[INYX LOGO]
Subscription Documentation Package
To subscribe for Units in the private offering of
INYX, INC.
1. Date and Fill in the number of Units being subscribed for and
Complete and Sign the Omnibus Signature Page included in the
Subscription Agreement.
2. Initial the Accredited Investor Certification page attached
to this letter.
3. Complete and Return the Confidential Investor Profile and, if
applicable, Wire Transfer Authorization attached to this
letter.
4. Fax all forms to Mr.__________________ at (212) ____________ and
then send all signed original documents with a check (if
applicable) to:
5. Please make your subscription payment payable to the order of
"______________________ Bank, Escrow Agent for INYX, INC."
For wiring funds directly to the escrow account,
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see the following instructions:
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Bank
Acct. Name: Bank as Escrow Agent for Inyx, Inc.
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ABA Number:
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A/C Number:
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FBO: Investor Name
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Social Security Number
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Address
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Investors will purchase the number of units (the "Units")
set forth on the signature page to the Subscription Agreement at
a purchase price of $100,000 per Unit. Each Unit consists of:
(i) such number of shares (the "Shares") of common stock of the
Company, $0.001 par value per share (the "Common Stock"), as will
equal the quotient of (a) $100,000, divided by (b) 75% of the
Closing Price (as hereafter defined) (the "Issue Price"); and
(ii) a warrant (the "Warrants") to purchase one hundred (100%)
percent of the number of Shares included in the Units sold (the
"Warrant Shares"). The closing price (the "Closing Price") will
be the average of the VWAP for each of the five (5) trading days
immediately prior to the date of closing of the Units so
purchased. The Warrants will be exercisable for a period of five
(5) years and will have an initial exercise price equal to one
hundred twenty-five (125%) percent of the Issue Price. The form
of Warrant is included as an Exhibit A the Investment Proposal
(as defined in the Subscription Agreement annexed hereto). The
subscription for the Units will be made in accordance with and
subject to the terms and conditions of the Subscription Agreement
and the Investment Proposal. "VWAP" means, for any date, the
price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a
Principal Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Principal Market on which the Common Stock is then listed or
quoted, as reported by Bloomberg Financial L.P. (based on a
trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern
Time); (b) if the Common Stock is not then listed or quoted on a
Principal Market and if prices for the Common Stock are then
quoted on the Over-the-Counter Bulletin Board ("OTCBB"), the
volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the OTCBB; (c) if the Common
Stock is not then listed or quoted on the OTCBB and if prices for
the Common Stock are then reported in the "Pink Sheets" published
by the Pink Sheets LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent
bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common
Stock, as determined by an independent appraiser selected in good
faith by the investors and reasonably acceptable to the Company.
"Principal Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the
date in question: the American Stock Exchange, the New York Stock
Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.
___________________ is acting as placement agent (the Placement Agent")
to the Company in connection with the sale of the Units.
All subscription funds will be held in a non-interest bearing
escrow account in the Company's name at _____________________ Bank,
___________________________, New York, New York ____________, or with such
other escrow agent as may be appointed by _______________________ and the
Company. In the event that the Company does not succeed in receiving and
accepting subscriptions for at least $4,000,000 (the "Minimum Amount") on
or before August 27, 2004, subject to an extension to October 11,
2004, at the discretion of the Placement Agent and the Company,
the Company will refund all subscription funds, without deduction
and/or interest accrued thereon, and will return the subscription
documents to each subscriber. The Company and the Placement
Agent reserve the right to have their respective officers,
directors and affiliates purchase Units in this Offering, and all
such purchases shall be counted towards the Minimum Amount and
Maximum Amount. If the Company rejects a subscription, either in
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whole or in part (which decision is in the sole discretion of the
Company), the rejected subscription funds or the rejected portion
thereof will be returned promptly to such subscriber without
interest accrued thereon. The minimum subscription per investor
in the Offering is $100,000; provided, however, that
and the Company, in their sole discretion, may waive such minimum
subscription requirement from time to time.
Questions regarding completion of the subscription documents
should be directed to Mr._______________________ (800)_______________.
ALL SUBSCRIPTION DOCUMENTS MUST BE FILLED IN AND SIGNED EXACTLY
AS SET FORTH WITHIN.
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SUBSCRIPTION AGREEMENT
FOR
INYX, INC.
Inyx, Inc.
840 Third Avenue, 40th Floor
New York, New York 10017
Ladies and Gentlemen:
1. Subscription. The undersigned (the "Purchaser"), intending
to be legally bound, hereby irrevocably agrees to purchase a unit
or units (each, a "Unit" and collectively, the "Units") from
Inyx, Inc. (the "Company") at a purchase price of $100,000 per
Unit. Each Unit consists of: (i) such number of shares (the
"Shares") of common stock of the Company, $0.001 par value per
share (the "Common Stock"), as will equal the quotient of (a)
$100,000, divided by (b) 75% of the Closing Price (as hereafter
defined) (the "Issue Price"); and (ii) a warrant (the "Warrants")
to purchase one hundred (100%) percent of the number of Shares
included in the Units sold (the "Warrant Shares"). The closing
price (the "Closing Price") will be the average of the VWAP for
each of the five (5) trading days immediately prior to the date
of closing of the Units so purchased. "VWAP" means, for any date,
the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a
Principal Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Principal Market on which the Common Stock is then listed or
quoted, as reported by Bloomberg Financial L.P. (based on a
trading day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern
Time); (b) if the Common Stock is not then listed or quoted on a
Principal Market and if prices for the Common Stock are then
quoted on the Over-the-Counter Bulletin Board ("OTCBB"), the
volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the OTCBB; (c) if the Common
Stock is not then listed or quoted on the OTCBB and if prices for
the Common Stock are then reported in the "Pink Sheets" published
by the Pink Sheets LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent
bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common
Stock, as determined by an independent appraiser selected in good
faith by the investors and reasonably acceptable to the Company.
"Principal Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the
date in question: the American Stock Exchange, the New York Stock
Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.
