Exhibit 10.2
SHOPOVERSEAS.COM, INC.
(A Nevada Corporation)
Confidential Private Placement Memorandum
SUBSCRIPTION DOCUMENTS FOR C UNITS
In the event you decide not to participate in this Offering please return
the Confidential Placement Memorandum and the Subscription Documents to the
principal office of the Company as set forth below.
Shopoverseas.com, Inc.
4706 18TH AVENUE
Brooklyn, New York 11204
Tel: (718) 435-5291
1
<PAGE>
SUBSCRIPTION DOCUMENTS
Page
1. Instructions for Subscribing 3
2. Subscription Agreement 5
3. Prospective Purchaser Questionnaire 24
4. Registration Rights Agreement 32
2
<PAGE>
INSTRUCTIONS FOR SUBSCRIBING
NO PERSON WILL BE ACCEPTED AS A PURCHASER PRIOR TO A CLOSING OF THE
OFFERING. THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION, IN WHOLE OR
IN PART, OR TO ALLOT ANY PROSPECTIVE PURCHASER FEWER THAN THE NUMBER OF UNITS
SUBSCRIBED FOR BY SUCH PROSPECTIVE PURCHASER. ANY REPRESENTATION TO THE CONTRARY
IS UNAUTHORIZED AND MAY NOT BE RELIED UPON.
Please read the Subscription Agreement carefully. In order to subscribe for the
Units you must:
1. Initial the appropriate box(es) in the Subscription Agreement under
the Sections "For Qualified Institutional Buyers" or "For Accredited
Investors" on pages 9 through 14.
2. Initial the appropriate boxes in the Subscription Agreement on pages
17, 18 and 19 and complete item 19(b)(2) (if applicable) and item
19(c) and pages 21 and 22.
3. Sign and complete the appropriate signature page. If you are a
resident of Pennsylvania, you must also append your signature in the
place provided immediately below paragraph 15(b) on page 16 of the
Subscription Agreement.
4. Complete pages 22 - 28 of the PROSPECTIVE PURCHASER QUESTIONNAIRE, and
sign on pages 26, 27, 28 and 29 of the Questionnaire, as applicable.
5. Complete and sign the last page of the Registration Rights Agreement
(page 40).
6. Return the above materials along with payment for the amount of your
Subscription to the Company at the following address:
Shopoverseas.com, Inc.
4706 18th Avenue
Brooklyn, New York 11204
Checks should be made payable to "Grushko & Mittman, as Escrow Agent
for Shopoverseas.com, Inc." and will be credited to Shopoverseas.com,
Inc. subscriptions. Wire transfers should be coordinated in advance of
transmission. Wire transmissions should be made as follows:
Citibank, N.A.
250 Broadway
New York, New York 10007
ABA Number: 0210000089
For Credit to: Grushko & Mittman
IOLA Trust Account
Account Number: 037-45208884
3
<PAGE>
7. Each prospective purchaser may be required to provide such additional
information as the Company shall reasonably request. In this
connection, please note:
(a) A partnership may be required to provide a copy, among other
items, of its Partnership Agreement, as amended, as well as all
other documents that authorize the partnership to invest in the
Units.
(b) A corporation may be required to provide a copy, among other
items, of its Articles of Incorporation and By-Laws, as amended,
in effect as well as all other documents that authorize the
corporation to invest in the Units.
(c) A trust may be required to provide a copy, among other items, of
its Declaration of Trust or other governing instrument, as
amended, as well as other documents that authorize the trust to
invest in the Units.
IF YOU HAVE ANY QUESTIONS ABOUT THE SUBSCRIPTION DOCUMENTS. PLEASE CONTACT THE
COMPANY, AT TELEPHONE: (718) 435-5291.
FAILURE TO COMPLY WITH THE ABOVE INSTRUCTIONS MAY CONSTITUTE AN INVALID
SUBSCRIPTION, WHICH, IF NOT CORRECTED, COULD RESULT IN THE REJECTION OF YOUR
SUBSCRIPTION REQUEST. EVEN IF CORRECTED, THE DELAY MAY RESULT IN (1) THE
ACCEPTANCE OF ANOTHER PURCHASER WHOSE SUBSCRIPTION BOOKLET WAS INITIALLY
RECEIVED BY THE SELLING AGENT AFTER YOURS OR (2) THE OFFERING BEING CLOSED
WITHOUT YOUR SUBSCRIPTION REQUEST BEING CONSIDERED BY THE COMPANY.
4
<PAGE>
SUBSCRIPTION AGREEMENT
NOTE: ONE COMPLETED AND EXECUTED COPY OF THIS SUBSCRIPTION AGREEMENT
ACCOMPANIED BY PAYMENT FOR THE AMOUNT OF YOUR SUBSCRIPTION, MUST BE
RETURNED TO: SHOPOVERSEAS.COM, INC., 4706 18TH AVENUE, BROOKLYN, NEW
YORK 11204.
Name of Subscriber: _________________________________________________
U.S. Social Security No.:____________________________________________
Address: ____________________________________________________________
_____________________________________________________________________
Telephone: _________________________ Fax: ___________________________
Number of C Units Subscribed:________________________________________
SUBSCRIPTION AGREEMENT
Gentlemen:
1. Subscription. The undersigned, intending to be legally bound, hereby
irrevocably agrees to purchase from Shopoverseas.com, Inc. (the "Company"), a
Nevada corporation, the number of Units set forth above and on the signature
page hereof, whereby each C Unit consists of 10,000 common shares ($.001 par
value per share) and 10,000 Class D Warrants. Each Class D Warrant allows the
purchaser to purchase one share of common stock ($.001 par value) for $1.25
until July 31, 2002. The purchase price per C Unit is $12,500.00 (the "Purchase
Price"). This Subscription Agreement and the Confidential Private Placement
Memorandum dated November 16, 1999, together with any supplements or amendments
thereto (the "Memorandum"), relates to an offering of a maximum of 100 C Units
for a total of $1,250,000 (the "Offering"). The Units, Common Stock and Common
Stock Purchase Warrants comprising the Units and the Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Securities".
2. Payment. The undersigned either (a) encloses herewith a check payable to
"Grushko & Mittman as Escrow Agent for Shopoverseas.com, Inc." or (b) has
transmitted by wire transfer funds into the Escrow Agent's Escrow Account in the
full amount of the purchase price of the Units for which the undersigned is
subscribing.
3. Deposit of Funds. All payments by check made as provided in Section 2
hereof shall be delivered to the Company and, thereafter, such payment will be
deposited as soon as practicable in an IOLA trust account maintained by Grushko
& Mittman at Citibank, N.A., 250 Broadway, New York, New York 10007, USA, and
held in escrow until the earliest to occur of (a) the closing of the sale of
Units (the "Closing"), (b) the cancellation of the Offering, (c) the rejection
of the subscriber's subscription, or (d) December 31, 1999, which date may be
extended by the Company (the "Final Closing Date"). Subscription payments of
prospective investors who become
5
<PAGE>
shareholders of the Company will be transferred to the Company at one or more
Closings. All funds deposited with the Escrow Agent will be held subject to the
terms of a Funds Escrow Agreement between the Company and Escrow Agent.
4. Acceptance of Subscription/Recission. The undersigned understands and
agrees that the Company in its sole discretion reserves the right to accept or
reject this or any other subscription for Units in whole or in part,
notwithstanding prior receipt by the undersigned of a notice of acceptance. If
this subscription is rejected by the Company in whole or in part, the Company
shall promptly return all funds received from the undersigned and this
Subscription Agreement shall thereafter be of no further force or effect. In
addition to any other rights granted to the Subscriber or available under State
law, in the event the Subscriber has delivered funds to the Company prior to
receipt of the Memorandum by the Subscriber, then the Subscriber is granted 72
hours from the receipt of the Memorandum to revoke the subscription and receive
back without deduction the entire amount of subscription funds delivered to the
Company.
