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Form #1114

PPM Stock Subscription Agreement

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CONFIDENTIAL PRIVATE PLACEMENT

MEMORANDUM: SUBSCRIPTION AGREEMENT AND CLOSING DOCUMENTS

 

 

Each prospective purchaser is urged to consult with his or her own advisers to determine the suitability of an investment in Common Shares (“the Shares”), and the relationship of such an investment to the purchaser’s overall investment program and financial and tax position.  Each purchaser of Shares will be required to further represent that, after all necessary advice and analysis, such purchaser’s investment in Shares is suitable and appropriate, in light of the foregoing considerations.

 

SUBSCRIPTION AGREEMENT

 

Each person who wishes to subscribe for Shares (a “Subscriber”) must return an executed Subscription Agreement to “COMPANY NAME”, which subscription must be accepted by the Company.  A Subscription Agreement will be sent separately to each Subscriber.

In the Subscription Agreement, each subscriber for Shares will acknowledge that it is committing to purchase Shares from “Seller’s Name”, pursuant to the offering.  Each subscriber will also acknowledge that it has received, read and understood the contents of this Private Placement Memorandum and the Exhibits. By executing the Subscription Agreement, each Subscriber covenants that, to the extent such Subscriber receives Shares directly or indirectly, it will execute the Stockholders’ Agreement.  In addition, by executing the Subscription Agreement, each Subscriber represents and warrants to the Company, among other things, that it is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act, and that it is acquiring the Shares exclusively for its own account without a view to the distribution of any part thereof.  In connection with sales of Shares to a non-U.S. person, “COMPANY NAME” may require a legal opinion with respect to compliance with the securities laws of that person’s jurisdiction of residence and other matters.

Once the Subscriber has completed the Subscription Agreement, he, she or it should sign and date, as applicable, the Subscription Agreement and the Signature Page and return them to “Officer’s Name”, together with a certified check or cashier’s check made payable to ““COMPANY NAME” LLC.” (or may wire funds to an account designated by The Company) in the amount that they specify in the Subscription Agreement.  All subscriptions are subject to acceptance by The Company.  If The Company rejects your subscription, “COMPANY NAME” will return your subscription to you without interest.  “COMPANY NAME” will deposit all

subscriptions in its bank account pending the closing of the offering, and subscribers will not be entitled to interest on payments sent to The Company.

If you have questions regarding the forms or how to complete them, you may call “Officer’s Name” at “PHONE NUMBER”.

Eligible Investors

Shares may be purchased only by investors who qualify as “accredited investors” as defined in Rule 501(a) of Regulation D under the Securities Act (see Exhibit C attached hereto).

The Shares are suitable investments only for sophisticated investors for whom an investment in  The Company does not constitute a complete investment program and who fully understand, are willing to assume, and have the financial resources necessary to withstand the risks involved in an investment in The Company  and who are able to bear the potential loss of their entire investment in the Shares.  Investors should not rely on The Company for short-term financial needs or for short-term investment in the stock market.  “COMPANY NAME” is intended to be part of a well-balanced, comprehensive investment program. Prospective investors will be required to make appropriate representations to The Company to evidence the foregoing.

Except as otherwise may be consented to by The Company, investors must meet all of the eligibility criteria set forth above and in The Company’s subscription documents, and “COMPANY NAME” reserves the right to reject initial or additional subscriptions in its absolute discretion.

The foregoing is only a summary and is qualified in its entirety by reference to the Subscription Agreement, a copy of which is attached hereto as Exhibit A. Potential investors should read the Subscription Agreement carefully.


 

STOCKHOLDERS’ AGREEMENT

As a condition precedent to the issuance of the Shares offered hereby, each investor will enter into a Stockholders’ Agreement with the Company and the principals and management stockholders of the Company, the material terms of which are summarized below:

Registration Rights:  Following the Company’s initial public offering, the investors will be entitled to participate in any registration by the Company, whether it is for its own account or for the account of other stockholders (subject to certain exceptions). The number of Shares that the investors may include in such registration may be reduced by the Company or the managing underwriter, if any, if the Company or such underwriter determines in good faith that market conditions and similar factors require such a reduction. The registration rights may not be assigned to a transferee who acquires less than two percent of the Shares issued pursuant to this offering or to a competitor of the Company. The registration rights will expire on the earlier of four years after the Company’s initial public offering or, with respect to a particular investor, the date when the Shares held by such investor may be sold in a single transaction pursuant to Rule 144 under the Securities Act.  The investors will not be permitted to sell, or offer to sell, any securities of the Company during the 180-day period following the Company’s initial public offering.

Information Rights: The Company shall provide each investor with financial statements within 120 days after the end of each fiscal year. The information rights will terminate upon a public offering by the Company following which the Company is required to publicly report financial statements.

Co-Sale Rights: The investors will be entitled to participate in any sale by one or more of the Company’s principals of at least “PERCENTAGE” percent or more of the issued and outstanding (on a fully diluted basis) shares of Common Stock, on a pro rata basis and on the same terms and conditions as apply to the selling principals. This co-sale right must be exercised within 120 days following delivery to the investors of the principals’ notice setting forth the terms of the proposed sale, and will expire upon the effective date of the Company’s initial public offering. The co-sale right will not apply to a transfer to affiliates, family members, family trusts or the estate of a selling founder, provided that such transferee agrees to become a party to the Stockholders’ Agreement.

Drag-Along Rights: In the event the principals propose to transfer at least “PERCENTAGE” percent of the shares of Common Stock held by them to a bona fide third-party purchaser, the principals may require the investors to sell, or cause to be sold, to such third-party purchaser all of their shares of Common Stock on the same terms and conditions as apply to the principals. This drag-along right will expire upon the effective date of the Company’s initial public offering.

 

 

 

Right of First Refusal: The Company shall have a right of first refusal to purchase all or any of such shares of Common Stock as are proposed to be sold by an investor on the same terms and conditions as apply to the proposed transferee. This restriction will expire upon the Company’s initial public offering and will not apply to transfers to partners, affiliates, family members, family trusts or the estate of a selling investor, provided that any such transferee agrees to become a party to the Stockholders’ Agreement.

Restrictions on Transfer. Investors will not be permitted to transfer shares of Common Stock to a competitor of the Company.

Amendment. The Stockholders’ Agreement may only be amended by the written consent of the Company, the principals, or, as to the investors, by the holders of a majority of the shares of Common Stock held by the investors and their assignees.

Term. The Stockholders’ Agreement will terminate on the earliest of (i) the date when the investors no longer hold shares of Common Stock, (ii) four years after the Company’s initial public offering and (iii) when the rights granted thereunder have terminated.

The foregoing is only a summary and is qualified in its entirety by reference to the Stockholders’ Agreement, a copy of which is attached hereto as Exhibit B. Potential investors should read the Stockholders’ Agreement carefully.

Additional Information

“COMPANY NAME” will make available to any proposed investor such additional information as it may possess, or as it can acquire without unreasonable effort or expense, to verify or supplement the information set forth herein.


 

SUBSCRIPTION AGREEMENT
“Company Name”

THIS AGREEMENT IS BEING ENTERED INTO IN RELIANCE ON CERTAIN EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), INCLUDING BUT NOT LIMITED TO THOSE SET FORTH IN REGULATION D PROMULGATED THEREUNDER, AND APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES LAW ADMINISTRATOR, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES LAW ADMINISTRATOR PASSED ON THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

A PURCHASER OF THE SECURITIES OF THE COMPANY OFFERED HEREBY MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND, THEREFORE, CANNOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.  THE ISSUER IS UNDER NO OBLIGATION TO REGISTER THE SECURITIES OFFERED HEREBY UNDER THE SECURITIES ACT, EXCEPT AS EXPRESSLY SET FORTH HEREIN.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND CANNOT BE OFFERED, SOLD, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS UNLESS AN EXEMPTION FROM QUALIFICATION IS AVAILABLE.

EACH PROSPECTIVE PURCHASER MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN WHICH IT PURCHASES, OFFERS OR SELLS THE SECURITIES AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED BY IT FOR THE PURCHASE, OFFER OR SALE BY IT OF THE SECURITIES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR RESALES, AND THE COMPANY SHALL NOT HAVE ANY RESPONSIBILITY THEREFOR.