The Warrants will be exercisable for a period of five (5)
years and will have an initial exercise price equal to one
hundred twenty-five (125%) percent of the Issue Price. The form
of Warrant is included as an Exhibit A to the Investment Proposal
(as hereafter defined).
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This subscription is submitted to you in accordance with and
subject to the terms and conditions described in this
Subscription Agreement, and the Confidential Investor Proposal of
the Company dated August 11, 2004, as amended or supplemented
from time to time, including all documents incorporated by
reference therein and all attachments, schedules and exhibits
thereto (the "Investment Proposal"), relating to the offering
(the "Offering") by the Company of a minimum amount of 40 Units
($4,000,000) (the "Minimum Amount") and a maximum amount of 70
Units ($7,000,000) (the "Maximum Amount").
The Company and ___________________________________, the placement
agent (the Placement Agent") to the Company in connection with the
sale of the Units, reserve the right to have their respective officers,
directors and affiliates purchase Units in this Offering, and all such
purchases shall be counted towards the Minimum Amount and Maximum Amount.
The terms of the Offering are more completely described in
the Investment Proposal and such terms are incorporated herein in
their entirety. Certain capitalized terms used, but not
otherwise defined herein, will have the respective meanings
provided in the Investment Proposal.
2. Payment. The Purchaser encloses herewith a check
payable to, or will immediately make a wire transfer payment to,
"_______________________ Bank, Escrow Agent for Inyx, Inc.," in
the full amount of the purchase price of the Units being
subscribed for. Together with the check for, or wire transfer
of, the full purchase price, the Purchaser is delivering a
completed and executed Omnibus Signature Page to this
Subscription Agreement and the Registration Rights Agreement.
3. Deposit of Funds. All payments made as provided in
Section 2 hereof will be deposited by the Company as soon as
practicable with ___________________, as escrow agent (the "Escrow
Agent") or such other escrow agent appointed by _______ and the
Company, in a non-interest bearing escrow account (the "Escrow
Account"). In the event that the Company does not succeed in
receiving and accepting subscriptions for the Minimum Amount on
or before August 27, 2004, subject to an extension until October
11, 2004, at the discretion of ______________ and the Company, the
Company will refund all of the Purchaser's subscription funds,
without interest accrued thereon or deduction therefrom, and will
return the subscription documents to the Purchaser. If the
Company rejects a Purchaser's subscription, either in whole or in
part (which decision is in the sole discretion of the Company),
the rejected subscription funds or the rejected portion thereof
will be returned promptly to the Purchaser without interest
accrued thereon or deduction therefrom. The minimum subscription
for a Purchaser in the Offering is one (1) Unit ($100,000);
provided, however, that ______________ and the Company, in their sole
discretion, may waive such minimum subscription requirement from
time to time.
4. Acceptance of Subscription. The Purchaser understands
and agrees that the Company, in its sole discretion, reserves the
right to accept or reject this or any other subscription for the
Units, in whole or in part, notwithstanding prior receipt by the
Purchaser of notice of acceptance of this or any other
subscription. The Company will have no obligation hereunder
until the Company executes and delivers to the Purchaser an
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executed copy of this Subscription Agreement. If Purchaser's
subscription is rejected in whole, or the Offering is terminated
or the Minimum Amount is not subscribed for and accepted, all
funds received from the Purchaser will be returned without
interest, penalty, expense or deduction, and this Subscription
Agreement will thereafter be of no further force or effect. If
Purchaser's subscription is rejected in part, the funds for the
rejected portion of such subscription will be returned without
interest, penalty, expense or deduction, and this Subscription
Agreement will continue in full force and effect to the extent
such subscription was accepted.
5. Representations and Warranties of the Purchaser. The
Purchaser hereby acknowledges, represents, warrants, and agrees
as follows:
(a) None of the shares of Common Stock contained in
the Units or the shares of Common Stock issuable upon exercise of
the Warrant offered pursuant to the Investment Proposal are
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. The Purchaser
understands that the offering and sale of the Units is intended
to be exempt from registration under the Securities Act, by
virtue of Section 4(2) thereof and the provisions of Regulation D
promulgated thereunder, based, in part, upon the representations,
warranties and agreements of the Purchaser contained in this
Subscription Agreement;
(b) The Purchaser and the Purchaser's attorney,
accountant, purchaser representative and/or tax advisor, if any
(collectively, "Advisors"), have received the Investment Proposal
and all other documents requested by the Purchaser or its
Advisors, if any, have carefully reviewed them and understand the
information contained therein, prior to the execution of this
Subscription Agreement;
(c) Neither the Securities and Exchange Commission
(the "Commission") nor any state securities commission has
approved the Units or any of the shares of Common Stock issued by
the Company or the shares of Common Stock issuable upon exercise
of the Warrant, or passed upon or endorsed the merits of the
Offering or confirmed the accuracy or determined the adequacy of
the Investment Proposal. The Investment Proposal has not been
reviewed by any Federal, state or other regulatory authority;
(d) All documents, records, and books pertaining to
the investment in the Units (including, without limitation, the
Investment Proposal) have been made available for inspection by
the Purchaser and its Advisors, if any;
(e) The Purchaser and its Advisors, if any, have had a
reasonable opportunity to ask questions of and receive answers
from a person or persons acting on behalf of the Company
concerning the offering of the Units and the business, financial
condition, results of operations and prospects of the Company,
and all such questions have been answered by the Company in
writing to the full satisfaction of the Purchaser and its
Advisors, if any;
(f) In evaluating the suitability of an investment in
the Company, the Purchaser has not relied upon any representation
or other information (oral or written) other than as stated in
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the Investment Proposal or as contained in documents so furnished
to the Purchaser or its Advisors, if any, by the Company in
writing;
(g) The Purchaser is unaware of, is in no way relying
on, and did not become aware of the offering of the Units through
or as a result of, any form of general solicitation or general
advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television, radio or
over the Internet, in connection with the offering and sale of
the Units and is not subscribing for Units and did not become
aware of the offering of the Units through or as a result of any
seminar or meeting to which the Purchaser was invited by, or any
solicitation of a subscription by, a person not previously known
to the Purchaser in connection with investments in securities
generally;
(h) The Purchaser has taken no action which would give
rise to any claim by any person for brokerage commissions,
finders' fees or the like relating to this Subscription Agreement
or the transactions contemplated hereby (other than commissions
to be paid by the Company to as described in the
Investment Proposal or as otherwise described in the Investment
Proposal);
(i) The Purchaser, either alone or together with its
Advisors, if any, have such knowledge and experience in
financial, tax, and business matters, and, in particular,
investments in securities, so as to enable them to utilize the
information made available to them in connection with the
offering of the Units to evaluate the merits and risks of an
investment in the Units and the Company and to make an informed
investment decision with respect thereto;
(j) The Purchaser is not relying on the Company,
or any of their respective employees or agents with respect to
the legal, tax, economic and related considerations of an
investment in the Units, and the Purchaser has relied on the
advice of, or has consulted with, only its own Advisors;
(k) The Purchaser is acquiring the Units solely for
such Purchaser's own account for investment and not with a view
to resale or distribution thereof, in whole or in part. The
