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EXHIBIT 4.4
SUBSCRIPTION AGREEMENT
American Professional Billiards, Inc.
1700 East Desert Inn Road, Suite 108
Las Vegas, Nevada 89109
Re: Offering of Notes
Gentlemen:
In connection with the offer (the "Offering") and proposed issuance by American
Professional Billiards, Inc., a Nevada corporation (the "Company"), of up to
$1,100,000 principal amount of non-negotiable 10% Convertible Subordinated
Notes, due December 31, 1996 ("Notes"), the undersigned prospective investor
("Investor") and the Company hereby agree as follows:
1. SUBSCRIPTION. The Investor hereby subscribes for the purchase of Notes
and agrees to purchase the aggregate principal amount of Notes set forth on the
signature page of this Agreement at par, subject to the following conditions and
understandings:
(a) ACCEPTANCE OR REJECTION. The Company, in its sole discretion and
for any reason, may accept or reject this subscription, in whole or
part, at any time not later than five days after receipt of this
subscription. The Company may also allocate to the Investor less than
the principal amount of Notes subscribed for, in which case there shall
be remitted to the Investor the difference between the subscription
amount paid and the subscription price allocable to the Notes accepted.
(b) TREATMENT OF FUNDS SUBMITTED IN CONNECTION WITH REJECTED
SUBSCRIPTIONS. If this subscription is rejected by the Company in its
entirety, the Investor's check accompanying this subscription will be
returned to the Investor without interest thereon. If this subscription
is accepted in whole or in part, the Investor's check will be cashed
and funds paid to the Company and the Company will promptly remit to
the Investor the funds relating to that portion of the subscription, if
any, that is not accepted, without interest.
2. REPRESENTATIONS AND WARRANTIES. The Investor makes the representations,
declarations and warranties set forth in this Section 2 with the intent that the
same may be relied upon in determining the Investor's suitability as a purchaser
of the Notes. If the Investor includes or consists of more than one person or
entity the obligations of the Investor shall be joint and several and the
representations and warranties herein contained shall be deemed to be made by
and be binding upon each such person or entity and their respective heirs,
executors, administrators, successors and assigns.
(a) NO REGULATORY REVIEW. The Investor is aware that this is a limited
offering and that no federal, state or other agency has made any
finding or determinations as to fairness of the investment nor made any
recommendation or endorsement of the Notes.
(b) INVESTMENT INTENT. The Investor acknowledges that the purchase of
Notes hereunder and any securities into which the Notes are convertible
is being made for the Investor's own account, for investment purposes
only and not with the present intention of distributing
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or reselling the Notes in whole or in part. The Investor further
understands that neither the Notes, nor any such securities have been
registered under the Securities Act of 1933, as amended (the "Act"), or
under state securities laws by reason of specific exemptions therefrom,
which depend upon, among other things, the accuracy of the Investor's
representations as expressed in this Subscription Agreement. The
Investor further understands that transfer of the Notes, and of the
Units into which they are convertible, is restricted under the Act and
under state securities laws.
The Investor further understands that each Note and any instruments
representing the Units will bear a legend substantially similar to the
following legend which may further restrict the liquidity of an
investment in such securities:
"The securities represented by this (Note or certificate) have
not been registered under the Securities Act of 1933, as
amended (the "Act"), or any applicable state law, and such
securities may not be sold or otherwise transferred unless
they are registered under the Act and the applicable state law
or such sale or transfer is exempt from such registration and
the (Maker or Company) has received an opinion of counsel
acceptable to it to the effect that such sale or transfer is
so exempt."
(c) INVESTMENT INFORMATION. The Investor has received and read the
Company's Private Placement Memorandum and the exhibits thereto (the
"Memorandum"), prior to the execution of this Subscription Agreement.
The Investor will rely solely upon the Memorandum, and independent
investigations made by the Investor in making the decision to purchase
the Notes. In particular, and without limiting the generality of the
foregoing, the Investor has not relied on, and the Investor's decision
to subscribe for Notes has not been influenced by: (i) newspaper,
magazine or other media articles or reports related to the Company or
its business; (ii) promotional literature or other materials or (iii)
any other written or oral statement of the Company or persons
purporting to represent the Company, except the Memorandum and other
documents furnished to the Investor by the Company, or oral statements
of management of the Company, furnished or communicated to the Investor
in connection with the Offering. The Investor has had the opportunity
to discuss all aspects of this transaction with management of the
Company, has made or has had the opportunity to make such inspection of
the books and records of the Company as the Investor has deemed
necessary in connection with this investment, and any questions asked
have been answered to the satisfaction of the Investor; however, no
oral or written representations apart from the Memorandum have been
made to the Investor.
