SONOMA COLLEGE, INC.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT ("AGREEMENT") made as of February 9, 2004 among
Sonoma College, Inc., a California corporation (the "COMPANY"), Xxxxx Xxxxxxxxx
("XXXXXXXXX"), Xxxxxx Xxxxxx ("R XXXXXX"), Xxxxx Xxxxx ("XXXXX"), ANC Group,
Inc. ("ANC") and Xxxxxx Xxxxxx ("E XXXXXX" and together with Xxxxxxxxx, R
Xxxxxx, ANC and Xxxxx collectively, the "SUBSCRIBERS").
WHEREAS, the Company acknowledges that the Subscribers provided certain
consulting services to the Company and in consideration for such services hereby
issues to the Subscribers, in the aggregate, 2,744,500 shares of the Company's
common stock, par value $0.0001 per share (the "SHARES"), on the terms and
conditions hereinafter set forth; and
WHEREAS, the Subscribers desire to acquire the number of Shares set forth
on the signature page hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTION; PURCHASE PRICE. Subject to the terms and conditions
herein, the Subscribers hereby agree to receive from the Company that number of
Shares set forth beneath the Subscribers' names on the signature page hereto,
free and clear of any claim, lien, encumbrance, option, contract right, pledge,
condition, community property, interest, security interest, right of first
refusal or restriction of any kind, other than pursuant to federal or state
securities laws, in full satisfaction for the services provided by the
Subscribers to the Company. The Company represents and warrants that the
transactions contemplated hereby do not require registration under the
Securities Act of 1933. The Company and each of the Subscribers hereby agree
that the monetary value of the services provided to the Company by the
Subscribers is $60,000.
Subscribers acknowledge: (i) this Agreement shall not be deemed to have
been accepted by the Company until the Company indicates its acceptance by
returning to Subscribers a copy of this Agreement executed by the Company; and
(ii) acceptance by the Company of this Agreement is conditioned upon the
information and representations and warranties of Subscribers contained herein
being complete, true and correct as of the date of Subscribers' execution and
the date of Closing (as hereinafter defined).
2. CLOSING. The closing of the issuance of the Shares (the "CLOSING")
shall be contemporaneous with the closing of that certain stock purchase
agreement by and between the Company and Xxxxx Xxx (the "Stock Purchase
Agreement"). The date the Closing hereunder shall be called a "CLOSING DATE".
A stock certificate in each Subscribers' name and representing the number
of Shares to be issued to such Subscriber pursuant hereto, which certificates
shall bear the legend set forth in
Section 4(i)(iv) hereof, shall be delivered to each Subscriber within thirty
(30) business days following the Closing Date.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SUBSCRIBER. Each
Subscriber hereby acknowledges, represents and warrants to the Company, on the
date hereof and on the Closing Date, as follows:
a. The Subscriber understands that the offering and issuance of the
Shares is intended to be exempt from registration under the Securities Act of
1933, as amended (the "ACT") by virtue of Section 4(2) of the Act and the
provisions of Regulation D promulgated thereunder, and in accordance therewith
and in furtherance thereof, the Subscriber represents and warrants and agrees as
follows:
b. The Subscriber and/or the Subscriber's adviser(s) has/have received
and carefully reviewed this Subscription Agreement, including the attachment
hereto entitled Sonoma College, Inc. Management Presentation dated April 2004
(including the Company's most recent audit) which is made a part hereof, and
understands the information contained therein.
c. The Subscriber acknowledges that the Subscriber, or the Subscriber's
attorney, accountant, or adviser(s), has/have had a reasonable opportunity to
inspect all documents and records pertaining to this investment.
d. The Subscriber and/or the Subscriber's adviser(s) has/have had a
reasonable opportunity to ask questions and receive answers from a person or
persons acting on behalf of the Company concerning the offering of the Shares
and all such questions have been answered to the full satisfaction of the
Subscriber.
e. In making a decision to invest in the Shares, the Subscriber has not
relied on any information other than information contained in this Agreement.
f. The Subscriber is not subscribing for the Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than a representative of the Company.
g. If the Subscriber is a natural person, the Subscriber has reached
the age of majority in the jurisdiction in which the Subscriber resides, the
Subscriber has adequate means of providing for the Subscriber's current
financial needs and contingencies, is able to bear the substantial economic
risks of an investment in the Shares for an indefinite period of time, has no
need for liquidity in such investment, and, at the present time, could afford a
complete loss of such investment.
h. The Subscriber has such knowledge and experience in financial, tax
and business matters so as to enable the Subscriber to utilize the information
made available to the Subscriber to evaluate the merits and risks of an
investment in the Shares, and to make an informed investment decision with
respect thereto.
