BIG XXXXX BRANDS, INC.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT made as of this day of May, 1998 between Big
Xxxxx Brands, Inc., a Delaware corporation (the "Company") and the undersigned
(the "Subscriber").
WHEREAS, the Company desires to issue no less than 5 and up to 10 Units
("Units" ) for $100,000 per Unit on the terms and conditions hereinafter set
forth and the Subscriber desires to acquire the Units in a private placement,
each Unit consisting of $100,000 principal amount of 12% Notes of the Company
(the "Notes") in the form attached hereto as Exhibit A, and warrants to purchase
10,000 shares of Common Stock, $.01 par value per share (the "Common Stock") of
the Company at an exercise price of $1.30 per share (the "Warrants") in the form
attached hereto as Exhibit B;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company Units
for a price equal to $100,000 per Unit and the Company agrees to sell such Units
to the Subscriber for said purchase price. The purchase price is payable by
certified or bank check or wire transfer payable to _______________ as Escrow
Agent [the Company], contemporaneously with the execution and delivery of this
Subscription Agreement.
1.2 The Subscriber recognizes that the purchase of Units involves a
high degree of risk in that (i) the Company has had substantial losses in recent
periods and requires substantial funds in addition to the proceeds of this
private placement; (ii) an investment in the Company is highly speculative and
only investors who can afford the loss of their entire investment should
consider investing in the Company; (iii) the Subscriber may not be able to
liquidate this investment; (iv) transferability of the Units is extremely
limited; and (v) in the event of a disposition, a Subscriber could sustain the
loss of the Subscriber's entire investment.
1.3 The Subscriber represents that the Subscriber is an "accredited
investor" as such term in defined in Rule 501 of Regulation D promulgated under
the United States Securities Act of 1933, as amended (the "Act") qualifying as
such on the basis set forth in the executed Investor Questionnaire provided by
the Subscriber to the Company concurrently herewith and that the Subscriber is
able to bear the economic risk of an investment in the Units.
1.4 The Subscriber acknowledges that the Subscriber has prior
investment experience, including investment in non-listed and non-registered
securities and to evaluate the merits and risks of such an investment on the
Subscriber's behalf, and that the Subscriber recognizes the highly speculative
nature of this investment. The Subscriber or the Subscriber's purchaser
representative has such knowledge and experience in finance, securities,
investments and other business matters so as to be able to protect the interests
of the Subscriber in connection with this transaction, and the Subscriber's
investment in the Company hereunder is not material when compared to the
Subscriber's total financial capacity. The Subscriber understands the various
risks of an investment in the Company as proposed herein and can afford to bear
such risks, including, without limitation, the risks of losing the entire
investment.
1.5 The Subscriber represents that the Subscriber has been furnished by
the Company during the course of this transaction with all information regarding
the Company which the Subscriber had requested or desired to know; that all
documents which could be reasonably provided have been made available for the
Subscriber's inspection and review; and that such information and documents
have, in the Subscriber's opinion, afforded the Subscriber with all of the same
information that would be provided the Subscriber in a registration statement
filed under the Act; that the Subscriber has been afforded the opportunity to
ask questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the terms and conditions of the
offering, and any additional information which the Subscriber had requested.
1.6 The Subscriber hereby acknowledges that this offering of Units has
not been reviewed by the United States Securities and Exchange Commission
("SEC") because of the Company's representations that this is intended to be a
nonpublic offering pursuant to Sections 4(2) or 3(b) of the Act. The Subscriber
represents that the Units are being purchased for his own account, for
investment and not for distribution or resale to others. The Subscriber agrees
that he will not sell or otherwise transfer such securities unless they are
registered under the Act or unless an exemption from such registration is
available.
1.7 The Subscriber understands that the Units have not been registered
under Act by reason of a claimed exemption under the provisions of the Act which
depends, in part, upon his investment intention and other representations and
warranties set forth herein. In this connection, the Subscriber understands that
it is the position of the SEC that the statutory basis for such exemption would
not be present if his representation merely meant that his present intention was
to hold such securities for a short period, such as the capital gains period of
tax statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC, a purchase now with an intent to resell would represent a
purchase with an intent inconsistent with his representation to the Company, and
the SEC might regard such a sale or disposition as a deferred sale to which such
exemptions are not available.