 

THIS SUBSCRIPTION AGREEMENT (this “Agreement” or “Subscription Agreement”) is made and entered into as of the date the subscription evidenced hereby is accepted, by and among “COMPANY NAME”,  a “STATE” corporation (the “Company”), and the undersigned (each, the “Purchaser”).

THE PARTIES HEREBY AGREE AS FOLLOWS:

1.      Purchase of Shares

.  Subject to the terms and conditions of this Agreement, on the Closing Date (as defined in Section 2 below) applicable to the Purchaser, the Company shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, that number of shares (the “Shares”) of the The Company’s Common Stock, par value $ .001 per share (the “Common Stock”) set forth on the signature page executed by the Purchaser and attached hereto (the “Purchased Shares”) at a purchase price of $.00 per share (the “Purchase Price”).   The Purchaser’s payment of the Purchase Price shall be delivered to the Company on or before the Closing Date (as hereinafter defined) applicable to the Purchaser’s investment.  The purchase of the Purchased Shares is in connection with the Company’s offering (the “Offering”) of Shares pursuant to the Company’s Private Placement Memorandum, dated as of “DATE”,  “YEAR” (the “Private Placement Memorandum”).

 

2.         Closing.

2.1     Closing Dates

.  The Offering will terminate on the earlier of an election by the Company to not accept further subscriptions,  or the sale of all Shares offered in the Offering, (the “Offering Termination Date”).  All Offering proceeds received prior to a closing will be placed in a segregated account maintained by the Company and distributed to the Company upon such closing.  All closings shall be held at the offices of  “Company Name”  “COMPANY ADDRESS”, or at such other time and place as the Company and the Purchaser may mutually agree.  (The dates of each of such closings shall be collectively referred to herein as the “Closing Date.”)

2.2  Issuance of Shares

.  Subject to the terms and conditions hereof, on the Closing Date applicable to the Purchaser, against the Purchaser’s payment to the Company of the Purchase Price, the Company shall issue to the Purchaser the Purchased Shares.

2.3     Delivery

.  As soon as practicable after the Closing Date applicable to the Purchased Shares, the Company will deliver to the Purchaser certificates representing the Purchased Shares, which certificates shall be issued in the Purchaser’s name as set forth on the signature page of this Agreement.

3.         Mechanics of Investment.

3.1    Subscription

.  The Purchaser shall subscribe for the Shares by (i) indicating on the signature page hereof the number of Shares Purchaser desires to purchase, and the Purchase Price for such Shares, (ii) executing this Agreement and fully completing and executing the Investor Questionnaire attached hereto as Exhibit “1” (the “Questionnaire”) and the Stockholders’ Agreement attached hereto as Exhibit “2” (the “Stockholders’ Agreement”), and

(iii) sending such documents by courier or express mail along with a check in an amount equal to the Purchase Price payable to ““Company Name” ” (unless the Purchase Price is being sent by wire transfer) to:

“Company Name”
“COMPANY ADDRESS”

Attention: “Officer’s Name”

 

3.2     Company Acceptance

.  The issuance of a certificate representing the Purchased Shares acquired by the Purchaser shall constitute the Company’s acceptance of the Purchaser’s investment.  No subscriptions will be accepted that do not include (a) a completed and executed Subscription Agreement, (b) a completed and executed Questionnaire, (c) a completed and executed Stockholders’ Agreement, and (d) payment of the Purchase Price by check or by wire transfer in accordance with Section 3.1 hereof.  The Company reserves the right, in its sole discretion, to reject any subscription if it believes the subscriber does not meet the qualifications to invest in the Shares or for any other reason.

4.       Representations and Warranties of the Company

.  The Company hereby represents and warrants to each Purchaser that:

4.1     Organization and Standing

.  The Company is a corporation duly organized and existing under the laws of the State of “STATE” and is in good standing under such laws.  The Company has the requisite corporate power to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted as provided in the Private Placement Memorandum, a copy of which has been provided to each Purchaser.

4.2     Corporate Power

.  The Company will have at the Closing Date all requisite legal and corporate power and authority to enter into this Agreement and the Stockholders’ Agreement (collectively, the “Investment Agreements”), to sell and issue the Purchased Shares as provided herein, and to carry out and perform its obligations under the terms of the Investment Agreements.

4.3    Subsidiaries.

Except for its interest in THE COMPANY, The Company does not own or control, directly or indirectly, any interest or investment in any other corporation, association, partnership or other business entity. . 

4.4     Authorization

.  All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of the Investment Agreements by the Company and the authorization, sale, issuance and delivery of the Purchased Shares pursuant hereto and the performance of all of the Company’s obligations under the Investment Agreements has been taken or will be taken at or prior to the Closing Date.  The Investment Agreements, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except as enforcement may be limited by applicable bankruptcy laws or other similar laws

affecting creditors’ rights generally, and the availability of equitable remedies may be limited by applicable law.  The Purchased Shares, when issued in accordance with the provisions of this Agreement and the Private Placement Memorandum, will be validly issued, fully paid and nonassessable.  The Purchased Shares will be free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the Purchaser; provided, however, that the Purchased Shares may be subject to restrictions on transfer under state and/or federal securities laws.

4.5       Agreements; Action.

(a)        Except as described in the Private Placement Memorandum, there are no agreements, understandings or proposed transactions between the Company and any of its officers, directors, affiliates, or any affiliate thereof nor to the Company’s knowledge are there agreements or understandings between any person and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company.

(b)        Except as described in the Private Placement Memorandum, “COMPANY NAME” has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iii) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale or disposal of its inventory or equipment in the ordinary course of business.

4.6    Title

.  The Company has good and marketable title to its material properties and assets and has good title to all its leasehold interests, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (i) the lien of current taxes not yet due and payable, and (ii) liens and encumbrances which do not, individually or in the aggregate, materially detract from the value of the property subject thereto or materially impair the operations of the Company and which have not arisen other than in the ordinary course of business.

4.7     Compliance with Other Instruments

.  “COMPANY NAME” is not in violation of or default under (i) any term of its Certificate of Incorporation (the “Certificate of Incorporation”) or its Bylaws, as amended (the “Bylaws”), (ii) to the knowledge of the Company, in any material respect of any term or provision of any material mortgage, indebtedness, indenture, contract, agreement, instrument, judgment, order or decree, or (iii) to the knowledge of the Company, any statute, rule or regulation applicable to The Company or “COMPANY NAME” in each case where such violation would materially and adversely affect the Company.  To the knowledge of the Company, the execution, delivery and performance of the Investment Agreements and the issuance of the Shares have not resulted in, and will not result in, any material violation of, or conflict with, or constitute with or without the passage of time and the giving of notice a material violation or default under, the Certificate of Incorporation or the Bylaws or any such material agreements except where the violation, conflict, or default would not (a) have a material adverse effect on the ability of the parties hereto to consummate the transaction contemplated by this Agreement, (b) have a material adverse

effect on the Company’s business operations, and (c) result in the creation of, any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company.

4.8    Litigation

.   There are no material actions, suits, proceedings or investigations pending or, to the knowledge of the Company, threatened against or affecting the Company or its properties before any court or governmental agency.  To the knowledge of the Company, the Company is not subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.

4.9    Employees

.  To the Company’s knowledge, no employee of the Company is in violation of any term of any employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of such employee with the Company or any other party because of the nature of the business conducted or to be conducted by the Company.

4.10     Governmental Consent, etc.

  To the Company’s knowledge, no consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Shares, or the consummation of any other transaction contemplated hereby, except for the making of filings and the payment of fees as may be necessary under any applicable Blue Sky laws, which filings and payments of fees, if required, will be accomplished in a timely manner, except where the failure to file or pay any such fee would not (i) have a material adverse effect on the ability of the parties hereto to consummate the transaction contemplated by this Agreement or (ii) have a material adverse effect on the Company’s business operations..

4.11     Obligations to Related Parties

4.12     .  Except as described in the Private Placement Memorandum, there are no obligations of the Company to officers, directors or employees of the Company other than (a) for payment of salary and stock options for services rendered, (b) for reimbursement for reasonable expenses incurred on behalf of the Company, and (c) for other standard employee benefits made generally available to all employees of the Company.  To the Company’s knowledge, none of the officers or directors of the Company, or any members of their immediate families, are indebted to the Company 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, except that such persons may own stock in publicly traded companies which may compete with the Company or have a business relationship with the Company.  To the Company’s knowledge, no officer or director, or any member of their immediate families is, directly or indirectly, interested in any material contract with the Company, other than such contracts as relate to any such person’s ownership of capital stock or other securities of the Company or employment with the Company.

