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EXHIBIT 10.40
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR BY THE SECURITIES REGULATORY
AUTHORITY OF ANY OTHER JURISDICTION, NOR HAS ANY COMMISSION OR AUTHORITY PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION CONTRARY TO THE
FOREGOING IS UNLAWFUL. THE SHARES MAY NOT BE TRANSFERRED OR RESOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
SUBSCRIPTION AGREEMENT
COMMON STOCK
UOL PUBLISHING, INC.
1. Subscription. The undersigned (hereinafter referred to as
"Subscriber") hereby subscribes for and agrees to purchase the number of shares
of Common Stock of UOL Publishing, Inc. (the "Company"), par value $0.01 per
share, set forth on the signature page hereto (the "Shares") in consideration
for payment by the Subscriber of $4.00 per Share pursuant to this Subscription
Agreement (the "Agreement"). The Subscriber herewith tenders the entire amount
of such purchase price by check or wire transfer payable to the order of Xxxxxxx
Xxxxx Securities Incorporated, the Company's escrow agent (the "Escrow Agent").
The Subscriber acknowledges that at the time of issuance the Common Stock
will not be registered under the Securities Act of 1933, as amended (the "Act"),
in reliance upon an exemption from registration contained in the Act, and that
the Company's reliance upon such exemption is based, at least partially, on the
Subscriber's representations and warranties contained in this Subscription
Agreement.
2. Acceptance or Rejection of Subscription. Subscriber acknowledges and
agrees that this subscription shall not be effective until accepted in writing
by the Company, and that the Company reserves the right to reject this
subscription in whole or in part. The Company is raising capital through the
sale of a minimum of 150,000 and a maximum of 300,000 Shares. Subscriptions may
be rejected if this minimum subscription is not achieved, for insufficient
documentation or for such other reason as the Company may determine, in its sole
discretion, to be in the best interests of the Company. The Company, in its sole
discretion, reserves the right to close this offering at any time after 150,000
Shares are sold and may limit the number of Shares sold in excess of 150,000. In
the event Subscriber's subscription is accepted by the Company, Subscriber's
Shares shall be issued as of the date specified by the Company at the time of
acceptance.
3. Escrow Arrangements. All payments received from subscribers in this
offering will be deposited by the Escrow Agent in a non-interest bearing account
in the Company's name, specifically segregated for deposit of the subscription
payments, to be held in the account until the Company receives subscription
payments for at least 150,000 Shares. If the minimum investment requirement is
not satisfied prior to , 1999 (the "Termination Date"), then the funds
in the escrow account will be returned to Subscribers without interest. All
subscription payments received by the Escrow Agent after the minimum investment
requirement has been satisfied will be promptly forwarded to the Company.
4. Registration Rights. The Company agrees to prepare and file a
registration statement with the SEC on any available form of registration
statement for the public sale of the Shares and use reasonable efforts to cause
such registration statement to become effective within 120 days from the closing
of the last subscription accepted under this offering; provided, however, if the
Company shall furnish to the holders of Shares a certificate signed by the
Chairman or President of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company for a registration
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statement to be filed or effective, then the Company's obligation shall be
deferred for a reasonable period, which shall in no event exceed 180 days from
the date such notice is delivered.
The Company will keep effective and maintain any registration for such
period (not exceeding 120 days) as may be reasonably necessary for Subscribers
to effect a public sale or disposition of the Shares. If the registration is to
be effected in connection with an underwritten offering, all holders of Shares
shall enter into an underwriting agreement with the managing or lead underwriter
in the form customarily used by such underwriter with such changes thereto as
the parties thereto shall agree. If any holder of Shares disapproves of the
terms of any such underwriting, it may elect to withdraw therefrom by written
notice to the Company and the managing or lead underwriter. Any Shares so
withdrawn from such underwriting shall be withdrawn from such registration. The
Company shall be required to prepare and file no more than one registration
statement in connection with this obligation. The Company may include in such
registration securities for offering by the Company and any other holder of
securities, it being understood, however, that the Company's and such other
holder's right of inclusion in such registration shall be subordinate to the
rights of the holders of the Shares under this Agreement. All Subscribers agree
provide necessary information and to cooperate fully with the Company and its
legal counsel in such registration. The Company may exclude from such
registration any Subscribers failing to so cooperate.