1.8 The Subscriber understands that there is no public market for the
Units. The Subscriber understands that even if a public market develops for the
Common Stock, Rule 144 (the "Rule") promulgated under the Act requires, among
other conditions, a one year holding period prior to the resale (in limited
amounts) of securities acquired in a non-public offering without having to
satisfy the registration requirements under the Act. The Subscriber understands
and hereby acknowledges that the Company is under no obligation to register the
securities comprising the Units under the Act, except as provided in Paragraph 4
hereof. The Subscriber consents that the Company may, if it desires, permit the
transfer of the securities comprising the
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Units out of his name only when his request for transfer is accompanied by an
opinion of counsel reasonably satisfactory to the Company that neither the sale
nor the proposed transfer results in a violation of the Act or any applicable
state "blue sky" laws (collectively "Securities Laws"). The Subscriber agrees to
hold the Company and its directors, officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by him contained herein or any sale or
distribution by the undersigned Subscriber in violation of any Securities Laws.
1.9 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Units stating that they have not
been registered under the Act and setting forth or referring to the restrictions
on transferability and sale thereof.
1.10 The Subscriber hereby represents that the address of Subscriber
furnished by him at the end of this Subscription Agreement is the undersigned's
principal residence if he is an individual or its principal business address if
it is a corporation or other entity.
1.11 The Subscriber hereby represents that no representations or
warranties have been made to the Subscriber by the Company or any agent,
employee or affiliate of the Company and in entering into this transaction, the
Subscriber is not relying on any information, other than that contained in this
Agreement and the results of independent investigation by the Subscriber.
In furtherance of the foregoing and not by way of limitation, it never
has been represented, guaranteed or warranted by any broker, the Company, X.X.
Xxxxxxxx Investments, Inc., any of the officers, directors, stockholders,
partners, employees or agents of either, or any other persons, whether expressly
or by implication, that: (i) the Company or the Subscriber will realize any
given percentage of profits and/or amount or type of consideration, profit or
loss as a result of the Company's activities or the Subscriber's investment in
the Company; or (ii) the past performance or experience of the management of the
Company, or of any other person, will in any way indicate the predictable
results of the ownership of the securities or of the Company's activities.
1.12 If a natural person, the Subscriber is a bona fide resident of the
State contained in the address set forth on the signature page of this Agreement
as the under-signed's home address; at least 21 years of age; and legally
competent to execute this Subscription Agreement. If an entity, the undersigned
is duly authorized to execute this Agreement and this Agreement constitutes the
legal, valid and binding obligation of the undersigned enforceable against the
undersigned in accordance with its terms.
1.13 The undersigned will acquire the Securities for the undersigned's
own account (or for the joint account of the undersigned and the undersigned's
spouse either in joint tenancy, tenancy by the entirety or tenancy in common)
for investment and not with a view to the sale or distribution thereof or the
granting of any participation therein, and has no present intention of
distributing or selling to others any of such interest or granting any
participation therein.
1.14 No oral or written representations have been made other than as
stated in this Agreement, and no oral or written information furnished to the
Subscriber or the Subscriber's
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advisor(s) in connection with this offering were in any way inconsistent with
the information stated herein.
1.15 The Subscriber is not subscribing for Units as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than a representative of X.X. Xxxxxxxx
Investments, Inc. or the Company with which the undersigned had a pre-existing
relationship in connection with investments in securities generally.
1.16 The Subscriber is not relying on the Company with respect to the
tax and other economic considerations of an investment.
1.17 The Subscriber has received and carefully read copies of the
Company's Annual Report on Form 10-KSB for the period ended December 31, 1997
and the Quarterly Report on Form 10-QSB for the period ended March 31, 1998. The
Subscriber has had the opportunity to ask questions about the contents of such
reports and is satisfied as to the responses of the Company.