5.       Representations and Warranties of the Purchaser

.  Purchaser hereby represents and warrants to the Company as follows:

5.1     Authority

.  If the Purchaser is not a natural person, the Purchaser is a corporation, partnership, trust or other organization (as indicated by its signature to this Agreement) and is

duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.  The Purchaser has now, and will have at the applicable Closing Date, all requisite legal and (if applicable) corporate, partnership or other power to enter into this Agreement, to purchase the Shares hereunder and to perform its obligations under the terms of this Agreement.

5.2     Authorization

.  All corporate, partnership or other action on the part of the Purchaser necessary for the purchase of the Purchased Shares and the performance of Purchaser’s obligations hereunder has been taken or will be taken prior to the applicable Closing Date.  This Agreement, when executed and delivered by the Purchaser, will constitute a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms, except as enforcement may be limited by (i) applicable bankruptcy laws or other similar laws affecting creditors’ rights generally, and (ii) the availability of equitable remedies.

5.3  Investment Representations

.  This Agreement is made with the Purchaser in reliance on the following specific representations to the Company that:

(a)        The Purchased Shares purchased hereunder will be acquired for the Purchaser’s own account, not as a nominee or agent, and not with a view to the distribution of any part thereof, and the Purchaser has no present intention of selling, granting participation in, or otherwise distributing the same.  If the Purchaser is not a natural person, the Purchaser has not been organized for the purpose of investing in securities of the Company, although such investment is consistent with its purposes.

(b)        The Purchaser understands that the purchase of the Purchased Shares represents a speculative investment, and the Purchaser is able, without impairing his, her or its financial condition, to hold the Purchased Shares for an indefinite period of time and to suffer a complete loss of the Purchaser’s investment.  The Purchaser is aware of and has investigated the Company’s business, management and financial condition, has had the opportunity to inspect the Company’s facilities and has had access to such other information about the Company as such Purchaser has deemed necessary or desirable to reach an informed and knowledgeable decision to acquire the Purchased Shares.

(c)        The Purchaser understands that the Shares will not be registered under the Securities Act by reason of, among other things, reliance upon certain exemptions therefrom, and that the reliance of the Company on such exemptions is predicated upon, among other things, the bona fide nature of such Purchaser’s investment intent as expressed herein.

(d)        Purchaser is experienced in evaluating and investing in securities of companies in the development stage and has made investments in securities other than those of the Company.  Purchaser acknowledges that by reason of his or its business or financial experience, he, she or it has the ability to bear the economic risk of his, her or its investment pursuant to this Agreement.

5.4     Rule 144

.  The Purchaser understands that the Shares may be restricted securities within the meaning of Rule 144 promulgated under the Securities Act; that the Shares are not registered under the Securities Act, that the Purchaser may be required to hold the Shares

indefinitely unless they are subsequently registered or an exemption from such registration is available; that, in any event, if the Shares are restricted securities, the exemption from registration under Rule 144 would not be available for at least one year, and even then, if the Purchaser is an affiliate of the Company or has held such Shares for less than two years, such exemption will not be available unless:  (i) a public trading market then exists for the Shares; (ii) adequate information concerning the Company is then available to the public; and (iii) other terms and conditions of Rule 144 are complied with, including, among other things, the sale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a “market maker” and the number of such Shares sold in any three‑month period not exceeding specified limitations.

5.5     No Public Market

.  The Purchaser understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities.

5.6     Access to Data

.  The Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with its management.  It has also had an opportunity to ask questions of officers of the Company, which questions were answered to its satisfaction.  The Purchaser understands that such discussions, as well as any written information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects but were not a thorough or exhaustive description.

5.7     Brokers or Finders

.  The Company may at its discretion pay brokers or finders fees in connection with this offering.

5.8    Tax Liability

.  The Purchaser has reviewed with its own tax advisors, the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  The Purchaser has relied solely on such advisors and not on any statements or representations of the Company or any of its agents.  The Purchaser understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

5.9     Accredited Investor

.  The Purchaser qualifies as an “accredited investor” pursuant to Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act.

6.         Conditions to Closing.

6.1     Conditions to Purchasers’ Obligations

.  The obligation of the Purchaser to purchase the Shares on the applicable Closing Date is subject to the fulfillment on or prior to such Closing Date of the following conditions:

(a)        Representations and Warranties Correct; Performance of Obligations.  The representations and warranties made by the Company in Section 4 hereof shall be true and correct on the applicable Closing Date and all covenants, agreements and conditions contained in this Agreement to be performed by the Company, on or prior to such Closing Date, shall have been performed or complied with.

(b)        Qualifications.  All authorizations, approvals or permits of any governmental authority that are required in connection with the lawful issuance and sale of the Shares under this Agreement shall have been duly obtained and effective, or will be obtained or made in a timely manner so as to comply with the requirements of such governmental authority.

(c)        Stockholders’ Agreement.  The Company shall have executed and delivered a copy of the Stockholders’ Agreement, executed by the Company.

6.2     Conditions to Obligations of the Company

.  The Company’s obligation to sell and issue the Purchased Shares on the applicable Closing Date is subject to the fulfillment on or prior to such Closing Date of the following conditions:

(a)        Representations and Warranties Correct; Performance of Obligations.  The representations and warranties of Purchaser in Section 5 hereof shall be true and correct as of the applicable Closing Date and the Purchaser shall have performed all obligations and conditions herein required to be performed by it on or prior to the applicable Closing Date.

(b)        Qualifications.  All other authorizations, approvals or permits of any other governmental authority that are required in connection with the lawful issuance and sale of the Shares under this Agreement shall have been duly obtained and effective, or will be obtained or made in a timely manner so as to comply with the requirements of such governmental authority.

(c)        Payment of the Purchase Price.  The Purchaser shall have tendered payment of the Purchase Price in accordance with Section 3.1 hereof.

(d)        Questionnaire.  The Purchaser shall have completed, executed and delivered the Questionnaire.

(e)        Joinder to Stockholders’ Agreement.  The Purchaser shall have executed and delivered an Investor Joinder Agreement to the Stockholders’ Agreement.

7.         Legends.

7.1    Securities Act Legend

.  Each certificate representing the Shares shall be stamped or otherwise imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS (THE “LAWS”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE SECURITIES UNDER THE SECURITIES ACT AND THE QUALIFICATION OF THE SECURITIES UNDER THE LAWS, UNLESS THE COMPANY AND ITS COUNSEL ARE SATISFIED THAT SUCH REGISTRATION AND

QUALIFICATION IS NOT THEN REQUIRED UNDER THE CIRCUMSTANCES OF SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION.

Such legend shall be removed by the Company upon delivery to it of an opinion of counsel satisfactory to the Company in form and substance satisfactory to the Company, that a registration statement under the Securities Act and qualification under applicable state securities laws is at the time in effect with respect to the legended security or that such security can be freely transferred without such registration and qualification.

7.2    State Securities Laws Legends

.  Any certificate representing the Shares shall also be endorsed with any legend or legends required by the securities laws of the jurisdictions of the residence of the Purchaser.

7.3     Restrictions on Transfer

.  The Shares may not be transferred unless and until one of the following events shall have occurred:

(a)        The Company shall have received a statement of the circumstances surrounding the transfer and, if reasonably requested by the Company, an opinion of counsel, in form and substance reasonably acceptable to the Company and its counsel, stating that the transfer is exempt from registration under the Securities Act as then in effect, and the rules and regulations promulgated by the Commission thereunder; or

(b)        the Shares are transferred pursuant to an effective registration statement under the Securities Act.

The restrictions on transfer imposed by this Section 7.3 shall cease and terminate as to the Shares or any portion thereof when (i) such Shares shall have been effectively registered under the Securities Act and sold by the holder thereof in accordance with such registration, or (ii) the Company is provided with an acceptable opinion of counsel as described in subparagraph (a) above to the effect that all future transfers of such Shares by the transferor or the contemplated transferee would be exempt from registration under the Securities Act.

8.         Miscellaneous.

8.1     Governing Law

.  This Agreement shall be governed in all respects by the laws of the State of “STATE”  without application of principles of conflicts of laws.

8.2    Survival

.  The representations, warranties, covenants and agreements made herein shall survive the closing of the transactions contemplated hereby.

