Exhibit 10.2
SUBSCRIPTION AGREEMENT
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SUBSCRIPTION AGREEMENT made as of this 24th day of January,
2006, between Handheld Entertainment, Inc., a Delaware corporation, with offices
at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX 00000, and the undersigned
(the "Subscriber"). The term Company as used herein is defined as set forth in
the PPM (as defined below).
WHEREAS, pursuant to a Confidential Memorandum dated January
24, 2006 (the "PPM"), the Company is offering in a private placement (the
"Offering") to accredited investors up to 100 Units, at a purchase price of
$50,000 per Unit equal to a maximum of $5,000,000. Each Unit consists of 25,000
shares of the Company's common stock, par value $0.0001 per share (the "Common
Stock"); and
WHEREAS, the Subscriber desires to subscribe for the number of
Units set forth on the signature page hereof, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants hereinafter set forth, the parties hereto do hereby agree
as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS AND COVENANTS OF
SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth,
the Subscriber hereby subscribes for and agrees to purchase from the Company
such number of Units as is set forth upon the signature page hereof, at a price
equal to $50,000 per Unit, and the Company agrees to sell such Units to the
Subscriber for said purchase price, subject to the Company's right to sell to
the Subscriber such lesser number of Units (or no Units) as the Company may, in
its sole discretion, deem necessary or desirable. The purchase price is payable
by wire transfer of immediately available funds to the account of the Company,
pursuant to the wire instructions attached hereto as Exhibit A.
1.2 The Subscriber recognizes that the purchase of Units
involves a high degree of risk in that (i) an investment in the Company is
highly speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Units; (ii) the
Units are not registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities law; (iii) there is no trading market for the
Units, none is likely ever to develop, and the Subscriber may not be able to
liquidate his, her or its investment; (iv) transferability of the Units is
extremely limited; and (v) an investor could suffer the loss of his, her or its
entire investment.
1.3 The Subscriber is an "accredited investor" as such term in
defined in Rule 501 of Regulation D promulgated under the Act, and the
Subscriber is able to bear the economic risk of an investment in the Units.
1.4 The Subscriber has prior investment experience (including
investment in non-listed and non-registered securities), and has read and
evaluated, or has employed the
services of an investment advisor, attorney or accountant to read and evaluate,
all of the documents furnished or made available by the Company to the
Subscriber and to all other prospective investors in the Units, including the
PPM, as well as the merits and risks of such an investment by the Subscriber.
The Subscriber's overall commitment to investments which are not readily
marketable is not disproportionate to the Subscriber's net worth, and the
Subscriber's investment in the Units will not cause such overall commitment to
become excessive. The Subscriber, if an individual, has adequate means of
providing for his or her current needs and personal and family contingencies and
has no need for liquidity in his or her investment in the Units. The Subscriber
is financially able to bear the economic risk of this investment, including the
ability to afford holding the Units for an indefinite period or a complete loss
of this investment.
1.5 The Subscriber acknowledges receipt and careful review of
the PPM, the draft Current Report on Form 8-K with regard to the Company's
merger with a publicly-traded company, all supplements to the PPM, and all other
documents furnished in connection with this transaction (collectively, the
"Offering Documents") and has been furnished by the Company during the course of
this transaction with all information regarding the Company which the Subscriber
has requested or desires to know; and the Subscriber has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering, and any additional information which the Subscriber
has requested.
1.6 The Subscriber acknowledges that the purchase of Units may
involve tax consequences to the Subscriber and that the contents of the Offering
Documents do not contain tax advice. The Subscriber acknowledges that the
Subscriber must retain his, her or its own professional advisors to evaluate the
tax and other consequences to the Subscriber of an investment in the Units. The
Subscriber acknowledges that it is the responsibility of the Subscriber to
determine the appropriateness and the merits of a corporate entity to own the
Subscriber's Units and the corporate structure of such entity.
1.7 The Subscriber acknowledges that this Offering has not
been reviewed by the Securities and Exchange Commission (the "SEC") or any state
securities commission, and that no federal or state agency has made any finding
or determination regarding the fairness or merits of the Offering. The
Subscriber represents that the Units are being purchased for his, her or its own
account, for investment only, and not with a view toward distribution or resale
to others. The Subscriber agrees that he, she or it will not sell or otherwise
transfer the Units or the Common Stock comprising the Units, unless they are
registered under the Act or unless an exemption from such registration is
available.
1.8 The Subscriber understands that the provisions of Rule 144
under the Act are not available for at least one (1) year to permit resales of
the Units or the Common Stock comprising the Units, and there can be no
assurance that the conditions necessary to permit such sales under Rule 144 will
ever be satisfied. The Subscriber understands that the Company is under no
obligation to comply with the conditions of Rule 144 or take any other action
necessary in order to make available any exemption from registration for the
sale of the Units or the Common Stock comprising the Units.
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1.9 The Subscriber agrees to hold the Company and its
directors, officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of any
misrepresentation made by the Subscriber contained herein or any sale or
distribution by the Subscriber in violation of the Act (including without
limitation the rules promulgated thereunder), any state securities laws, or the
Company's certificate of incorporation or by-laws, as amended from time to time.
1.10 The Subscriber consents to the placement of a legend on
any certificate or other document evidencing the Units or the underlying Common
Stock stating that they have not been registered under the Act and setting forth
or referring to the restrictions on transferability and sale thereof.
1.11 The Subscriber understands that the Company will review
and rely on this Subscription Agreement without making any independent
investigation; and it is agreed that the Company reserves the unrestricted right
to reject or limit any subscription and to withdraw the Offering at any time.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished at the end of this Subscription Agreement is the
undersigned's principal residence if the Subscriber is an individual or its
principal business address if it is a corporation or other entity.
1.13 The Subscriber acknowledges that if the Subscriber is a
Registered Representative of an NASD member firm, the Subscriber must give such
firm the notice required by the NASD's Conduct Rules, receipt of which must be
acknowledged by such firm on the signature page hereof.
1.14 The Subscriber hereby represents that, except as
expressly set forth in the Offering Documents, no representations or warranties
have been made to the Subscriber by the Company or any agent, employee or
affiliate of the Company and in entering into this transaction, the Subscriber
is not relying on any information, other than that contained in the Offering
Documents and the results of independent investigation by the Subscriber.
1.15 All information provided by the Subscriber in the
Investor Questionnaire attached as Exhibit B to the PPM is true and accurate in
all respects, and the Subscriber acknowledges that the Company will be relying
on such information to its possible detriment in deciding whether the Company
can sell these securities to the Subscriber without giving rise to the loss of
an exemption from registration under the applicable securities laws.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that as
of the date of the closing of this Offering (the "Closing Date"):
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power to conduct the business which it conducts and
proposes to conduct.
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(b) The execution, delivery and performance of this
Subscription Agreement by the Company have been duly authorized by the Company
and all other corporate action required to authorize and consummate the offer
and sale of the Units has been duly taken and approved.
(c) The Units and the underlying Common Stock have been
duly and validly authorized and issued.
(d) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations necessary
to the conduct of its business, except where the failure to so obtain such
licenses, permits and authorizations would not have a material adverse effect on
the Company. Such licenses, permits and other governmental authorizations
obtained are in full force and effect, except where the failure to be so would
not have a material adverse effect on the Company, and the Company is in all
material respects complying therewith.
(e) The Company knows of no pending or threatened legal
or governmental proceedings to which the Company is a party which would
materially adversely affect the business, financial condition or operations of
the Company.
(f) The Company is not in violation of or default under,
nor will the execution and delivery of this Subscription Agreement or the
issuance of the Units, or the consummation of the transactions herein
contemplated, result in a violation of, or constitute a default under, the
Company's certificate of incorporation or by-laws, any material obligations,
agreements, covenants or conditions contained in any bond, debenture, note or
other evidence of indebtedness or in any material contract, indenture, mortgage,
loan agreement, lease, joint venture or other agreement or instrument to which
the Company is a party or by which it or any of its properties may be bound or
any material order, rule, regulation, writ, injunction, or decree of any
government, governmental instrumentality or court, domestic or foreign.
III. COVENANTS BY THE COMPANY
The Company agrees Subscribers shall have the certain
registration rights with respect to the shares of Common Stock underlying the
Units issued to Subscribers pursuant to the terms of the Registration Rights
Agreement attached as Exhibit C to the PPM.
IV. TERMS OF SUBSCRIPTION
4.1 Subject to Section 4.2 hereof, the subscription period
will begin as of the date of the PPM and will terminate at 11:59 PM Eastern
Time, on February 10, 2006, unless sooner terminated by the Company, or extended
by the Company.
4.2 The Subscriber has effected a wire transfer in the full
amount of the purchase price for the Units to the Company's account in
accordance with the wire instructions set forth on Exhibit A hereto.
4.3 The Subscriber hereby authorizes and directs the Company
and its escrow agent to deliver any certificates or other written instruments
representing the Units to be issued
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to such Subscriber pursuant to this Subscription Agreement to the address
indicated on the signature page hereof.