(d) INVESTOR ACKNOWLEDGEMENT. The Investor understands and acknowledges
that the investment in Notes is subject to considerable risk and that
the entire investment may be lost for any of a number of reasons,
including the risk factors discussed in the Memorandum and for other
reasons all of which are acknowledged by Investor.
(e) CONFIDENTIALITY. The Investor understands that the Memorandum is
confidential. The Investor has not distributed the Memorandum, or
divulged the contents thereof, to anyone other than such legal or
financial advisors as the Investor has deemed necessary for purposes of
evaluating an investment in the Notes and no one (except such advisors)
has used the Memorandum, and the Investor has not made any copies
thereof.
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(f) AUTHORIZATION AND FORMATION OF SUBSCRIBER. The Investor, if a
corporation, partnership, limited liability company, trust or other
form of business entity, is authorized and otherwise duly qualified to
purchase and hold Notes and such entity has not been formed for the
specific purpose of acquiring Notes in the Offering. If the Investor is
one of the aforementioned entities, it hereby agrees that upon request
of the Company it will supply the Company with any additional written
information that may be requested by the Company.
(g) INVESTOR STATUS. Subscriber represents and warrants that it is an
"accredited investor" as defined in Rule 501(a) of Regulation D under
the Act.
The term accredited investor includes any bank as defined in Section
3(a)(2) of the Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Act whether acting
in its individual or fiduciary capacity; any broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of
1934; any insurance company as defined in Section 2(13) of the Act; any
investment company registered under the Investment Company of 1940 or
business development company as defined in Section 2(a)(48) of that
Act; any Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Act of 1958; any plan established and maintained by a state or
its political sub-divisions, for the benefit of its employees if such a
plan has total assets in excess of $5,000,000; any employee benefit
plan within the meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self- directed plan, with investment decision made
solely by persons that are accredited investors. The term accredited
investor also includes any trust with total assets in excess of
$5,000,000, any private business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940, and certain
individuals whose net worth or joint net worth with the person's spouse
exceeds $1,000,000 or any person who has an individual income in excess
of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year.
3. RELIANCE ON REPRESENTATIONS AND WARRANTIES; INDEMNITY. The Investor
understands that the Company and any agent offering the Note(s) for sale
("Selling Agent") will rely on the representations and warranties of the
Investor herein in determining whether a sale of the Notes to the Investor is in
compliance with federal and applicable state securities laws and exemptions
therefrom. The Investor hereby agrees to indemnify the Company and the Selling
Agent and their respective affiliates, and hold the Company and the Selling
Agent and their respective affiliates harmless from and against any and all
liability, damage, cost or expense (including reasonable attorney's fees)
incurred on the account of or arising out of: (a) any inaccuracy in the
Investor's declarations, representations and warranties set forth in this
Subscription Agreement; (b) the disposition of any of the Notes which the
Investor will receive or any securities into which the Notes are convertible,
contrary to the Investor's declarations, representations and warranties in this
Subscription Agreement; (c) any suit or proceeding based upon the claim that
said declarations, representations or warranties were inaccurate or misleading
or otherwise cause for obtaining damages or redress from the Company or the
Selling Agent or any of their respective
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affiliates or the disposition of all or any part of the Investor's Notes or any
such securities; and (d) the Investor's failure to fulfill any or all of the
Investor's obligations herein.
4. UPDATING INFORMATION. All of the information set forth herein with
respect to the Investor, including, without limitation, all of the
representations as warranties set forth in Section 2, is correct and complete as
of the date hereof and, if there should be any material change in such
information prior to the acceptance of this subscription by the Company, the
Investor will immediately furnish the revised or corrected information to the
Company.
5. REGISTRATION RIGHTS.
(a) DEFINITION. As used in this section, the term "Registerable
Securities" shall mean any and all equity securities of the Company
that may be obtained (i) upon conversion of the Notes or (ii) upon
exercise of all or part of the Noteholder's Purchase Option expiring on
December 31, 1999.
