SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is made and entered into as
of April 29, 2002 by and between Valesc Inc., a Delaware corporation (the
"Company"), and Xx. Xxx Xxxx, an individual residing at 0 Xxxxxxxx Xxxx,
Xxxxxxxxx, XX 00000 (the "Subscriber").
WHEREAS, the Company desires to issue to the Subscriber, and the Subscriber
desires to purchase from the Company, the Company's common stock and attached
option on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Agreement to Purchase and Sell the Common Stock and Attached Stock
Options. The Company agrees to issue to the Subscriber, and the Subscriber
agrees to purchase from the Company, at the Closing (as defined below), a total
of 75,000 shares of its common stock, $.0001 par value per share (the "Shares"),
for $30,000 (the "Purchase Price"). In addition, the Company will grant options
to the Subscriber to purchase an aggregate of an additional 75,000 shares of
its common stock in accordance with the option agreement attached hereto as
Exhibit A (the "Options" and, together with (i) any common stock issuable under
the Options and (ii) the Shares, the "Securities").
2. Closing. The purchase and sale of the Shares and delivery of the Options
will take place at the offices of Xxxxx & Associates, P.C., 00 Xxxx 00xx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000-0000, at 10:00 a.m. E.S.T., on April 29,
2002, or at such other time and place as the Company and the Subscriber
mutually agree (which time and place are referred to herein as the "Closing").
At the Closing, the Company will deliver stock certificates to the Subscriber
representing the Shares executed by the Company or its Transfer Agent, against
delivery to the Company by the Subscriber of the Purchase Price by certified
check in same day funds.
3. Representations, Warranties and Certain Covenants of Subscriber. The
Subscriber hereby represents and warrants to the Company that:
(a) Disclosure of Risks. Subscriber is aware that the Company's financial
condition is not stable: (i) the Company has received a "going
concern" opinion from its independent auditor with respect to its last
fiscal year and the Company may receive a subsequent "going concern"
opinion to be issued in the Company's next audited fnancial
statements; (ii) there is no assurance that the Company will be able
to successfully commercialize any services or products thereby
resulting in profits; and (iii) an investment in the Company involves
a high degree of risk and should not be made unless the Subscriber is
prepared to, and can afford to, lose the entire investment.
(b) Investment Experience and Access to Information. Subscriber (i) has
sufficient knowledge, sophistication and experience in business and
finance to capably evaluate information concerning an investment in
the Company, (ii) has had an opportunity to ask detailed questions and
receive satisfactory answers from representatives of the Company,
(iii) has had adequate opportunity to request and review any and all
documents and other information, including the Company's publicly
available filings with the Securities and Exchange Commission,
relevant to Subscriber's consideration of investment in the
Company, (iv) has otherwise obtained sufficient information from the
Company to evaluate the merits and risks of an investment in the
Company; (v) has independently considered and discussed such
prospective investment with the Subscriber's business, legal, tax and
financial advisers as to the suitability of such investment with
respect to the Subscriber's particular fnancial situation, and (vi) on
the basis of the foregoing, the Subscriber has determined that
investment in the Securities is a suitable investment.
(c) Dilution and Additional Indebtedness. Subscriber acknowledges that (i)
the Company may make additional offerings of equity securities in the
future which may cause Subscriber and other stockholders to experience
dilution of their respective percentage ownership of the Company, and
any such securities subsequently offered may have rights, preferences
or privileges senior to those of the holders of the Securities, (ii)
the Company may determine that it is necessary to incur additional
indebtedness to finance its operations, which could restrict the
Company's operations, and (iii) there can be no assurance that
additional equity or debt financing will not be required, and if so
required, that it will be available on terms favorable to the Company,
if at all.
(d) Restricted Securities. Subscriber understands that the Securities are
characterized as "restricted securities" under the Securities Act of
1933, as amended (the "Securities Act"), inasmuch as they are being
acquired from the Company in a transaction not involving a public
offering and that under the Securities Act and applicable regulations
thereunder the Securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this
connection, the Subscriber represents that it is familiar with Rule
144, as presently in effect, promulgated by the SEC under the
Securities Act and understands the resale limitations imposed thereby
and by the Securities Act. The Subscriber understands that the
Company is under no obligation to register any of the Securities sold
hereunder. The Subscriber understands that no public market now exists
for the Securities and that it is uncertain whether a public market
will ever exist for the Securities.