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i. The Subscriber is not relying on the Company or any agent of the
Company with respect to any legal, tax or economic advice related to an
investment in the Shares.
j. The Subscriber will not sell or otherwise transfer the Shares
without registration under the Act and applicable state securities law, or
pursuant to an exemption therefrom. The Shares have not been registered under
the Act or under the securities laws of any state and the Company will be under
no obligation to so register the Shares. The Subscriber represents that the
Subscriber is purchasing the Shares for the Subscriber's own account, for
investment and not with a view to resale or distribution except in compliance
with the Act and applicable state securities laws. The Subscriber has no present
intention to sell the Shares and the Subscriber has no present arrangement
(whether or not legally binding) to sell the Shares to or through any person or
entity; provided, however, that by making the representations herein, the
Subscriber does not agree to hold the Shares for any minimum or other specific
term and reserves the right to dispose of the Shares at any time in accordance
with Federal and state securities law applicable to such disposition.
k. The Subscriber recognizes that investment in the Shares involves
substantial risks, including the risk of loss of the entire amount of such
investment, and has taken full cognizance of and understands all of the risks
related to the purchase of the Shares.
l. The Subscriber's overall commitment to investments that are not
readily marketable is reasonable in relation to the Subscriber's net worth.
m. The Subscriber is an "ACCREDITED INVESTOR" as that term is defined
in Rule 501 (a) of Regulation D under the Act and as described on Appendix 1
attached hereto. The Subscriber further represents and warrants that any
information furnished by the Subscriber to the Company is accurate and complete
in all material respects.
n. The Subscriber understands that the Shares are being offered and
issued in reliance on a transactional exemption from the registration
requirements of Federal and state securities law and that the Company is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Subscriber set forth in this Agreement
in order to determine the applicability of such exemptions and the suitability
of the Subscriber to acquire the Shares.
o. The Subscriber understands that there is no public trading market
for the Shares and none can be expected to develop, and that the securities must
be held indefinitely unless registered under the Act or an exemption from
registration is available. The Subscriber has been advised or is aware of the
provisions of Rule 144 promulgated under the Act.
p. The Subscriber hereby agrees to provide such information and to
execute and deliver such documents, as the Company may deem reasonably
appropriate with regard to the Subscriber's suitability or otherwise in
connection with this Agreement.
q. The execution, delivery and performance of this Agreement by the
Subscriber: (i) will not constitute a default under or conflict with any
agreement or instrument to which the Subscriber is a party or by which it or its
assets are bound, (ii) will not conflict with or violate
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any order, judgment, decree, statute, ordinance or regulation applicable to the
Subscriber (including, without limitation, any applicable laws relating to
permissible legal investments) and (iii) does not require the consent of any
person or entity, other than those that will have been obtained prior to the
Closing Date.
r. This Agreement has been duly authorized, executed and delivered by
the Subscriber and constitutes the valid and binding agreement of the Subscriber
enforceable against it in accordance with its terms.
s. The Subscriber has not retained, or otherwise entered into any
agreement or understanding with, any broker or finder in connection with the
purchase of the Shares by the Subscriber, and the Company will not incur any
liability for any fee, commission or other compensation on account of any such
retention, agreement or understanding by the Subscriber.
t. The Subscriber understands, acknowledges and agrees that in making
an investment decision, the Subscriber has relied solely on the Subscriber's own
examination of the Company, including the merits and risks involved. The Shares
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 Agreement.
u. The representations, warranties, and agreements of the Subscriber
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date and shall
survive the execution and delivery of this Agreement and the issuance of the
Shares.
v. For as long as is required by applicable laws, the certificates
representing the Shares shall bear a legend in substantially the following form,
together with any legend required by applicable state laws, and the Subscriber
shall not transfer any or all of the Shares or any interests therein, except in
accordance with the terms of such legends:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "ACT") or applicable state securities laws,
and may be offered, sold or otherwise transferred only
if so registered under the Act and applicable state
securities laws or if the holder has delivered to the
Company an opinion of counsel, which counsel and opinion
shall be reasonably satisfactory to the Company, that an
exemption from such registration is available."
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Subscriber as follows:
a. The Company has been duly organized, is validly existing as a
corporation and is in good standing under the laws of the State of California.