1.18 Without limiting any of the Subscriber's other representations and
warranties hereunder, the Subscriber acknowledges that the undersigned has
reviewed and is aware of the risk factors described in the Company's annual
report on Form 10-KSB for the fiscal year ended December 31, 1997 and the
Company's other periodic reports filed with the SEC from time to time.
1.19 The Subscriber acknowledges that the representations, warranties
and agreements made by the Subscriber herein shall survive the execution and
delivery of this Agreement and the purchase of the Units.
1.20 The Subscriber has consulted his own financial, legal and tax
advisors with respect to the economic, legal and tax consequences of an
investment in the Units and has not relied on the Company, its officers,
directors or professional advisors for advice as to such consequences.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that prior to the
consummation of this offering and at the Closing Date:
(a) The Company is a corporation duly organized and existing under the
laws of the State of Delaware and has the corporate power to conduct the
business which it conducts and proposes to conduct. Upon the payment of past due
franchise taxes upon the closing of this offering, the Company will be in good
standing in the State of Delaware
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(b) The execution, delivery and performance of this Subscription
Agreement by the Company will have been duly approved by the Board of Directors
of the Company and all other actions required to authorize and effect the offer
and sale of the Units will have been duly taken and approved.
(c) The Notes and Warrants comprising the Units have been duly and
validly authorized and when issued and paid for in accordance with the terms
hereof, will be valid and binding obligations of the Company enforceable in
accordance with their respective terms.
(d) Except as disclosed in its public filings, the Company knows of no
pending or threatened legal or governmental proceedings to which the Company is
a party which could materially adversely affect the business, property,
financial condition or operations of the Company.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will begin as of May 18, 1998 and will
terminate at 11:59 PM Eastern time on May 31, 1998 , unless extended by the
Company for an additional 15 days (the "Termination Date"). Five Units will be
offered on a "best efforts-all or none" basis and the remaining five Units will
be offered on a "best efforts" basis.
3.2 Placement of the Units will be made by X.X. Xxxxxxxx Investments,
Inc., which will receive a placement fee of 5% of the purchase price of the
Units placed.
3.3. Pending the sale of the Units, all funds paid hereunder shall be
deposited by the Company in escrow at [escrow agent]. If the Company has not
obtained subscriptions for at least five Units ($500,000) by the Termination
Date, then this subscription shall be void and all funds paid hereunder by the
Subscriber, without interest, shall be promptly returned to the Subscriber.
IV. REGISTRATION RIGHTS
4.1. Commencing April 1, 1998 through May 31, 2001, the Company shall
advise the holder of the Warrants or its transferee (the "Holder"), whether the
Holder holds the Warrants or has exercised the Warrants and holds Common Stock,
by written notice at least 30 days prior to the filing of any new registration
statement or post-effective amendment thereto under the Act covering any
securities of the Company, for its own account or for the account of others
(other than a registration statement on Form S-4 or S-8 or any successor forms
thereto), and will for a period of one year from the effective date of the
Registration Statement, upon the request of the Holder, include in any such
registration statement, such information as may be required to permit a public
offering of the Warrants or the Common Stock issuable upon the exercise of the
Warrants (the "Registrable Securities"). The Company shall supply prospectuses
and such other documents as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities,
use its best efforts to register and qualify any of the Registrable Securities
for sale in such states as such Holder reasonably designates provided that the
Company shall not be required to qualify as a foreign corporation or a dealer in
securities or execute a general consent to service of process in any
jurisdiction in any action and do any and
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all other acts and things which may be reasonably necessary or desirable to
enable such Holders to consummate the public sale or other disposition of the
Registrable Securities, and furnish indemnification in the manner provided in
paragraph 4.2 hereof. The Holder shall furnish information and indemnification
as set forth in paragraph 4.2 except that the maximum amount which may be
recovered from the Holder shall be limited to the amount of proceeds received by
the Holder from the sale of the Registrable Securities. The Company shall use
its reasonable efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the holders of Registrable Securities
requested to be included in the registration to include such securities in such
underwritten offering on the same terms and conditions as any similar securities
of the Company included therein, including but limited to executing the
underwriting agreement and providing reasonable and customary representations
and indemnification. Notwithstanding the foregoing, if the managing underwriter
or underwriters of such offering advises the holders of Registrable Securities
that the total amount of securities which they intend to include in such
offering is such as to materially and adversely affect the success of such
offering, then the amount of securities to be offered for the accounts of
holders of Registrable Securities shall be eliminated, reduced, or limited to
the extent necessary to reduce the total amount of securities to be included in
such offering to the amount, if any, recommended by such managing underwriter or
underwriters (any such reduction or limitation in the total amount of
Registrable Securities to be included in such offering to be borne by the
holders of Registrable Securities proposed to be included therein pro rata). The
Holder will pay its own legal fees and expenses and any underwriting discounts
and commissions on the securities sold by such Holder and shall not be
responsible for any other expenses of such registration.