(b) REGISTRATION. If the Company determines that, at any time prior to
December 31, 1996, it will file a registration statement pursuant to
the Act in connection with a public offering of securities by the
Company for cash on a form appropriate for the inclusion of the
Registrable Securities ("Public Offering") it shall include in such
registration statement all of the Registrable Securities to be
registered under the Act pursuant to such registration.
(c) PREPARATION AND FILING. Whenever the Company is under obligation
pursuant to the provisions of this Subscription Agreement to use its
best efforts to effect the registration of any Registrable Securities,
the Company shall, as expeditiously as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement on an
appropriate form with respect to such Registrable Securities
and use its best efforts to cause such registration statement
to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for a period of one year
following the later of the effective date of such registration
statement and the expiration of "lockup" or "holdback" periods
required, if any, pursuant to this Agreement, or until the
Registerable Securities covered thereunder have been sold,
whichever is earlier, and to comply with the provisions of the
Act with respect to the sale or other disposition of all
Registerable Securities covered by such registration
statement;
(iii) furnish to each selling holder such number of copies of
the prospectus contained in such registration statement,
including any preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such
Registerable Securities; and
(iv) use its best efforts to register or qualify the
Registerable Securities covered by such registration statement
under the securities or blue sky laws of the same
jurisdictions in which the sale of securities in the Public
Offering are registered or
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qualified; or if the Registerable Securities are not being
registered in connection with a Public Offering, in such
states as the holders of the Registerable Securities so
registered shall reasonably request.
(d) EXPENSES. All expenses incurred by the Company in complying with
Section 5(c) above, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees
and disbursements of counsel for the Company, fees and expenses for
independent certified public accountants (including the expenses of any
special audits in connection with any such registration) shall be paid
by the Company; provided, however, that all underwriting discounts and
selling commissions applicable to the Registerable Securities covered
by such registration and all fees and disbursements of special counsel
to any seller or sellers of Registerable Securities shall be borne by
the seller or sellers.
(e) INDEMNIFICATION. In the event of any registration of any
Registerable Securities under the Act pursuant to this Subscription
Agreement or registration or qualification of any Registerable
Securities pursuant to Section 5(c)(iv) above, the Company shall
indemnify and hold harmless the seller of such Registerable Securities,
each underwriter of such Registerable Securities, each broker or any
other person acting on behalf of such seller and each other person, if
any, who controls any of the foregoing persons, within the meaning of
the Act, against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing persons 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 an untrue statement or alleged untrue statement of a material fact
contained in the registration statement under which Registrable
Securities were registered under the Act, or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to
make the statements therein in light of the circumstances under which
they were made, not misleading or any violation by the Company of the
Act or state securities or blue sky laws applicable to the Company in
connection with such registration or qualification under such state
securities or blue sky laws; and shall reimburse such seller, such
underwriter, broker or other person acting on its behalf of such seller
and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage liability or action; provided,
however, that the Company shall 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, or
said prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
seller, underwriter or controlling person seeking indemnification
hereunder.
Before Registerable Securities held by a prospective seller shall be
included in any registration pursuant to this Subscription Agreement,
such prospective seller and any underwriter acting on its behalf (i)
shall have agreed to indemnify and hold harmless (in manner and to the
same extent as set forth in the preceding paragraph of this section)
the Company, each director of the Company, each officer of the Company
who shall sign such registration statement and any person who controls
the Company within the meaning of
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the Act, with respect to any statement or omission from such
registration statement, any final prospectus contained therein, or any
amendment or supplement thereto, but only with reference to statements
or omissions made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such seller or
such underwriter specifically for use in the preparation of such
registration statement, final prospectus or amendment or supplement and
with reference to statements or omissions made in reliance upon an
omission or failure by such seller or such underwriter to furnish any
statement with respect to such seller or underwriter required to be
included therein, and (ii) shall have entered into an underwriting
agreement in usual and standard form, if such registration relates to
an offering that is to be underwritten.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the
preceding paragraphs of this section, such indemnified party will, if a
claim in respect thereof is made against an indemnifying party, give
written notice to the latter of the commencement of such action. In
case any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that they may wish, with counsel reasonably
satisfactory to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall be responsible for any
legal or other expenses subsequently incurred by the latter in
connection with the defense thereof.
