SUBSCRIPTION AND DEBT CONVERSION AGREEMENT
BETWEEN
VITECH AMERICA, INC.
AND
AVANCE TECHNOLOGIES USA INC.
SUBSCRIPTION AND DEBT CONVERSION AGREEMENT
------------------------------------------
Vitech America, Inc.
0000 XX 00xx Xxxxx
Xxxxx, XX 00000
Gentlemen:
The undersigned is writing to advise you of the following terms and
conditions under which the undersigned hereby offers (the "Offer") to purchase
share(s) of common stock of Vitech America, Inc. (the "Company") in satisfaction
of certain debts owed by the Company to the undersigned.
1. Subscription
------------
Subject to the terms and conditions hereinafter set forth in this
Subscription and Debt Conversion Agreement ("Agreement"), the undersigned hereby
offers to purchase 29,091 shares of the Company's common stock (the "Shares"),
for $6.1875 per share, or an aggregate purchase price of $180,000.56 (the
"Purchase Price").
If the offer is accepted, the Shares shall be paid for by the
conversion of $180,000.56 of indebtedness (the "Indebtedness") of the Company to
the undersigned.
2. Conditions to Offer
-------------------
Acceptance of this Offer shall be deemed given by the countersigning of
this Agreement on behalf of the Company.
3. Satisfaction of Indebtedness
----------------------------
Upon acceptance of this Agreement by the Company and issuance of the
Shares to the undersigned, the Indebtedness shall be fully satisfied and the
Company shall have no further obligation for the Indebtedness.
4. Representations and Warranties of the Undersigned
-------------------------------------------------
The undersigned, in order to induce the Company to accept this Offer,
hereby warrants and represents as follows:
(A) The undersigned has sufficient liquid assets to sustain a loss of
the undersigned's entire investment.
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(B) The undersigned represents that it is an Accredited Investor as
that term is defined in Regulation D promulgated under the Act. In general, an
"accredited investor" is an organization described in Section 501(c)(8) of the
Internal Revenue Code, a corporation, Massachusetts or similar business trust,
or company, not formed for the specific purpose of acquiring the securities
offered, with assets in excess of $5,000,000.
(C) IThe Company has not made any representations or warranties to the
undersigned with respect to the Company, its profitability or future performance
or rendered any investment advice except as contained herein.
(D) The undersigned has not authorized any person or institution to act
as its Purchaser Representative (as that term is defined in Regulation D) in
connection with this transaction. The undersigned has such knowledge and
experience in financial, investment and business matters that it is capable of
evaluating the merits and risks of the prospective investment in the securities
of the Company. The undersigned has consulted with such independent legal
counsel or other advisers as it has deemed appropriate to assist the undersigned
in evaluating its proposed investment in the Company.
(E) The undersigned represents that it (i) has adequate means of
providing for its current financial needs and possible personal contingencies,
and has no need for liquidity of investment in the Company; (ii) can afford (a)
to hold unregistered securities for an indefinite period of time as required and
(b) sustain a complete loss of the entire amount of the subscription; and (iii)
has not made an overall commitment to investments which are not readily
marketable which is disproportionate so as to cause such overall commitment to
become excessive.
(F) The undersigned has been afforded the opportunity to ask questions
of, and receive answers from the officers and/or directors of the Company acting
in its behalf concerning the terms and conditions of this transaction and to
obtain any additional information, to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information furnished; and has availed itself of
such opportunity to the extent it considers appropriate in order to permit it to
evaluate the merits and risks of an investment in the Company. It is understood
that all documents, records and books pertaining to this investment have been
made available for inspection, and that the books and records of the Company
will be available upon reasonable notice for inspection by investors during
reasonable business hours at its principal place of business.
(G) The undersigned acknowledges that the Shares have not been
registered under the Act in reliance on an exemption for transactions by an
issuer not involving a public offering.
(H) The undersigned further acknowledges that this Offer has not been
passed upon or the merits thereof endorsed or approved by any state or federal
authorities.
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(I) The Shares being subscribed for are being acquired solely for the
account of the undersigned for personal investment and not with a view to, or
for resale in connection with, any distribution in any jurisdiction where such
sale or distribution would be precluded. By such representation, the undersigned
means that no other person has a beneficial interest in the Shares subscribed
for hereunder, and that no other person has furnished or will furnish directly
or indirectly, any part of or guarantee the payment of any part of the
consideration to be paid to the Company in connection therewith. The undersigned
does not intend to dispose of all or any part of the Shares, except in
compliance with the provisions of the Act and applicable state securities laws
and understands that the Shares are being offered pursuant to a specific
exemption under the provisions of the Act, which exemption(s) depends, among
other things, upon the compliance with the provisions of the Act.
