SUBSCRIPTION AGREEMENT
Dear Subscriber:
You (the "Subscriber") hereby agree to purchase, and Stateside Fundings,
Inc., a Delaware corporation (the "Company") hereby agrees to issue and to sell
to the Subscriber, the number of shares of Common Stock, $.0001 par value (the
"Company Shares") and Common Stock Purchase Warrants ("Warrants") as set forth
on the signature page hereof for the aggregate consideration as set forth on the
signature page hereof ("Purchase Price"). The Company shall also issue Placement
Shares and Placement Warrants set forth on Schedule A hereto to the Placement
Agents identified on Schedule A hereto. The Warrants and Placement Warrants
shall contain the same terms and conditions. (The Company Shares are sometimes
referred to herein as the "Shares" or "Common Stock"). The Company Shares,
Warrants, Placement Shares, Placement Warrants, and the Common Stock issuable
upon exercise of the Warrants and Placement Warrants are collectively referred
to herein as, the "Securities"). Upon acceptance of this Agreement by the
Subscriber, the Company shall issue and deliver to the Subscriber the Company
Shares and Warrants against payment, by federal funds (U.S.) wire transfer of
the Purchase Price.
The following terms and conditions shall apply to this subscription.
1. Subscriber's Representations and Warranties. The Subscriber hereby
represents and warrants to and agrees with the Company that:
(a) Information on Company. The Subscriber has been furnished with and has
read the Company's Form 10-SB and the amendments thereto, filed with the
Securities and Exchange Commission, the Company's Form 10-QSB for the quarter
ended August 31, 1999, and the Business Plan including the section "Risk
Factors" (hereinafter referred to as the "Reports") of Relocate 000.xxx, Inc. In
addition, the Subscriber has received from the Company such other information
concerning its operations, financial condition and other matters as the
Subscriber has requested, including the Agreement and Plan of Merger with
Relocate 000.xxx, Inc., a New York corporation ("Relocate"), and considered all
factors the Subscriber deems material in deciding on the advisability of
investing in the Securities (such information in writing is collectively, the
"Other Written Information").
(b) Information on Subscriber. The Subscriber is an "accredited investor",
as such term is defined in Regulation D promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States privately-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof. The Subscriber is not
a United States citizen or resident. No offer to purchase the Securities has
been made to the Subscriber in the United States.
(c) Purchase of Company Shares and Warrants. On the Closing Date, the
Subscriber will purchase the Company Shares and Warrants for its own account and
not with a view to any distribution thereof.
(d) Compliance with Securities Act. The Subscriber understands and agrees
that the Securities have not been registered under the Securities Act of 1933,
as amended (the "1933 Act") by reason of their issuance in a transaction that
does not require registration under the 1933 Act, and that such Securities must
be held unless a subsequent disposition is registered under the 1933 Act or is
exempt from such registration.
(e) Company Shares Legend. The Company Shares, and the shares of Common
Stock issuable upon the exercise of the Warrants and Placement Warrants shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO STATESIDE FUNDINGS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED."
(f) Warrants Legend. The Warrants and Placement Warrants shall bear the
following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO STATESIDE FUNDINGS, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED."
(g) Communication of Offer. The offer to sell the Securities was directly
communicated to the Subscriber. At no time was the Subscriber presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting
otherwise than in connection and concurrently with such communicated offer.
(h) Correctness of Representations. The Subscriber represents that the
foregoing representations and warranties are true and correct as of the date
hereof and, unless the Subscriber otherwise notifies the Company prior to the
Closing Date (as hereinafter defined), shall be true and correct as of such
Closing Date. The foregoing representations and warranties shall survive the
Closing Date.
2. Company Representations and Warranties. The Company represents and
warrants to and agrees with the Subscriber that:
(a) Due Incorporation. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company is duly qualified as a foreign corporation
to do business and is in good standing in each jurisdiction where the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those jurisdictions in which the failure to so qualify
would not have a material adverse effect on the business, operations or
prospects or condition (financial or otherwise) of the Company.
(b) Outstanding Stock. All issued and outstanding shares of capital stock
of the Company has been duly authorized and validly issued and are fully paid
and non-assessable.