Purchaser has no agreement or arrangement, formal or informal,
with any person to sell or transfer all or any part of the Units,
the Shares or the Warrant Shares and the Purchaser has no plans
to enter into any such agreement or arrangement;
(l) The purchase of the Units represents high risk
capital and the Purchaser is able to afford an investment in a
speculative venture having the risks and objectives of the
Company. The Purchaser must bear the substantial economic risks
of the investment in the Units indefinitely because none of the
securities included in the Units may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an
exemption from such registration is available. Legends will be
placed on the securities included in the Units to the effect that
they have not been registered under the Securities Act or
applicable state securities laws and appropriate notations
thereof will be made in the Company's stock books. Stop transfer
instructions will be placed with the transfer agent of the
securities constituting the Units. The Company has agreed that
purchasers of the Units will have, with respect to the Shares and
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the Warrant Shares, the registration rights described in the
Registration Rights Agreement in the form of Exhibit C attached
to the Investment Proposal. Notwithstanding such registration
rights, it is not anticipated that there will be any market for
resale of the Units, the Shares, or the Warrant Shares, and such
securities will not be freely transferable at any time in the
foreseeable future;
(m) The Purchaser has adequate means of providing for
such Purchaser's current financial needs and foreseeable
contingencies and has no need for liquidity of the investment in
the Units for an indefinite period of time;
(n) The Purchaser is aware that an investment in the
Units involves a number of very significant risks and has
carefully read and considered the matters set forth in the
Investment Proposal and, in particular, the matters under the
caption "Risk Factors" therein and any of such risk may
materially adversely affect the Company's results of operations
and future prospects;
(o) The Purchaser is an "accredited investor" as that
term is defined in Regulation D under the Securities Act, and has
truthfully and accurately completed the Accredited Investor
Certification contained herein;
(p) The Purchaser: (i) if a natural person, represents
that the Purchaser has reached the age of 21 and has full power
and authority to execute and deliver this Subscription Agreement
and all other related agreements or certificates and to carry out
the provisions hereof and thereof; (ii) if a corporation,
partnership, or limited liability company or partnership, or
association, joint stock company, trust, unincorporated
organization or other entity, represents that such entity was not
formed for the specific purpose of acquiring the Units, such
entity is duly organized, validly existing and in good standing
under the laws of the state of its organization, the consummation
of the transactions contemplated hereby is authorized by, and
will not result in a violation of state law or its charter or
other organizational documents, such entity has full power and
authority to execute and deliver this Subscription Agreement and
all other related agreements or certificates and to carry out the
provisions hereof and thereof and to purchase and hold the
securities constituting the Units, the execution and delivery of
this Subscription Agreement has been duly authorized by all
necessary action, this Subscription Agreement has been duly
executed and delivered on behalf of such entity and is a legal,
valid and binding obligation of such entity; or (iii) if
executing this Subscription Agreement in a representative or
fiduciary capacity, represents that it has full power and
authority to execute and deliver this Subscription Agreement in
such capacity and on behalf of the subscribing individual, ward,
partnership, trust, estate, corporation, or limited liability
company or partnership, or other entity for whom the Purchaser is
executing this Subscription Agreement, and such individual,
partnership, ward, trust, estate, corporation, or limited
liability company or partnership, or other entity has full right
and power to perform pursuant to this Subscription Agreement and
make an investment in the Company, and represents that this
Subscription Agreement constitutes a legal, valid and binding
obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with
any order, judgment, injunction, agreement or controlling
document to which the Purchaser is a party or by which it is
bound;
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(q) The Purchaser and its Advisors, if any, have had
the opportunity to obtain any additional information, to the
extent the Company had such information in their possession or
could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information contained in
the Investment Proposal and all documents received or reviewed in
connection with the purchase of the Units and have had the
opportunity to have representatives of the Company provide them
with such additional information regarding the terms and
conditions of this particular investment and the financial
condition, results of operations, business and prospects of the
Company deemed relevant by the Purchaser or its Advisors, if any,
and all such requested information, to the extent the Company had
such information in its possession or could acquire it without
unreasonable effort or expense, has been provided by the Company
in writing to the full satisfaction of the Purchaser and its
Advisors, if any;
(r) The Purchaser represents to the Company that any
information which the undersigned has heretofore furnished or is
furnishing herewith to the Company or is complete and
accurate and may be relied upon by the Company in determining the
availability of an exemption from registration under Federal and
state securities laws in connection with the offering of
securities as described in the Investment Proposal. The
Purchaser further represents and warrants that it will notify and
supply corrective information to the Company and
immediately upon the occurrence of any change therein occurring
prior to the Company's issuance of the securities contained in
the Units;
(s) The Purchaser has significant prior investment
experience, including investment in non-listed and non-registered
securities. The Purchaser is knowledgeable about investment
considerations in public companies and, in particular, public
companies traded on the NASD's Over the Counter Bulletin Board
System. The Purchaser has a sufficient net worth to sustain a
loss of its entire investment in the Company in the event such a
loss should occur. The Purchaser's overall commitment to
investments which are not readily marketable is not excessive in
view of the Purchaser's net worth and financial circumstances and
the purchase of the Units will not cause such commitment to
become excessive. This investment is a suitable one for the
Purchaser;
(t) The Purchaser is satisfied that it has received
adequate information with respect to all matters which it or its
Advisors, if any, consider material to its decision to make this
investment;
(u) The Purchaser acknowledges that any estimates or
forward-looking statements or projections included in the
Investment Proposal were prepared by the Company in good faith,
but that the attainment of any such projections, estimates or
forward-looking statements cannot be guaranteed, will not be
updated by the Company and should not be relied upon;
(v) No oral or written representations have been made,
or oral or written information furnished, to the Purchaser or its
Advisors, if any, in connection with the offering of the Units
which are in any way inconsistent with the information contained
in the Investment Proposal;
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(w) Within five (5) days after receipt of a request
from the Company or______________________, the Purchaser will
provide such information and deliver such documents as may
reasonably be necessary to comply with any and all laws and
ordinances to which the Company or __________________ is subject;
(x) The Purchaser's substantive relationship with ___________
or subagent through which the Purchaser is subscribing for Units
predates _________________________ or such subagent's contact with
the Purchaser regarding an investment in the Units;
(y) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF
CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE COMMISSION, ANY STATE
SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
INVESTMENT PROPOSAL. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL;
(z) The Purchaser acknowledges that neither the Units,
the Shares nor the Warrant Shares have been recommended by any
Federal or state securities commission or regulatory authority.