5. Representations and Warranties. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company, as follows:
(a) The undersigned understands that the offering and sale of the Units and
the common shares issuable upon exercise of the Warrants are intended to be
exempt from registration under the Securities Act of 1933 (the "Securities
Act"), by virtue of Section 4(2) of the Securities Act and the provisions
of Regulation D promulgated thereunder, and in accordance therewith and in
furtherance thereof, the undersigned represents and warrants and agrees as
follows:
(1) The undersigned and/or the undersigned's adviser(s) has/have
received the Memorandum, has/have carefully reviewed it and
understand(s) the information contained therein;
(2) The undersigned acknowledges that all documents, records, and
books pertaining to this investment (including, without limitation,
the Memorandum) have been made available for inspection by the
undersigned, the undersigned's attorney, accountant, or adviser(s);
(3) The undersigned and/or the undersigned's adviser(s) has/have had a
reasonable opportunity to ask questions of receive answers from a
person or persons acting on behalf of the Company concerning the
Offering of the Units and all such questions have been answered to the
full satisfaction of the undersigned;
(4) No oral or written representations have been made other than as
stated in the Memorandum, and no oral or written information furnished
to the undersigned or to the undersigned's adviser(s) in connection
with the Offering of the Units were in any way inconsistent with the
information stated in the Memorandum.
(5) The undersigned is not subscribing for Units as a result of or
subsequent to
6
<PAGE>
any advertisement, article, notice or other communication published in
any newspaper, magazine, or similar media or broadcast over television
or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than the Company in connection
with investments in securities generally;
(6) If the undersigned is a natural person, the undersigned has
reached the age of majority in the state in which the undersigned
resides, has adequate means of providing for the undersigned's current
financial needs and contingencies, is able to bear the substantial
economic risks of an investment in the Units for an indefinite period
of time, has no need for liquidity in such investment, and, at the
present time, could afford a complete loss of such investment;
(7) The undersigned or the undersigned's purchaser representative, as
the case may be, has such knowledge and experience in financial, tax,
and business matters so as to enable the undersigned to utilize the
information made available to the undersigned in connection with the
Offering of the Securities, to evaluate the merits and risks of an
investment in the Securities, and to make an informed investment
decision with respect thereto;
(8) The undersigned is not relying on the Company with respect to the
tax and other economic considerations of an investment;
(9) The undersigned understands that the Securities have not been
registered under the Act by reason of a claimed exemption under the
provisions of the Act which depends, in part, upon the undersigned's
investment intention. In this connection, the undersigned hereby
represents that the undersigned is purchasing the Securities for the
undersigned's own account for investment and not with a view toward
the resale or distribution to others.
10) The undersigned understands that there is no public market for the
Securities and that no market may develop therefor. The undersigned
understands that even if a public market develops for the Securities,
Rule 144 promulgated under the Act requires, among other conditions, a
two-year holding period prior to the resale (in limited amounts) of
securities acquired in a non-public offering without having to satisfy
the registration requirements under the Act. The undersigned
understands and hereby acknowledges that the Corporation is under no
obligation to register the Units or any of the Securities under the
Act or any state securities or "blue sky" laws other than as expressly
set forth in the Memorandum. The undersigned consents that the
Corporation may, if it desires, permit the transfer of the Securities
comprising the Units under or issuable upon exercise thereof out of
the undersigned's name only when the undersigned's request for
transfer is accompanied by an opinion of counsel reasonably
satisfactory to the Corporation that neither the sale nor the proposed
transfer results in a violation of the Act or any applicable state
"blue sky" laws (collectively, "Securities Laws"). The undersigned
agrees to hold the Corporation and its directors, officers and
controlling persons and their respective heirs,
7
<PAGE>
representatives, successors and assigns harmless and to indemnify them
against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by the undersigned contained
herein or any sale or distribution by the Subscriber in violation of
the Securities Laws.
(11) The undersigned consents to the placement of a legend on any
certificate or other document evidencing the Securities that such
Securities have not been registered under the Act or any state
securities or "blue sky" laws and setting forth or referring to the
restrictions on transferability and sale thereof contained in this
Agreement. The undersigned is aware that the Corporation will make a
notation in its appropriate records with respect to the restrictions
on the transferability of the Securities.
(12) The undersigned understands that the Corporation will review this
Agreement and is hereby given authority by the undersigned to call
undersigned's bank or place of employment or otherwise review the
financial standing of the undersigned; and it is further agreed that
the Corporation reserves the unrestricted right to reject or limit any
subscription, to accept subscriptions for fractional Units and to
close the Offering to the undersigned at any time.
(13) The undersigned hereby represents that the address of the
undersigned furnished by the undersigned on the signature page hereof
is the undersigned's principal residence if the undersigned is an
individual or its principal business address if it is a corporation or
other entity.
(14) The undersigned acknowledges that if he is a Registered
Representative of an NASD member firm, he must give such firm the
notice required by the NASD's Rules of Fair Practice, receipt of which
must be acknowledged by such firm in Section 14 below.
(15) The undersigned recognizes that the Company has only recently
been organized, that it has a very limited financial and operating
history and that investment in the Company involves substantial risks,
including loss of the entire amount of such investment, and has taken
full cognizance of and understands all of the risks related to the
purchase of the Units.
(16) The undersigned acknowledges that each certificate representing
Securities shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"The securities presented hereby have not been registered under
the Securities Act of 1933, as amended or any state securities
laws and neither the securities nor any interest therein may be
offered, sold, transferred, pledged, or otherwise disposed of
except pursuant to an effective registration statement under such
act or such laws or unless an exemption from registration under
8
<PAGE>
such act and such laws, in the opinion of counsel for the holder
(which counsel and opinion are reasonably satisfactory to counsel
for this Company) is available."
(b) The undersigned meets the requirements of one of the subparagraphs
listed in subparagraph (c) or (d) below as of the date of this Subscription
Agreement, and if there is any material change in such status prior to the
sale of the Units, the undersigned will immediately furnish such revised or
corrected information to the Company.
[Please insert you initials in the appropriate space to the description
applicable to you]
9
<PAGE>
(c) FOR ACCREDITED INVESTORS
___ (1) A natural person who has individual income of more than $200,000
in each of the most recent two years or joint income with that
persons's spouse in excess of $300,000 in each of the most recent two
years and who reasonably expects to reach that same income level for
the current year. For this purpose, "individual income" means adjusted
gross income, as reported by a federal income tax purposes, less any
income attributable to a spouse or to property owned by a spouse, (A)
increased by the individual's share (and not a spouse's share) of: (1)
the amount of any tax exempt interest income received, (2) amounts
contributed to an IRA or Keogh retirement plan (3) alimony paid, and
(4) the excluded portion of any long-term capital gains, and (B)
adjusted, plus or minus, for any non-cash loss or gain, respectively,
reported for federal income;
___ (2) A natural person whose individual net worth, or joint net worth
with that person's spouse, is in excess of $1,000,000. For this
purpose, "net worth" means the excess of total assets at fair market
value, including home and personal property, over total liabilities,
provided, however, for the purpose of determining a person's net
worth, the principal residence owned by an individual shall be valued
at cost, including the cost of improvements, net of current
encumbrances upon the property or valued on the basis of a written
appraisal used by an institutional lender making a loan secured by the
property. For the purposes of this provisions, "institutional lender"
means a bank, savings and loan company, industrial loan company,
credit union, personal property broker or a company whose principal
business is as a lender upon loans secured by real property and which
has such loans receivable in the amount of $2,000,000 or more. Any
person relying on the appraised value of a principal residence must
deliver to the Company, at or prior to the date of execution hereof, a
copy of such appraisal;
___ (3) A trust, with total assets in excess of $5,000,000, which is not
formed for the purpose of acquiring the Units and whose purchase is
directed by a person who has such knowledge and experience in
financial business matters that such person is capable of evaluating
the risks and merits of an investment in the Units;
___ (4) A bank as defined in Section 3(a)(2) of the Securities Act or a
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Securities 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 an agency or instrumentality of a state or its
political subdivisions, for the benefit of its
10
<PAGE>
employees, if such plan has total assets in excess of $5,000,000; or
an employee benefit plan within the meaning of Title I 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 the Employee
Retirement Income Security Act of 1974, 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 $5,000,000 or, if the employee benefit plan is a
self-directed plan and the investment decision is made solely by
persons who are accredited investors;
___ (5) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
___ (6) An organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, a corporation, Massachusetts or
similar business trust, or partnership, not formed for the specific
purpose of acquiring the Units with total assets in excess of
$5,000,000;
___ (7) A director or executive officer of the Company;
or
___ (8) An entity in which all of the equity owners meet the requirements
of at least one of the above subparagraphs for accredited investors.