(c) Authority; Enforceability. This Agreement and each other agreement
entered into in connection herewith has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity; and the Company has full corporate power and authority necessary to
enter into this Agreement and such other agreements, and to perform its
obligations hereunder and all other agreements entered into by the Company
relating hereto.
(d) Additional Issuances. There are no outstanding agreements or preemptive
or similar rights affecting the Company's common stock or equity and no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of any shares of common stock or equity of the Company or other
equity interest in any of the subsidiaries of the Company, except as described
in the Reports or Other Written Information.
(e) Consents. No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company,
or any of its affiliates, the NASD, NASDAQ or the Company's Shareholders is
required for execution of this Agreement, and all other agreements entered into
by the Company relating thereto, including, without limitation issuance and sale
of the Securities, and the performance of the Company's obligations hereunder,
which consent will have been obtained at or before Closing, if required.
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(f) No Violation or Conflict. Assuming the representations and warranties
of the Subscriber in Paragraph 1 are true and correct and the Subscriber
complies with its obligations under this Agreement, neither the issuance and
sale of the Securities nor the performance of its obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:
(i) violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time
or both would be reasonably likely to constitute a default) under (A) the
articles of incorporation, charter or bylaws of the Company, or any of its
affiliates, (B) to the Company's knowledge, any decree, judgment, order,
law, treaty, rule, regulation or determination applicable to the Company,
or any of its affiliates of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its affiliates
or over the properties or assets of the Company, or any of its affiliates,
(C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which the
Company, or any of its affiliates is a party, by which the Company, or any
of its affiliates is bound, or to which any of the properties of the
Company, or any of its affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to
which the Company, or any of its affiliates is a party; or
(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company, or any
of its affiliates.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject to restrictions upon transfer under
the 1933 Act and State laws;
(ii) have been, or will be, duly and validly authorized and on the
date of issuance and on the Closing Date, the Securities (not including the
common stock issuable upon exercise of the Warrants and Placement Warrants)
will be duly and validly issued, fully paid and nonassessable;
(iii) will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company;
(iv) will not subject the holders thereof to personal liability by
reason of being such holders; and
(h) Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before
any court, governmental agency or body, or arbitrator having jurisdiction over
the Company, or any of its affiliates that would affect the execution by the
Company or the performance by the Company of its obligations under this
Agreement, and all other agreements entered into by the Company relating hereto.
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(i) Information Concerning Company. The Reports and Other Written
Information do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(j) Defaults. Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation or ByLaws. Neither the Company nor
any of its subsidiaries is (i) in default under or in violation of any other
material agreement or instrument to which it is a party or by which it or any of
its properties are bound or affected, which default or violation would have a
material adverse effect on the Company, (ii) in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) to its
knowledge in violation of any statute, rule or regulation of any governmental
authority material to its business.
(k) Use of Proceeds. The proceeds of the Subscriber funds to be released to
the Company will be used for working capital for Relocate, a redemption payment
of approximately $150,000 to the principal shareholders of the Company, and for
expenses of this offering and as described in the Reports.
(l) No General Solicitation. Neither the Company, nor any of its
affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the offer or sale of
the Securities.
(m) Reporting Company. The Company's common stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "1934 Act").
(n) Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects and, unless the Company otherwise notifies the
Subscriber prior to the Closing Date, shall be true and correct in all material
respects as of such Closing Date. The foregoing representations and warranties
shall survive the Closing Date.
3. Regulation D Offering. This Offering is being made pursuant to the
exemption from the registration provisions of the Securities Act of 1933, as
amended, afforded by Rule 505 and/or 506 of Regulation D promulgated thereunder.
4. Reissuance of Securities. The Company agrees to reissue certificates
representing the Securities without the legend set forth in Section 1(e) above
upon resale subject to an effective registration statement after the Securities
are registered under the Act.
5. No Regulatory Review. The Subscriber is aware that this Subscription
Agreement relates to a limited private offering and that no federal, state or
other agency has made any finding or determination as to the fairness of the
investment described in this Subscription Agreement nor made any recommendation
or endorsement of the investment.