In making an investment decision, investors must rely on their
own examination of the Company and the terms of the Offering,
including the merits and risks involved. Furthermore, the
foregoing authorities have not confirmed the accuracy or
determined the adequacy of this Subscription Agreement. Any
representation to the contrary is a criminal offense. The Units,
the Shares and the Warrant Shares are subject to restrictions on
transferability and resale and may not be transferred or resold
except as permitted under the Securities Act, and the applicable
state securities laws, pursuant to registration or exemption
therefrom. Investors should be aware that they will be required
to bear the financial risks of this investment for an indefinite
period of time; and
(aa) (For ERISA plans only) The fiduciary of the ERISA
plan (the "Plan") represents that such fiduciary has been
informed of and understands the Company's investment objectives,
policies and strategies, and that the decision to invest "plan
assets" (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require
diversification of plan assets and impose other fiduciary
responsibilities. The Purchaser or Plan fiduciary (a) is
responsible for the decision to invest in the Company; (b) is
independent of the Company and any of its affiliates; (c) is
qualified to make such investment decision; and (d) in making
such decision, the Purchaser or Plan fiduciary has not relied on
any advice or recommendation of the Company or any of its
affiliates.
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(bb) The Purchaser hereby represents, warrants, agrees and
covenants to and with the Company that the Subscriber has not,
directly and/or indirectly, previously had and/or maintained
and/or currently has, and/or in the future will not make or
maintain a "short" position in the Company's securities and will
not encourage and/or facilitate the same by any third party.
6. Representations and Warranties of the Company. The
Company hereby acknowledges, represents, warrants, and agrees as
follows:
(a) Other than as disclosed in SEC Reports (as defined in
Section 6(h) below), the Company does not own or control,
directly or indirectly, any interest in any other corporation,
association or other business entity (a "Subsidiary" and
collectively, the "Subsidiaries"). The Company owns, directly or
indirectly, all of the capital stock of each Subsidiary free and
clear of any lien, charge, security interest, encumbrance, right
of first refusal or other restriction (collectively, "Liens"),
and all the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid, non-
assessable and free of preemptive and similar rights.
(b) Each of the Company and the Subsidiaries is an entity
duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite
corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of
incorporation, by-laws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it
makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, would
not result in (i) a material adverse effect on the legality,
validity or enforceability of the Warrants, this Subscription
Agreement, the Registration Rights Agreement (collectively, with
the Investment Proposal, the "Transaction Documents"), (ii) a
material adverse effect on the results of operations, assets,
business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company's ability to perform in any material
respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a "Material Adverse
Effect").
(c) The Company has the requisite corporate power and
authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise
to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of
the Company and no further corporate action is required by the
Company in connection therewith. Each Transaction Document has
been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms
except as limited by applicable bankruptcy, insolvency,
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reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally.
(d) The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated thereby, do not and will
not (i) conflict with or violate any provision of the Company's
Restated Articles of Incorporation or by-laws and any and all
amendments thereto (collectively, the "Internal Documents"),
(ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of
time or both) of, any material agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or
otherwise), or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or
a Subsidiary is bound or affected.
(e) The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make
any filing or registration with, any court or other federal,
state, local or other governmental authority or other an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind (a "Person") in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than the filing with
the Commission of the Registration Statement (as defined in the
Registration Rights Agreement) and applicable Blue Sky filings.
(f) All of the Units, the Shares and Warrants, have been
duly authorized and, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens and not
subject to any preemptive rights. The Company has reserved from
its duly authorized capital stock such number of shares of Common
Stock so as to permit the issuance of the Shares and the Warrant
Shares.
(g) Other than as disclosed in the Investment Proposal
and/or any of the SEC Reports (as defined below) (i) there are
no outstanding securities of the Company or any of its
Subsidiaries which contain any preemptive, redemption or similar
provisions, nor is any holder of securities of the Company or any
Subsidiary entitled to preemptive or similar rights arising out
of any agreement or understanding with the Company or any
Subsidiary by virtue of any of the Transaction Documents, and
there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is
or may become bound to redeem a security of the Company or any of
its Subsidiaries; (ii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement; and (iii) there are no outstanding
options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or
securities, except as a result of the purchase and sale of the
9
Securities, or rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock.