(d) FOR QUALIFIED INSTITUTIONAL BUYERS
___ (1) An insurance company as defined in Section 2(13) of the Securities
Act, acting for its own account or the accounts of other qualified
institutional buyers which, in the aggregate, owns or invests on a
discretionary basis at least $100 million in securities of issuers
that are not affiliated with it;
___ (2) An investment company registered under the Investment Company Act
of 1940 (the "Investment Company Act") or any business development
company as defined in Section 2(a)(48) of that Act, acting for its own
account or the accounts of other qualified institutional buyers which,
in the aggregate, owns or invests on a discretionary basis at least
$100 million in securities of issuers that are not affiliated with it;
___ (3) 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, acting for its own account or the
accounts of other qualified institutional buyers which, in the
aggregate, owns or invests on a discretionary basis at least $100
million in securities of issuers that are not affiliated with it;
11
<PAGE>
___ (4) 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, aggregate,
owns or invests on a discretionary basis at least $100 million in
securities of issuers that are not affiliated with it;
___ (5) An employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, acting for its own
account or the accounts of other qualified institutional buyers which,
in the aggregate, owns or invests on a discretionary basis at least
$100 million in securities of issuers that are not affiliated with it;
___ (6) A business development company as defined in Section 202(a)(22) of
the Investment Adviser Act of 1940, acting for its own account or the
accounts of other qualified institutional buyers which, in the
aggregate, owns or invests on a discretionary basis at least $100
million in securities of issuers that are not affiliated with it;
___ (7) An organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, a corporation (other than a bank as
defined in Section 3(a)(2) of the Securities Act or a savings and loan
association or other institution referenced in Section 3(a)(5)(A) of
the Securities Act or a foreign bank or savings and loan association
or equivalent institution, partnership, or Massachusetts or similar
business trust, acting for its own account or the accounts of other
qualified institutional buyers which, in the aggregate, owns or
invests on a discretionary basis at least $100 million in securities
of issuers that are not affiliated with it;
___ (8) An investment adviser registered under the Investment Advisers Act
of 1940, acting for its own account or the accounts of other qualified
institutional buyers which, in the aggregate, owns or invests on a
discretionary basis at least $100 million in securities of issuers
that are not affiliated with it;
___ (9) A dealer registered pursuant to Section 15 of the Exchange Act or
1934, acting for its own account or the accounts of other qualified
institutional buyers, which, in the aggregate, owns and invests on a
discretionary basis at least $10 million of securities of issuers that
are not affiliated with the dealer, provided that securities
constituting the whole or a part of an unsold allotment to or
subscription by a dealer as a participant in a public offering shall
not be deemed to be owned by such dealer;
___ (10) A dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934 acting in a riskless principal transaction on
behalf of a qualified institutional buyer;
___ (11) An investment company registered under the Investment Company
Act, acting for its own account or for the accounts of other qualified
institutional, that is part of a family of investment companies which
own, in the aggregate, at least $100 million in
12
<PAGE>
securities of issuers, other than issuers that are affiliated with the
investment company or are part of such family of investment companies.
"Family of investment companies" means any two or more investment
companies registered under the Investment Company Act (except for a
unit investment trust whose assets consist solely of Units of one or
more registered investment companies) that have the same investment
adviser (or, in the case of unit investment trusts, the same
depositor), provided that for purposes of this paragraph (11);
(A) Each series of a series company (as defined in Rule 18f-2 under
the Investment Company Act) shall be deemed to be a separate
investment company; and
(B) Investment companies shall be deemed to have the same adviser (or
depositor) if their adviser (or depositors) are majority-owned
subsidiaries of the same parent, or if one investment company's
adviser (or depositor) is a majority-owned subsidiary of the other
investment company's adviser (or depositor).
___ (12) An entity, all of the equity owners of which are qualified
institutional buyers, acting for its own account or the accounts of
other qualified institutional buyers; and
___ (13) A bank as defined in section 3(a)(2) of the Securities Act,
savings and loan association or other institution as referenced in
Section 3(a)(5)(A) of the Securities Act, or foreign bank or savings
and loan association or equivalent institution, acting for its own
account or the accounts of other qualified institutional buyers,
which, in the aggregate, owns and invests on a discretionary basis at
least $100 million in securities of issuers that are not affiliated
with it and that has an audited net worth of at least $25 million as
demonstrated in its latest annual financial statements, as of a date
not more than 16 months preceding the date of execution hereof, in the
case of a U.S. bank or savings and loan association, and not more than
18 months preceding the date of execution hereof, in the case of a
foreign bank or savings and loan association or equivalent
institution.
(e) The undersigned's overall commitment to investments which are not
readily marketable is reasonable in relation to the undersigned's net
worth.
(f) The undersigned hereby agrees to provide such information and to
execute and deliver such documents as may reasonably be necessary to comply
with any and all laws and ordinances to which the Company is subject,
including without limitation, such additional information as the Company or
the Placement Agent may deem appropriate with regard to the undersigned's
suitability.
___ (14) NASD Affiliation.
Are you affiliated or associated with an NASD member firm (please check
one):
13
<PAGE>
Yes______ No______
If Yes, please described:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
* If undersigned is a Registered Representative with an NASD member firm,
have the following acknowledgement signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice
required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
_____________________________________
Name of NASD Member Firm
By:__________________________________
Authorized Officer
Date:________________________________
The undersigned is informed of the significance to you of the foregoing
representations and answers contained in the undersigned representations
contained in this Paragraph 5 and such answers have been provided under the
assumption that the Corporation will rely on them.
(g) The undersigned acknowledges:
(1) That the undersigned is aware that investment in the Units
involves a number of very significant risks, and has carefully read and
considered the matters set forth under the caption "Risk Factors" in the
Memorandum;
(2) In making an investment decision the undersigned has relied on the
undersigned's own examination of the Company and the terms of the Offering,
including the merits and risks involved. These Units have not been
recommended by any federal or state securities commission or regulatory
authority. Furthermore, the foregoing authorities have not confirmed the
accuracy or determined the adequacy of the Memorandum or this document. Any
representation to the contrary is a criminal offense.
14
<PAGE>
(3) The undersigned, if executing this Subscription Agreement in a
representative or fiduciary capacity, has full power and authority to
execute and deliver this Subscription Agreement in such capacity and on
behalf of the subscribing individual, ward, partnership, trust, estate,
corporation, or other entity for whom the undersigned is executing this
Subscription Agreement, and such individual, ward, partnership, trust,
estate, corporation, or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the
Company; and
(4) The representations, warranties, and agreements of the undersigned
contained herein and in any other writing delivered in connection with the
transactions contemplated hereby shall be true and correct in all respects
on and as of the date of the sale of the Units as if made on and of such
date and shall survive the execution and delivery of this Subscription
Agreement and the purchase of the Units.