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6. Legal Fees/Commissions. The Company shall pay to its counsel its fee of
$18,250 for services rendered in reviewing this Agreement and other subscription
agreements for the aggregate subscription amounts of up to $1,550,000 and acting
as escrow agent and pay to Xxxx X. Xxxxxxxxx, attorney for the Subscribers her
fee of $5,000.
7.1. Covenants of the Company. The Company covenants and agrees with the
Subscriber as follows:
(a) The Company shall promptly secure the listing of the Company Shares
upon each national securities exchange, or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain such listing so long as any other shares of common
stock shall be so listed.
(b) The Company shall take all necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Subscriber and Placement Agents.
(c) The Company undertakes to use the proceeds of the Subscriber's funds
for working capital for Relocate, a redemption payment of approximately $150,000
to the principal shareholder of the Company, and expenses of this offering and
as further described in the Reports.
8. Covenants of the Company and Subscriber Regarding Idemnifications.
(a) The Company agrees to indemnify, hold harmless, reimburse and defend
Subscriber against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon Subscriber which results, arises out of or is based upon (i) any
misrepresentation by Company or breach of any warranty by Company in this
Agreement or in any Exhibits or Schedules attached hereto, or Reports or other
Written Information; or (ii) any breach or default in performance by Company of
any covenant or undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and Subscribers relating hereto.
(b) Subscriber agrees to indemnify, hold harmless, reimburse and defend the
Company at all times against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by or
imposed upon the Company which results, arises out of or is based upon (a) any
misrepresentation by Subscriber in this Agreement or in any Exhibits or
Schedules attached hereto; or (b) any breach or default in performance by
Subscriber of any covenant or undertaking to be performed by Subscriber
hereunder, or any other agreement entered into by the Company and Subscribers
relating hereto.
(c) The procedures set forth in Section 9.6 shall apply to the
indemnifications set forth in Section 8(a) and 8(b) above.
9.1. Registration Rights. The Company hereby grants the following
registration rights to holders of the Securities.
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(i) On one occasion, for a period commencing 180 days after the Closing
Date, but not later than three years after the Closing Date, the Company, upon a
written request therefor from any record holder or holders of more than 50% of
the aggregate of the Company's Shares issued at or about the same time in the
Company's offering of 4,650,000 Company Shares and 4,650,000 Warrants (the
Securities and securities issued or issuable by virtue of ownership or exercise
of the Securities, being, the "Registrable Securities"), shall prepare and file
with the SEC a registration statement under the Act covering the Registrable
Securities which are the subject of such request, unless such Registrable
Securities are the subject of a pending or effective registration statement. In
addition, upon the receipt of such request, the Company shall promptly give
written notice to all other record holders of the Registrable Securities that
such registration statement is to be filed and shall include in such
registration statement Registrable Securities for which it has received written
requests within 10 days after the Company gives such written notice. Such other
requesting record holders shall be deemed to have exercised their demand
registration right under this Section 9.1(i). As a condition precedent to the
inclusion of Registrable Securities, the holder thereof shall provide the
Company with such information as the Company reasonably requests. The obligation
of the Company under this Section 9.1(i) shall be limited to one registration
statement.
(ii) If the Company at any time proposes to register any of its securities
under the Act for sale to the public, whether for its own account or for the
account of other security holders or both, except with respect to registration
statements on Forms X-0, X-0 or another form not available for registering the
Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Subscriber or Holder
pursuant to an effective registration statement, each such time it will give at
least 30 days' prior written notice to the record holder of the Registrable
Securities of its intention so to do. Upon the written request of the holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of the Registrable Securities, the Company will
cause such Registrable Securities as to which registration shall have been so
requested to be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition of the Registrable Securities so registered
by the holder of such Registrable Securities (the "Seller"). In the event that
any registration pursuant to this Section 9.1(ii) shall be, in whole or in part,
an underwritten public offering of common stock of the Company, the number of
shares of Registrable Securities to be included in such an underwriting may be
reduced by the managing underwriter if and to the extent that the Company and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the Seller in writing
of any such reduction. Notwithstanding the forgoing provisions, the Company may
withdraw any registration statement referred to in this Section 9.1(ii) without
thereby incurring any liability to the Seller.