(h) The Company has filed all reports required to be filed
by it under the Securities Act and the Securities Exchange Act of
1934, as amended (the "1934 Act"), including pursuant to
Section 13(a) or Section 15(d) of the 1934 Act (the foregoing
materials, including the exhibits thereto, being collectively
referred to herein as the "SEC Reports"). As of their respective
dates, except to the extent set forth in the SEC Reports with
respect to restatements of the Company's financial statements,
the SEC Reports complied in all material respects with the
requirements of the Securities Act and the 1934 Act and the rules
and regulations of the Commission promulgated thereunder, as
applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading. All material
agreements to which the Company is a party or to which the
property or assets of the Company are subject have been filed as
exhibits to the SEC Reports to the extent required. The
financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing, except to the
extent set forth in the SEC Reports with respect to restatements
of the Company's financial statements. Such financial statements
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods involved ("GAAP"), except to the extent set forth in the
SEC Reports with respect to restatements of the Company's
financial statements, and except as may be otherwise specified in
such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. Additionally, since the adoption of the
Sarbanes-Oxley Act of 2002 (the "New Act") and to the extent that
the Company is subject to the New Act, the Company has complied
in all material respects with the laws, rules and regulation
under the New Act.
(i) Since June 30, 2004, other than as may be filed on a
Current Report on Form 8-K filed by the Company with the
Commission or disclosed in the Investment Proposal or any SEC
Report (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A)
trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors,
(iv) the Company has not declared or made payment or distribution
of any dividend or distribution of cash or other property to its
10
holders of Common Stock or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing
Company stock option plans.
(j) There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the
Company, currently threatened against or affecting the Company,
any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency
and/or regulatory authority (federal, state, county, local or
foreign), (collectively, an "Action") which does and/or could
(i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents and/or the
Securities or to consummate the transactions contemplated hereby
or thereby or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in, either individually
or in the aggregate, a Material Adverse Effect. The SEC has not
issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any
Subsidiary under the 1934 Act or the Securities Act. The
foregoing includes, without limitation, actions, pending or
threatened (or any basis therefor known to the Company),
involving the prior employment of any of the Company's employees,
their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment, or decree of
any court or government agency or instrumentality.
(k) No material labor dispute exists or, to the knowledge
of the Company, is imminent with respect to any of the employees
of the Company which could reasonably be expected to result in a
Material Adverse Effect.
(l) Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of
a claim that it is in default under or that it is in violation
of, any indenture, mortgage, decree, lease, license, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and
local laws applicable to its business, except in the case of
clauses (i), (ii) and (iii) as would not result in a Material
Adverse Effect. Neither the Company nor any of the Subsidiaries
has received any written notice of any violation of or
noncompliance with, any federal, state, local or foreign laws,
ordinances, regulations and orders (including, without
limitation, those relating to environmental protection,
occupational safety and health, federal securities laws, equal
employment opportunity, consumer protection, credit reporting,
"truth-in-lending", and warranties and trade practices)
applicable to its business or to the business of any Subsidiary,
the violation of, or noncompliance with, which would have a
materially adverse effect on either the Company's business or
operations, or that of any Subsidiary, and the Company knows of
no facts or set of circumstances which would give rise to such a
11
notice. The execution, delivery, and performance of the
Transaction Documents and the consummation of the transactions
contemplated thereby will not result in any such violation or be
in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such
provision, instrument, judgment, order, writ, decree or contract,
or an event which results in the creation of any lien, charge, or
encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the
Company, its business or operations, or any of its assets or
properties, except as would not reasonably be expected to have a
Material Adverse Effect.
(m) The Company and the Subsidiaries possess all licenses,
certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses,
except where the failure to possess such permits would not have
or reasonably be expected to result in a Material Adverse Effect
("Material Permits"), and believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its
business as planned to be conducted, and neither the Company nor
any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.
(n) Other than as disclosed in the Investment Proposal
and/or SEC Reports, the Company owns its property and assets free
and clear of all mortgages, liens, loans, pledges, security
interests, claims, equitable interests, charges, and
encumbrances, except such encumbrances and liens which arise in
the ordinary course of business and do not materially impair the
Company's ownership or use of such property or assets. With
respect to the property and assets it leases, the Company is in
compliance in all material respects with such leases and, to its
knowledge, holds a valid leasehold interest free of any liens,
claims, or encumbrances.
(o) The Company and its Subsidiaries own, or possess
adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names,
patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights
necessary to conduct their respective businesses as now
conducted, the lack of which could reasonably be expected to have
a Material Adverse Effect. The Company and its Subsidiaries do
not have any knowledge of any infringement by the Company or its
Subsidiaries of trademarks, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secrets or other similar
rights of others, or of any such development of similar or
identical trade secrets or technical information by others and no
claim, action or proceeding has been made or brought against, or
to the Company's knowledge, has been threatened against, the
Company or its Subsidiaries regarding trademarks, trade name
rights, patents, patent rights, inventions, copyrights, licenses,
service names, service marks, service mark registrations, trade
secrets or other infringement, except where such infringement,
claim, action or proceeding would not reasonably be expected to
have either individually or in the aggregate a Material Adverse
Effect. The Company is not aware that any of its employees,
officers, or consultants are obligated under any contract
(including licenses, covenants, or commitments of any nature) or
other agreement, or subject to any judgment, decree, or order of
12
any court or administrative agency, that would interfere with the
use of such employee's, officer's, or consultant's commercially
reasonable efforts to promote the interests of the Company or
that would conflict with the Company's business as conducted.
Neither the execution nor delivery of the Transaction Documents,
nor the carrying on of the Company's business by the employees of
the Company, as is presently conducted, nor the conduct of the
Company's business, will, to the Company's knowledge, conflict
with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract,
covenant, or instrument under which any of such employees,
officers or consultants are now obligated.
(p) The Company has not entered into agreement to pay any
brokerage or finder's fees or commissions to any person
including, but not limited to, any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by
this Agreement, other than with the .