6. Indemnification. The undersigned agrees to indemnify and hold harmless
the Company, the Placement Agent, the Selected Dealers and their respective
officers, directors, agents, and affiliates against any and all loss, liability,
claim, damage, and expense whatsoever (including, but not limited to, any and
all expenses reasonably incurred in investigating, preparing, or defending
against any litigation commenced or threatened or any claim whatsoever) arising
out of or based upon any false representation or warranty or breach or failure
by the undersigned to comply with any covenant or agreement made by the
undersigned herein or in any other document furnished by the undersigned to any
of the foregoing in connection with this transaction.
7. Irrevocability; Binding Effect. The undersigned hereby acknowledges and
agrees that the subscription hereunder is irrevocable by the undersigned, that,
except as required by law, the undersigned is not entitled to cancel, terminate,
revoke this Subscription Agreement or any agreements of the undersigned
hereunder, and shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the undersigned is more than one person, the obligations
of the undersigned hereunder shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his/her heirs,
executors, administrators, successors, legal representatives, and permitted
assigns.
8. Modification. Neither this Subscription Agreement nor any provisions
hereof shall be waived, modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any such waiver,
modification, discharge, or termination is sought.
9. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be personally delivered or deemed
delivered the third business day after being mailed by first class mail, to the
party to receive same (a) if to the Company, to Shopoverseas.com, Inc., 4706
18th Avenue, Brooklyn, New York 11204, or (b) if to the undersigned, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 9). Any notice or other communication given by
certified mail shall be deemed given at the time of receipt thereof.
15
<PAGE>
10. Assignability. This Subscription Agreement and the rights and
obligations hereunder are not transferable or assignable by the undersigned.
11. Applicable Law. Notwithstanding the place where this Subscription
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all of the terms and provisions hereof except by operation of law and
laws of decent shall be construed in accordance with the laws of the State of
New York without regard to principles of conflicts of law and any dispute
brought hereunder shall be brought in a Federal or State court located in either
the Southern or Eastern Districts of New York.
12. Binding Agreement. Upon the execution and delivery of this Agreement by
the Subscriber, this Agreement shall become a binding obligation of the
Subscriber with respect to the purchase of Units as herein provided; subject,
however, to the right hereby reserved to the Corporation to enter into the same
agreements with other subscribers and to add and/or delete other persons as
subscribers.
13. Waiver. It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any other provision of this Agreement nor any subsequent breach by that same
party.
14. Future Action. The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purpose and intent of
this Agreement.
15. State Securities Laws. Subscribers who reside in CALIFORNIA,
PENNSYLVANIA or MASSACHUSETTS also agree and represent as follows:
(a) THE UNDERSIGNED, IF A CALIFORNIA RESIDENT, REPRESENTS THAT: (1)
THE UNDERSIGNED OR THE UNDERSIGNED'S PROFESSIONAL ADVISER CAN PROTECT
THE UNDERSIGNED'S INTEREST IN CONNECTION WITH THIS TRANSACTION; (2)
THE UNDERSIGNED IS ABLE TO BEAR THE ECONOMIC RISK OF THIS INVESTMENT
OR (3) THIS INVESTMENT DOES NOT EXCEED 10% OF SUCH PERSON'S NET WORTH
OR JOINT NET WORTH WITH SUCH PERSON'S SPOUSE.
(b) THE UNDERSIGNED, IF A PENNSYLVANIA RESIDENT, REPRESENTS THAT THE
UNDERSIGNED WILL NOT SELL ANY UNITS FOR A PERIOD OF TWELVE (12) MONTHS
FROM THE DATE OF PURCHASE IF THIS SUBSCRIPTION IS NOT TIMELY WITHDRAWN
PURSUANT TO THE RIGHT OF RECISION GRANTED UNDER THE PENNSYLVANIA
SECURITIES ACT, UNLESS SUCH SECURITIES ARE SUBSEQUENTLY REGISTERED
UNDER FEDERAL SECURITIES LAWS OR ARE SOLD IN ACCORDANCE WITH
PENNSYLVANIA SECURITIES LAWS. ANY OFFEREE WHO IS A RESIDENT OF
PENNSYLVANIA HAS THE RIGHT TO WITHDRAW THIS SUBSCRIPTION, WITHOUT
INCURRING ANY LIABILITY TO THE
16
<PAGE>
COMPANY, THE SELLING AGENT OR ANY OTHER PERSON AND TO CANCEL THE
PURCHASE OF UNITS, WITHIN TWO (2) BUSINESS DAYS FROM THE DATE OF
RECEIPT BY THE COMPANY OF A WRITTEN BINDING CONTRACT OF PURCHASE OR,
IN THE CASE OF A TRANSACTION IN WITH THERE IS NO WRITTEN BINDING
CONTRACT OF PURCHASE, WITHIN TWO (2) BUSINESS DAYS AFTER THE INITIAL
PAYMENT FOR THE UNITS BEING OFFERED.
SIGNATURE OF PENNSYLVANIA RESIDENT:________________________________
(c) THE UNDERSIGNED, IF A MASSACHUSETTS RESIDENT, REPRESENTS THAT THE
UNDERSIGNED'S INVESTMENT IN THE Units DOES NOT EXCEED 25% OF SUCH
PERSON'S NET WORTH OR, IF MARRIED, THE COMBINED NET WORTH OF SUCH
PERSON'S SPOUSE AND THE UNDERSIGNED, EXCLUDING PRINCIPAL RESIDENCE AND
HOME FURNISHINGS.
16. Registration Agreement: Grant of Power of Attorney.
(a) The undersigned understands that each of the subscribers whose
subscriptions are accepted by the Company is deemed to have entered into the
Registration Rights Agreement annexed hereto (the "Registration Rights
Agreement") with the Company pursuant to which the Company may be required to
register for sale pursuant to the Securities Act the Units as described in the
Memorandum. In order to facilitate the execution and fulfillment of the
Registration Agreement the undersigned grants the following power of attorney to
the President of the Company and each officer of the Company, for the purposes
set forth below.
(b) The undersigned hereby irrevocably constitutes and appoints the
President of the Company and each officer of the Company (the "Attorney"), and
each of the foregoing acting individually, in each case with full power of
substitution, the true and lawful agent and attorney-in-fact of the undersigned
with full power and authority in the undersigned's name, place and stead, to
execute and deliver on behalf of the undersigned at any time on or prior to the
Final Closing Date the Registration Rights Agreement or any amendments or
supplements thereto or any instrument, the execution and delivery by any of said
Attorneys of such Registration Rights Agreement, amendment or supplement being
conclusive evidence that such execution and delivery were authorized hereby.
(c) It is expressly understood and intended by the undersigned that the
power of attorney granted in paragraph (b) above (the "Power of Attorney") is
coupled with an interest, is irrevocable and may be delegated by said Attorney.
The Power of Attorney shall survive the death or incapacity of the undersigned,
or if the undersigned is a partnership, corporation or trust, the dissolution,
liquidation or termination thereof, or the assignment of the undersigned's Units
or any part thereof. This Power of Attorney shall terminate upon the earlier to
occur of (1) the rejection of the undersigned's Subscription by the Selling
Agent and (2) the second business day immediately following the Final Closing
Date.
17
<PAGE>
17. Nature of Subscriber. The undersigned is (check one):
_____ (a) One or more individuals
_____ (b) A corporation
_____ (c) A partnership
_____ (d) A trust
_____ (e) Another entity or organization,
namely (please specify): _________________________
18. Other Certifications. By signing the Signature Page, the undersigned
certifies as follows:
(a) that the undersigned and its grantor (if a trust) or its general
partners (if a partnership) have not filed or been involved in bankruptcy
proceedings;
if the undersigned is an individual investor, that one of the following is
true and correct (check one):
Spouse if
Purchaser Co-Owner
--------- --------
____ ____ (1) I am a United States citizen or resident of the
United States for United States federal income tax purposes.
____ ____ (2) I am neither a United States citizen nor a resident
of the United States for federal income tax purposes.