8.3    Successors and Assigns

.  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

8.4    Entire Agreement; Amendment.

(a)          This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.  Any provision of this Agreement may be

amended and may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Purchaser.

(b)        Any amendment or waiver effected in accordance with this Section 8.4 shall be binding upon each holder of any Shares purchased under this Agreement at the time outstanding, each future holder of all such Shares, and the Company.

8.5     Notices, etc.

  All notices and other communications required or permitted hereunder shall be in writing and shall be (i) delivered personally or by facsimile, (ii) transmitted by first‑class mail, postage prepaid, or airmail, postage prepaid, in the event of mailing for delivery outside of the country in which mailed, or (iii) transmitted by an overnight courier of recognized reputation or of recognized international reputation in the event of an international delivery addressed (a) if to the Purchaser, at its address as set forth on the signature pages hereto, or at such other address as such Purchaser shall have furnished to the Company in writing, or (b) if to any other holder of any Shares at such address as such holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such Shares who has so furnished an address to the Company, or (c) if to the Company, at its address set forth at the signature page of this Agreement, or at such other address as the Company shall have furnished to each such holder in writing.  Except as otherwise specified herein, all notices and other communications shall be deemed to have been duly given on (A) the date of receipt if delivered personally or by facsimile, (B) the date three (3) days after posting if transmitted by mail, or (C) the date one (1) day after delivery to the courier if sent by recognized or internationally recognized overnight courier service, whichever shall first occur.

8.6    Separability of Agreements; Separability of this Agreement

.  Unless otherwise expressly provided herein, the rights of the Purchaser hereunder are several rights, not rights jointly held with any of the other purchasers of Shares in the Offering.  Any invalidity, illegality or limitation on the enforceability of any part of this Agreement, whether arising by reason of the law of the Purchaser’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to any other such purchaser or purchasers.  In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

8.7    Titles and Subtitles

.  The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

8.8     Counterparts

.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

8.9    Expenses

.  The Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of the Investment Agreements and each Purchaser shall pay all costs and expenses that he, she or it incurs with respect to the negotiation, execution, delivery and performance of the Investment Agreements.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day and year first written above.

SIGNATURE OF INDIVIDUAL PURCHASERS:

 

 

 

                                                               
Signature

 

 

 

 

                                                               
Signature (if jointly held)

 

 

 

                                                               
Print Name
Address:_________________

                   _________________

                   _________________

Telephone:_______________

Facsimile:________________

e-mail:___________________

 

 

 

 

 

                                                               
Print Name

Address:_________________

                   _________________

                   _________________

Telephone:_______________

Facsimile:________________

e-mail:___________________

 

 

 

Executed at:

 

                                                               

City, State

 

 

 

 

 

Date:                                                    

 

 

Professional Adviser(s)/Purchaser Representative(s)
(if applicable)  

Signature           

Print Name

Executed at:

 

___________________________

                  City, State

 

Date: 

NUMBER OF SHARES:   ____________________X “Price per Share” per share


            TOTAL PURCHASE PRICE:  $                                             


 

SIGNATURE OF PURCHASERS WHO ARE CORPORATIONS, TRUSTS OR PARTNERSHIPS:

 

                                                                                                                                               
Name of entity (please print or type)

 

                                                                                                                                               
Signature(s) of authorized agent, trustee or general partner(s)

 

                                                                                                                                               
Title of authorized agent, trustee or general partner

Address:______________________________________________

                   ______________________________________________

                   ______________________________________________

Telephone:____________________________________________

Facsimile:_____________________________________________

e-mail:________________________________________________

 

Executed at:                                                                       Date:                                    
                                       City, State

 

 

NUMBER OF SHARES:                                     X”Price per Share” Per Share

 

PURCHASE PRICE:  $                                  


 

“COMPANY NAME”.

INVESTOR QUESTIONNAIRE

INTRODUCTORY STATEMENT

The undersigned is being asked to complete this Investor Questionnaire in connection with the undersigned’s purchase of certain securities (the “Securities”) of “Company Name” LLC, a “STATE” Limited Liability Corporation (the “Company”) in connection with the Company’s offering (the “Offering”) of shares of the Company’s common Stock (the “Common Stock”) pursuant to the Company’s Private Placement Memorandum, dated as of “DATE”th, “YEAR” (the “Offering Memorandum”), and subject to the terms and conditions of that certain Subscription Agreement, dated as of “DATE”, “YEAR” (the “Subscription Agreement”), by and among the Company and the purchasers signatory thereto (the “Purchasers”).  Capitalized terms used in this Investor Questionnaire shall have the meanings as set forth in the Subscription Agreement.  The undersigned’s receipt of the Securities is conditioned upon the satisfactorily completion of this Investor Questionnaire.

The Company will not deliver the Securities to any person that is not an “accredited investor”, as defined in Rule 501 promulgated under the Securities Act of 1933, as amended (the “Act”).  The purpose of this Investor Questionnaire is to represent to the Company that the undersigned meets the standards imposed by any applicable state securities laws and Regulation D promulgated under the Act, since the Securities will not be registered under the Act or under state securities laws.

By signing this Investor Questionnaire, the undersigned agrees that the Company may present a copy of this Investor Questionnaire to such persons as the Company deems appropriate if called upon under law to establish the availability under the Act or state securities laws of an exemption from registration for the offer and sale of the Securities.

This Investor Questionnaire is not an offer to sell, nor is it a solicitation for an offer to buy, any Securities.

Please complete the entire Investor Questionnaire and return it to the address set forth below:

“COMPANY NAME” 

                                    “COMPANY ADDRESS”.

                                   

                                    Fax: “FAX”


 

INVESTOR QUESTIONNAIRE

“COMPANY NAME”

ALL INFORMATION WILL BE TREATED CONFIDENTIALLY

1.         The undersigned acknowledges that any offer and sale of Securities will not be registered with the Securities and Exchange Commission because the Company will rely upon exemptions from registration under the Act in connection with such offer and sale.  The undersigned understands that all investors must be Accredited Investors, as defined in Rule 501 of Regulation D under the Act, and that the Company will not deliver any Securities to any person who has not confirmed that such person is an Accredited Investor.

       Accredited Investor - The undersigned hereby confirms to the Company that such person (check  each category which applies):

        (a)        is a bank as defined in Section 3(a)(2) of the Act or a 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; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $”AMOUNT OF OFFERING”; an 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 plan fiduciary is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $”AMOUNT OF OFFERING” or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

       (b)        is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

        (c)        is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Securities offered, with total assets in excess of $”AMOUNT OF OFFERING”;

       (d)        is a director, executive officer or general partner of the Company, or any director, executive officer, or a general partner of a general partner of the Company;

        (e)        is a natural person whose individual net worth, individually or together with his or her spouse, exceeds “PRICE”,000,000 at the time of his or her purchase;

        (f)                (i)        is a natural person who had an individual income in excess of $200,000 in both 1998 and 1999 and who reasonably expects reaching the same income level in 2000; or

                                (ii)        is a natural person who had a joint income with his or her spouse in excess of $300,000 in both 1998 and 1999 and who reasonably expects reaching the same income level in 2000;

        (g)        is a trust, with total assets in excess of $”AMOUNT OF OFFERING”, not formed for the specific purpose of acquiring the Securities offered, whose purchase is directed by a person who either alone or with his purchaser representative has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment, or that the Company reasonably believes immediately prior to making any sale that such purchaser comes within this definition;

        (h)        is an entity in which all of the equity owners are Accredited Investors meeting one or more of the tests under subparagraphs (a) - (g).

2.         The undersigned understands that this is a highly speculative investment with a substantial risk of loss of its, his or her (as the case may be) entire investment.  The undersigned is in a position to bear the economic risk of such loss.  The undersigned acknowledges that the Securities are subject to restrictions on transferability and resale pursuant to that certain Stockholders’ Agreement among the Company, the undersigned and certain other stockholders of the Company.

3.         The undersigned hereby acknowledges that it, he or she is acquiring the Securities for its, his or her (as the case may be) own account for investment and not with a view toward distribution.

4.         The undersigned hereby represents that by reason of its, his or her (as the case may be) financial experience, or the business and financial experience of its management, the undersigned has the capacity to protect its, his or her (as the case may be) own interests in connection with the transaction contemplated by the Subscription Agreement.  The undersigned was not formed for the specific purpose of consummating the transactions contemplated by the Subscription Agreement.