(e) Authorization. If the Subscriber is a corporation, partnership, trust
or estate, the person executing this Agreement on behalf of the
Subscriber has reached the age of 21 and been duly authorized and is
duly qualified to execute and deliver this Agreement and all other
instruments executed and delivered on behalf of such entity; the
Subscriber is duly organized, validly existing, and in good standing
in its jurisdiction of organization and has all the requisite power
and authority to invest in the Securities as provided herein; and an
investment in the Securities, to Subscriber's knowledge, does not
result in any violation of, or conflict with any term of the charter,
bylaws, partnership agreement, trust instrument or other governing
document of the Subscriber or any other instrument to which it is
bound or any law or regulation applicable to it.
(f) Purchase for Own Account. The Securities to be granted to the
Subscriber hereunder will be acquired for investment for the
Subscriber's own account, not as a nominee or agent, and not with a
view to the public resale or distribution thereof, and the Subscriber
has no present intention of selling, granting any participation in, or
otherwise distributing the same.
(g) Accredited Investor Status. Subscriber is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities
Act.
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(h) Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Subscriber further agrees not to
make any disposition of all or any portion of the Securities, except:
(i) pursuant to a registration statement under the Securities Act
covering such disposition; or
(ii) pursuant to an exemption from registration under the
Securities Act, including, without limitation, Rule 144, Rule 144A or
Regulation S thereunder.
(i) Legend. It is understood that the certificates evidencing the
Securities will bear the legend set forth below:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE, OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"). THESE SECURITIES ARE RESTRICTED AND MAY NOT BE
OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER
THE ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
The legend set forth above shall be removed by the Company from any
stock certificate evidencing common stock upon delivery to the Company
of an opinion by counsel reasonably satisfactory to the Company that a
registration statement under applicable securities laws is at that
time in effect with respect to the legended security or that such
security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to
which the Company issued the common stock.
(j) No Reliance on Oral Statements. Subscriber, in purchasing the
Securities, is not relying on any oral representations, promises or
statements made by the Company, or any officer, director, employee,
agent or attorney of the Company.
(k) Transferee Undertaking. In connection with any disposition of all or
any portion of the Securities permitted under this Agreement, the
Subscriber shall obtain an undertaking from each offeree or purchaser
of the Securities pursuant to which the offeree or purchaser shall
represent and warrant the following:
(i) purchaser understands that the Securities have not been
registered under the Securities Act and that, if in the future it
decides to offer, sell, pledge or otherwise transfer such
Securities, such Securities may be offered, sold, pledged or
otherwise transferred only (A) to a person whom the seller
reasonably believes is a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, (B) in an
offshore transaction pursuant to and in compliance with
Regulation S, (C) pursuant to an exemption from registration
under the Securities Act provided by Rule 144, if available, or
(D) pursuant to a registration statement under the Securities Act
covering such disposition, in all cases in accordance with all
applicable securities laws of any state of the United States.
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(ii) purchaser understands that the Securities will contain a
legend to the following effect unless the Company determines such
legend is not necessary under applicable laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH SECURITIES MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER SUCH
ACT 1N A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2)
IN AN OFFSHORE TRANSACTION PURSUANT TO REGULATION S UNDER SUCH
ACT, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT PROVIDED BY RULE 144, IF AVAILABLE, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES."
(iii) If the offeree or transferee is a qualified institutional
buyer as defined in Rule 144A of the Securities Act, that it is
aware that the sale to it is being made in reliance on Rule 144A
and it is acquiring the Securities for its own account or for the
account of a qualified institutional buyer.
(l) Survival. The foregoing representations and warranties are true and
accurate as of the date hereof, shall be true and accurate as of the
date of the acceptance hereof by the Company and shall survive
thereafter, including after any termination of this Agreement. If such
representations and warranties shall not be true and accurate in any
respect, the Subscriber will, prior to such acceptance, given written
notice of such fact to the Company specifying which representations
and warranties are not true and accurate and the reasons therefor.
(m) Investment Questionnaire and Letter. Subscriber shall have completed
and delivered an Investor Questionnaire in the form provided by the
Company and executed an Investment Letter as of the date of the
Closing in the form attached hereto as Exhibit B.
4. Indemnification. The Subscriber acknowledges that he or she understands
the meaning and legal consequences of the representations and warranties
contained herein, and the Subscriber hereby agrees to indemnify and hold
harmless the Company, and each person, if any, who controls the Company, within
the meaning of Section 15 of the Securities Act and all representatives and
agents of the Company, including, but not limited to, counsel to the Company,
against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the Subscriber to comply with
any covenant or agreement made by the Subscriber herein or in any other document
furnished by the Subscriber to any of the foregoing in connection with this
transaction.
5. Conditions.
(a) Subscriber's ownership interest in the Company shall be governed solely
in
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accordance with Delaware General Corporation Law, the Company's Certificate of
Incorporation and the Company's By-laws, each as in effect and as may be
amended from time-to-time.