(J) The undersigned understands that sales of the Shares may be subject
to restrictions imposed under state securities laws. The undersigned further
represents and agrees that the undersigned will not sell, transfer, pledge or
otherwise dispose of or encumber the Shares, except pursuant to the applicable
rules and regulations under applicable state securities laws, and prior to any
such sale, transfer, pledge, disposition or encumbrance, the undersigned will,
if requested, furnish the Company and its transfer agent with an opinion of
counsel satisfactory to the Company in form and substance that registration
under applicable state securities laws is not required.
(K) The undersigned hereby agrees that the Company may place the
following or similar legend on the face of the certificates evidencing Shares if
required in compliance with state securities laws:
"These securities have not been registered under the
Securities Act of 1933, as amended, or any state securities
laws and may not be sold or otherwise transferred or disposed
of except pursuant to an effective registration statement
under any applicable federal and state securities laws, or an
opinion of counsel satisfactory to counsel to the Company that
an exemption from registration is available."
(L) The undersigned certifies that each of the foregoing
representations and warranties set forth in subsections (A) through (K)
inclusive of this Section 4, are true as of the date hereof and shall survive
such date.
5. Registration Rights
-------------------
The Company shall prepare and file with the Securities and Exchange
Commission within 30 days of the date hereof, a Registration Statement on Form
S-3 (or if the Company is not eligible to register for resale of the Shares on
Form S-3, such registration shall be on another appropriate form in accordance
herewith) in accordance with the method or methods of distribution thereof as
specified by the undersigned, and use its best efforts to cause the Registration
Statement to become effective within 90 days of the date hereof and remain
effective. The Company will be responsible to pay for all registration costs and
fees including all related attorney, auditor or other expenses.
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Should the Registration Statement not become effective within 90 day of
the date hereof, the Company shall be required to pay to the undersigned a fee
of $5,000.00 for a 30 day extension (the "Extension Period") to use its best
efforts to cause the Registration Statement to become effective. During the
Extension Period, interest at the annualized rate of 18% percent shall accrue on
the Purchase Price of the Shares. If the Registration Statement does not become
effective by the end of the Extension Period, the undersigned shall have the
right to require the Company to repurchase all of the Shares at a purchase price
equal to the Purchase Price plus the accrued interest during the Extension
Period.
6. Indemnification
---------------
The undersigned understands that the Shares acquired pursuant to this
Agreement are being issued without registration under the Act and applicable
state securities laws in reliance upon the exemption for transactions by an
issuer not involving any public offering; that the availability of such
exemption is, in part, dependent upon the truthfulness and accuracy of the
representations made by the undersigned herein; that the Company will rely on
such representations in accepting this Offer for the Shares; and that the
Company may take such steps as it considers reasonable to verify the accuracy
and truthfulness of such representations in advance of accepting or rejecting
the undersigned's subscription. The undersigned agrees to indemnify and hold
harmless the Company against any damage, loss, expense or cost, including
reasonable attorney's fees, sustained as a result of any misrepresentation,
misstatement or omission on the undersigned's part.
7. State Legend
------------
FOR RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
8. No Waiver
---------
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Notwithstanding any of the representations, warranties,
acknowledgements or agreements made herein by the undersigned, the undersigned
does not thereby or in any manner waive any rights granted to the undersigned
under federal or state securities laws.
9. Revocation
----------
The undersigned agrees that he shall not cancel, terminate or revoke
this Agreement or any agreement the undersigned made hereunder, and that this
Agreement shall survive the death or disability of the undersigned.
10. Miscellaneous
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(A) All notices or other communications given or made hereunder shall
be in writing and shall be mailed by registered or certified mail, return
receipt requested, postage prepaid, to the undersigned at its address set forth
below and to Vitech America, Inc.
(B) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and may be amended only by a
writing executed by all parties.
(C) The provisions of this Agreement shall survive the execution and
acceptance hereof.
11. Certification
-------------
The undersigned certifies that he has read this entire Agreement and
that every statement on his part made and set forth herein is true and complete.
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IN WITNESS WHEREOF, the undersigned has executed this Subscription and Debt
Conversion Agreement on the date his signature has been subscribed and sworn to
below.
AVANCE TECHNOLOGIES USA, INC..
/s/ Ieneke The Yoe
---------------------
Name: Ieneke The Yoe
Its: Vice President
The Shares are
To be issued as follows: Avance Technologies USA Inc.
0000 Xxxxxxxx Xxxx., Xxxxx# 000
Xxx Xxxxxxx, XX 00000
Accepted as of the 15 day
of June, 0000
XXXXXX XXXXXXX, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Chief Financial Officer
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