SECURITIES SUBSCRIPTION AGREEMENT
THIS SECURITIES SUBSCRIPTION AGREEMENT, dated as of _____________
("Agreement"), is executed in reliance upon the exemption from
registration afforded by Rule 504 promulgated under Regulation D
by the Securities and Exchange Commission ("SEC"), under
the Securities Art of 1933, as amended. Capitalized terms
used herein and not defined shall have the meanings given
to them in Rule 504 and Regulation D.
This Agreement has been executed by the undersigned buyer ("Buyer") in
connection with the private placement of 3% Series A Convertible Debentures
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Entertainment, Inc., a corporation organized under the
laws of Colorado, with its principal executive offices located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, hereinafter referred to
as ("Seller"). Buyer hereby represents and warrants to, and agrees with
Seller:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT
OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER
(THE "1933 ACT"), AND RULE 504 OF REGULATION D PROMULGATED THEREUNDER.
1. Agreement to Subscribe; Purchase Price.
(a) Subscription. The undersigned Buyer hereby subscribes for and agrees to
purchase the Seller's 3% Series A Convertible Debenture substantially in the
form of the Debenture attached as Exhibit A hereto and having an aggregate
original principal face amount of U.S. $________ (singly, a "Debenture," and
collectively, the "Debentures"), at an aggregate purchase price of 100% of
the face amount of such Debentures as set forth in subsection (b) herein.
(b) Payment. The Purchase Price for the Debenture shall be ______________
United States Dollars (U.S. $___________ ) ("Purchase Price"), which
shall be payable at closing, pursuant to paragraph c herein, in accordance
with the terms and conditions of an Escrow Agreement which is attached
hereto and shall be executed simultaneously with this Agreement ("Escrow
Agreement").
(c) Closing. Subject to the satisfaction of the conditions set
forth in Sections 7 and 8 hereof, the Closing of the transactions
contemplated by this Agreement shall
take place when (i) Seller delivers the Debentures to the Escrow Agent, and
(ii) Buyer delivers to the Escrow Agent the purchase price of the Debentures
less any sums required to be paid pursuant to the Escrow Agreement.
2. Buyer Representations and Covenants;
Access to Information.
In connection with the purchase and sale of the Debenture, Buyer represents
and warrants to, and covenants and agrees with Seller as follows,
(i) Buyer is not, and on the closing date will not be, an
affiliate of Seller;
(ii) Buyer is purchasing the Securities for its own account and Buyer is
qualified to purchase the Securities under the laws of its jurisdiction of
residence, and the offer and sale of the Securities will not violate the
securities laws or other laws of such jurisdiction;
(iii) All offers and sales of any of the Securities by Buyer shall be made
in compliance with any applicable securities laws of any applicable
jurisdiction and in accordance with Rule 504, as applicable, of Regulation D
or pursuant to registration of securities under the 1953 Act or pursuant to
an exemption from registration;
(iv) Buyer understands that the Securities are not registered under the 1933
Act and are being offered and sold to it in reliance on specific exclusions
from the registration requirements of Federal and State securities laws, and
that Seller is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Buyer set
forth herein in order to determine the applicability of such exclusions and
the suitability of Buyer and any purchaser from Buyer to acquire the
Securities;
(v) Buyer shall comply with Rule 504 promulgated under Regulation D;
(vi) Buyer has the full right, power and authority to enter into this
Agreement and to consummate the transaction contemplated herein. This
Agreement has been duly authorized, validly executed and delivered on behalf
of Buyer and is a valid and binding agreement in accordance with its terms,
subject to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally;
(vii) The execution and delivery of this Agreement and the consummation of
the Purchase Of the Securities and the transactions contemplated by this
Agreement do not and will not conflict with or result in a breach by Buyer
of any of the term or provisions of, or constitute a default under, the
articles of incorporation or by-laws (or similar constitutive documents) of
Buyer or any indenture, mortgage, deed of trust, or other material agreement
or instrument to which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation of the United States or any State thereof or any applicable
decree, judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States governmental
body having jurisdiction over buyer or any of its properties or assets;
(viii) All invitations, offers and sales of or in respect of, any of the
Securities, by Buyer and any distribution by Buyer of any documents relating
to any invitation, offer or sale by it of any of the Securities will be in
compliance with applicable laws and regulations, will be made in such a
manner that no prospectus need be filed and no other filing need by made by
Seller with any regulatory authority or stock exchange in any country or any
political sub-division of any country, and Bayer will make no
misrepresentations nor omissions of material fact in the invitation, offer
or resale of the Debentures;
(ix) The Buyer (or others for whom it is contracting hereunder) has been
advised to consult its own legal and tax advisors with respect to applicable
resale restrictions and applicable tax considerations and it (or others for
whom it is contracting hereunder) is solely responsible (and the Seller is
not in any way responsible) for compliance with applicable resale
restrictions and applicable tax legislation;
(x) Buyer understands that no Federal or State or foreign government agency
has passed on or made any recommendation or endorsement of the Securities;
(xi) Buyer has had an opportunity to discuss with the officers of Seller,
all matters relating to the securities, financial condition, operations and
prospects of Seller and any questions raised by Buyer have been answered to
Buyer's satisfaction.