(q) Assuming the accuracy of the Purchaser's
representations and warranties set forth in this Subscription
Agreement, no registration under the Securities Act is required
for the offer and sale of the securities by the Company to the
Purchaser as contemplated hereby.
(r) The Company is not, and is not an affiliate of, an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(s) Neither the Company, its Subsidiaries, any of their
affiliates nor any person acting on their behalf, has engaged in
any form of general solicitation or general advertising (within
the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Units.
(t) Other than as discussed in any SEC Report and/or the
sale of $1,100,000 of equity securities to affiliates of the
on or about August 3, 2004, neither the Company, its
Subsidiaries, any of their affiliates nor any person acting on
their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of
any of the Securities under the Securities Act or cause the
Offering to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder
approval provisions, including without limitation, under the
rules and regulations of any exchange or automated quotation
system on which any of the securities of the Company are listed
or designated. None of the Company, its Subsidiaries, their
affiliates and any person acting on their behalf will take any
action or steps referred to in the preceding sentence that would
require registration of any of the Securities under the
Securities Act or cause the Offering to be integrated with other
offerings.
(u) The Company and each of its Subsidiaries has made or
filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it
is subject, except when the failure to do so would not have a
Material Adverse Effect, and has paid all taxes and other
governmental assessments and charges that are material in amount,
13
shown or determined to be due on such returns, reports and
declarations otherwise due and payable, except those being
contested in good faith and has set aside on its books reserves
in accordance with GAAP reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no
basis for any such claim. The Company has not executed a waiver
with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, statue or local
tax. To the Company's knowledge, none of the Company's tax
returns is presently being audited by any taxing authority.
(v) Except as disclosed in the Investment Proposal and/or
the SEC Reports, and approximately $800,000 which has been loaned
to the Company since March 2004 by certain executive officers and
directors of the Company, which funds will not be repaid until no
earlier than December 31, 2004 (i) the Company is not indebted in
excess of $20,000, directly or indirectly, to any of its
employees, officers or directors or to their respective spouses
or children, in any amount whatsoever other than in connection
with accrued but unpaid salary payments, expenses or advances of
expenses incurred in the ordinary course of business or
relocation expenses of employees, officers and directors, nor is
the Company contemplating such indebtedness as of the date of
this Agreement, (ii) to the Company's knowledge, none of said
employees, officers or directors, or any member of their
immediate families, is directly or indirectly indebted to the
Company (other than in connection with purchases of the Company's
stock) or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with
which the Company has a business relationship or any firm or
corporation which competes with the Company, nor is the Company
contemplating such indebtedness as of the date of this Agreement,
except that employees, officers, directors and/or shareholders of
the Company may own stock in publicly traded companies (not in
excess of 1% of the outstanding capital stock thereof) which may
directly compete with the Company and (iii) to the Company's
knowledge, no employee, shareholder, officer or director, or any
member of their immediate families, is, directly or indirectly,
interested in any material contract with the Company, nor does
any such person own, directly or indirectly, in whole or in part,
any material tangible or intangible property that the Company
uses or contemplates using in the conduct of its business. The
Company is not a guarantor or indemnitor of any indebtedness of
any other Person.
(w) The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient
in amount (subject to reasonable deductibles) to allow it to
replace any of its properties that might be damaged or destroyed,
and the Company has insurance against other hazards, risks, and
liabilities to persons and property to the extent and in the
manner customary for companies in similar businesses similarly
situated.
(x) The sale of the Units by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto. Without limiting the foregoing,
14
neither the Company nor any of its Subsidiaries (a) is a person
whose property or interests in property are blocked pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)) or (b) engages in any dealings or transactions, or be
otherwise associated, with any such person. The Company and its
Subsidiaries are in compliance with the USA Patriot Act of 2001
(signed into law October 26, 2001).
7. Indemnification. The Purchaser agrees to indemnify and
hold harmless the Company, and each of their respective
officers, directors, employees, agents, attorneys, control
persons and affiliates from and against all losses, liabilities,
claims, damages, costs, fees and expenses whatsoever (including,
but not limited to, any and all expenses incurred in
investigating, preparing or defending against any litigation
commenced or threatened) based upon or arising out of any actual
or alleged false acknowledgment, representation or warranty, or
misrepresentation or omission to state a material fact, or breach
by the Purchaser of any covenant or agreement made by the
Purchaser herein or in any other document delivered in connection
with this Subscription Agreement.
8. Irrevocability; Binding Effect. The Purchaser hereby
acknowledges and agrees that the subscription hereunder is
irrevocable by the Purchaser, except as required by applicable
law, and that this Subscription Agreement will survive the death
or disability of the Purchaser and will be binding upon and inure
to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives, and permitted
assigns. If the Purchaser is more than one person, the
obligations of the Purchaser hereunder will be joint and several
and the agreements, representations, warranties and
acknowledgments herein will be deemed to be made by and be
binding upon each such person and such person's heirs, executors,
administrators, successors, legal representatives and permitted
assigns.
9. Modification. This Subscription Agreement will not be
modified or waived except by an instrument in writing signed by
the party against whom any such modification or waiver is sought.
10. Notices. Any notice or other communication required or
permitted to be given hereunder will be in writing and will be
mailed by certified mail, return receipt requested, or delivered
against receipt to the party to whom it is to be given (a) if to
the Company, at the address set forth above or (b) if to the
Purchaser, at the address set forth on the signature page hereof
(or, in either case, to such other address as the party will have
furnished in writing in accordance with the provisions of this
Section 10). Any notice or other communication given by
certified mail will be deemed given at the time of certification
thereof, except for a notice changing a party's address which
will be deemed given at the time of receipt thereof.
11. Assignability. This Subscription Agreement and the
rights, interests and obligations hereunder are not transferable
or assignable by the Purchaser and the transfer or assignment of
the Units, the shares of Common Stock issued by the Company or
the shares of Common Stock issuable upon exercise of the Warrants
or otherwise contained in the Units will be made only in
accordance with all applicable laws.