(c) if the undersigned is a trust, that the trust has not been established
in connection with either (1) an employee benefit plan (as defined in Section
3(3) of ERISA), whether or not subject to the provisions of Title I of ERISA, or
(2) a plan described in Section 4975(e)(i) of the Internal Revenue Code and that
one of the following is true and correct (check one):
____ (1) the Trust is an estate or trust whose income from sources
outside the United States is includable in its gross income for
United States federal income tax purposes regardless of its
connection with a trade or business carried on the United States.
____ (2) the Trust is an estate or trust whose income from sources
outside the United States is not includable in its gross income
for United States federal income tax purposes regardless of its
connection with a trade or business carried on in the United
States.
(d) if the undersigned is a partnership, that the assets of the partnership
do not constitute "plan assets" within the meaning of ERISA and regulation S
2510.3-101 promulgated thereunder
18
<PAGE>
and that one of the following is true and correct (check one):
____ (1) the Partnership is a partnership formed in or under the laws
of the United States or any political subdivision thereof.
____ (2) the Partnership is a partnership not formed in or under the
laws of the United States or any political subdivision thereof.
(e) if the undersigned is a corporation, that the assets of the Corporation
do not constitute "plan assets" within the meaning of ERISA and regulation
S2510.3-101 promulgated thereunder and that one of the following is true and
correct (check one):
____ (1) the Corporation is a corporation organized in or under the
laws of the United States or any political subdivision thereof.
____ (2) the Corporation is a corporation which is neither created nor
organized in or under the United States or any political
subdivision thereof but which has made an election under either
Section 897(i) or 897(k) of the United States Internal Revenue
Code of 1986, as amended, to be treated as a domestic corporation
for certain purposes of United States federal income taxation (A
copy of the Internal Revenue Service acknowledgment of the
undersigned's election must be attached to this Subscription
Agreement if this provision is applicable).
____ (3) neither (1) nor (2) above is true.
19. Matters Relating to the Undersigned's Ownership of Units.
(a) Ownership of the Units is to be held as follows (check one):
____ (1) Individual
____ (2) Joint Tenants (with rights of survivorship)
____ (3) Tenants in Common (no rights of survivorship)
____ (4) Community Property
(b) All correspondence relating to the undersigned's investment should be
sent (check one):
____ (1) to the address of the undersigned set forth on the signature
page hereof
____ (2) to the following address:
______________________________
______________________________
19
<PAGE>
______________________________
(c) The undersigned may be contacted by telephone at the following
telephone number(s):
Home: (____) ___________
Work: (____) ___________
20
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE FOR INDIVIDUALS
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
_______ day of ________, 1999.
Number of Units being subscribed for: ______________
________________________________________
Print Name
________________________________________
Signature of Investor
________________________________________
Social Security Number
________________________________________
Residence Address
If the purchaser has indicated that the Units will be held as JOINT
TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY, please complete the
following:
________________________________________
Print Name of Spouse or Other Purchaser
________________________________________
Signature of Spouse or Other Purchaser
________________________________________
Social Security Number
ACCEPTED AND AGREED:
SHOPOVERSEAS.COM, INC.
By: _______________________________
Name:
Title:
Dated: ____________, 1999
IF YOU ARE PURCHASING UNITS WITH YOUR SPOUSE, YOU MUST BOTH SIGN THE
SIGNATURE PAGE. IF YOU ARE PURCHASING UNITS WITH ANOTHER PERSON NOT YOUR SPOUSE,
YOU MUST EACH FILL OUT ALL AREAS OF THIS AGREEMENT APPLICABLE TO AN INDIVIDUAL
PURCHASER.
21
<PAGE>
SUBSCRIPTION AGREEMENT SIGNATURE PAGE FOR PARTNERSHIPS,
CORPORATIONS, TRUSTS, OR OTHER ENTITIES
IN WITNESS WHEREOF, the undersigned has executed this Agreement this ___
day of _______, 1999.
Number of Units being subscribed for:__________________
________________________________________
Print Name of Partnership, Corporation,
Trust or other Entity
________________________________________
(Signature of Authorized Signatory)
Name:___________________________________
Title:__________________________________
Address:________________________________
________________________________________
________________________________________
Taxpayer Identification Number:_________
Date of Formation:______________________
Address of Chief Executive Office of
Subscriber:
________________________________________
________________________________________
________________________________________
ACCEPTED AND AGREED:
SHOPOVERSEAS.COM, INC.
By: _______________________________
Name:
Title:
Dated: ______________, 1999
PROSPECTIVE PURCHASER QUESTIONNAIRE
22
<PAGE>
For Confidential Private Offering
of
Shopoverseas.com, Inc.
To: Shopoverseas.com, Inc.
4706 18th Avenue
Brooklyn, New York 11204
The information contained herein is being furnished to you in order to assure
you that the undersigned meets the standards of an "Accredited Investor" imposed
by Rule 501 of Regulation D promulgated under the Securities Act of 1933
(hereinafter the "Act"). The undersigned understands that (i) you will rely upon
the information contained herein for purposes of such determination, (ii) the
securities will not be registered under the Act in reliance upon the exemption
from registration provided by Section 4 (2) of the Act and Rule 506 of
Regulation D, promulgated thereunder and (iii) this questionnaire is not an
offer to sell securities to the undersigned.
The undersigned further represents to you that (i) the information contained
herein is complete and accurate and may be relied upon by you, and (ii) the
undersigned will notify you immediately of any material change in any of such
information occurring prior to the purchase of such securities, if any purchase
is made, by the undersigned.
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT, ALTHOUGH THIS QUESTIONNAIRE WILL BE
KEPT STRICTLY CONFIDENTIAL, THE ISSUER OF ANY SECURITIES PURCHASED BY THE
UNDERSIGNED MAY PRESENT THIS QUESTIONNAIRE TO SUCH PARTIES AS IT DEEMS ADVISABLE
IF CALLED UPON TO ESTABLISH THE AVAILABILITY UNDER ANY FEDERAL OR STATE
SECURITIES LAWS OF AN EXEMPTION FROM REGISTRATION OF THE PRIVATE PLACEMENT.
THIS LETTER IS NOT AN OFFER TO SELL SECURITIES BUT MERELY A REQUEST FOR
INFORMATION PURSUANT TO REGULATION D OF THE SECURITIES AND EXCHANGE COMMISSION.
Please complete, sign, date and return one copy of this questionnaire to the
Company at Shopoverseas.com, Inc., 4706 18th Avenue, Brooklyn, New York 11204,
as soon as possible.
PLEASE TYPE OR PRINT
1. Name: _____________________________________________________________
Date of Birth: ____________________________________________________
Social Security Number:____________________________________________
Citizenship: ______________________ Marital Status: ___________
Number of Dependents: _________
Where Registered to Vote:__________________________________________
State of Issuance of Driver's License: ____________________________
23
<PAGE>
Home Address:______________________________________________________
Home Telephone Number:_____________________________________________
2. Firm Name: ________________________________________________________
Nature of Business: _______________________________________________
Position: _________________________________________________________
Nature of Duties: _________________________________________________
Business Address: _________________________________________________
Business Telephone Number: ________________________________________
3. Your employment, positions or occupations during the past 5 years (and
the inclusive dates of each) are as follows (Note: What is sought is a
sufficient description to enable the Issuer to determine the extent of
vocationally related experience in financial and business matters):
Employment, Position Nature of
or Occupation Duties From To
------------- ------ ---- --
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
4.4. Your general, business or professional education, and the
degrees received, are as follows:
School Degree Year Received
------ ------ -------------
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
5. Was your income (from all sources) for each of the latest two complete
calendar years more than (check one):
___ $40,000; ___ $60,000; ___ $80,000;
24
<PAGE>
___ $100,000; ___ $200,000; ___ $500,000.
(a) What percentage of your income as shown above was derived from sources
other than salary? ______________
(b) Approximately what percentage of your income as shown above remained
after payment of Federal, state and local taxes, and after payment of all
ordinary and necessary business and/or living expenses? _______________
6. Was your income with that of your spouse for each of the latest two
complete calendar years more than (check one):
