EXHIBIT 10.1
FORM
SUBSCRIPTION AGREEMENT
NELX, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Gentlemen:
SECTION 1. SUBSCRIPTION.
1.1 NELX, Inc. a Kansas corporation (the "Company"), is offering for sale
shares of [Series A Preferred Stock/Series B Preferred Stock] of the Company
(the "Shares"), together with warrants to purchase shares of Common Stock of the
Company (the "Warrants"), for the purpose and with terms as described on
Appendix A to this Agreement (collectively, the "Securities"). The undersigned
(the "Subscriber") hereby subscribes for the purchase of such Securities as set
forth on the signature page hereto (the "Purchased Securities"), for the
consideration set forth on the signature page hereto determined at the rate of
$_______ for each Share, with Warrants (the "Purchase Price") (such subscription
referred to herein as the "Subscription").
1.2 The Subscriber shall fully complete this Agreement, including
Appendices B and C attached hereto. Upon the execution hereof, the Subscriber
shall deliver to the Company (i) two executed copies of this Agreement, (ii) an
amount equal to 10% of the Purchase Price (the "Deposit"), which shall be paid
by a check payable to the order of the Xxxxxxx Xxxxxx & Battle, PLLC, as Escrow
Agent, and (iii) three executed copies of the Escrow Agreement in the form
attached hereto as Exhibit 1.
1.3 As soon as practicable after receipt of the foregoing items, the
Company shall notify the Subscriber whether the Subscription has been accepted
in whole or in part. If the Company accepts all or a portion of the
Subscription, this Agreement shall become effective, and the Company shall
promptly deliver to the Subscriber (i) one fully-executed copy of this
Agreement, countersigned by the Company and (ii) a fully executed copy of the
Escrow Agreement.
1.4 Following the effectiveness of this Agreement, the balance of the
Purchase Price shall be paid to the Company by Subscriber, and the Deposit held
pursuant to the Escrow Agreement will be released, upon five (5) days notice to
Subscriber and the Escrow Agent that the following conditions have been
satisfied:
(a) The Company shall have obtained the requisite power and authority to
issue the Securities;
(b) The Company shall have entered into a definitive agreement for the
acquisition of the target insurance company (the "Insurance Company")
with the owner of the Insurance Company;
(c) The acquisition of the Insurance Company by the Company shall have
been approved by the Insurance Commissioner of the State of West
Virginia; and
(d) The Company shall have obtained sufficient Subscriptions to accomplish
the acquisition of the Insurance Company.
1.5 Upon receipt of the balance of the Purchase Price, the Company shall
issue the balance of the Securities to Subscriber.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Subscriber that:
2.1 This Agreement and the Escrow Agreement have been duly authorized,
executed and delivered by the Company, and each constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws now or hereafter in effect relating to creditors' rights generally
and by general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
2.2 Within seventy-five (75) days following the acceptance of this
Subscription, the Company shall have called a meeting of the shareholders of the
Company seeking an approval of an amendment to the Articles of Incorporation of
the Company, establishing the Company's authority to issue [Series A Preferred
Stock/Series B Preferred Stock].
2.3 When issued in accordance herewith, the Securities shall be fully paid
and nonassessable.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber
represents and warrants to the Company that:
3.1 This Agreement and the Escrow Agreement have been duly authorized,
executed and delivered by the Subscriber, and each constitutes a legal, valid
and binding obligation of the Subscriber, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other laws now or hereafter in effect relating to creditors' rights
generally and by general principles of equity, regardless of whether considered
in a proceeding in equity or at law.
3.2 The Subscriber has knowledge and experience in financial and business
matters sufficient to enable it to evaluate the merits and risks of an
investment in the Securities.
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3.3 The Subscriber is acquiring the Securities hereunder for its own
account, solely for investment and not with a view to the resale or distribution
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
3.4 The Subscriber understands that its investment in the Securities
entails a high degree of risk. The Subscriber understands that its acquisition
of the Securities will be a speculative investment, and, without impairing its
financial condition, it is able to hold the Securities for an indefinite period
of time and would be able to suffer a complete loss of its investment without
undue financial hardship.