(iii) If, at the time any written request for registration is received by
the Company pursuant to Section 9.1(i), the Company has determined to proceed
with the actual preparation and filing of a registration statement under the
1933 Act in connection with the proposed offer and sale for cash of any of its
securities for the Company's own account, such written request shall be deemed
to have been given pursuant to Section 9.1(ii) rather than Section 9.1(i), and
the rights of the holders of Registrable Securities covered by such written
request shall be governed by
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Section 9.1(ii) except that the Company or underwriter, if any, may not withdraw
such registration or limit the amount of Registrable Securities included in such
registration.
(iv) The Company shall file with the Commission within 90 days of the
Closing Date (the "Filing Date"), and use its reasonable commercial efforts to
cause to be declared effective a Form SB-2 registration statement (or such other
form that it is eligible to use) within two hundred and ten (210) days of the
Closing Date in order to register the Registrable Securities for resale and
distribution under the Act. The registration statement described in this
paragraph must be declared effective by the Commission within 210 days of the
Closing Date (as defined herein) ("Effective Date"). The Company will register
not less than one (1) share of common stock in the aforedescribed registration
statement for each Company Share subscribed for, and each Placement Share, and
one share of common stock for each common share issuable upon exercise of the
Warrants and Placement Warrants. The Registrable Securities shall be reserved
and set aside exclusively for the benefit of the Subscriber and Placement Agents
and not issued, employed or reserved for anyone other than the Subscriber and
Placement Agents. Except as disclosed to the Subscriber in writing, no equity of
the Company other than the Registrable Securities may be included for
registration in such registration statement.
9.2. Registration Procedures. If and whenever the Company is required by
the provisions hereof to effect the registration of any shares of Registrable
Securities under the Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby which shall be up to eighteen months after the Effective
Date, and promptly provide to the holders of Registrable Securities copies of
all filings;
(b) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for the period
specified in paragraph (a) above and comply with the provisions of the Act with
respect to the disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Seller's intended method of
disposition set forth in such registration statement for such period;
(c) furnish to the Seller, and to each underwriter if any, such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or their disposition of the securities
covered by such registration statement;
(d) use its best efforts to register or qualify the Seller's Registrable
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as the Seller and in the case of an underwritten
public offering, the managing underwriter shall reasonably request, provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
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jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) list the Registrable Securities covered by such registration statement
with any securities exchange on which the Common Stock of the Company is then
listed;
(f) immediately notify the Seller and each underwriter under such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event of which
the Company has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) make available for inspection by the Seller, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Seller or underwriter,
all publicly available, non-confidential financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the seller, underwriter,
attorney, accountant or agent in connection with such registration statement.
9.3. Provision of Documents.
(a) At the request of the Seller, provided a demand for registration has
been made pursuant to Section 9.1(i) or a request for registration has been made
pursuant to Section 9.1(ii), the Registrable Securities will be included in a
registration statement filed pursuant to this Section 9. In the event of a firm
commitment underwritten public offering in which the Registrable Securities are
so included, the lockup, if any, requested by the managing underwriter may not
exceed one hundred and eighty (180) days after the effective date thereof.