___ $40,000; ___ $60,000; ___ $80,000;
___ $100,000; ___ $300,000; ___ $500,000.
(a) What percentage of your combined income as shown above is derived from
sources other than salary?____________
(b) Approximately what percentage of your combined income as shown above
remained after payment of Federal, state and local taxes, and after payment
of all ordinary and necessary business and/or living
expenses?_________________
7. Is your income from all sources for the current calendar year reasonably
expected to be more than (check one):
___ $40,000; ___ $60,000; ___ $80,000;
___ $100,000; ___ $300,000; ___ $500,000.
(a) What percentage of your income as shown above will be derived for
sources other than salary?_________________
(b) Approximately what percentage of your income as shown above will remain
after payment of Federal, state, and local taxes, and after payment of all
ordinary and necessary business and/or living expenses?_________________
8. Is your income with that of your spouse from all sources for the current
calendar year reasonably expected to be more than (check one):
___ $40,000; ___ $60,000; ___ $80,000;
___ $100,000; ___ $300,000; ___ $500,000.
(a) What percentage of your net worth as shown above is invested in tax
"shelter" investments and investments in marketable securities (stocks,
bonds, debentures, or notes)? __________________
25
<PAGE>
(b) What percentage of you net worth as shown above constitutes home,
furnishings and automobiles?________________
(c) What percentage of your net worth as shown above constitutes liquid
assets (cash or assets readily convertible to cash)? ____________________
10. Indicate any other investments or contingent liabilities which you
reasonably anticipate could cause you to require cash in excess of the
amount of cash readily available to you (please specify):
__________________________________________________________
__________________________________________________________
__________________________________________________________
11. Investment experience:
(a) Please indicate the frequency of your investment in marketable
securities:
( ) often; ( ) occasionally; ( ) seldom; ( ) never.
(b) Please indicate the frequency of your investment in high technology
companies:
( ) often; ( ) occasionally; ( ) seldom; ( ) never.
(c) Please indicate the frequency of your investment in options:
( ) often; ( ) occasionally; ( ) seldom; ( ) never.
(d) Please indicate the frequency of your investment in securities
purchased on margin:
( ) often; ( ) occasionally; ( ) seldom; ( ) never.
(I) Please indicate the frequency of your investment in unmarketable
securities:
( ) often; ( ) occasionally; ( ) seldom; ( ) never.
(ii) Indicate any previously purchased securities which were sold to
you in reliance on the private offering exemption from registration under
the Securities Act of 1933.
Total
Type of Business Amount
Year Securities Issuer of Issuer Invested
---- ---------- ------ --------- --------
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
12. Please indicate in the space provided below any additional information
which you think may be helpful in enabling the Issuer to determine that
your knowledge and experience in financial and business matters is
sufficient to enable you to evaluate the merits and risks of this
investment.
_______________________________________________________________________
_______________________________________________________________________
26
<PAGE>
_______________________________________________________________________
13. Indicate whether you are acting for your own account:
Yes__ No __
(a) If not acting for your own account complete the following:
(i) Capacity in which you are acting (Trustee or otherwise):
__________________________
(ii) Name, address and telephone number of persons you represent:
______________________________________________
______________________________________________
______________________________________________
(iii) Evidence of authority (please attach).
NOTE: ANY INDIVIDUALS REPRESENTED BY YOU MUST ALSO BE QUALIFIED AS
"PURCHASERS" PURSUANT TO RULE 506 AND THE ACT.
To the best of my information and belief, the above information supplied by
the undersigned is true and correct in all respects.
IN WITNESS WHEREOF, I have executed this questionnaire this ___ day of
_________ , 1999.
____________________________________
(Signature of Prospective Purchaser)
27
<PAGE>
ALL INFORMATION WILL BE TREATED CONFIDENTIALLY
SHOPOVERSEAS.COM, INC.
PURCHASER REPRESENTATIVE QUESTIONNAIRE
Shopoverseas.com, Inc.
4706 18th Avenue
Brooklyn, New York 11204
(718) 435-5291
Gentlemen:
The information contained herein in being furnished to you in order for you to
determine whether a sale of a Unit (the "Units") in Shopoverseas.com, Inc. (the
"Company") may be made to the undersigned, pursuant to Section 4 (2) of the
Securities Act of 1933 (the "Act") and Regulation D promulgated thereunder. I
understand that, (1) you will rely upon the information contained herein for
purposes of determining the availability of said exemptions from registration,
(2) the Units will not be registered under the Act in reliance upon the
exemption from registration afforded by Section 4 (2) of the Act and Regulation
D promulgated thereunder, and (3) this Questionnaire is not an offer to sell the
Units or any other securities to the undersigned Purchaser Representative.
I herewith furnish you with the following representations and information:
1. The undersigned is not an affiliate or employee of the Company, its
officers, directors or their affiliates or beneficial owner of 10 percent
or more of the equity interest in the Company, except as follows: (State
"no exceptions", or set forth exceptions and give details).
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
2. The undersigned has such knowledge and experience in financial and business
matters so as to be capable of evaluating, alone, or together with other
Purchaser to evaluate fully and accurately the merits and risks of an
investment in the Company. The undersigned offers as evidence thereof the
following additional information (e.g., investment experience, business
experience, professional education):
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
3. There is no material relationship between the undersigned or his, her, or
its affiliates and the Company or its affiliates, which now exists or is
mutually understood to be contemplated or which has existed at any time
during the previous two years, nor has compensation been received or will
be received as a result of any such relationship, except as follows: (State
"no exceptions", or set forth exceptions and give details).
28
<PAGE>
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
The undersigned agrees to notify you promptly of any changes in the foregoing
information which may occur prior to the completion of the transaction.
Dated:________________
Very truly yours,
____________________________________
Print or Type Name
____________________________________
Signature
____________________________________
Business Address
____________________________________
____________________________________
Telephone
____________________________________
Principal Profession
PURCHASER ACKNOWLEDGEMENT
The undersigned hereby acknowledges that the undersigned acted as Purchaser
Representative in connection with evaluating the merits and risks of the
undersigned's prospective investment in Shopoverseas.com.
29
<PAGE>
WARNING TO PROSPECTIVE PURCHASER
DO NOT EXECUTE THE FOREGOING PURCHASER ACKNOWLEDGEMENT UNLESS AND UNTIL THE
PURCHASER REPRESENTATIVE QUESTIONNAIRE PRECEDING SUCH ACKNOWLEDGMENT HAS BEEN
COMPLETED IN FULL AND SIGNED.
Under Regulation D, a purchaser representative may not be an affiliate,
director, officer or other employee of the Company or any officer, director or
beneficial owner of 10 percent or more of any class of the equity securities or
10 percent or more of the equity interest in the Company except where the
purchaser is:
(a) Related to the purchaser representative by blood, marriage or adoption,
no more remotely than as first cousin;
(b) Any trust or estate in which the purchaser representative or any person
related to him as specified in Subdivision (a) or (c) collectively have 100
percent of the beneficial interest (excluding contingent interests) or of
which any person serves as trustee, executor or in any similar capacity; or
(c) Any corporation or other organization in which the purchaser
representative or any persons related to him as specified in Subdivision
(a) or (b) collectively are the beneficial owners of 100 percent of the
equity securities (excluding directors' qualifying Units) or equity
interest.
----------------------------------------
Signature
----------------------------------------
Full Name
----------------------------------------
Date
30
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of November ____, 1999 by and among Shopoverseas.com, Inc., a Nevada
corporation (the "Company"), and the persons and entities who purchase Units in
the Company's private placement described in a Private Placement Memorandum
dated November 16, 1999 (collectively, the "Investors").