4.2. (a) Whenever pursuant to paragraph 4.1 a registration statement
relating to the Registrable Securities, is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each holder of the
securities covered by such registration statement, amendment, or supplement
(such holder being hereinafter called the "Distributing Holder"), and each
person, if any, who controls (within the meaning of the Act) the Distributing
Holder, and each underwriter (within the meaning of the Act) of such securities
and each person, if any, who controls (within the meaning of the Act) any such
underwriter, against any losses, claims, damages, or liabilities, joint or
several, to which the Distributing Holder, any such controlling person or any
such underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof or any amendment or
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse the Distributing Holder
and each such controlling person and underwriter for any legal or other expenses
reasonably incurred by the Distributing Holder or such controlling person or
underwriter in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus, or said amendment or
supplement in reliance upon and in conformity with written information furnished
by such Distributing Holder or any other Distributing Holder, for use in the
preparation thereof.
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(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, each person,
if any, who controls the Company (within the meaning of the Act) against any
losses, claims, damages, or liabilities, joint and several, to which the Company
or any such director, officer, or controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages, or liabilities
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in said registration statement, said preliminary
prospectus, said final prospectus, or said amendment or supplement, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in said registration statement, said preliminary prospectus,
said final prospectus, or said amendment or supplement in reliance upon and in
conformity with written information furnished by such Distributing Holder for
use in the preparation thereof; and will reimburse the Company or any such
director, officer, or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action.
(c) Promptly after receipt by an indemnified party under this paragraph
4.2 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party, give
the indemnifying party notice of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Paragraph 4.2.
In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this paragraph 4.2 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at 0000 X. Xxxxxx Xxxx, Xxxxx 000,
Xxxx Xxxxx, Xxxxxxx 00000, Attention: President and to the Subscriber at his
address indicated on the last page of this Subscription Agreement. Notices shall
be deemed to have been given on the date of mailing, except notices of change of
address, which shall be deemed to have been given when received.
5.2 This Subscription Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Subscription Agreement may not be
7
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
5.4 Notwithstanding the place where this Subscription Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of Florida.
5.5 This Subscription Agreement may be executed in counterparts. Upon
the execution and delivery of this Subscription Agreement by the Subscriber,
this Subscription Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided; subject, however, to
the right hereby reserved to the Company to enter into the same agreements with
other subscribers and to add and/or to delete other persons as subscribers.
5.6 The holding of any provision of this Subscription Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Subscription Agreement, which shall remain in full
force and effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate, or be construed, as
a waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.
V. BLUE SKY LEGENDS
Connecticut
The undersigned acknowledges that the Securities have not been
registered under the Connecticut Uniform Securities Act, as amended (the "Act")
and are subject to restrictions on transferability and sale of securities as set
forth herein. The undersigned hereby agrees that such Securities will not be
transferred or sold without registration under the Act or exemption therefrom.