(b) In connection with each registration hereunder, the Seller will furnish
to the Company in writing such information with respect to itself and the
proposed distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws. In connection with
each registration pursuant to Section 9.1(i) or 9.1(ii) covering an underwritten
public offering, the Company and the Seller agree to enter into a written
agreement with the managing underwriter in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
9.4. Non-Registration Events. The Company and the Subscriber agree that the
Seller will suffer damages if any registration statement required under Section
9.1(i) or 9.1(ii) above is not filed within 60 days after request by the Holder
and not declared effective by the Commission within 120 days after such request
[or the Filing Date and Effective Date, respectively, in reference to the
Registration Statement on Form SB-2 or such other form described in Section
9.1(iv)], and maintained in the manner and within the time periods contemplated
by Section 9 hereof, and it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, if (i) the
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Registration Statement described in Sections 9.1(i) or 9.1(ii) is not filed
within 60 days of such request, or is not declared effective by the Commission
on or prior to the date that is 120 days after such request, or (ii) the
registration statement on Form SB-2 or such other form described in Section
9.1(iv) is not filed on or before the Filing Date or not declared effective on
or before the sooner of the Effective Date, or within ten days of receipt by the
Company of a communication from the Commission that the registration statement
described in Section 9.1(iv) will not be reviewed, or (iii) any registration
statement described in Sections 9.1(i), 9.1(ii) or 9.1(iv) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate per
year but not more than 20 consecutive calendar days (defined as a period of 365
days commencing on the date the Registration Statement is declared effective)
(each such event referred to in clauses (i), (ii) and (iii) of this Section 9.4
is referred to herein as a "Non-Registration Event"), then, for so long as such
Non-Registration Event shall continue, the Company shall pay in cash as
Liquidated Damages to each holder of any Registrable Securities an amount equal
to two (2%) percent for each thirty (30) days or part thereof, of the Purchase
Price of the Company Shares and one-half (1/2) percent of the aggregate exercise
prices of the Warrants as set forth on the signature page hereto, or Placement
Warrants as set forth on Schedule A hereto, then owned of record by such holder
as of the occurrence of such Non-Registration Event. Payments to be made
pursuant to this Section 9.4 shall be due and payable immediately upon demand in
immediately available funds.
9.5. Expenses. All expenses incurred by the Company in complying with
Section 9, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including counsel fees) incurred
in connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, fee of one counsel, if any, to represent all the
Sellers, and costs of insurance are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any special
counsel to the Seller, are called "Selling Expenses". The Seller shall pay the
fees of its own additional counsel, if any.
The Company will pay all Registration Expenses in connection with the
registration statement under Section 9. All Selling Expenses in connection with
each registration statement under Section 9 shall be borne by the Seller and may
be apportioned among the Sellers in proportion to the number of shares sold by
the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.
9.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Securities under the
Act pursuant to Section 9, the Company will indemnify and hold harmless the
Seller, each officer of the Seller, each director of the Seller, each
underwriter of such Registrable Securities thereunder and each other person, if
any, who controls such Seller or underwriter within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Seller, or such underwriter or controlling person may become subject under
the Act or otherwise, insofar as such
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losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Registrable Securities was registered under the Act pursuant to Section 9, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Seller, each such underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such Seller, the
underwriter or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any of the Registrable Securities
under the Act pursuant to Section 9, the Seller will indemnify and hold harmless
the Company, and each person, if any, who controls the Company within the
meaning of the Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Securities were registered under the Act
pursuant to Section 9, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability of
the Seller hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the public
offering price of the Registrable Securities sold by the Seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the gross proceeds
received by the Seller from the sale of Registrable Securities covered by such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may
11
have to such indemnified party other than under this Section 9.6(c) and shall
only relieve it from any liability which it may have to such indemnified party
under this Section 9.6(c) if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9.6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties shall have the right to select one separate
counsel and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In order to provide for just and equitable contribution in the event of
joint liability under the Act in any case in which either (i) the Seller, or any
controlling person of the Seller, makes a claim for indemnification pursuant to
this Section 9.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 9.6 provides for indemnification in such case, or (ii) contribution
under the Act may be required on the part of the Seller or controlling person of
the Seller in circumstances for which indemnification is provided under this
Section 9.6; then, and in each such case, the Company and the Seller will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that the
Seller is responsible only for the portion represented by the percentage that
the public offering price of its securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, provided, however, that, in any such case, (A) the
Seller will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
10. Conditions to Closing. The following condition must be satisfied at or
before the Closing Date.
(a) A Closing under the Plan of Merger shall have occurred and the
Certificate of Merger described in the Plan of Merger shall have been filed with
and accepted by the Delaware Secretary of State.