WITNESSETH:
WHEREAS, the Company will issue Units consisting of Common Stock ("Common
Stock") and common stock purchase warrants ("Warrants"); and
WHEREAS, with respect to the Common Stock and common stock to be acquired
by the Investors upon exercise of the Warrants, the Company has agreed to grant
to the Investors the rights contained herein.
NOW, THEREFORE, in consideration of the foregoing recital and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized terms
shall have the following respective meanings:
Closing Date. The term "Closing Date" shall mean the final date of the
offering period of the Units, as described in the Private Placement
Memorandum, which may be extended by the Company.
Exchange Act. The term "Exchange Act" means the United States
Securities Exchange Act of 1934, as amended.
Holder. The term "Holder" means any person owning of record
Registrable Securities or any assignee of record of such Registrable
Securities to whom rights under this Agreement have been duly assigned in
accordance with this Agreement.
Person. The term "Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Registrable Securities. The term "Registrable Securities" means all
the Common Stock and common stock issuable upon exercise of the Warrants;
excluding in all cases, however, any of such securities sold by a Person in
a transaction in which rights under this Agreement are not assigned in
accordance with this Agreement.
Registration. The terms "register," "registered" and "registration"
refer to a
31
<PAGE>
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
Registration Statement. The term "Registration Statement" shall mean a
registration statement filed by the Company with the Commission under the
Securities Act providing for the offer and sale of Registrable Securities.
SEC. The term "SEC" or "Commission" means the U.S. Securities and
Exchange Commission.
Securities Act. The term "Securities Act" means the United States
Securities Act of 1933, as amended.
Warrants. The term Warrants means the Class D common stock purchase
warrants of the Company, each of which allows the holder to purchase one
share of the Company's common stock ($.001 par value per share) at a price
of $1.25 per common share, until July 31, 2002.
2. Grant of Registration Rights. The Company hereby grants the following
registration rights to holders of the Securities offered in the accompanying
Private Placement Memorandum.
(a) On one occasion, for a period commencing 270 days after the
Closing Date, but not later than three years after the Closing Date, the
Company, upon a written request therefor from any record holder or holders
of more than 50% of the aggregate of the "Registrable Securities", shall
prepare and file with the SEC a registration statement under the Act
covering the Registrable Securities which are the subject of such request,
unless such Registrable Securities are the subject of an effective
registration statement or are otherwise salable pursuant to an exemption
from registration. In addition, upon the receipt of such request, the
Company shall promptly give written notice to all other record holders of
the Registrable Securities that such registration statement is to be filed
and shall include in such registration statement Registrable Securities for
which it has received written requests within 10 days after the Company
gives such written notice. Such other requesting record holders shall be
deemed to have exercised their demand registration right under this Section
2(a). As a condition precedent to the inclusion of Registrable Securities,
the holder thereof shall provide the Company with such information as the
Company reasonably requests. The obligation of the Company under this
Section 2(a) shall be limited to one registration statement.
(b) If the Company at any time proposes to register any of its
securities under the Act for sale to the public, whether for its own
account or for the account of other security holders or both, except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Securities for sale to the
public, provided the Registrable Securities are not otherwise registered
for resale by the Subscriber or Holder pursuant to an effective
registration statement, each such time it will give at least 30 days' prior
written notice to the record holder of the Registrable Securities of its
intention so to do. Upon the written request of the holder, received by the
Company within 30 days after the giving of any such notice by the Company,
to register any of the Registrable Securities, the Company will cause such
Registrable Securities as to which registration shall have been so
requested to be included with the securities to be covered by
32
<PAGE>
the registration statement proposed to be filed by the Company, all to the
extent required to permit the sale or other disposition of the Registrable
Securities so registered by the holder of such Registrable Securities (the
"Seller"). In the event that any registration pursuant to this Section 2(b)
or 2(d) shall be, in whole or in part, an underwritten public offering of
common stock of the Company, the number of shares of Registrable Securities
to be included in such an underwriting may be reduced by the managing
underwriter if and to the extent that the Company and the underwriter shall
reasonably be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold by the Company therein; provided,
however, that the Company shall notify the Seller in writing of any such
reduction. Notwithstanding the forgoing provisions, the Company may
withdraw any registration statement referred to in this Section 2(b)
without thereby incurring any liability to the Seller.
(c) If, at the time any written request for registration is received
by the Company pursuant to Section 2(a), the Company has determined to
proceed with the actual preparation and filing of a registration statement
under the 1933 Act in connection with the proposed offer and sale for cash
of any of its securities for the Company's own account, such written
request shall be deemed to have been given pursuant to Section 2(b) rather
than Section 2(a), and the rights of the holders of Registrable Securities
covered by such written request shall be governed by Section 2(b).
(d) The Company shall file with the Commission within 120 days of the
final Closing Date (the "Filing Date"), and use its reasonable commercial
efforts to cause to be declared effective a Registration Statement within
270 days of the Closing Date (the "Effective Date"). The Company will
register one share of Common Stock in the aforedescribed registration
statement for each share of Common Stock contained in the Units and one
share of Common Stock for each common share issuable upon exercise of the
Warrants. The Registrable Securities shall be reserved and set aside
exclusively for the benefit of the Subscriber and not issued, employed or
reserved for anyone other than the Subscriber. the Company may delay the
Filing Date and Effective Date during the pendency of negotiations with an
underwriter for an initial public offering by the Company of its
securities. Any such delay may not be longer than thirty (30) days in
connection with the Filing Date and sixty (60) days in connection with the
Effective Date.
3. Registration Procedures. If and whenever the Company is required by the
provisions hereof to effect the registration of any shares of Registrable
Securities under the Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as herein provided), and
promptly provide to the holders of Registrable Securities copies of all
filings and Commission letters of comment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective until the latest of: (i) six months after the exercise
period of the Warrants; or (ii) one year after the Closing Date, and comply
with the provisions of the Act
33
<PAGE>
with respect to the disposition of all of the Registrable Securities
covered by such registration statement in accordance with the Seller's
intended method of disposition set forth in such registration statement for
such period;
(c) furnish to the Seller, and to each underwriter if any, such number
of copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or their disposition of the
securities covered by such registration statement;
(d) use its best efforts to register or qualify the Seller's
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Seller and in
the case of an underwritten public offering, the managing underwriter shall
reasonably request, provided, however, that the Company shall not for any
such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(e) list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the
Company is then listed;
(f) immediately notify the Seller and each underwriter under such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of any event of
which the Company has knowledge as a result of which the prospectus
contained 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 light of the circumstances then existing;
(g) make available for inspection by the Seller, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by the Seller or
underwriter, all publicly available, non-confidential financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all
publicly available, non-confidential information reasonably requested by
the seller, underwriter, attorney, accountant or agent in connection with
such registration statement.
4. Provision of Documents.
(a) At the request of the Seller, provided a demand for registration
has been made pursuant to Section 2(a) or a request for registration has
been made pursuant to Section 2(b), the Registrable Securities will be
included in a registration statement filed pursuant to this Agreement. In
the event of an underwritten public offering in which the Registrable
Securities are so included, the lockup, if any, requested by the managing
underwriter may not exceed nine months after the effective date thereof.
(b) In connection with each registration hereunder, the Seller will
furnish to the Company in writing such information and representation
letters with respect to itself and the
34
<PAGE>
proposed distribution by it as reasonably shall be necessary in order to
assure compliance with federal and applicable state securities laws. In
connection with each registration pursuant to Section 2(a) or 2(b) covering
an underwritten public offering, the Company and the Seller agree to enter
into a written agreement with the managing underwriter in such form and
containing such provisions as are customary in the securities business for
such an arrangement between such underwriter and companies of the Company's
size and investment stature.