(f) SELLER TO PROVIDE INFORMATION. As a condition to the Company's
obligation hereunder to cause Registerable Securities to be included in
a registration statement, the seller of such Registerable Securities
shall provide information and shall execute such documents in
connection with such registration as the Company shall reasonably
request.
(g) LOCK-UP OR HOLDBACK PERIOD. If Registerable Securities are included
in any registration pursuant to which the Company is also offering
securities for its own account, the seller of Registerable Securities
will not offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of such Registerable Securities for a period of 90
days after the effective date of the registration statement without
prior written consent of the managing underwriter of the securities
being offered by the Company or, if such securities are not
underwritten, of the Company. If Registerable Securities are included
in any registration other than one pursuant to which the Company is
also offering securities and, during the period of effectiveness of
such registration, the Company proposes to offer securities in an
underwritten public offering, then, (i) during a period beginning on
the effective date of the registration statement relating to such
underwritten public offering and ending 90 days thereafter, the seller
of Registerable Securities will not offer to sell, contract to sell,
grant any option to purchase or otherwise dispose of such Registerable
Securities without prior written consent of the managing underwriter of
the securities being offered by the Company, and (ii) if such event
occurs during the one-year period in which the Company is required to
maintain the effectiveness of the registration relating to the
Registerable Securities, the period in which the Company is required to
maintain such effectiveness shall be extended to a date one year after
the end of the period during which the restriction on resale described
in this sentence applies.
6. NOTICES. Any notices or other communications required or permitted hereunder
shall be sufficiently given if in writing and sent by registered or certified
mail, postage prepaid, return receipt requested, if to the Company, to: American
Professional Billiards, Inc., 1700 East Desert
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Inn Road, Suite 108, Las Vegas, Nevada 89109, Attention: Chief Executive
Officer; and if to the Investor, at the address set forth following the
Investor's signature to this Subscription Agreement, or, in the case of notice
to the Investor or the Company, to such address as either the Company or the
Investor shall designate to the other to notice in writing; and if to a holder
of Registerable Securities other than the Investor, to the address of such
holder on the books and records of the Company.
7. GOVERNING LAW. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada without giving
effect to the rules governing conflicts of laws.
8. SIGNATURES. The Investor declares under penalty of perjury that the
statements, representations and warranties contained herein are true, correct
and complete and that this subscription Agreement was executed at:
____________________________ ____________________________
(City) (State)
Principal amount Notes: $________________________
MAKE ALL CERTIFIED OR BANK CHECKS PAYABLE TO: AMERICAN PROFESSIONAL BILLIARDS,
INC.
Exact Name(s) in which ownership of Notes is to be registered:
______________________________________________________________________________
Address: ________________________________________________________________
City, State, Zip Code: ______________________________________________________
Social Security/Tax ID Number:
SUBSCRIBER JOINT SUBSCRIBER:(IF NECESSARY)
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___________________________ ___________________________
(Print Name) (Print Name)
___________________________ ___________________________
(Signature) (Signature)
___________________________ ___________________________
(Title) (Title)
Date: _____________________ Date: __________________
RECEIVED AND ACCEPTED:
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$___________________________ Notes: __________________
Date: _______________________
AMERICAN PROFESSIONAL BILLIARDS, INC.
By ____________________________
Its ___________________________
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THE SECURITIES REPRESENTED BY THIS CONVERTIBLE PROMISSORY NOTE AND THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS.
CONVERTIBLE SUBORDINATED NOTE
(Non-negotiable)
$ __________________ ______, 1996
FOR VALUE RECEIVED, American Professional Billiards, Inc., a Nevada corporation
("Maker"), promises to pay to , ("Creditor"), at the principal office of Maker,
in Las Vegas the principal sum of Dollars ($ ), together with interest, if any,
as provided herein, from the date of this Note on the unpaid principal balance
at the rate of ten percent (10.0%) per annum. This Note is one of a series of
Notes aggregating up to One Million One Hundred Thousand Dollars ($1,100,000) in
principal amount, issued in a private offering by the Maker. Each of the Notes
shall represent the general unsecured obligation of the Maker and shall be in
pari passu with each of the other Notes with respect to all rights and
preferences of such Notes.