Missouri
The undersigned acknowledges that the Securities have not been
registered under the Missouri Uniform Securities Act, as amended (the "Act") and
are subject to restrictions on transferability and sale of securities as set
forth herein. The undersigned hereby acknowledges
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that such Securities may be disposed of only through a licensed broker-dealer.
It is a felony to sell securities in violation of the Missouri Securities Act.
Pennsylvania
The undersigned hereby acknowledges that the Issuer is relying upon the
exemption from registration of securities set forth in Section 203(d) of the
Pennsylvania Securities Act of 1972, as amended (the "Pennsylvania Act") in
connection with the sale of the Securities to the undersigned.
In accordance with the requirements of Section 203(d) of the
Pennsylvania Act, the undersigned hereby agrees not to sell his Securities
within twelve (12) months from the date of purchase except pursuant to Section
204.01 of the Blue Sky Regulations of the Pennsylvania Securities Act of 1972.
Additionally, the undersigned is aware of the right of withdrawal under Section
207(m) of the Act described in the cover pages of the Memorandum.
Texas
The undersigned hereby acknowledges that the Securities cannot be sold
unless they are subsequently registered under the Securities Act of 1933, as
amended, and the Texas Securities Act, or an exemption from registration is
available. The undersigned further acknowledges that because the Securities are
not readily transferable, he must bear the economic risk of his investment for
an indefinite period of time.
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IN WITNESS WHEREOF, the parties have executed this
Subscription Agreement as of the day and year first written above.
------------------------------ ---------------------------
Signature of Subscriber(s)
------------------------------ ---------------------------
Name of Subscriber(s)
[please print]
------------------------------ ---------------------------
Address of Subscriber(s)
------------------------------ ---------------------------
Social Security or Taxpayer
Identification Number of Subscriber(s)
Subscription Accepted:
BIG XXXXX BRANDS, INC.
By: ______________________________
Name:
Title:
Date: ____________________
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BIG XXXXX BRANDS, INC.
INVESTOR QUESTIONNAIRE
Purpose of this Questionnaire
The Units are being offered without registration under the Securities
Act of 1933, as amended (the "1933 Act"), or the securities laws of any state,
in reliance on the exemptions contained in Rule 506 of Regulation D promulgated
under the Securities Act of 1933, as amended. The Company may be required to
determine that an individual, or an individual together with a "purchaser
representative" or each individual equity owner of an investing entity meets
certain suitability requirements before selling the Units to such individual or
entity. You understand that the Company will rely on the following information
for purposes of such determination, and that the Units will not be registered
under the 1933 Act in reliance on an exemption from registration provided under
Section 4(2) under the 1933 Act. THE COMPANY MAY, AT ITS ELECTION, NOT SELL
UNITS TO A SUBSCRIBER WHO HAS NOT THOROUGHLY FILLED OUT A QUESTIONNAIRE. IN THE
CASE OF AN INVESTOR THAT IS A PARTNERSHIP, TRUST, OR CORPORATION, EACH EQUITY
OWNER MUST COMPLETE A QUESTIONNAIRE. This Questionnaire does not constitute an
offer to sell or a solicitation of an offer to buy the Units or any other
security.
Instructions
One (1) copy of this Questionnaire should be completed, signed, dated,
and delivered to Xxxxx Xxxxxxxx, X.X. Xxxxxxxx Investments, Inc., 0000 X.
Xxxxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxxxx 00000 . Please contact Xxxxxxx Xxxxxx--
telephone (561) 394-8383-- if you have any questions with respect to the
Questionnaire.
Please Answer All Questions
If the appropriate answer is "None" or "Not Applicable," so state.
Please print or type your answers to all questions. Attach additional sheets if
necessary to complete your answers to any item.
Your answers will be kept strictly confidential at all times; however,
the Company may present this Questionnaire to such parties as it deems
appropriate, including its counsel, in order to assure itself that the offer and
sale of the Units will not result in a violation of the registration provisions
of the 1933 Act or a violation of the securities laws of any state and if called
on to establish that the proposed offer and sale of the security is exempt from
registration under the 1933 Act or meets the requirements of applicable state
securities laws.