The Company is duly qualified and in good standing in each jurisdiction in which
the character or location of its properties or the nature or conduct of its
business makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, in the aggregate, have a material
adverse effect on the financial condition of the Company. The Company has all
requisite power and authority, and
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all material consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all applicable public,
regulatory or governmental agencies and bodies, to own, lease and operate its
properties and conduct its business as now being conducted.
b. The Company has full corporate power and authority to enter into
this Agreement and to issue the Shares on the terms and conditions set forth
herein. The execution and delivery of this Agreement by the Company and the
consummation of the transactions contemplated hereby: (i) have been duly and
validly authorized and approved by all necessary corporate action on the part of
the Company; (ii) will not constitute a default under or conflict with (A) the
Company's charter or bylaws; or (B) any material agreement or other instrument
to which the Company is a party or by which the Company is bound; and (iii) does
not require the consent of any person or entity, other than those that will have
been obtained prior to the Closing Date.
c. This Agreement has been duly authorized, and when executed and
delivered by the Company, will constitute valid and binding obligations of the
Company enforceable against it in accordance with their respective terms.
d. The representations, warranties and agreements of the Company
contained herein shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date and shall survive the
execution and delivery of this Agreement and the issuance of the Shares.
5. NASAA UNIFORM LEGEND.
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 TRANSFER-ABILITY 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 WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.
6. MISCELLANEOUS.
a. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to principles of
conflicts of law.
b. In the event any provision of this Agreement is invalid or
unenforceable under any applicable law, statute, rule or regulation, then such
provision shall be deemed inoperative to the extent it may conflict therewith
and shall be deemed modified to conform with such law,
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statute, rule or regulation. Any provision hereof which may prove invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
c. Each party shall indemnify each other party against any loss,
expense or damages (including reasonable attorney's fees but excluding
consequential damages) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.
d. This Agreement may be executed in counterparts, each of which shall
be an original, but all of which shall constitute one instrument.
e. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. Only a writing executed by the
Company and the Subscriber may amend any provision of this Agreement.
f. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to Sonoma College, Inc., 0000 Xxxxx Xxxxx Xxxx.,
Xxxxx 000, Xxxxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxx, Chief Executive
Officer, and to the Subscribers at the addresses indicated on the last page of
this Subscription Agreement. Notices shall be deemed to have been given on the
date of mailing, except notices of change of address, which shall be deemed to
have been given when received.
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IN WITNESS WHEREOF, Subscribers and the Company have executed and
dated this Subscription Agreement as of the dates below.
XXXXX XXXXXXXXX XXXXX XXXXX
_______________________________________ _______________________________________
Soc. Sec. #:___________________________ Soc. Sec. #:___________________________
Address:_______________________________ Address:_______________________________
_______________________________ _______________________________
Number of Shares: 731,500 Number of Shares: 275,000
XXXXXX XXXXXX XXXXXX XXXXXX
_______________________________________ _______________________________________
Soc. Sec. #:___________________________ Soc. Sec. #:___________________________
Address:_______________________________ Address:_______________________________
_______________________________ _______________________________
Number of Shares: 731,500 Number of Shares: 731,500
ANC GROUP, INC. SUBSCRIPTION ACCEPTED:
SONOMA COLLEGE, INC.
_______________________________________
Soc. Sec. #:___________________________ BY:__________________________________
Address:_______________________________ NAME:________________________________
_______________________________________ TITLE:_______________________________
Number of Shares: 275,000 DATE:________________________________
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APPENDIX I
Pursuant to Rule 501 of Regulation D promulgated under the Securities Act,
an "accredited investor" means:
(a) A bank as defined in Section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in Section 2(13) of the Securities Act,
any investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section
2(a)(48) of that act; any Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions,
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; any employee benefit plan
within the meaning of the Employee Retirement Income Security Act of
1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such act, which is either a bank,
savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with investment
decision made solely by persons that are accredited investors;
(b) Any private business development company as defined in Section 202
(a)(22) of the Investment Advisers Act of 1940;
(c) Any organization described in Section 501(c)(3) of the Internal
Revenue Code (the "CODE"), corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose
of acquiring the securities offered, with total assets in excess of
$5,000,000;
(d) Any director or executive officer of the Company;
(e) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of such person's purchase
exceeds $1,000,000;
(f) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years
and who reasonably expects to reach the same income level in the
current year;
(g) Any trust, with assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase
is directed by a person having such
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knowledge and experience in financial and business matters so such
person is capable of evaluating the merits and risks of the
investment to be made; or
(h) Any entity in which all of the equity owners are accredited
investors.
In addition, a participant in a defined contribution or profit sharing
plan qualified under Section 401 of the Code may be deemed the purchaser of the
Securities for the purpose of determining whether the plan is an Accredited
Investor if the following conditions are satisfied: (x) the plan trust must
provide for segregated accounts for each plan participant, (y) the plan document
must provide the participant with the power to direct the trustee to make each
particular investment to the extent of the participant's voluntary contributions
plus that portion of employer contributions that have vested to the
participant's benefit, and (z) the investment in the Securities must have been
made pursuant to an exercise by the participant of the power to direct the
investment of his or her account in the plan trust.
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