Unless this Note is converted as provided herein, the principal amount hereof,
together with all accrued and unpaid interest thereon are due and payable in
full on or before the close of business, Eastern Time, on December 31, 1996 (the
"Maturity Date"). Interest on this Note shall accrue and be payable upon payment
of principal of this Note in full; provided, however, that no interest shall be
payable with respect to this Note upon conversion. The Maker shall have no right
to prepay this Note prior to the Maturity Date.
The Notes will be automatically converted into shares of Units (as hereinafter
defined) upon the closing of the Company's proposed public offering of Units
(the "Public Offering"), provided that such closing occurs on or before the
Maturity Date, and, if not automatically converted, will be converted into Units
at the option of the holder at any time through the Maturity Date. Each Unit
obtained on automatic conversion will be identical to the Units offered to the
public in the Public Offering, consisting of one (1) share of Common Stock and
one (1) redeemable Common Stock Purchase Warrant, and will be convertible at a
conversation rate of six (6) Units for each amount of principal equal to the
initial public offering price of the Units offered in the Public Offering. For
the purpose of the provisions of this Note relating to automatic conversion, the
term "Unit" means the smallest denomination of securities that can be purchased
in the Public Offering, whether that denomination consists of one or more
securities.
Each Unit obtained on optional conversion will consist of one (1) Share of
Common Stock and one (1) redeemable Common Stock Purchase Warrant. Upon any
optional conversion, a holder of a Note will be entitled to receive one (1) Unit
for each one dollar ($1.00) of principal of Notes.
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Each Warrant will entitle the holder thereof to purchase tone share of Common
Stock for a period of three years commencing with the date that the Registration
Statement is declared effective by the SEC at a price equal to 150% of the
initial Public Offering Price. During the exercise period of the Warrants, each
Warrant shall be redeemable by the Company at a redemption price of $.10 per
Warrant upon 30 days prior written notice to each Warrant holder, provided,
however, that the closing average bid price of the Company's Common Stock, for a
period of 20 consecutive trading days prior to any such call for redemption,
shall have been 100% or more of the then effective exercise price of the
Warrants.
The Maker shall grant certain registration rights with respect to the securities
issuable upon the automatic conversion of this Note as set forth in the
Subscription Agreement executed by the Maker and the Creditor in connection with
the issuance of this Note (the "Subscription Agreement") which is incorporated
herein by reference.
Upon the occurrence of any of the following events of default the Creditor may,
by written notice to the Maker, declare all or any portion of the unpaid
principal amount due to such Creditor, together with accrued interest thereon,
immediately due and payable:
1. The nonpayment, when due, of any principal or interest on this
Note;
2. The material breach by the Maker of any representation made in
this Note or in the Subscription Agreement to which this Note
relates;
3. The Maker shall commence any voluntary proceeding under any
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, receivership, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter
in effect; or the Maker shall be adjudicated insolvent or
bankrupt by a decree of a court of competent jurisdiction; or
the Maker shall petition or apply for, acquiesce on, or
consent to, the appointment of any receiver or trustee of the
Maker for all or a substantial part of the property of the
Maker; or the Maker shall make an assignment for the benefit
of creditors, or the Maker shall admit in writing its
inability to pay its debt as they mature; or
4. There shall be commenced against the Maker any proceeding
relating to the Maker under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debts, receivership,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereinafter in effect; or a receiver or trustee
shall be appointed for the Maker or for all or a substantial
part of the property of the Maker; or a warrant of attachment,
execution or similar process shall be issued against any
substantial part of the property of the Maker.
The Maker hereby waives notice of default or presentment, protest or notice of
nonpayment or dishonor and all other notices or demands relative to this
instrument. Maker agrees to pay reasonable attorney's fees, if any, incurred by
Creditor in connection with any action to collect this Note.
This Note shall be governed, construed and interpreted in accordance with the
laws of the State of Florida, without giving effect to the rules governing
conflicts of law.
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THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE LAW, AND
SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE
REGISTERED UNDER THE ACT AND THE APPLICABLE STATE LAW OR SUCH SALE OR TRANSFER
IS EXEMPT FROM SUCH REGISTRATION AND THE MAKER HAS RECEIVED AN OPINION OF
COUNSEL ACCEPTABLE TO IT TO THE EFFECT THAT SUCH SALE OR TRANSFER IS SO EXEMPT.
AMERICAN PROFESSIONAL BILLIARDS, INC.
By: _______________________________
Its: _______________________________
________________________
Creditor's Name
________________________
Creditor's Name
________________________
________________________
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