STOCKHOLDERS’ AGREEMENT

“COMPANY NAME”

This Stockholders’ Agreement (this “Agreement”) is made as of “DATE”th, “YEAR” by and among “COMPANY NAME”,  a “STATE” corporation (the “Company”), the holders of the Company’s Common Stock, par value $.001 per share (the “Common Stock”) signatory to this Agreement and any transferees of such holders (the “Investors”) and founders and management stockholders of the Company listed on Exhibit 1 hereto (the “Key Stockholders” and together with the Investors, the “Stockholders”).

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Investors are acquiring shares (the “Shares”) of Common Stock pursuant to Subscription Agreements (the “Subscription Agreements”) between each such Investor and the Company;

WHEREAS, as a condition precedent to acquiring the Shares, the Investors desire that the parties hereto enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.         Definitions.

(a)        Affiliate”:  With reference to any Person, a spouse of such Person, any relative (by blood, adoption or marriage) of such Person within the second degree, any director, officer or employee of such Person or any of its Affiliates, any other Person of which such Person is a general partner, managing member, manager, director, officer or employee, and any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person.
(b)        Co-Sale Stock” shall mean shares of the Company’s Common Stock and Convertible Securities now owned or subsequently acquired by any Key Stockholder.  The number of shares of Co-Sale Stock owned by each Key Stockholder as of the date hereof  is set forth on Exhibit 1, which Exhibit shall be amended from time to time to reflect changes in the number of shares owned by the Key Stockholders.
(c)        Convertible Securities” shall mean options, warrants, convertible securities or other rights convertible into or exercisable for Common Stock.
(d)        Holder” shall mean any Investor owning of record Registrable Securities that have not been sold to the public pursuant to the Company’s Initial Public Offering or any assignee of record of such Registrable Securities in accordance with Section 2(e) hereof.
(e)        Initial Public Offering” shall mean the initial registered offering and sale of the Company’s Common Stock under the Securities Act.
(f)        Liens” shall mean any and all liens, claims, options, charges, encumbrances, voting trusts, irrevocable proxies or other rights of any kind or nature.
(g)        Person” shall mean an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or other entity or a government or any department or agency thereof.
(h)        Registrable Securities” shall mean (a) shares of Common Stock owned of record by the Holders and (b) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities.
(i)         Securities Act” shall mean the Securities Act of 1933, as amended.
(j)         “Transfer” shall mean any direct or indirect disposition of an interest whether by sale, exchange, merger, consolidation, transfer, assignment, conveyance, distribution, pledge, inheritance, gift, mortgage, the creation of any security interest in, or Lien upon, any other disposition of any kind and in any manner, by operation of law or otherwise.

2.         Piggyback Registration Rights.

(a)        The Company shall promptly notify all Holders of Registrable Securities in writing at least thirty (30) days prior to the filing of any registration statement under the Securities Act for purposes of a public offering (other than the Initial Public Offering) of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company on behalf of security holders of the Company, but excluding registration statements relating to employee benefit plans, dividend reinvestment plans, mergers, acquisitions, exchange offers, corporate reorganizations or similar corporate transactions) and will afford each such Holder an opportunity to include in such registration statement all or part of such Registrable Securities held by such Holder.  Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall, within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing.  Such notice shall state the intended method of disposition of the Registrable Securities by such Holder.  If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

(b)          If the registration statement under which the Company gives notice under this Section 2 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities.  In such event, the right of any such Holder to be included in a registration pursuant to this Section 2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their Registrable Securities through such

underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. 
(c)        If the Company or the managing underwriter, if any, determines in good faith that market conditions and similar factors require a limitation of the number of shares to be offered, and the offering was initiated by the Company for its own account, the number of shares that may be included in the offering shall be allocated, first, to the Company for its own account; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to any stockholder (other than a Holder) invoking contractual rights to have their securities registered, if any, on a pro rata basis. No such reduction shall reduce the securities being offered by the Company for its own account to be included in the registration and underwriting.  If the Company or the managing underwriter, if any, determines in good faith that market conditions and similar factors require a limitation of the number of shares to be offered, and the offering was initiated for the account of any stockholders invoking contractual rights to have their securities registered, the number of shares that may be included in the offering shall be allocated, first, to such stockholders, on a pro rata basis; second, to the Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders; and third, to the Company.  If any Holder disapproves of the terms of any such offering, it may elect to withdraw therefrom by written notice to the Company and the underwriter, if applicable.  Any Registrable Securities excluded or withdrawn from such offering shall be withdrawn from the registration.
(d)        The Company shall bear all fees and expenses incurred in connection with any registration under this Section 2, including without limitation all registration, filing, qualification, printers’ and accounting fees, fees and disbursements of counsel to the Company, and the reasonable fees and disbursements of a single counsel to the selling Holders, except that each participating Holder shall bear its proportionate share of all amounts payable to underwriters in connection with such offering for discounts and commissions.
(e)        The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2 prior to the effectiveness of such registration, whether or not any Holder has elected to include securities in such registration.
(f)        The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned by a Holder to a transferee or assignee of Common Stock, and the Company shall promptly be furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; provided, however, that no such assignment or Transfer may be made to (i) a transferee who acquired less than two percent (2%) of the total number of Shares originally issued to the Investors or (ii) a competitor of the Company.  Notwithstanding the foregoing, rights to cause the Company to register securities may be assigned to an Affiliate of a Holder without restriction as to minimum Share ownership.

(g)          All registration rights granted under this Section 2 shall terminate and be of no further force and effect on the earlier of (i) the date four (4) years following the Company’s Initial Public Offering or (ii) with respect to a particular Holder, the date the Registrable

Securities held by such Holder may be sold in a single transaction pursuant to Rule 144 under the Securities Act.
(h)        Each Holder hereby agrees that during the one hundred eighty (180) day period following the effective date of a registration statement of the Company filed under the Securities Act relating to the Company’s Initial Public Offering, it shall not, to the extent requested by the Company or the managing underwriter, if any, sell or otherwise Transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period.  In order to enforce the foregoing covenant, the Company may impose stop-Transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other Person subject to the foregoing restriction) until the end of such period.
(i)         Obligations of the Company. Whenever required to effect the registration of any Registrable Securities, the Company shall:
(i)         Prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to thirty (30) days.
(ii)        Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.
(iii)       Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(iv)       Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or file a general consent to service of process in any such states or jurisdictions.
(v)        In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering.  Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(vi)         Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a

material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
(vii)      Make available for inspection by any Investor, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by the Investors or underwriter (collectively, the “Inspectors”), all pertinent financial and other records, pertinent corporate documents and properties of the Company, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information  reasonably requested by any such Inspector in connection with such registration statement; provided, however, that the Company shall not be obligated to provide access to any information which it reasonably considers to be a trade secret or similar confidential information unless the recipient of such information executes a nondisclosure agreement in a form reasonably acceptable to the Company.
(j)         In connection with the obligations of the Company to take any action pursuant to this Section 2, the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as shall be required to effect the registration of their Registrable Securities.
(k)       Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 2, the following indemnification provisions shall apply:

(i)           To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, Affiliates, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”), against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “Violation”) by the Company:  (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) 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 (iii) any violation or alleged violation by the Company of the Securities Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Securities Act, the 1934 Act or any state securities law in connection with the offering covered by such registration statement; and the Company will reimburse each such Holder, partner, Affiliate, officer or director, underwriter or controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2(k)(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or

delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder.
(ii)        To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers, each Person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, Affiliates, directors or officers or any Person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling Person, underwriter or other such Holder, or partner, Affiliate, director, officer or controlling Person of such other Holder may become subject under the Securities Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling Person, underwriter or other Holder, or partner, Affiliate, officer, director or controlling Person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Violation which occurred in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; provided, however, that the indemnity agreement contained in this Section 2(k)(ii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld or delayed; provided, further, that in no event shall any indemnity under this Section 2(k)(ii) exceed the net proceeds from the offering received by such Holder.

(iii)         Promptly after receipt by an indemnified Party under this Section 2(k) of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2(k), deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the

indemnified party under this Section 2(k), but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2(k).
(iv)       If the indemnification provided for in this Section 2(k) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(v)        The foregoing indemnity agreements of the Company and Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the registration statement in question becomes effective or the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any Person if a copy of the Final Prospectus was furnished to the indemnified party and was not furnished by the indemnified party to the Person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act.
(vi)       The obligations of the Company and Holders under this Section 2(k) shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise.

