchase Price $ 1.50
--------------------------------------------
Social Security or Tax Identification Aggregate Purchase
Number Price $ _______
Mailing Address and Phone Number of Subscriber:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Accepted and agreed to on this ____ day of __________, 2002:
STRONGHOLD TECHNOLOGIES, INC. Number of Shares
Accepted ________
By:
-----------------------------------------
Name:
Title: Purchase Price $ 1.50
Aggregate Purchase
Price $ _______
[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT]
10
EXHIBIT A
INVESTOR
QUALIFICATION STATEMENT
11
------------------------
Name of Subscriber
INVESTOR
QUALIFICATION STATEMENT/1/
PART I. Regulation D Matters.
(a) If the Subscriber is a natural person (i.e., an individual), please
indicate with an "X" the manner in which such person qualifies as an "accredited
investor" pursuant to Regulation D promulgated under the Securities Act of 1933,
as amended (the "Act"):
______ (1) a natural person whose individual net worth/2/(or joint
net worth with such person's spouse) exceeds $1,000,000;
or
______ (2) a natural person who had an individual income/3/ in
excess of $200,000 in each of the two most recent years
and who reasonably expects to have an individual income
in excess of $200,000 in the current year or who had
joint income/4/ in excess of $300,000 in each of the two
most recent years and who reasonably expects to have
joint income in excess of $300,000 in the current year;
or
--------
/1/ For purposes hereof, the "Company" means Stronghold Technologies, Inc., a
Nevada corporation.
/2/ For purposes of this item, "net worth" means the excess of total assets at
fair market value, including home and personal property, over total liabilities,
including mortgage debt.
/3/ For purposes of this item, "individual income" means adjusted gross income
as reported for Federal income tax purposes, less any income attributable to a
spouse or to property owned by a spouse, increased by the following amounts (but
not including any amounts attributable to a spouse or to property owned by a
spouse): (i) the amount of any interest income received which is tax-exempt
under Section 103 of the Internal Revenue Code of 1986 (the "Code"), (ii) the
amount of losses claimed as a limited partner in a limited partnership (as
reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion
under Section 611 et seq. of the Code, and (iv) any amount by which income from
long-term capital gains has been reduced in arriving at adjusted gross income
pursuant to the provisions of Section 1202 of the Code prior to its repeal by
the Tax Reform Act of 1986.
/4/ For purposes of this item, "joint income" means adjusted gross income as
reported for Federal income tax purposes, including any income attributable to a
spouse or to property owned by a spouse, increased by the following amounts
(including any amounts attributable to a spouse or to property owned by a
spouse): (i) the amount of any interest income received which is tax-exempt
under Section 103 of the Code, (ii) the amount of losses claimed as a limited
partner in a limited partnership (as reported on Schedule E of Form 1040), (iii)
any deduction claimed for depletion under Section 611 et seq. of the Code, and
(iv) any amount by which income from long-term capital gains has been reduced in
arriving at adjusted gross income pursuant to the provisions of Section 1202 of
the Code prior to its repeal by the Tax Reform Act of 1986.
12
______ (3) a manager or executive officer of the issuer of the
Shares being offered or sold;
(b) If the Subscriber is a natural person (i.e., an individual), please
answer questions 1-3 of this subparagraph (b):
(1) Occupation of subscriber:
-------------------------------------------------
(2) Name of employer:
-------------------------------------------------
(3) Business address, if different from mailing address in
Subscription Agreement, of subscriber:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
(c) If the Subscriber is not a natural person (i.e., a corporation,
partnership, a limited liability company, trust or other entity), please
indicate with an "X" the manner in which such entity qualifies as an "accredited
investor" pursuant to Regulation D promulgated under the Act:
______ (1) a bank as defined in Section 3(a)(2) of the Act, or a
savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Act, whether acting
in its individual or fiduciary capacity;
______ (2) a broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934, as amended;
______ (3) an insurance company as defined in Section 2(13) of the
Act;
______ (4) an investment company registered under the Investment
Company Act of 1940, as amended;
______ (5) a business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940, as
amended;
______ (6) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958, as
amended;
13
______ (7) a plan established and maintained by a state, its
political subdivisions, or any 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 $5,000,000;
______ (8) an employee benefit plan within the meaning of Title I
of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), if either:
______ (A) the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of
ERISA, which is either a bank, savings and
loan association, insurance company or
registered investment adviser.
______ (B) the employee benefit plan has total assets
in excess of $5,000,000, or
______ (C) such a plan is a self-directed plan with
investment decisions made solely by persons
that are "accredited investors;"
______ (9) a private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of
1940, as amended;
______ (10) one of the following entities which was not formed for
the specific purpose of making an investment in the
Company and which has total assets in excess of
$5,000,000:
(A) an organization described in Section
501(c)(3) of the Internal Revenue Code of
1986, as amended;
(B) a corporation, limited liability company or
partnership; or
(C) a Massachusetts or similar business trust;
______ (11) a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares,
whose purchase of the Shares offered is directed by a
sophisticated person as described in Rule 506(b)(2)(ii)
of Regulation D; or
______ (12) an entity in which all of the equity owners are
"accredited investors."