5. Non-Registration Events. The Company and the Subscriber agree that the
Seller will suffer damages if any registration statement required under Section
2(a) or 2(b) above is not filed within 90 days after request by the Holder and
not declared effective by the Commission within 150 days after such request [or
the Filing Date and Effective Date, respectively, in reference to the
Registration Statement described in Section 2(d), and maintained in the manner
and within the time periods contemplated by Section 3 hereof, and it would not
be feasible to ascertain the extent of such damages with precision. Accordingly,
if (i) the Registration Statement described in Sections 2(a) or 2(b) is not
filed within 90 days of such request, or is not declared effective by the
Commission on or prior to the date that is 125 days after such request, or (ii)
the Registration Statement described in Section 2(d) is not filed on or before
the Filing Date or not declared effective on or before the sooner of the
Effective Date, or within five days of receipt by the Company of a communication
from the Commission that the registration statement described in Section 2(d)
will not be reviewed, or (iii) any registration statement described in Sections
2(a), 2(b) or 2(d) is filed and declared effective but shall thereafter cease to
be effective (without being succeeded immediately by an additional registration
statement filed and declared effective) for a period of time which shall exceed
30 days in the aggregate per year but not more than 20 consecutive calendar days
(defined as a period of 365 days commencing on the date the Registration
Statement is declared effective) (each such event referred to in clauses (i),
(ii) and (iii) of this Section 5 is referred to herein as a "Non-Registration
Event"), then, for so long as such Non-Registration Event shall continue, the
Company shall pay in cash as Liquidated Damages to each holder of any
Registrable Securities an amount equal to two (2%) percent for each thirty (30)
days or part thereof, of the Purchase Price of the Registrable Securities then
owned of record by such holder as of the occurrence of such Non-Registration
Event. Payments to be made pursuant to this Section 5 shall be due and payable
immediately upon demand in immediately available funds. Liquidated damages shall
not be payable in connection with any Non-Registration Event arising from the
exercise of rights granted to an underwriter as described herein, or in
connection with delays arising from negotiations with an underwriter as
described in Section 2(d) hereof.
6. Expenses. All expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including reasonable counsel
fees) incurred in connection with complying with state securities or "blue sky"
laws, fees of the National Association of Securities Dealers, Inc., transfer
taxes, fees of transfer agents and registrars, fee of one counsel, if any, to
represent all the Sellers, and costs of insurance are called "Registration
Expenses". All underwriting discounts and selling commissions applicable to the
sale of Registrable Securities, including any fees and disbursements of any
special counsel to the Seller, are called "Selling Expenses". The Seller shall
pay the fees of its own additional counsel, if any.
35
<PAGE>
The Company will pay all Registration Expenses in connection with the
Registration Statement. All Selling Expenses in connection with each
Registration Statement shall be borne by the Seller and may be apportioned
among the Sellers in proportion to the number of shares sold by the Seller
relative to the number of shares sold under such Registration Statement or
as all Sellers thereunder may agree.
7. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Securities under
the Act pursuant to this Agreement, the Company will indemnify and hold
harmless the Seller, each officer of the Seller, each director of the
Seller, each underwriter of such Registrable Securities thereunder and each
other person, if any, who controls such Seller or underwriter within the
meaning of the 1933 Act, against any losses, claims, damages or
liabilities, joint or several, to which the Seller, or such underwriter or
controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such Registrable Securities was registered under the
Act pursuant to this Agreement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Seller, each
such underwriter and each such 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 Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any
such Seller, the underwriter or any such controlling person in writing
specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the Act pursuant to this Agreement, the Seller will
indemnify and hold harmless the Company, and each person, if any, who
controls the Company within the meaning of the Act, each officer of the
Company who signs the registration statement, each director of the Company,
each underwriter and each person who controls any underwriter within the
meaning of the Act, against all losses, claims, damages or liabilities,
joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Registrable Securities were
registered under the Act pursuant to this Agreement, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending
36
<PAGE>
any such loss, claim, damage, liability or action, provided, however, that
the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to such Seller, as such, furnished in writing to the Company by
such Seller specifically for use in such registration statement or
prospectus, and provided, further, however, that the liability of the
Seller hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion that
the public offering price of the Registrable Securities sold by the Seller
under such registration statement bears to the total public offering price
of all securities sold thereunder, but not in any event to exceed the gross
proceeds received by the Seller from the sale of Registrable Securities
covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim
in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any liability which
it may have to such indemnified party other than under this Section 7(c)
and shall only relieve it from any liability which it may have to such
indemnified party under this Section 7(c) if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7(c) for any legal expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be reasonable defenses
available to it which are different from or additional to those available
to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties shall have the right to select one separate
counsel and to assume such legal defenses and otherwise to participate in
the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution in the
event of joint liability under the Act in any case in which either (i) the
Seller, or any controlling person of the Seller, makes a claim for
indemnification pursuant to this Section 7 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 7 provides for indemnification
in such case, or (ii) contribution under the Act may be required on the
part of the Seller or controlling person of the Seller in circumstances for
which indemnification is provided under this Section 7; then, and in each
such case, the Company and the Seller will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that the
37
<PAGE>
Seller is responsible only for the portion represented by the percentage
that the public offering price of its securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, provided, however, that, in any
such case, (A) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities offered by it
pursuant to such registration statement; and (B) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 10(f) of the
Act) will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
8. Assignment and Amendment. Notwithstanding anything herein to the
contrary:
(a) Registration Rights. The registration rights of a Holder under
this Agreement may be assigned to a party who acquires Registrable
Securities from a Holder (or a Holder's permitted assigns) only if: (i)
such Holder agrees in writing with the transferee or assignee to assign
such rights, and the Company is given written notice by the assigning party
before, at or after the time of such assignment stating the name and
address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned; and (ii) the transferee or
assignee agrees in writing with the Company to be bounded by all of the
terms and conditions of this Agreement, including, without limitation, the
provisions of this Section 8.
(b) Amendment of Rights. 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 with
the written consent of the Company and Investors (and/or any of their
permitted successors or assigns) holding shares representing and/or
exercisable into a majority of all the Registration Securities. Any
amendment or waiver effected in accordance with this subsection 8(b) shall
be binding upon each Investor, each Holder, each permitted successor or
assignee of such Investor or Holder and the Company.
9. Miscellaneous.
(a) Notices. All notices or other communications given or made
hereunder shall be in writing and shall be personally delivered or deemed
delivered the first business day after being telecopied (provided that a
copy is delivered by first class mail) or on the third business day after
being mailed by first class mail, to the party to receive the same at its
address set forth below or to such other address as either party shall
hereafter give to the other by notice duly made under this Section: (i) if
to the Company, to Shopoverseas.com, Inc., 4706 18th Avenue, Brooklyn, New
York 11204, telecopier number: (718) 972-6196, and (ii) if to the
Subscriber, to the name, address and telecopier number set forth on the
signature page hereto.
(b) Entire Agreement; Assignment. This Agreement and the documents
referred to herein represent the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended only by
a writing executed by the parties pursuant to Section 8 hereof. No right or
obligation of either party shall be assigned by that party without prior
notice to and the written consent of the other party except as described in
Section 8 hereof.
(c) Execution. This Agreement may be executed by facsimile
transmission, and
38
<PAGE>
in counterparts, each of which will be deemed an original.
(d) Law Governing this Agreement. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought exclusively in the state courts of New York or
in the federal courts located in the state of New York. The parties and the
Company agree to submit to the jurisdiction of such courts and waive trial
by jury. The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision of any agreement.
(e) Adjustments for Stock Splits, etc. Wherever in this Agreement
there is a reference to a specific number of shares of Common Stock of the
Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of
stock, the specific number of shares so referenced in this Agreement shall
automatically be proportionally adjusted to reflect the effect on the
outstanding shares of such class or series of stock by such subdivision,
combination or stock dividend.
[THIS SPACE INTENTIONALLY LEFT BLANK]
39
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first written above.
SHOPOVERSEAS.COM
By:________________________________
Ethel Schwartz
President and Director
INVESTOR:
___________________________________
Signature
___________________________________
Print Name
___________________________________
Address
___________________________________
Address
___________________________________
Telecopier Number (must be provided)
40