3.         Information Rights.

Within 120 days after the end of each fiscal year of the Company, the Company will furnish each Holder an audited consolidated balance sheet of the Company as at the end of such fiscal year, and an audited consolidated statement of income and an audited consolidated statement of cash flows of the Company for such year, all prepared in accordance with generally accepted accounting principles. The information rights set forth in this Section 3 shall terminate if the Company sells securities in a public offering following which the Company is required to publicly report financial statements.

4.         Right of Co-Sale.

(a)        If at any time any Key Stockholder(s) propose(s) to Transfer, other than pursuant to an Exempt Transfer (as defined in Section 5 hereof), twenty percent (20%) or more of the issued and outstanding (on a fully diluted basis) shares of Co-Sale Stock, then such Key Stockholder(s) shall promptly give written notice (the “Notice”) simultaneously to the Company and to each of the Investors at least twenty (20) days prior to the closing of such Transfer.  The Notice shall describe in reasonable detail the proposed Transfer, including, without limitation, the number of shares of Co-Sale Stock to be Transferred, the nature of such Transfer, the consideration to be paid and the name and address of each prospective purchaser or transferee.
(b)        Subject to Section 5, each Investor shall have the right (the “Co-Sale Right”), exercisable upon written notice to the selling Key Stockholder(s) within ten (10) days of the date of the Notice described in Section 4(a), to participate in such sale of Co-Sale Stock on a pro rata basis and on the same terms and conditions as apply to the selling Key Stockholder(s).  Such notice shall indicate the number of shares of Common Stock such Investor wishes to sell pursuant to its Co-Sale Right.  To the extent one or more of the Investors exercise such Co-Sale Right in accordance with the terms and conditions set forth below, the number of shares of Co-Sale Stock that the selling Key Stockholder(s) may Transfer in the transaction shall be correspondingly reduced.
(i)         Each Investor may sell all or any part of that number of shares of Common Stock equal to the product obtained by multiplying (x) the aggregate number of shares of Co-Sale Stock covered by the Notice by (y) a fraction the numerator of which is the number of shares of Common Stock owned by the Investor (on an as-if-converted basis) at the time of the Transfer and the denominator of which is the total number of shares of Common Stock (on an as-if-converted basis) owned at the time of the Transfer by the selling Key Stockholder(s) and the Investors exercising their Co-Sale Right.
(ii)        Each Investor who elects to exercise its Co-Sale Right (a “Participant”) shall effect its participation in the sale by promptly delivering to the selling Key Stockholder(s) for Transfer to the prospective purchaser one or more certificates, properly endorsed for Transfer, which represent the type and number of shares of Common Stock which such Participant elects to Transfer.

(iii)         The stock certificate or certificates that the Participant delivers to the selling Key Stockholder(s) pursuant to this Section 4(b) shall be Transferred to the prospective purchaser in consummation of the sale of such Common Stock pursuant to the terms and conditions specified in the Notice, and the selling Key Stockholder(s) shall as promptly as practicable thereafter remit or cause to be remitted to such Participant that portion of the sale proceeds to which such Participant is entitled by reason of its participation in such Transfer.  To the extent that any prospective purchaser or purchasers prohibit such assignment or otherwise refuse to purchase shares or other securities from a Participant exercising its Co-Sale Right, the selling Key Stockholder(s) shall not Transfer to such prospective purchaser or purchasers any Co-Sale Stock unless and until, simultaneously with such sale, the selling Key Stockholder(s) shall purchase such shares

or other securities from such Participant on the same terms and conditions specified in the Notice.
(c)        If none of the Investors elects to exercise its Co-Sale Right, the selling Key Stockholder(s) may, at any time within one hundred twenty (120) days following delivery to the Company and the Investors of the Notice, enter into an agreement providing for the closing of the Transfer of the Co-Sale Stock covered by the Notice within sixty (60) days of such agreement on terms and conditions not more materially favorable to the selling Key Stockholder(s) than those described in the Notice.  Any proposed Transfer on terms and conditions materially more favorable to the selling Key Stockholder(s) than those described in the Notice, as well as any subsequent proposed Transfer of any of the Co-Sale Stock by the selling Key Stockholder(s), shall again be subject to the Co-Sale Rights of the Investors and shall require compliance by the selling Key Stockholder(s) with the procedures described in this Section 4.
(d)        The Co-Sale Rights of the Investors shall terminate upon the effective date of the Initial Public Offering.

5.         Exempt Transfers.

Notwithstanding the foregoing, the Co-Sale Rights set forth in Section 4 hereof shall not apply to (i) any Transfer to the ancestors, descendants or spouse or to trusts for the benefit of such persons or the selling Key Stockholder(s), (ii) any bona fide gift to any person described in clause (i), (iii) any Transfer to the partners, members or shareholders of a Key Stockholder or (iv) a Transfer to an Affiliate of such Key Stockholder(s) (in each case, an “Exempt Transfer”); provided, however, that the following conditions precedent shall apply to any Exempt Transfer:  (A) the selling Key Stockholder(s) shall inform the Investors of such Transfer prior to effecting it, and (B) the pledgee, transferee or donee shall furnish the Investors with a written agreement to be bound by and comply with all provisions of Sections 4 and 5 hereof, and such Transferred Co-Sale Stock shall remain “Co-Sale Stock” hereunder subject to all of the rights and obligations thereof, and such pledgee, transferee or donee shall be treated as a “Key Stockholder” for purposes of this Agreement.

6.         Drag-Along Right.

(a)        If the Key Stockholders propose to Transfer, in any transaction or a series of related transactions, “PERCENT” percent (%) or more of Common Stock held by such Key Stockholders to any Person other than an Affiliate, the Key Stockholders shall have the right (a “Drag-Along Right”) to require the Investors to sell, or cause to be sold, to such Person all of their shares of Common Stock for the same consideration per share of Common Stock and otherwise on the same terms and conditions as are applicable to the Key Stockholders.

(b)          Each Key Stockholder who desires to exercise a Drag-Along Right pursuant to this Section 6 must give written notice to each Investor of the proposed transaction giving rise to the Drag-Along Right at least thirty (30) days prior to the consummation thereof (a “Drag-Along Notice”).  The Drag-Along Notice shall set forth the principal terms of such proposed transaction, including the price per share of Common Stock to be paid and the name and address

of the prospective buyer.  If the Key Stockholders consummate the proposed transaction to which reference is made in the Drag-Along Notice, each Investor shall be bound and obligated to sell in the proposed transaction the same percentage of its shares of Common Stock as is being sold by the Key Stockholders in the proposed transaction, on the same terms and conditions with respect to each share of Common Stock sold by the Key Stockholders.  If, at the end of the 120th day following the date of the Drag-Along Notice, the Key Stockholders have not completed the proposed transaction, each Investor shall be released from its obligation under the Drag-Along Notice, the Drag-Along Notice shall be null and void, and it shall be necessary for a separate Drag-Along Notice to be furnished, and the terms and provisions of this Section 6 separately complied with, in order to consummate a proposed transaction pursuant to this Section 6.
(c)        In the event the consideration to be paid in exchange for Common Stock in a transaction pursuant to this Section 6 includes any securities, and the receipt thereof by an Investor would require under applicable law the provision to any Investor of any information other than such information as would be required in an offering made pursuant to Regulation D under the Securities Act solely to “accredited investors” as defined in Regulation D, the Key Stockholders may require that such Investor accept, in lieu of securities, an amount in cash equal to the fair market value as of the date of issuance of such securities, as determined by the Company’s Board of Directors in good faith.
(d)        Each Investor agrees to vote its shares of Common Stock, and hereby irrevocably appoints the Company and each of its officers as its attorney and proxy pursuant to the provisions of Section 212(c) of the Delaware General Corporation Law with full power of substitution, to vote and otherwise act (by written consent or otherwise) with respect to such Common Stock which such Investor is entitled to vote at any meeting of security holders of the Company (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise, in the same manner and proportion as shares of Common Stock are voted by the Key Stockholders in connection with any transaction giving rise to a Drag-Along Right or any consolidation or merger by the Company with or into another corporation or other entity (other than an Affiliate of any Key Stockholder), or the sale, transfer or other disposal by the Company of all or substantially all of its property, assets or business. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.  Each such Investor hereby revokes all other proxies and powers of attorney with respect to its Common Stock that such Investor may have heretofore appointed or granted with respect to the matters set forth above, and no subsequent proxy or power of attorney shall be given or written consent executed (and, if given or executed, shall not be effective) by such Investor with respect thereto. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of such Investor and any obligation of such Investor under this Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the Investor or any other Person which is in contravention of this Section. The foregoing provisions shall expire on the last day permitted by law.