15
12. Applicable Law. This Subscription Agreement will be
governed by and construed under the laws of the State of New York
as applied to agreements among New York residents entered into
and to be performed entirely within New York. Each of the
parties hereto (1) agree that any legal suit, action or
proceeding arising out of or relating to this Agreement will be
instituted exclusively in New York State Supreme Court, County of
New York, or in the United States District Court for the Southern
District of New York, (2) waive any objection which the Company
may have now or hereafter to the venue of any such suit, action
or proceeding, and (3) irrevocably consent to the jurisdiction of
the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of
New York in any such suit, action or proceeding. Each of the
parties hereto further agrees to accept and acknowledge service
of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County
of New York, or in the United States District Court for the
Southern District of New York and agree that service of process
upon it mailed by certified mail to its address will be deemed in
every respect effective service of process upon it, in any such
suit, action or proceeding. THE PARTIES HERETO AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION AGREEMENT
OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
13. Blue Sky Qualification. The purchase of Units under
this Subscription Agreement is expressly conditioned upon the
exemption from qualification of the offer and sale of the Units
from applicable Federal and state securities laws. The Company
will not be required to qualify this transaction under the
securities laws of any jurisdiction and, should qualification be
necessary, the Company will be released from any and all
obligations to maintain its offer, and may rescind any sale
contracted, in the jurisdiction.
14. Use of Pronouns. All pronouns and any variations
thereof used herein will be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the
person or persons referred to may require.
15. Confidentiality. The Purchaser acknowledges and agrees
that any information or data the Purchaser has acquired from or
about the Company, not otherwise properly in the public domain,
was received in confidence. The Purchaser agrees not to divulge,
communicate or disclose, except as may be required by law or for
the performance of this Subscription Agreement, or use to the
detriment of the Company or for the benefit of any other person
or persons, or misuse in any way, any confidential information of
the Company, including any scientific, technical, trade or
business secrets of the Company and any scientific, technical,
trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to,
ideas, discoveries, inventions, developments and improvements
belonging to the Company and confidential information obtained by
or given to the Company about or belonging to third parties.
16
16. Miscellaneous.
(a) This Subscription Agreement, together with the
Warrants and the Registration Rights Agreement, constitute the
entire agreement between the Purchaser and the Company with
respect to the subject matter hereof and supersede all prior oral
or written agreements and understandings, if any, relating to the
subject matter hereof. The terms and provisions of this
Subscription Agreement may be waived, or consent for the
departure therefrom granted, only by a written document executed
by the party entitled to the benefits of such terms or
provisions.
(b) Each of the Purchaser's and the Company's
representations and warranties made in this Subscription
Agreement will survive the execution and delivery hereof and
delivery of the Shares and the Warrant Shares.
(c) Each of the parties hereto will pay its own fees
and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with
this Subscription Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are
consummated.
(d) This Subscription Agreement may be executed in one
or more counterparts each of which will be deemed an original,
but all of which will together constitute one and the same
instrument.
(e) Each provision of this Subscription Agreement will
be considered separable and, if for any reason any provision or
provisions hereof are determined to be invalid or contrary to
applicable law, such invalidity or illegality will not impair the
operation of or affect the remaining portions of this
Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only
and will not control or alter the meaning of this Subscription
Agreement as set forth in the text.
17. Omnibus Signature Page. This Subscription Agreement is
intended to be read and construed in conjunction with the
Registration Rights Agreement. Accordingly, pursuant to the
terms and conditions of this Subscription Agreement and such
related agreements it is hereby agreed that the execution by the
Purchaser of this Subscription Agreement, in the place set forth
herein, will constitute agreement to be bound by the terms and
conditions hereof and the terms and conditions of the
Registration Rights Agreement, with the same effect as if each of
such separate, but related agreement, were separately signed.
[REMAINDER OF THIS PAGE IS BLANK]
17
ANTI-MONEY LAUNDERING REQUIREMENTS
The USA PATRIOT Act
- -------------------
The USA PATRIOT Act is designed to detect, deter, and punish
terrorists in the United States and abroad. The Act imposes new
anti-money laundering requirements on brokerage firms and
financial institutions. Since April 24, 2002 all brokerage firms
have been required to have new, comprehensive anti-money
laundering programs.
To help you understand theses efforts, we want to provide you
with some information about money laundering and our steps to
implement the USA PATRIOT Act.
What is money laundering?
- -------------------------
Money laundering is the process of disguising illegally obtained
money so that the funds appear to come from legitimate sources or
activities. Money laundering occurs in connection with a wide
variety of crimes, including illegal arms sales, drug
trafficking, robbery, fraud, racketeering, and terrorism.
How big is the problem and why is it important?
- -----------------------------------------------
The use of the U.S. financial system by criminals to facilitate
terrorism or other crimes could well taint our financial markets.
According to the U.S. State Department, one recent estimate puts
the amount of worldwide money laundering activity at $1 trillion
a year.
What are we required to do to eliminate money laundering?
Under new rules required by the USA PATRIOT Act, our anti-money
laundering program must designate a special compliance officer,
set up employee training, conduct independent audits, and
establish policies and procedures to detect and report suspicious
transaction and ensure compliance with the new laws.
As part of our required program, we may ask you to provide
various identification documents or other information. Until you
provide the information or documents we need, we may not be able
to effect any transactions for you.
18
INYX, INC.
OMNIBUS SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT
Purchaser hereby elects to purchase a total of ______ Units at a
price of $100,000 per Unit (NOTE: to be completed by the Purchaser).
Date (NOTE: To be completed by the Purchaser): __________________, 2004
- -----------------------------------------------------------------------
If the Purchaser is an INDIVIDUAL, and if purchased as JOINT
TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:
____________________________ ______________________________
Print Name(s) Social Security Number(s)
___________________________ ______________________________
Signature(s) of Purchaser(s) Signature
____________________________ ______________________________
Date Address
If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY or TRUST:
____________________________ ______________________________
Name of Partnership, Federal Taxpayer
Corporation, Limited Identification Number
Liability Company or Trust
By:_________________________ ______________________________
Name: State of Organization
Title:
____________________________ ______________________________
Date Address
INYX, INC.