During the effective period of any registration statement covering the
Shares, the holders of the Shares will not effect sales thereof after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update a registration statement or prospectus until the
holders receive written notice from the Company that the registration statement
or prospectus has been corrected or updated.
At the end of the effective period of any registration statement covering
the Shares, the holders of the Shares shall discontinue sales of shares pursuant
to such registration statement upon receipt of notice from the Company of its
intention to remove from registration the Shares covered by such registration
statement which remain unsold, and the holders shall notify the Company of the
number of shares registered which remain unsold immediately upon receipt of such
notice from the Company.
5. Subscriber's Representations and Warranties. Subscriber represents,
warrants, acknowledges and agrees to the following.
a. Subscriber is a resident of the state indicated on the signature
page hereof, is legally competent to execute this Agreement, and:
(i) if Subscriber is an individual, has his or her principal
residence in such state; or
(ii) if Subscriber is a corporation, partnership, trust or other
form of business organization, has its principal office in such state;
and
(iii) if Subscriber is a corporation, partnership, trust or other
form of business organization, Subscriber has not been organized for the
specific purpose of acquiring the Shares.
b. This Agreement is and shall be irrevocable, except that the
Subscriber shall have no obligations hereunder in the event that the
subscription is not accepted by the Company in whole or in part.
c. The Subscriber has read this Agreement carefully and, to the
extent believed necessary, has discussed the representations, warranties
and agreements and the applicable limitations upon the Subscriber's resale
of the Common Stock with counsel.
d. The Subscriber represents that, if an individual, the Subscriber
is at least 21 years of age.
e. The Subscriber understands that no federal or state agency has
made any finding or determination regarding the fairness of this offering,
or any recommendation or endorsement of this offering.
f. The Subscriber is an "accredited investor" as defined in Rule 501
of Regulation D promulgated under the Act.
Entities that are accredited investors under Rule 501 include,
among others, certain banks, savings and loan associations,
registered securities broker-dealers, insurance companies,
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registered investment companies and trusts. Individuals that are
accredited investors under Rule 501 include, among others, any
natural person whose individual net worth, or joint net worth
with that person's spouse, exceeds $1 million; or who had income
in excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000 in
each of those years and who has a reasonable expectation of
reaching the same income level in the current year.
g. The Subscriber has received from the Company or others and has
read copies of the Company's filings with the U.S. Securities and Exchange
Commission (the "SEC"), and has had an adequate opportunity to ask
questions of and receive answers from the Company regarding these documents
(the "SEC Filings").
h. The Subscriber represents that the Subscriber, if an individual,
has adequate means of providing for his/her current needs and personal and
family contingencies and has no need for liquidity in his/her investment in
this offering.
i. The Subscriber is financially able to bear the economic risk of
this investment, including the ability to afford holding the Common Stock
for an indefinite period, or to afford a complete loss of its investment.
The Subscriber's total investment in the Company will not exceed ten
percent (10%) of net worth as determined exclusive of principal residence,
mortgage thereon, home furnishings and automobiles.
j. The Subscriber is purchasing the Common Stock for the Subscriber's
own account, with the intention of holding the Common Stock for investment
purposes and not for the purpose of reselling or otherwise participating,
directly or indirectly, in a distribution of the Common Stock, and shall
not make any sale, transfer or other disposition of any portion of the
Common Stock purchased hereby without registration under the Act and any
applicable securities act of any state or unless an exemption from
registration is available under such acts.
k. The Subscriber's overall commitment to investments that are not
readily marketable is not disproportionate to the Subscriber's net worth,
and the Subscriber's investment in the Common Stock will not cause such
overall commitment to become excessive.
l. The Subscriber understands that an investment in the Common Stock
is a highly illiquid investment, and that, the Subscriber will have to bear
the economic risk of the investment indefinitely (or at least until such
shares may become registered as provided under this Agreement) because the
Common Stock has not been registered under the Act and is being issued
pursuant to a private placement exemption under Regulation D, on the
grounds that no public offering is involved. Therefore, the Common Stock
cannot be offered, sold, transferred, pledged or hypothecated to any
person, unless either it is subsequently registered under the Act and
applicable state securities laws or an exemption from registration is
available and the Subscriber obtains a favorable opinion of the Company's
counsel to that effect.