(e)          Each Investor shall take or cause to be taken all such actions as may be necessary or reasonably desirable in order to expeditiously consummate each transaction pursuant to this Section 6 and any related transactions, including, without limitation:  executing, acknowledging and delivering consents, assignments, waivers and other documents or instruments; furnishing information and copies of documents; filing applications, reports, returns, filings and other

documents or instruments with governmental authorities; and otherwise cooperating with the Key Stockholders and the prospective buyer.  Without limiting the generality of the foregoing, each Investor agrees to execute and deliver such agreements as may be reasonably specified by the Key Stockholders to which such Key Stockholders will also be a party.
(f)        The closing of a transaction pursuant to this Section 6 shall take place at such time and place as the Key Stockholders shall specify by notice to each Investor.  At any such closing, each Investor shall deliver certificates representing the Common Stock being purchased, duly endorsed in blank or accompanied by stock powers duly executed in blank with the signatures thereon guaranteed, and free and clear of Liens, against delivery of a bank check and/or other consideration representing the aggregate purchase price thereof.
(g)        The Drag-Along Right of the Key Stockholders shall terminate upon the effective date of the Initial Public Offering.

7.         Right of First Refusal.

(a)        Subject to Section 8 below, before any Investor (a “Seller”) may effect any Transfer of shares of Common Stock, the Seller shall promptly give written notice to the Company (the “Seller’s Notice”) stating (i) the Seller’s bona fide intention to Transfer such shares of Common Stock (the “Offered Shares”) and the name and address of the proposed transferee (the “Transferee”), (ii) the number of Offered Shares, and (iii) the bona fide cash price or, in reasonable detail, other consideration, per share for which the Seller proposes to Transfer such Offered Shares (the “Offered Price”).  The Seller will promptly furnish such information to the Company as may be reasonably requested by the Company to establish that the offer and the Transferee are bona fide. Upon the giving of such Seller’s Notice, the Company shall have the option to purchase, at the Offered Price, all or any of such Offered Shares, said option to be exercised within thirty (30) days following the date of the Seller’s Notice by giving a notice of acceptance (an “Acceptance Notice”) to the Seller.  
(b)        If the Company elects to purchase any of the Offered Shares, the Seller shall sell such Offered Shares to the Company at a closing to be held on the thirtieth (30th) day after the date of the Acceptance Notice at the principal offices of the Company, or at such other time and place as the Seller and the Company may mutually agree.
(c)        If the Company elects to purchase the Offered Shares within the time limits specified in this Section 7, then the Company shall have the right to purchase any of the Offered Shares and the Seller, at any time within a period of 120 days from the date of the Seller’s Notice, may Transfer any of the Offered Shares to the Transferee at the price and on the terms contained in the Seller’s Notice; provided, however, that in the event the Seller has not so Transferred the Offered Shares to the Transferee within said 120-day period, then such Offered Shares shall thereafter continue to the subject to the right of first refusal set forth in this Section 7 as if no Seller’s Notice had ever been given.

(d)          At the closing of any purchase of Offered Shares pursuant to this Section 7, the Seller shall deliver certificates representing such Offered Shares duly endorsed for Transfer and accompanied by all requisite stock transfer taxes.  Any Offered Shares purchased pursuant to this

Section 7 shall be free and clear of any and all Liens (other than those arising under this Agreement) and at the closing of the purchase, the Seller shall represent and warrant to such effect and to the effect that the Seller is the beneficial owner of such Offered Shares.  The Company shall deliver to the Seller at such closing, by certified or bank check, payment in full for the Offered Shares.  At such closing, the parties to the transaction shall execute such additional documents as are otherwise necessary or appropriate.
(e)        If, in any instance, the Company elects not to exercise its first refusal rights hereunder or elects to waive such rights, such election shall not constitute a waiver of the Company’s first refusal rights with respect to any Transfer subsequently proposed by an Investor.
(f)        The Company’s first refusal rights under this Section 7 shall terminate upon the effective date of the Initial Public Offering.

8.         Exceptions to Right of First Refusal.

The right of first refusal set forth in Section 7 hereof shall not apply to any Transfer of Shares of Common Stock by a Investor in the following circumstances or to the following transferees (each such transferee a “Permitted Transferee”):

(a)        to an Affiliate of such Investor;
(b)        pursuant to an effective registration statement under the Securities Act;
(c)        to a transferee pursuant to the Right of Co-Sale set forth in Section 4 hereof;
(d)        to the ancestors, descendants or spouse or to trusts for the benefit of such persons or the Seller;
(e)        any bona fide gift to any person described in subsection (d) above; or
(f)        to financial institutions or other entities as security for indebtedness;

provided, however, that, as a condition to a Transfer to a Permitted Transferee, such Permitted Transferee agrees in writing to be bound by all the terms and conditions of this Agreement.

9.         Legend.

(a)        Each certificate representing shares of Common Stock and Co-Sale Stock now or hereafter owned by the Stockholders or issued to any Person in connection with a Transfer pursuant to the terms of this Agreement shall be endorsed with the following legend:

“THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS’ AGREEMENT BY AND AMONG THE STOCKHOLDER, THE COMPANY AND CERTAIN HOLDERS OF STOCK OF THE COMPANY. COPIES OF

SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.”

(b)        The Stockholders agree that the Company may instruct its transfer agent to impose Transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 7(a) above to enforce the provisions of this Agreement, and the Company agrees to promptly do so.  The legend shall be removed upon termination of this Agreement.

10.       Company Obligations.

The Company agrees to use reasonable efforts to ensure that the rights granted to the Stockholders hereunder are effective and that the Stockholders enjoy the benefits thereof.  The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Agreement and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the  Stockholders hereunder against impairment.

11.       Miscellaneous.

(a)        Restrictions on Transfer.  No investor may Transfer any shares of Common Stock to a competitor of the Company.
(b)        Amendment and Waiver.  This Agreement contains the sole and entire understanding of the parties with respect to its subject matter, and all prior negotiations, discussions, commitments and understandings heretofore had between them with respect thereto are merged herein.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only by the written consent of (i) as to the Company, only by the Company, (ii) as to the Investors, by Persons holding at least a majority of the shares of Common Stock held by the Investors and their assignees pursuant to Section 9(b) hereof, and (iii) as to the Key only by the Key Stockholders.  Any amendment or waiver effected in accordance with clauses (i), (ii) and (iii) of this Section 9(a) shall be binding upon each Investor, its successors and assigns, the Company and the Key Stockholders.  A waiver on one occasion shall not constitute a waiver on any future occasion.
(c)        Assignment of Rights.  This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of and be binding upon their respective successors, assigns and legal representatives.  The provisions of this Agreement shall inure to the benefit of and be binding upon the successors in interest to or transferees of any of the Co-Sale Stock or the Company’s Common Stock.  The Key Stockholders hereby agree, and any transferee or assignee of any shares of the Company’s capital stock now owned or hereafter acquired by the Key Stockholders is hereby on notice, that any Transfer or assignment of such securities is conditioned upon such transferee’s or assignee’s execution and delivery of this Agreement prior to such Transfer.  Any Transfer or assignment of any such voting securities of the Company in violation of this Section shall be void be of no force or effect.
(d)        Term.  This Agreement shall terminate on the earliest of (i) the date when the Investors no longer hold any Common Stock, (ii) the fourth anniversary of the effective date of the Initial Public Offering and (iii) such time as the provisions of Sections 2, 3, 4, 6 and 7 shall have terminated.
(e)        Attorneys’ Fees.  In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
(f)        Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given:  (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) three (3) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized or internationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the party to be notified, if to the Company, at “COMPANY ADDRESS”,  to the attention of the CEO, if to the Stockholders, at their respective addresses set forth on the signature page hereto or to such other address as such party may designate by ten (10) days advance written notice to the other parties hereto.
(g)        Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original by the party executing the same, but all of which together shall constitute one and the same instrument.
(h)        Severability.  In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein; provided, such severed provision is not material to the overall agreement of the parties herein.
(i)         Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of “STATE”, without giving effect to the conflicts of law principles thereof.
(j)         Joinder Agreement.  This Agreement may be supplemented from time to time to include additional Key Stockholders upon the execution and delivery of a joinder agreement in the form of Exhibit 2 hereto or additional Investors upon the execution and delivery of a joinder agreement in the form of Exhibit 3 hereto.