(b) The Subscriber agrees not to transfer or assign this Agreement, or any
of its interest herein or in the Company, and further agrees, except as provided
herein, that the assignment and transferability of the Securities acquired
pursuant hereto shall be allowed only in accordance with applicable law.
6. Revocation. The Subscriber agrees that he or she will not cancel,
terminate, or revoke this Agreement or any agreement made hereunder and that
this Agreement shall survive the death or disability of the Subscriber.
7. Acceptance of Subscription. Execution of this Agreement by the
Subscriber constitutes an offer by the Subscriber to subscribe for the number of
Securities specified on the signature page hereto. If this offer is rejected for
any reason, the Subscriber's subscription documents shall be returned to the
Subscriber as promptly as practicable and the Company and the Subscriber shall
have no further obligations to each other, other than the obligation of the
Company to return the Subscriber's funds to such Subscriber.
8. General Provisions.
(a) Investigation. It shall be no defense to an action for breach of this
Agreement that the Subscriber or its agents have (or have not) made
investigations into the affairs of the Company or that the Company could not
have known of the misrepresentation or breach of warranty.
(b) Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties.
(c) Governing Law; Jurisdiction. This Agreement and the enforcement thereof
shall be governed by and construed under the internal laws of the State of New
York. The parties hereto consent to the non-exclusive jurisdiction of any New
York State or Federal court sitting in the City of New York and any appellate
court from any thereof in any action or proceeding arising out of or relating to
this Agreement.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
(e) Headings. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs, exhibits
and schedules shall, unless otherwise provided, refer to sections and paragraphs
hereof and exhibits and schedules attached hereto, all of which exhibits and
schedules are incorporated herein by this reference.
(f) Notices. Any and all notices required or permitted to be given to a
party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to provide such party sufficient notice under this
Agreement on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) at the time of transmission by
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facsimile, addressed to the other party at its facsimile number specified herein
(or hereafter modified by subsequent notice to the parties hereto), with
confirmation of receipt made by both telephone and printed confirmation sheet
verifying successful transmission of the facsimile; (iii) one (1) business day
after deposit with an express overnight courier for deliveries within the U.S.,
or (iv) three (3) business days after deposit in mail by certified mail (return
receipt requested) or equivalent for deliveries within the U.S.
All notices not delivered personally or by facsimile will be sent with postage
and/or other charges prepaid and properly addressed to the party to be notified
at the address or facsimile number indicated for such party, in the case of the
Company, Xxxxxx X. Xxxxx, Valesc Inc., 0000 Xxxx Xxxx, Xxxxx 000X, Xxxxx, XX
00000, with a copy to Xxxxx & Associates, P.C., 00 Xxxx 00xx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, XX 00000-0000, Attention: Xxxxx Xxxxx, Esq. or, in the case of the
Subscriber, to the address listed at the front of this document, or at such
other address or facsimile number as such other party may designate by giving
ten (10) days advance written notice by one of the indicated means of notice
herein to the other parties hereto. Notices by facsimile shall be machine
verified as received.
Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder. Notice shall conclusively be
deemed to have been given in the manner set forth above.
(g) Costs, Expenses. Each party hereto shall bear its own costs in
connection with the preparation, execution and delivery of this Agreement.
(h) No Finder's Fees. Each party represents that it neither is nor will be,
obligated for any finder's or broker's fee or commission in connection with this
transaction.
(i) Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Subscriber. No delay or omission to
exercise any right, power, or remedy accruing to the Subscriber, upon any
breach, default or noncompliance of the Company under this Agreement shall
impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. All remedies, either under this Agreement, by law, or otherwise
afforded to the Subscriber, shall be cumulative and not alternative.
(j) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
(k) Entire Agreement. This Agreement, together with all exhibits and
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter hereof.
(l) Further Assurances. From and after the date of this Agreement,
upon the request of the Subscriber or the Company, the Company and the
Subscriber shall execute and deliver
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such instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
DO NOT SIGN THIS SUBSCRIPTION AGREEMENT IF ANY OF THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN SECTION 3 ABOVE ARE UNTRUE OR INACCURATE.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Subscriber has executed this Agreement as of the
date first written above.
Restricted Securities Subscribed 75,000 Shares of Common Stock
-----------------------------------
Options to purchase 75,000
Shares of Common Stock
(*)
-----------------------------------
Total Consideration $30,000
-----------------------------------
(*) Options are subject to additional terms and conditions of the Stock Option
Agreement, executed as of even date herewith and attached hereto.
SUBSCRIBER
/s/ Xxxxxxx Xxxx
-----------------------------------
Xx. Xxx Xxxx
Subscription Accepted and Agreed as of the date first written above by:
VALESC INC.
By:/s/ Xxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
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