(xii) Buyer acknowledges that the purchase of the Securities involve a high
degree of risk. Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
purchasing the Securities- Buyer understands that the Securities are not
being registered under
the 1933 Act, and therefore, Buyer must bear the economic risk of this
investment for an indefinite period of time; and
(xiii) Buyer is not a "10-percent Shareholder" (as defined in Section
871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller.
3. Seller Representations and Covenants
(a) Seller is a corporation duly organized and validly existing under the
laws of the State of Colorado, and is in good standing under such laws- The
Seller has all requisite corporate power and authority to own, lease and
operate its properties and assets, and to carry on its business as presently
conducted. The Seller is qualified to do business as a foreign corporation
in each jurisdiction in which the ownership of its property or the nature of
its business requires such qualification, except where failure to so qualify
would not have a material adverse effect on the Seller
(b) There are 100,000,000 shares of Seller's Common Stock, $0. 001 par value
per share ("Common Stock"), authorized and 39,735,106 as of July 30, 1998
outstanding. The Common Stock trades on OTC Bulletin Board. All issued and
outstanding shares of Common Stock have been authorized and validly issued
and are My paid and assessable
(c) My execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of. any obligation or to a loss of a material
benefit, under, any provision of the Articles of Incorporation, and any
amendments thereto, By-laws, Stockholders Agreements and any amendments
thereto of the Seller or any material mortgage, indenture, lease or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law ordinance, rule or regulation applicable to the
Seller, its properties or assets.
(d) The Seller is not subject to the reporting requirements of Sections 13
or 15(d) of the Securities and Exchange Act, is not an investment company or
a developmental stage company that either has no specific business plan or
purpose.
(e) There is no fact known to the Seller that has not been publicly
disclosed by the Seller or disclosed in writing to the Buyer which could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, business affairs, properties or
assets of the Seller, or could reasonably be expected to materially and
adversely affect the ability of the Seller to perform its obligations
pursuant to this Agreement.
(f) No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Seller is required
in connection with the valid execution and delivery of this Agreement, or
the offer, sale or issuance of the debentures or Common Stock, or the
consummation of any other transaction contemplated hereby, except the filing
with the SEC of Form D. A copy of such filed Form D will be sent to the
Escrow Agent.
(g) There is no action, proceeding or investigation pending, or to the
Seller's knowledge, threatened, against the Seller which might result,
either individually or in the aggregate, in any material adverse change in
the business, prospects, conditions, affairs or operations of the Seller.
The Seller is not a party to or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. is no action, suit proceeding or investigation by the
Seller currently pending or which the Seller intends to initiate. The SEC
has not issued any order suspending trading in the Seller's Common Stock.
(h) There are no other material outstanding debt or equity
securities presently convertible into Common Stock other than the Debentures.
(i) The Seller has not sold any securities within The 12 month period prior
to the date the Common Stock was first offered in reliance on any exemption
under Section 3(b) of the 1933 Act or in violation of Section 5(a) of the
1933 Act.
j) The issuance, sale and delivery of the Debentures have been duly
authorized by all required corporate action on the part of the Seller, and
when issued, sold and delivered in accordance with the terms hereof and
thereof for the consideration expressed herein and therein, will be duly and
validly issued, fully paid and non-assessable. The Common Stock issuable
upon conversion of the Debenture has been duly and validly reserved for
issuance and upon issuance in accordance with the terms of the Debentures,
shall be duly and validly issued, fully paid, and non-assessable There are
no pre-emptive rights of any shareholder of Seller.
(k) This Agreement has been duly authorized, validly executed and delivered
on behalf of Seller and is a valid and binding agreement in accordance with
its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally - The
Seller has all requisite right, power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. All
corporate action on the part of the Seller, its directors and shareholders
necessary for the authorization, execution, delivery and performance of this
Agreement and the Debentures has been taken. Upon their issuance to the
Buyer and delivery to the Escrow Agent, as defined in and pursuant to the
Escrow Agreement, the Debentures will be validly issued and nonassessable,
and will be free of any liens or encumbrances.
4. Exemption; Reliance on Representations. Buyer understands that the offer
and sale of the Securities are not being registered under the 1933 Act.