11. (a) Right of First Refusal. Unitl 180 days after the Effective Date of
the Registration Statement described in Section 9.1(iv) hereof, the Subscriber
shall be given not less than
12
ten (10) business days prior written notice of any proposed sale by the Company
of its common stock or other securities or debt obligations. The Subscriber
shall have the right during the ten (10) business days following the notice to
agree to purchase an amount of Company Shares in the same proportion as being
purchased in the aggregate offering to which this Subscription Agreement relates
(i.e. $1,550,000 in the aggregate), of those securities proposed to be issued
and sold, in accordance with the terms and conditions set forth in the notice of
sale. In the event such terms and conditions are modified during the notice
period, the Subscriber shall be given prompt notice of such modification and
shall have the right during the original notice period or for a period of ten
(10) business days following the notice of modification, whichever is longer, to
exercise such right. In the event the right of first refusal described in this
Section is exercised by the Subscriber and the Company thereby receives net
proceeds from such exercise, then commissions and fees will be paid by the
Company to the Placement Agents in the same amounts as specified in the notice
of sale.
(b) Offering Restrictions. Until 180 days after the Effective Date, the
Company agrees not to issue any equity, convertible debt or other securities
without the consent of the Subscribers owning the majority of the Company Shares
purchased in the $1,550,000 offering described herein.
12. Miscellaneous.
(a) Notices. All notices or other communications given or made hereunder
shall be in writing and shall be personally delivered or deemed delivered the
first business day after being telecopied (provided that a copy is delivered by
first class mail) to the party to receive the same at its address set forth
below or to such other address as either party shall hereafter give to the other
by notice duly made under this Section: (i) if to the Company, to Stateside
Fundings, Inc., 0000 Xxxx 00xx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, telecopier
number: (000) 000-0000, and (ii) if to the Subscriber, to the name, address and
telecopy number set forth on the signature page hereto. Any notice that may be
given pursuant to this Agreement, or any document delivered in connection with
the foregoing may be given by the Subscriber on the first business day after the
observance dates in the United States of America by Orthodox Jewry of Rosh
Hashanah, Yom Kippur, the first two days of the Feast of Tabernacles, Shemini
Atzeret Simchat Torah, the first two and final two days of Passover and
Pentecost, with such notice to be deemed given and effective, at the election of
the Subscriber on a holiday date that precedes such notice. Any notice received
by the Subscriber on any of the aforedescribed holidays may be deemed by the
Subscriber to be received and effective as if such notice had been received on
the first business day after the holiday.
(b) Closing. The consummation of the transactions contemplated herein shall
take place at the offices of Grushko & Xxxxxxx, 000 Xxxxxxxx, Xxxxx 000, Xxx
Xxxx, Xxx Xxxx 00000, upon the satisfaction of all conditions to Closing set
forth in this Agreement. The closing date shall be the date that subscriber
funds representing the net amount due the Company from the Purchase Price are
transmitted by wire transfer to the Company (the "Closing Date").
(c) Entire Agreement; Assignment. This Agreement represents the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by both parties. No right or
obligation of either party shall be assigned by that party without prior notice
to and the written consent of the other party.
13
(d) Conflict. The parties hereto have been advised of a possible conflict
of interest arising from the past and future representation by Grushko & Xxxxxxx
of the Subscriber in other transactions and the current representation by
Grushko & Xxxxxxx of the Company in connection with the Merger, this
Subscription Agreement, related matters and the registration statement described
in Section 9.1(iv) hereof. The Company and Subscriber acknowledge that they have
been advised by Grushko & Xxxxxxx to investigate and consider the potential
impact of this conflict prior to executing this Subscription Agreement and in
connection with the registration statement described in Section 9.1(iv) of this
Subscription Agreement. The parties hereto consent to the representation by
Grushko & Xxxxxxx of the Company in this and other matters and the
representation by Grushko & Xxxxxxx of the Subscribers in other matters, and
waive any conflict.
(e) Execution. This Agreement may be executed by facsimile transmission,
and in counterparts, each of which will be deemed an original.
(f) Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
(g) Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 13(e) hereof, each of the Company and Subscriber
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
14
(h) Automatic Termination. This Agreement shall automatically terminate
without any further action of either party hereto if the Closing shall not have
occurred by the tenth (10th) business day following the date this Agreement is
accepted by the Subscriber.