m. Absent or prior to registration of the Shares by the Company
pursuant to Section 4 hereof, the Subscriber understands that the
provisions of Rule 144 promulgated under the Act are not available for at
least one (1) year, to permit resale of the Common Stock, and there can be
no assurance that the conditions necessary to permit routine sales of the
Common Stock under Rule 144 will ever be satisfied, and, if Rule 144 should
become available, routine sales made in reliance on its provisions could be
made only in limited amounts and in accordance with the terms and
conditions of the Rule. The Subscriber further understands that in
connection with sales for which Rule 144 is not available, compliance with
some other registration exemption will be required, which may not be
available.
n. The Subscriber understands that the Company is under a reasonable
efforts obligation to the Subscriber to register the Common Stock for
public sale under the Act within and that such obligation is subject to
certain limitations as provided in Section 4 hereof.
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o. The Subscriber understands and agrees that stop transfer
instructions will be given to the Company's transfer agent or the officer
in charge of its stock records and noted on the appropriate records of the
Company to the effect that the Common Stock may not be transferred out of
the Subscriber's name unless either the Shares become registered under the
Act or it is established to the satisfaction of counsel for the Company
that an exemption from the registration provisions of the Act and
applicable state securities laws is available therefore. The Subscriber
further agrees that there will be placed on the certificates for the Common
Stock, or any substitutions therefore, a legend stating in substance as
follows, that the Subscriber understands and agrees that the Company may
refuse to permit the transfer of the stock out of its name and that the
stock must be held indefinitely in the absence of compliance with the terms
of such legend.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES ACT AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED
IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE CORPORATION
RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE
CORPORATION) REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER
MAY BE MADE IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE
SECURITIES LAWS AND REGULATIONS.
p. The Subscriber has been given the opportunity to review the
Company's SEC Filings, and to ask questions of, and receive answers from,
Company representatives concerning the Company and the terms and conditions
of the offering and to obtain such other information as the Subscriber
desires in order to evaluate an investment in the Common Stock.
q. The Subscriber agrees to indemnify the Company, its directors,
officers and employees, and to hold them harmless from and against any and
all liability, damages, costs or expenses, including reasonable attorney
fees, on account of or arising out of (i) any inaccuracy in the
Subscriber's representations and warranties hereinabove set forth; (ii) the
disposition of any of the Common Stock which it will receive, contrary to
its foregoing representations and warranties; and (iii) any action, suit or
proceeding based upon either the claim that its representations or
warranties were inaccurate or misleading or otherwise cause for obtaining
damages or redress from the Company, its directors, officers or employees,
or the disposition of any portion of the Common Stock.
r. The Subscriber understands that the Shares are being sold by the
Company through Xxxxxxx Xxxxx Securities as the Company's placement agent
for the offering and that the Company has agreed to pay Xxxxxxx Xxxxx
Securities a customary placement fee of 7.0% of the gross offering proceeds
for its services.
6. Company Representations and Warranties. The Company represents,
warrants acknowledges and agrees to the following.
a. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority to
own and operate its properties and assets and to carry on its business as
now conducted and as currently proposed to be conducted. The Company is
duly qualified and authorized to do business, and is in good standing as a
foreign corporation, in Virginia and in each other jurisdiction where the
nature of its activities and of its properties (both owned and leased)
makes such qualification necessary, except where a failure to do so would
not have a material adverse effect on the Company.
b. Capitalization. The authorized capital of the Company,
immediately prior to the Closing, will consist of: 1,200,000 shares of
Series D Convertible Preferred Stock, $0.01 par value per share, 1,082,625
of which are issued and outstanding; 1,000,000 shares of Series C
Convertible Preferred Stock, $0.01 par value per share, 626,293 shares of
which are issued and outstanding; 7,800,000 shares of undesignated
Preferred Stock, $0.01 par value per share; and 36,000,000 shares of Common
Stock, $0.01 par value per share, 3,990,046 of which were issued and
outstanding as of December 31, 1998.