3.5 The Subscriber understands that the acquisition of the Insurance
Company is subject to (i) the Company's entering into a definitive purchase
agreement with the owner of the Insurance Company, (ii) the prior approval of
the acquisition by the Insurance Commissioner of the State of West Virginia and
(iii) the Company's obtaining Subscriptions for at least $3,000,000.
3.6 The Subscriber has had an opportunity to ask questions of and receive
answers from the Company and its officers concerning the terms and conditions of
the sale of the Securities contemplated hereby and has had an opportunity to
obtain additional information from the Company to the extent deemed necessary or
advisable by the Subscriber in order to verify the accuracy of the information
obtained. The Subscriber has, to the extent deemed necessary by the Subscriber,
consulted with its own advisors (including the Subscriber's attorney, accountant
or investment advisor) regarding the Subscriber's investment in the Securities
and understands the significance and effect of its representations, warranties,
acknowledgments and agreements set forth in this Agreement.
3.7 The Subscriber has reviewed copies of the public filings of the Company
on Forms 10-KSB and 10-QSB. The Subscriber has, to the extent deemed necessary
by the Subscriber, completed due diligence and an independent investigation
concerning the Company and the terms and conditions of the sale of the
Securities contemplated hereby. The Subscriber acknowledges that there can be no
assurance the Company will be successful in the implementation of its business
plan, and a total loss of the Subscriber's investment in the Securities is
possible.
3.8 The Subscriber acknowledges that neither the Company, nor any of its
officers, representatives or affiliates, nor any other person or entity, has
made any representations or warranties with respect to the Company, its business
or the Securities other than as set forth herein.
3.9 The Subscriber understands that the Securities have not been registered
under the Securities Act in reliance upon an exemption from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof, that the
Securities have not been registered under applicable state securities laws, and
that the Securities may not be sold or otherwise disposed of unless registered
under the Securities Act and applicable state securities laws (the Company being
under no obligation to so register such Securities) or exempted from
registration. The Subscriber further understands that the exemption from
registration afforded by Rule 144 promulgated under the Securities Act is not
presently available with respect to the Securities.
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3.10 The Subscriber is an "Accredited Investor" as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act and has accurately
completed Appendix B to this Agreement.
3.11 The Subscriber acknowledges that neither the Company nor any person or
entity acting on its behalf has offered to sell any of the Securities to the
Subscriber by means of any form of general solicitation or advertising,
including without limitation (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media, or
broadcast over television or radio, and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
SECTION 4. GENERAL.
4.1 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered to the parties at the addresses set forth below or on Appendix C, as
applicable, as same may be modified from time to time. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number set forth below or on Appendix
C, as applicable, if such facsimile is transmitted on a business day, and if
not, then on the next business day thereafter, and the appropriate answer back
is received or (b) if given by mail, three (3) days after mailed by registered
or certified mail (return receipt requested) or (c) if given by express courier,
on the day delivered by an express courier (with confirmation from recipient) to
the following addresses:
(a) if to the Company, to:
NELX, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
(b) if to the Subscriber, to its mailing address and facsimile number as
shown on the Appendix C to this Agreement.
Notice of any change in any address or facsimile number shall also be given in
the manner set forth above. Whenever the giving of notice is required, the
giving of such notice may be waived by the party entitled to receive such
notice.
4.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties hereto with respect to the matters contemplated herein and
supersedes all prior agreements or understandings among the parties related to
such matters.
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4.3 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
4.4 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by all of the parties hereto
or, in the case of a waiver, by the party waiving compliance. Except as
otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or at any prior or
subsequent time.
4.5 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of West Virginia, without giving effect to the principles of conflicts
of laws thereof.
4.6 HEADINGS. Headings to the sections in this Agreement are intended
solely for convenience, and no provision of this Agreement is to be construed by
reference to the heading of any section.
4.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.
4.8 FEES AND EXPENSES. The Company, on the one hand, and the Subscriber, on
the other hand, shall pay the respective fees and expenses incurred by them in
connection with the transactions contemplated herein.
4.9 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction.
4.10 FURTHER ACTIONS. The parties hereto agree to execute such further
instruments and to take such further actions as may reasonably be necessary to
carry out the intent of this Agreement.
[Signatures Appear on Following Page.]
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IN WITNESS WHEREOF, the Subscriber has executed this Subscription
Agreement.