[THIS SPACE INTENTIONALLY LEFT BLANK]
15
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $500,000.00
Common Shares Purchased: 1,500,000 (at $.333 per share)
Common Stock Purchase Warrants: 1,500,000
ACCEPTED: Dated as of January ____, 2000
AUSTOST ANSTALT XXXXXX - Subscriber
(a Lichenstein corporation)
7440 Fuerstentum
Xxxxxxxxxxx, Xxxxxxxxxxx 000
Fax: 000-000-000000000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $500,000.00
Common Shares Purchased: 1,500,000 (at $.333 per share)
Common Stock Purchase Warrants: 1,500,000
ACCEPTED: Dated as of January ____, 2000
BALMORE FUNDS, S.A. - Subscriber
(a X.X.X. xxxxxxxxxxx)
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $250,000.00
Common Shares Purchased: 750,000 (at $.333 per share)
Common Stock Purchase Warrants: 750,000
ACCEPTED: Dated as of January ____, 2000
AMRO INTERNATIONAL, S.A. - Subscriber
c/o Ultra Finanz
Grossmuenster Xxxxx 00
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx CH 8022
Fax: 000-000-000-0000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $50,000.00
Common Shares Purchased: 150,000 (at $.333 per share)
Common Stock Purchase Warrants: 150,000
ACCEPTED: Dated as of January ____, 2000
ICT N.V. - Subscriber
Antwerp Xxxxx
Xx Xxxxxxxxx 0 Xxx 00
0000 Xxxxxxx, Xxxxxxx
Fax: 000-00-0-000-0000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $150,000.00
Common Shares Purchased: 450,000 (at $.333 per share)
Common Stock Purchase Warrants: 450,000
ACCEPTED: Dated as of January ____, 2000
LEVAL TRADING, INC. - Subscriber
(a B.V.I. corporation)
c/o Xxxxxxx Xxxxxx
00 xxx xx Xxxxxxx-Xxxxxxx
XX-0000, Xxxxxx
Xxxxxxxxxxx
Fax: 000-00-00-000-0000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $50,000.00
Common Shares Purchased: 150,000 (at $.333 per share)
Common Stock Purchase Warrants: 150,000
ACCEPTED: Dated as of January ____, 2000
NESHER, INC. - Subscriber
(an Isle of Man corporation)
Ragnall House
00 Xxxx Xxxx
Xxxxxxx, Xxxx xx Xxx
0X0, 0X0, Xxxxxx Xxxxxxx
Fax: 000-000-00000000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
STATESIDE FUNDINGS, INC.
By:________________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
Dated: January ____, 2000
Aggregate Purchase Price: $50,000.00
Common Shares Purchased: 150,000 (at $.333 per share)
Common Stock Purchase Warrants: 150,000
ACCEPTED: Dated as of January ____, 2000
TALBIYA B. INVESTMENTS LTD. - Subscriber
(an Isle of Man corporation)
Ragnall House
00 Xxxx Xxxx
Xxxxxxx, Xxxx xx Xxx
0X0, 0X0, Xxxxxx Xxxxxxx
Fax: 000-000-00000000
By:____________________________
SCHEDULE A
PLACEMENT AGENT PLACEMENT PLACEMENT
SHARES WARRANTS
--------------------------------------------------------------------------------
LIBRA FINANCE, S.A 198,000 198,000
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
--------------------------------------------------------------------------------
AMRO INTERNATIONAL, S.A 41,250 41,250
c/o Ultra Finanz
Grossmuenster Xxxxx 00
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx CH 8022
Fax: 000-000-000-0000
--------------------------------------------------------------------------------
X. XXXXX 139,500 139,500
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Fax: 000-000-0000
--------------------------------------------------------------------------------
XXXXX CAPITAL LTD 69,750 69,750
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
--------------------------------------------------------------------------------
TALBIYA B. INVESTMENTS LTD 16,500 16,500
c/o Ragnall House
00 Xxxx Xxxx
Xxxxxxx, Xxxx xx Xxx
0X0, 0X0, Xxxxxx Xxxxxxx
Fax: 000-000-00000000
--------------------------------------------------------------------------------
TOTAL 465,000 465,000
--------------------------------------------------------------------------------