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All of the outstanding shares of Common Stock and Preferred Stock that
have been duly authorized and validly issued, are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws. The Company has duly and validly reserved the Shares
for issuance as contemplated hereby and sufficient shares of Common Stock
for issuance upon exercise of warrants issued to certain parties and
options granted to officers, directors, employees and consultants of the
Company under the Company's stock option plan. Except as disclosed in the
SEC Filings, there are no outstanding rights of first refusal, preemptive
rights or other rights, options, warrants, conversion rights or other
agreements, either directly or indirectly, for the purchase or acquisition
from the Company of any shares of its capital stock.
c. Authorization. All corporate action on the part of the Company
and its directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all the
Company's obligations hereunder and thereunder, and the authorization,
issuance, sale and delivery of the Shares has been taken. This Agreement,
when executed and delivered by the Company and the respective other parties
thereto, shall constitute a valid and legally binding obligation of the
Company enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, rules and laws governing specific performance, injunctive relief
and other equitable remedies.
d. Validity of the Shares. The Shares, when issued pursuant to the
terms of this Agreement, will be validly issued, and fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that the Shares will be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein.
e. Compliance with Other Instruments. The Company is not in
violation of any provisions of its Certificate of Incorporation or its
Bylaws as amended, or of any provisions of any material agreement or any
judgment, decree or order by which it is bound or any statute, rule or
regulation applicable to the Company. Subject to the compliance with such
filings as may be required to be made with the SEC, the National
Association of Securities Dealers, Inc. (the "NASD") and certain state
securities commissions, the execution, delivery and performance of this
agreement and the issuance and sale of the Shares pursuant hereto, will not
result in any such violation or be in conflict with or constitute a default
under any such provisions or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of
the Company.
f. Governmental Consents. All consents, approvals, orders or
authorization of, or registrations, qualifications, designations,
declarations or filings with, any federal or state governmental authority
on the part of the Company required in connection with the valid execution
and delivery of this agreement, the offer, sale or issuance of the Shares,
or the consummation of any other transaction contemplated hereby, have been
obtained, except for the registration of the Shares as provided in Section
4 hereof and the notices required to be filed with the SEC, the NASD and
certain state securities commissions thereafter, which notices will be
filed on a timely basis.
g. Accuracy of Reports. The SEC Filings required to be filed by the
Company within the year prior to the date of this Agreement under the
Securities Exchange Act of 1934 have been duly filed, were in substantial
compliance with the requirements of their respective forms, were complete
and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
h. Disclosure. No representation or warranty of the Company
contained in this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
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7. Revocation. Subscriber acknowledges and agrees that Subscriber shall
not and cannot cancel, terminate or revoke this Agreement or any agreement of
Subscriber made hereunder, except as otherwise provided by applicable state law,
and that (if Subscriber is an individual) this Agreement shall survive the
death, disability, or incompetence of Subscriber.
8. Assignment. This Agreement is not transferable or assignable by the
Subscriber.
9. Expenses. The Company and each of the Purchasers shall bear his, her
or its own expenses with respect to this Agreement and the transactions
contemplated hereby.
10. Correct Information. All information which the Subscriber has provided
concerning the Subscriber, his, her or its financial position and the
Subscriber's knowledge of financial and business matters is correct and complete
as of the date hereof, and if there should be any material change in such
information prior to the Company's acceptance of the subscription, the
Subscriber will immediately provide the Company with such information.
11. Miscellaneous. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware. 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.
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SUBSCRIPTION AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement
on this ___ day of ________ 1999.
____________ = Shares of Common Stock
____________ = total payment by Subscriber
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Signature of Subscriber
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Printed or typed name of Subscriber (in exactly the form
in which securities are to be registered)
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Printed or Typed Name and Title of person signing
(if Subscriber is not an individual)
Escrow Agent:
Xxxxxxx Xxxxx Securities Incorporated
By:
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Title:
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Address
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Social Security Number(s) (if an individual)
FOR COMPANY USE ONLY:
ACCEPTED THIS ___ DAY OF ________ 1999, ON BEHALF OF UOL PUBLISHING, INC.,
FOR ______ SHARES OF COMMON STOCK.
BY:
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NAME:
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TITLE:
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