(1) Please provide the following personal information:
Name: Age:
-------------------- --------
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Residence Address
(including zip code): ________________________
------------------------
Telephone Numbers: Residence:________________________
Business: ________________________
(2) Please describe your present or most recent business or occupation and
indicate such information as the nature of your employment, the principal
business of your employer, the principal activities under your management
or supervision, and the scope (e.g., dollar volume, industry rank, etc.) of
such activities.
(3) Please provide the following information concerning your financial
experience.
3.1 Indicate by check xxxx which of the following categories best
describes the extent of your prior experience in the areas of
investment listed below:
Substantial Limited No
Experience Experience Experience
Marketable Securities
Equity Securities for which
no market exists
Limited Partnerships
Initial Public Offerings
3.2 Indicate by check xxxx whether or not you maintain any of the
following types of accounts over which you, rather than a third party,
exercise investment discretion, and the length of time you have
maintained each type of account.
Securities (cash) _______ _______ Number of years ______
Yes No
Securities (margin) _______ _______ Number of years ______
Yes No
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(4) Please answer the following questions concerning your financial condition:
4.1 Does your net worth/1/(or joint net worth with your spouse, if
greater) exceed $1,000,000?
Yes _____ No _____
4.2 Did you have an individual income/2/ in excess of $200,000 or joint
income together with your spouse in excess of $300,000 in each of 1996
and 1997 and do you reasonably expect to reach the same income level
in the current year?
Yes _____ No _____
(5) Check, if appropriate:
(7) By signing this Questionnaire, I hereby confirm the following statements:
. I am aware that the offering of the Units will involve
securities for which no market currently exists, thereby
requiring any investment to be maintained for an indefinite
period of time, and I have no need to liquidate the
investment.
. I acknowledge that any delivery to me of any documentation
relating to the Units prior to the determination by the
Company of my suitability as an investor shall not constitute
an offer of the Units until such determination of suitability
shall be made, and I agree that I shall promptly return all
such documentation to the Company upon request.
--------
/1/For purposes hereof, net worth shall be deemed to include all of your assets,
liquid or illiquid (including such items as home, furnishings, automobile, and
restricted securities) minus any liabilities (including such items as home
mortgages and other debts and liabilities).
/2/For purposes hereof, the term "income" is not limited to "adjusted gross
income" as that term is defined for Federal Income Tax purposes, but rather
includes certain items of income which are deducted in computing "adjusted gross
income." For investors who are salaried employees, the gross salary of such
investor, minus any significant expenses personally incurred by such investor in
connection with earning the salary, plus any income from any other source
including unearned income, is a fair measure of "income" for purposes hereof.
For investors who are self-employed, "income" is generally construed to mean
total revenues received during the calendar year minus significant expenses
incurred in connection with earning such revenues.
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. I hereby represent and warrant that I have such knowledge and
experience in financial and business matters that I am capable of
evaluating the merits and risks of any prospective investment in
the Company.
. Neither I nor any of my associates or affiliates: (i) are a
member or a person associated with a member firm of the NASD,
(ii) own any stock or other securities of any NASD member, or
(iii) made subordinated loans to any NASD member.
. My answers to the foregoing questions are true and complete to
the best of my information and belief, and I will promptly notify
the Company of any changes in the information I have provided.
. I also understand and agree that, although the Company will use
its best efforts to keep the information provided in answers to
this Questionnaire strictly confidential, the Company may present
this Questionnaire and the information provided in answers to it
to such parties as it may deem advisable if called upon to
establish the availability under any federal or state securities
laws of an exemption from registration of the private placement
or if the contents thereof are relevant to any issue in any
action, suit, or proceeding to which the Company is a party or by
which it or they are or may be bound.
. I realize that this Questionnaire does not constitute an offer by
the Company to sell the Units but is merely a request for
information.
-------------------------------------
Printed Name
-------------------------------------
Signature
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Social Security Number or
Employee Identification Number
Date and Place Executed:
Date:
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Place:
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14