4.4 The Subscriber hereby authorizes and directs the Company
and its escrow agent to return any funds, without interest, for unaccepted
subscriptions to the same account from which the funds were drawn.
4.5 If the Subscriber is not a United States person, such
Subscriber shall immediately notify the Company and the Subscriber hereby
represents that the Subscriber is satisfied as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Units or any use of this Subscription Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Units, (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 Units or the securities comprising
the Units. Such Subscriber's subscription and payment for, and continued
beneficial ownership of, the Units and the securities comprising the Units will
not violate any applicable securities or other laws of the Subscriber's
jurisdiction.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by reputable overnight courier,
facsimile (with receipt of confirmation) or registered or certified mail, return
receipt requested, addressed to the Company, at the address set forth in the
first paragraph hereof, Attention Chief Executive Officer, facsimile (415)
358-4865, and to the Subscriber at the address or facsimile number indicated on
the signature page hereof. Notices shall be deemed to have been given on the
date of mailing or fax, except notices of change of address, which shall be
deemed to have been given when received.
5.2 This Subscription Agreement shall not be changed, modified
or amended except by a writing signed by the parties to be charged, and this
Subscription Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
5.4 Notwithstanding the place where this Subscription
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of Delaware. The parties hereby agree
that any dispute which may arise between them arising out of or in connection
with this Subscription Agreement shall be adjudicated before a court located in
New York, New York and they hereby submit to the exclusive jurisdiction of the
federal and state courts of the State of New York located in New York County
with respect to any action or legal
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proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Subscription Agreement or
any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of the
address set forth below or such other address as the undersigned shall furnish
in writing to the other.
5.5 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription Agreement by
the Subscriber, this Subscription Agreement shall become a binding obligation of
the Subscriber with respect to the purchase of Units as herein provided;
subject, however, to the right hereby reserved to the Company to (i) enter into
the same agreements with other subscribers, (ii) add and/or delete other persons
as subscribers and (iii) cut back or reject any subscription.
5.6 The holding of any provision of this Subscription
Agreement to be invalid or unenforceable by a court of competent jurisdiction
shall not affect any other provision of this Subscription Agreement, which shall
remain in full force and effect.
5.7 It is agreed that a waiver by either party of a breach of
any provision of this Subscription Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this
Subscription Agreement as of the day and year first written above.
__________________________ X $50,000 for each Unit = $_____________________.
Number of Units subscribed for Aggregate Purchase Price
MANNER IN WHICH TITLE IS TO BE HELD (PLEASE CHECK ONE):
1. ___ Individual 7. ___ Trust/Estate/Pension or Profit Sharing Plan
Date Opened:______________
2. ___ Joint Tenants with Right of 8. ___ As a Custodian for
Survivorship ________________________________
Under the Uniform Gift to Minors Act of the
State of
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3. ___ Community Property 9. ___ Married with Separate Property
4. ___ Tenants in Common 10. ___ Xxxxx
5. ___ Corporation/Partnership/ Limited 11. ___ Tenants by the Entirety
Liability Company
6. ___ XXX 12. ___ Foundation described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended.
IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 8
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 9.
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EXECUTION BY NATURAL PERSONS
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Exact Name in Which Title is to be Held
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Name (Please Print) Name of Additional Subscriber
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Residence: Number and Street Address of Additional Subscriber
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City, State and Zip Code City, State and Zip Code
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Social Security Number Social Security Number
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Telephone Number Telephone Number
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Fax Number (if available) Fax Number (if available)
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E-Mail (if available) E-Mail (if available)
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(Signature) (Signature of Additional Subscriber)
ACCEPTED this ___ day of _________ 2006, on behalf
Handheld Entertainment, Inc.
By: _______________________________________________________
Name:
Title:
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EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
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(Corporation, Partnership, Trust, Etc.)
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Name of Entity (Please Print)
Date of Incorporation or Organization:
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State of Principal Office:
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Federal Taxpayer Identification Number:
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Office Address
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City, State and Zip Code
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Telephone Number
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Fax Number (if available)
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E-Mail (if available)
[seal] By:
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Name:
Attest: Title:
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(If Entity is a Corporation)
*IF SUBSCRIBER IS A REGISTERED
REPRESENTATIVE WITH AN NASD MEMBER FIRM,
HAVE THE FOLLOWING ACKNOWLEDGEMENT SIGNED
BY THE APPROPRIATE PARTY:
The undersigned NASD member firm
acknowledges receipt of the notice
required by Rule 3050 of the NASD
Conduct Rules
ACCEPTED this ____ day of __________
2006, on behalf of Handheld
------------------------------------- Entertainment, Inc
Name of NASD Firm
By: By:
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Name: Name:
Title: Title:
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