 

ACCREDITED INVESTOR DEFINITION

Sec. 230.501  Definitions and terms used in Regulation D.

As used in Regulation D (Secs. 230.501-230.508), the following terms shall have the meaning indicated:

(a) Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

(1) 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 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 Act of 1940 or a 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 Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such 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 adviser, or if the employee benefit plan has total assets in excess of $”AMOUNT OF OFFERING” or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $”AMOUNT OF OFFERING”;

(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

(5) Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $5,000,000

(6) Any natural person who had 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;

SIGNATURE PAGE TO “COMPANY NAME”
SUBSCRIPTION AGREEMENT

SIGNATURE OF INDIVIDUAL PURCHASERS:


                                                               
Signature

 


                                                 
Signature (if jointly held)


                                                               
Print Name
Address:___________________
              ___________________
              ___________________
Telephone:_________________
Facsimile:__________________
e-mail:_____________________

 


                                                                 
Print Name
Address:___________________
              ___________________
              ___________________
Telephone:_________________
Facsimile:__________________
e-mail:_____________________


Executed at:


                                                               

City, State

 

Date:                                                      

 

 

Professional Adviser(s)/Purchaser Representative(s)
(if applicable)  

Signature           

Print Name

Executed at:


___________________________

                  City, State


Date: 

NUMBER OF SHARES:   ____________________X “PRICE” per share


            PURCHASE PRICE:  $                                              


 

SIGNATURE PAGE TO “COMPANY NAME”

SUBSCRIPTION AGREEMENT

 

SIGNATURE OF PURCHASERS WHO ARE CORPORATIONS, TRUSTS OR PARTNERSHIPS:

 

                                                                                                                                               
Name of entity (please print or type)

 

                                                                                                                                               
Signature(s) of authorized agent, trustee or general partner(s)

 

                                                                                                                                               
Title of authorized agent, trustee or general partner

Address:                                                                                                                             
                                                                                                                                               
                                                                                                                                               
Telephone:                                                                                                                       
Facsimile:                                                                                                                          
e-mail:                                                                                                                                

 

Executed at:                                                                       Date:                                    
                                       City, State

 

NUMBER OF SHARES:                                     X”PRICE” per share

 

PURCHASE PRICE:  $                                  

 

--------------------------------------------------------------------------------------------

“COMPANY NAME” D.B.A “COMPANY NAME”, INC.

INVESTOR QUESTIONNAIRE

INTRODUCTORY STATEMENT

The undersigned is being asked to complete this Investor Questionnaire in connection with the undersigned’s purchase of certain securities (the “Securities”) of “COMPANY NAME”, a “STATE” corporation (the “Company”) in connection with the Company’s offering (the “Offering”) of shares of the Company’s Common Stock (the “Common Stock”) pursuant to the Company’s Private Placement Memorandum, dated as of “DATE” “YEAR” (the “Offering Memorandum”), and subject to the terms and conditions of that certain Subscription Agreement, dated as of “DATE”, “YEAR” (the “Subscription Agreement”), by and among the Company and the purchasers signatory thereto (the “Purchasers”).  Capitalized terms used in this Investor Questionnaire shall have the meanings as set forth in the Subscription Agreement.  The undersigned’s receipt of the Securities is conditioned upon the satisfactorily completion of this Investor Questionnaire.

The Company will not deliver the Securities to any person that is not an “accredited investor”, as defined in Rule 501 promulgated under the Securities Act of 1933, as amended (the “Act”).  The purpose of this Investor Questionnaire is to represent to the Company that the undersigned meets the standards imposed by any applicable state securities laws and Regulation D promulgated under the Act, since the Securities will not be registered under the Act or under state securities laws.

By signing this Investor Questionnaire, the undersigned agrees that the Company may present a copy of this Investor Questionnaire to such persons as the Company deems appropriate if called upon under law to establish the availability under the Act or state securities laws of an exemption from registration for the offer and sale of the Securities.

This Investor Questionnaire is not an offer to sell, nor is it a solicitation for an offer to buy, any Securities.

Please complete the entire Investor Questionnaire and return it to the address set forth below:

“COMPANY NAME”.

                                    “COMPANY ADDRESS”

                                   

                                    Attention:  “Officer’s Name”


 

INVESTOR QUESTIONNAIRE

“COMPANY NAME” D.B.A “COMPANY NAME”, INC.

ALL INFORMATION WILL BE TREATED CONFIDENTIALLY

1.         The undersigned acknowledges that any offer and sale of Securities will not be registered with the Securities and Exchange Commission because the Company will rely upon exemptions from registration under the Act in connection with such offer and sale.  The undersigned understands that all investors must be Accredited Investors, as defined in Rule 501 of Regulation D under the Act, and that the Company will not deliver any Securities to any person who has not confirmed that such person is an Accredited Investor.

       Accredited Investor - The undersigned hereby confirms to the Company that such person (check  each category which applies):

        (a)        is a bank as defined in Section 3(a)(2) of the Act or a 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; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $”AMOUNT OF OFFERING”; an 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 plan fiduciary is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $”AMOUNT OF OFFERING” or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

       (b)        is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

        (c)        is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Securities offered, with total assets in excess of $”AMOUNT OF OFFERING”;

       (d)        is a director, executive officer or general partner of the Company, or any director, executive officer, or a general partner of a general partner of the Company;

        (e)        is a natural person whose individual net worth, individually or together with his or her spouse, exceeds “PRICE”,000,000 at the time of his or her purchase;

        (f)                (i)        is a natural person who had an individual income in excess of $200,000 in both 1998 and 1999 and who reasonably expects reaching the same income level in 2000; or

                                (ii)        is a natural person who had a joint income with his or her spouse in excess of $300,000 in both 1998 and 1999 and who reasonably expects reaching the same income level in 2000;

        (g)        is a trust, with total assets in excess of $”AMOUNT OF OFFERING”, not formed for the specific purpose of acquiring the Securities offered, whose purchase is directed by a person who either alone or with his purchaser representative has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment, or that the Company reasonably believes immediately prior to making any sale that such purchaser comes within this definition;

        (h)        is an entity in which all of the equity owners are Accredited Investors meeting one or more of the tests under subparagraphs (a) - (g).

2.         The undersigned understands that this is a highly speculative investment with a substantial risk of loss of its, his or her (as the case may be) entire investment.  The undersigned is in a position to bear the economic risk of such loss.  The undersigned acknowledges that the Securities are subject to restrictions on transferability and resale pursuant to that certain Stockholders’ Agreement among the Company, the undersigned and certain other stockholders of the Company.

3.         The undersigned hereby acknowledges that it, he or she is acquiring the Securities for its, his or her (as the case may be) own account for investment and not with a view toward distribution.

4.         The undersigned hereby represents that by reason of its, his or her (as the case may be) financial experience, or the business and financial experience of its management, the undersigned has the capacity to protect its, his or her (as the case may be) own interests in connection with the transaction contemplated by the Subscription Agreement.  The undersigned was not formed for the specific purpose of consummating the transactions contemplated by the Subscription Agreement.


Investor Joinder Agreement

The undersigned, ______________________, by executing this Joinder Agreement dated as of _____________, “YEAR”, does hereby acknowledge the terms of, and agrees to be bound as an “Investor” and a “Stockholder” by that certain Stockholders’ Agreement, dated as of “DATE”, “YEAR”, by and among “COMPANY NAME”. and the Stockholders listed on the signature pages thereto (the terms “Stockholder” and “Investor” as being defined in such agreement).

New Investor:

                                                                       
Signature

                                                                       
Print Name (and title if signing on behalf of a corporate New Investor)

Address:                                                          
                                                                       
                                                                       
Telephone:                                                       
Facsimile:                                                        
e-mail:                                                             

 

“COMPANY NAME”

By:                                                                  
            Name:
            Title:

 

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FastDue.com
 
Name of Firm FastDue.com
Location Fairfield, Iowa, United States
Total Forms Contributed 74
Phone 641-209-1761
Website http://fastdue.com
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Keywords: Stockholder's Agreement, Registration Rights, Information Rights, C0-Sale Rights, Drag-Along Rights, Funding, Offering Memorandum, online stock agreement for download

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