(d) If the Subscriber is not a natural person (i.e., a corporation,
partnership, limited liability company, trust or other entity), please xxxx
either (1) or (2) of this subparagraph (d) with an "X":
______ (1) the Subscriber was not organized or reorganized for the
purpose of acquiring Shares; or
14
______ (2) if the Subscriber was organized or reorganized for the
purpose of acquiring Shares, the number of stockholders,
partners, members or other owners, direct or indirect,
of the subscriber is ___________ and all such
stockholders, partners or other investors are
"accredited investors."/5/ If one of Newcorp's
shareholders is an entity which was organized or
reorganized for the purpose of investing in Newcorp, the
rule set forth above would be applied again until an
individual or an entity which was not so formed is
reached.
(e) If the subscriber is an accredited investor for the reason
described in (c)(8)(C) above, a separate Investor Qualification Statement must
be submitted for each person making investment decisions for the Subscriber.
If the subscriber is an accredited investor for the reason described
in (c)(12) above, a separate Investor Qualification Statement must be submitted
for each stockholder, partner, member or other owner of the Subscriber.
If the subscriber is described in (d)(2) above, a separate Investor
Qualification Statement must be submitted for each direct or indirect
stockholder, partner, member or other owner of the Subscriber.
-------------------
/5/ For this calculation, if an entity was organized or reorganized for the
purpose of investing in the Subscriber, each of such entity's investors must be
treated as an indirect investor in the Subscriber.
In addition, if one of the entity's investors is another entity (the
"Higher-Tier Entity") which was organized or reorganized for the purpose of
participating in the Company investment, each of the Higher-Tier Entity's
investors must be treated as an indirect investor in the Subscriber and hence
included in the blank above. This rule must be applied again until an individual
or entity which was not so formed is reached.
For example, assume that (a) the Subscriber is a partnership which was organized
or reorganized for the purpose of investing in the Company, (b) the undersigned
partnership has three partners, one of whom is a long-standing corporation, one
of whom is an individual, and one of whom is a corporation ("Newcorp") formed
for the purpose of investing in the undersigned partnership, and (c) Newcorp has
three stockholders. In this case the answer called for in (d)(2) above would be
5.
15
Part II. Investment Company Act Matters.
------------------------------
(a) The Subscriber is not
(i) an investment company registered or required to be
registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"); or
(ii) a business development company, as defined in Section
2(a)(48) of the Investment Company Act.
True _______ False
(b) The Subscriber would be defined as an investment company under
Section 3(a) of the Investment Company Act, but for the exception provided from
that definition by Section 3(c)(1) or Section 3(c)(7) of the Investment Company
Act.
True _______ False
(c) If the answer to (b) above is true, the Subscriber's commitment to
the Company is both (i) less than forty percent (40%) of the Subscriber's
committed capital and (ii) less than ten percent (10%) of the Company's
committed capital committed by all of its stockholders.
True _______ False
If the answer to (c) above is false, the number of shareholders
(other than holders of short-term paper), direct or indirect, of the Subscriber
is _____________.
If at any time during the term of the Company any statement in (c)
above shall no longer be true, the Subscriber shall promptly notify the Company.
(d) The Subscriber was not organized or reorganized (as interpreted
under the Investment Company Act) for the purpose of acquiring the Shares.
True _______ False
Part III. Miscellaneous Matters.
No part of the aggregate Purchase Price used by the Subscriber to
acquire the Shares constitutes assets of any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, or other "benefit plan investor" (as defined in U.S. Department of
Labor Reg. ss.2510.3-101 et seq, as amended) or assets allocated to any
insurance company separate account or general account in which any such employee
benefit plan or benefit plan investor (or related trust) has any interest.
True _______ False
16
The Subscriber hereby represents and warrants that all of the answers,
statements and information set forth in Parts I, II and III of this Investor
Qualification Statement are true and correct on the date hereof and will be true
and correct as of the date; if any, the Subscription Agreement to which this
Investor Qualification Statement is attached is accepted by the Company. The
Subscriber hereby agrees to provide such additional information as requested by
the Company.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, the undersigned has executed this Investor
Qualification Statement as of this ___ day of _________, 2002.
-------------------------------
Signature of the Subscriber
-------------------------------
Name (Typed or Printed)
[SIGNATURE PAGE TO INVESTOR QUALIFICATION STATEMENT]
18
EXHIBIT B
Company Wire Transfer Instructions
19