NAME OF SUBSCRIBER:
----------------------------
Authorized Signature:
----------------------------
Name: ______________________
Date: _______________________________
Aggregate Purchase Price: $_____________
Number of Shares with Warrants
Purchased: ____________
Agreed and Accepted this __ day of ________, 2005:
NELX, INC.
By: _______________________
Name: Xxxx X. Xxxxxx
Title: President
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APPENDIX A
TERM SHEET FOR SECURITIES
Securities:
Issuer: NELX, Inc. (NLXI)
Purpose: To finance the acquisition and operation of a West Virginia
insurance company with active licenses (the "Insurance Company") for
the principal purpose of engaging in business as a surety
Issue Price:
Preferred Stock Dividend Rights:
Warrants:
Protective Provisions:
Use of Funds:
X-0
XXXXXXXX X
ACCREDITED INVESTOR STATUS. Please xxxx the appropriate box next to each
description applicable to you.
[___] A corporation or a partnership, not formed for the specific purpose of
acquiring Securities, with total assets in excess of $5,000,000.
[___] A natural person whose individual net worth, or joint net worth with that
person's spouse, exceeds $1,000,000.
[___] A natural person who had individual income in excess of $200,000 in each
of the most recent two years, or joint income with that person's spouse in
excess of $300,000 in each of the most recent two years and who has a reasonable
expectation of reaching the same income level in the current year.
[___] A director or executive officer (as defined in Rule 501(f) of Regulation D
promulgated under the Securities Act) of the Company.
[___] A bank (as defined in Section 3(a)(2) of the Securities Act) or a savings
and loan association or other institution (as defined in Section 3(a)(5)(A) of
the Securities Act) whether acting in its individual or fiduciary capacity.
[___] A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended.
[___] An insurance company (as defined in Section 2(13) of the Securities Act).
[___] An investment company registered under the Investment Company Act of 1940
(the "Investment Company Act") or a business development company (as defined in
Section 2(a)(48) of the Investment Company Act).
[___] A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958.
[___] A plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions, for
the benefit of its employees, if such plan has total assets in excess of
$5,000,000.
[___] An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA") if (A) the investment decision is made by
a plan fiduciary (as defined in Section 3(21) of ERISA) which is either a bank,
savings and loan association, insurance company or registered investment
advisor, or (B) the employee benefit plan has total assets in excess of
$5,000,000, or (C) if the plan is a self-directed plan, its investment decisions
are made solely by persons who are accredited investors.
[___] An individual retirement account the beneficiary of which is an accredited
B-1
investor under the standards for natural persons set forth above (i.e.
$1,000,000 net worth or $200,000 individual income or $300,000 joint income with
spouse).
[___] A private business development company (as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940).
[___] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring Securities, whose acquisition is directed by a
person who, either alone or with his or her purchaser representative(s), has
such knowledge and experience in financial business matters that such person is
capable of evaluating the merits and risks of acquiring Securities.
[___] An organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, or a Massachusetts or similar business trust, not
formed for the specific purpose of acquiring Securities, with total assets in
excess of $5,000,000.
[___] An entity in which all of the equity owners meet the requirements of at
least one of the above subparagraphs for accredited investors.
B-2
APPENDIX C
GENERAL INFORMATION. Please print or type the following information about you:
PART A. (TO BE COMPLETED BY NATURAL PERSONS)
Full Name: __________________________________________________
Residence Address: __________________________________________________
Number Street
__________________________________________________
City State Zip
Telephone Number: _____________ Facsimile Number: _________________
Email Address: _____________________________________________________
Name of Employer: _____________________________________________________
Business Address and Telephone Number: ___________________________
___________________________
Telephone Number: _____________ Facsimile Number: _________________
Social Security Number: ______-_____-___________
PART B. (TO BE COMPLETED BY ENTITIES)
Name: _____________________________________________________
Business Address: _____________________________________________________
Number Street
_____________________________________________________
City State Zip
Telephone Number: _____________ Facsimile Number: _________________
Email Address: _____________________________________________________
Name and Title of
Individual Executing Questionnaire:____________________________________
Principal Business: ____________________________________
State and Year of Organization: ____________________________________
Tax Identification Number: ____________________________________
C-1