By: __________________________
Authorized Officer
19
INYX, INC.
ACCREDITED INVESTOR CERTIFICATION
For Individual Investors Only
(all Individual Investors must INITIAL where appropriate):
Initial _______ I certify that I have a net worth (including
home, furnishings and automobiles) of at least $1
million either individually or through aggregating
my individual holdings and those in which I have a
joint, community property or other similar shared
ownership interest with my spouse.
Initial _______ I certify that I have had an annual gross
income for the past two years of at least $200,000
(or $300,000 jointly with my spouse) and expect my
income (or joint income, as appropriate) to reach
the same level in the current year.
Initial _______ I certify that I am a director or executive
officer of Inyx, Inc. (the "Company").
For Non-Individual Investors
(all Non-Individual Investors must INITIAL where appropriate):
Initial _______ The undersigned certifies that it is a
partnership, corporation, limited liability company
or business trust that is 100% owned by persons who
meet either of the criteria for Individual
Investors, above.
Initial _______ The undersigned certifies that it is a
partnership, corporation, limited liability company
or business trust that has total assets of at least
$5 million and was not formed for the purpose of
investing in the Company.
Initial _______ The undersigned certifies that it is an
employee benefit plan whose investment decision is
made by a plan fiduciary (as defined in ERISA
3(21)) that is a bank, savings and loan
association, insurance company or registered
investment adviser.
Initial _______ The undersigned certifies that it is an
employee benefit plan whose total assets exceed
$5,000,000 as of the date of the Subscription
Agreement.
Initial _______ The undersigned certifies that it is a self-
directed employee benefit plan whose investment
decisions are made solely by persons who meet either
of the criteria for Individual Investors, above.
Initial _______ The undersigned certifies that it is a U.S.
bank, U.S. savings and loan association or other
similar U.S. institution acting in its individual or
fiduciary capacity.
Initial _______ The undersigned certifies that it is a broker-
dealer registered pursuant to 15 of the Securities
Exchange Act of 1934.
Initial _______ The undersigned certifies that it is an
organization described in 501(c)(3) of the Internal
Revenue Code with total assets exceeding $5,000,000
and not formed for the specific purpose of investing
in the Company.
Initial _______ The undersigned certifies that it is a trust with
total assets of at least $5,000,000, not
formed for the specific purpose of investing in
the Company, and whose purchase is directed by a
person with such knowledge and experience in
financial and business matters that he is capable of
evaluating the merits and risks of the prospective
investment.
Initial _______ The undersigned certifies that it
is a plan established and maintained by a state or
its political subdivisions, or any agency or
instrumentality thereof, for the benefit of its
employees, and which has total assets in excess of
$5,000,000.
Initial _______ The undersigned certifies that it is an
insurance company as defined in 2(a)(13) of the
Securities Act of 1933, as amended, or a registered
investment company.
20
INYX, INC.
Investor Profile
(Must be completed by Investor)
Section A - Personal Investor Information
-----------------------------------------
Investor Name(s):
______________________________________________________________________
Individual executing Profile or Trustee:
______________________________________________________________________
Social Security Numbers/Federal I.D. Number:
______________________________________________________________________
Date of Birth:____________________ Marital Status:____________________
Joint Party Date of Birth:_________________
Investment Experience (Years): ___________
Annual Income: _________________
Liquid Net Worth:_____________
Net Worth: ________________
Investment Objectives (circle one or more): Long Term Capital
Appreciation, Short Term Trading,
Businessman's Risk, Income, Safety of
Principal, Tax Exempt Income or other
Home Street Address:
______________________________________________________________________
Home City, State & Zip Code:
______________________________________________________________________
Home Phone:________________________ Home Fax:_________________________
Home Email: _______________________________
Employer:
______________________________________________________________________
Employer Street Address:
______________________________________________________________________
Employer City, State & Zip Code:
______________________________________________________________________
Bus. Phone: __________________________ Bus. Fax:______________________
Bus. Email: ________________________________
Type of Business:_____________________________________________________
______ Account Executive/Outside Broker/Dealer:
______________________________________________________________________
21
Section B - Certificate Delivery Instructions
---------------------------------------------
____ Please deposit my certificate in my _______________ Account #
_____________________________________________________
____ Please open a ________________________ account and subsequently
deposit my certificate in it
____ Please deliver my certificate to the Employer Address listed in Section A
____ Please deliver my certificate to the Home Address listed in Section A
____ Please deliver my certificate to the following address:
____________________________________________________________________
Section C - Form of Payment - Check or Wire Transfer
----------------------------------------------------
____ Check payable to "____________________________ Bank, As Agent for
INYX, INC."
____ Wire funds from my outside account according to the "To subscribe
for Units in the private offering of Inyx, Inc." page (page "i")
____ Wire funds from my ___________________ Account - See following page
____ The funds for this investment are rolled over, tax deferred
from ____________________ within the allowed 60-day window
Please check if you are a NASD member or affiliate of a NASD
member firm: _____________
Investor Signature ___________________________________ Date___________
22
Investment Proposal
Wire Transfer Authorization
TO: Operations Manager
RE: Client Wire Transfer Authorization
INYX, INC.
DATE:________________
__________________________________________________________________________
This authorizes the transfer of the following listed funds
from my ________ Brokerage Account as follows:
Brokerage Account # ______________________
Wire Amount $______________________
BANK
Acct. Name: _________________ Bank as Escrow Agent for Inyx, Inc.
ABA Number: _________________
A/C Number: _________________
REFERENCE:
----------
SUBSCRIBER LEGAL NAME
______________________________________________________
TAX ID NUMBER
______________________________________________________
SUBSCRIBER ADDRESS
______________________________________________________
FBO:
________________________________________________
Investment Title: ________________________________________________
Signature: ________________________________________________
Signature: ________________________________________________
(Joint Signature)
23