Seller and Buyer are relying on the rules governing offers and sales made
pursuant to Rule 504 promulgated under Regulation D.
5. Transfer Agent Instructions.
(a) Debentures. Upon the conversion of the Debentures, the Buyer or holder
shall give a notice of conversion to the Seller and the Seller shall
instruct its transfer agent to issue one or more Certificates representing
that number of shares of Common Stock into which the Debenture or Debentures
are convertible in accordance with the provisions regarding conversion set
forth in Exhibit . The Seller shall act as Debenture Registrar and shall
maintain an appropriate ledger containing the necessary information with
respect to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. Upon the conversion
of any Debenture, Seller shall instruct Seller's transfer agent to issue
Stock Certificates up to the total of the "Conversion Amount" (as defined it
the Debenture) and any "Interest Shares" (as defined in the Debenture)
without restrictive legend in the name of the Buyer (or its nominee) and in
such denominations to be specified at conversion representing the number of
shares of Common Stock issuable upon such conversion, as applicable. The
Common Stock shall be immediately freely transferable on the books and
records of Seller.
6. Delivery Instructions. The Debentures being purchased
hereunder, and the Purchase Price, shall be delivered to the Escrow Agent
pursuant to the Escrow Agreement.
7. Conditions To Seller's Obligation To Sell. Seller's
obligation to sell the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as
executed by Buyer.
(b) All of the representations and warranties of the Buyer contained in this
Agreement shall be true and correct on the Payment Date with the same force
and effect as if made on and as of the Payment Date. The Buyer shall have
performed or complied with all agreements and satisfied all conditions on
its part to be performed, complied with or satisfied at or prior to the
Payment Date.
(c) No order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Act shall have
been issued, and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Seller, be contemplated. No
stop order suspending the sale of the Debentures or Common Stock shall have
been issued, and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Seller, be contemplated.
(d) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency
that would prevent the issuance of the Debentures or Common Stock. No
injunction, restraining order or order of any nature by a federal or state
court of competent jurisdiction shall have been issued that would prevent
the issuance of the Debentures.
(e) The funding by the Buyer of the Escrow Fund.
8. Conditions To Buyers Obligation To Purchase. Buyer's
obligation to purchase the Debentures is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of this
Agreement as evidenced by execution of this Agreement of the duly authorized
officer of Seller.
(b) Delivery of the Debentures to the Escrow Agent.
9. No Shareholder Approval. Seller hereby agrees that from the
Closing Date until the issuance of Common Stock upon
the conversion of the Debentures, Seller will
not take any action Which would require Seller to seek shareholder
approval of such issuance unless such
shareholder approval is required by law or
regulatory body (including but not limited to the NASDAQ Stock
Market, Inc.) as a result of the issuance of the Securities
hereunder.
10. Miscellaneous.
(a) This Agreement together with the Debentures and Escrow Agreement,
constitutes the entire agreement between the parties, and neither party
shall be liable or bound to the other in any mariner by any warranties,
representations or covenants except as specifically set forth herein- Any
previous agreement among the parties related to the transactions described
herein is superseded hereby. The term and conditions of this Agreement shall
inure to the benefit of and be binding upon the restrictive successors and
assigns of the parties hereto. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties
hereto, and their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
(b) Buyer is an independent contractor and is not the agent of
Seller. Buyer is not authorized to bind Seller or to make any representation
or warranties on behalf of Seller.
(c) All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the transactions
contemplated by this Agreement.
(d) This Agreement shall be construed in accordance with the laws of New
York applicable to contracts made and wholly to be performed within the
State of New York and shall be binding upon the successors and assigns of
each party hereto. Buyer and Seller hereby
mutually waive trial by jury and consent to exclusive jurisdiction and venue
in the courts of the State of New York. At Buyer's election, any dispute
between the parties may be arbitrated rather than litigated in the courts,
before the arbitration board of the National Association of Securities
Dealers in New York City and pursuant to its rules. Upon demand made by the
Buyer to the Seller, Seller agrees to submit to and participate in such
arbitration. This Agreement may be executed in counterparts, and the
facsimile transmission of an executed counterpart to this Agreement shall be
effective as an original.
(e) Seller agrees to indemnify and hold Buyer harmless from any and all
claims, damages and liabilities arising from Seller's breach of its
representations and/or covenants set forth herein.
(f) Buyer agrees to indemnify and hold Seller harmless from any and all
claims, damages and liabilities arising from Buyer's breach of its
representations and warranties set forth in this Agreement.
IN WITNESS WHEREOF, the undersigned has executed This Agreement as of the
date first set forth above.
Official Signatory of Seller:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENTERTAINMENT, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Accepted this _______ day of _______________
Official Signatory of Buyer:
By: _____________________
Address of Buyer:
