EXHIBIT 10.38
SUBSCRIPTION AGREEMENT
This Subscription Agreement (hereinafter the "Agreement") is entered
into this 8th day of January, 2004, by and between Xxxxxxx X. Xxxxxxxxx
("Skiptunis") and Power Efficiency Corporation ("PEC").
WHEREAS, Skiptunis desires to purchase from PEC, and PEC desires to
sell to Skiptunis, shares of PEC's common stock as described below;
NOW, THEREFORE, in consideration of the foregoing and of the promises
and covenants contained herein, it is hereby covenanted and agreed as follows:
1. Agreed Subscription; Purchase Price. Skiptunis hereby purchases from
PEC 107,773 newly issued shares of PEC's common stock (the "Shares")
for the purchase price of $71,130.61 (approximately $0.66 per share;
the closing price of PEC's common stock on December 9, 2003). The
purchase price shall be paid to PEC by the cancellation of $71,130.61
of deferred salary owed by PEC to Skiptunis pursuant to Skiptunis's
Employment Agreement dated November 7, 2002. The debt hereby cancelled
consists of:
a. $71,103.61 of deferred salary (entire existing balance)
accrued pursuant to the Employment Agreement between Xx.
Xxxxxxxxx and PEC dated November 7, 2002.
2. Acknowledgments; Economic Risk; No Liquidity. Skiptunis understands and
agrees that the purchase of the Shares is not a liquid investment. In
particular and in addition to the representations in Section 3 hereof,
Skiptunis recognizes, acknowledges and agrees that:
a. Skiptunis must bear the economic risk of investment in the
Shares for an indefinite period of time since the Shares have
not been registered under the Securities Act of 1933, as
amended (the "Securities Act") or applicable state securities
laws ("State Acts"), and, therefore, cannot be transferred or
sold unless either they are subsequently registered under the
Securities Act and applicable State Acts, or an exemption from
registration is available and a favorable opinion of counsel
to that effect is obtained.
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b. Although there is a limited public market for the Company's
Common Stock, which is thinly traded on the National
Association of Securities Dealers' Over the Counter Bulletin
Board ("OTCBB") under the symbol "PREF", the Shares are being
issued in a private transaction exempt from the registration
requirements of the Securities Act and therefore cannot be
freely resold. The Shares are restricted securities. The
Shares may be resold in accordance with the provisions of
Securities Act Rule 144.
3. Representations. Skiptunis represents to, and agrees with the Company
that:
a. Skiptunis has carefully reviewed and understands the risks of
and other considerations relating to a purchase of the Shares.
x. Xxxxxxxxx is acquiring the Shares for which he hereby
subscribes as principal for his own investment account, and
not (1) with a view to the resale or distribution of all or
any part thereof, or (2) on behalf of another person. No
person other than the undersigned will have a direct or
indirect interest in the Shares subscribed for hereby.
x. Xxxxxxxxx consents to the placement of a legend on any
certificate(s) evidencing the Shares stating that such
securities have not been registered under the Securities Act
and setting forth or referring to the restrictions on
transferability and sale thereof. Skiptunis is aware that the
Company will make a notation in its appropriate records with
respect to the restrictions on the transferability of such
securities.
4. Terms of Subscription and Closing.
a. This subscription, upon acceptance by the Company, shall be
binding upon the heirs, executors, administrators, successors
and assigns of Skiptunis.
b. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without giving
effect to conflict of laws principles.
[Signature page to immediately follow.]
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IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement dated January 8, 2004.
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POWER EFFICIENCY CORPORATION, a Delaware Corporation Xxxxxxx X. Xxxxxxxxx, individually
By: _______________________________ ___________________________________
Name: Xxxxxxx Xxxx
Title: Chief Executive Officer
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