________________________[Name of Issuer]
SUBSCRIPTION & SUITABILITY MEMORANDUM
Book Number _____
Delivered to: ________________________
Note: This Memorandum is intended only for the person named above. The contents of this
Memorandum is confidential and may only be disseminated by an authorized officer of the
Company named above. If you have found or received this Memorandum in error, please
notify the Company’s legal counsel immediately at __________________.
Book Number ______
Investment Advisor, if any: _____________________________________
Advisor’s Telephone: _____________________________________
SUBSCRIPTION AND SUITABILITY AGREEMENT
FOR STOCK TO BE ISSUED BY
THE PURCHASE OF THESE SECURITIES INVOLVE RISKS TO THE PURCHASER. THE SPECIAL RISKS
ASSOCIATED WITH THIS OFFERING COULD CAUSE INVESTORS TO LOSE THEIR ENTIRE
INVESTMENT IN THE COMPANY. THE PRINCIPAL RISKS ARE LITTLE OPERATING HISTORY, NO
MINIMUM OFFERING, POSSIBLE NEED FOR ADDITIONAL CAPITAL TO SUSTAIN LONG-TERM
GROWTH, DEPENDENCE ON KEY PERSONNEL AND SUPPLIERS, GOVERNMENT REGULATION AND
SUBSTANTIAL RESTRICTIONS ON THE RESALE OF THE SECURITIES OFFERED HEREBY.
THE SECURITIES ARE OFFERED ONLY TO ACCREDITED AND SOPHISTICATED INVESTORS AS
DEFINED BY REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
WHO MUST EXPECT TO BEAR THE ECONOMIC RISK OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD. THE SECURITIES MAY NOT BE RESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNLESS, IN THE OPINION OF THE COMPANY’S COUNSEL, SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE LAW.
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ACT, OR THE SECURITIES LAWS OF
ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. THE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY OR ADEQUACY OF THE COMPANY’S DISCLOSURES. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS LETTER, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ITS AGENTS. THE COMPANY WILL MAKE AVAILABLE TO ANY
POTENTIAL INVESTOR THE OPPORTUNITY TO ASK OF, AND RECEIVE ANSWERS FROM, ITS
REPRESENTATIVES CONCERNING THE TERMS AND CONDITIONS OF THIS SUBSCRIPTION AND TO
OBTAIN ADDITIONAL INFORMATION, TO THE EXTENT SUCH INFORMATION IS POSSESSED OR CAN
BE OBTAINED WITHOUT UNREASONABLE EFFORT.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS LETTER (OR ANY
PRIOR OR SUBSEQUENT COMMUNICATION FROM THE COMPANY, ITS AFFILIATES AND
EMPLOYEES, OR ANY PROFESSIONAL ASSOCIATED WITH THIS OFFERING) AS LEGAL ADVICE.
EACH INVESTOR SHOULD CONSULT HIS OWN PERSONAL COUNSEL, ACCOUNTANT AND OTHER
ADVISORS AS TO THE LEGAL, TAX, ECONOMIC AND RELATED MATTERS CONCERNING THE
INVESTMENT DESCRIBED HEREIN AND ITS SUITABILITY FOR HIM.
THIS LETTER CONSTITUTES AN OFFER ONLY TO THE PROSPECTIVE INVESTOR TO WHICH IT WAS
DELIVERED, AND SUCH OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO CLOSING. THIS
LETTER DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY JURISDICTION OR
COUNTRY IN WHICH SUCH OFFER IS UNLAWFUL.
__________________ [Name of Issuer]
__________________ [Address of Issuer]
1. The undersigned (“Investor”) hereby subscribes to purchase ____________________________
(_________) Shares of ___________ [class and series, if any] Stock (“Stock”) issued by ________________, a
corporation organized and existing under the laws of the State of _____________ (the "Company"),
[OPTIONAL: constituting on the date hereof a total of _______________ Percent (____ %) of the now issued
and outstanding Stock of the Company], for a price of _________________________________ ($ _______)
per share and _________________________ Dollars ($_________) in the aggregate, pursuant to the terms and
conditions of this Subscription and Suitability Agreement [and that certain Stock Purchase Agreement attached
hereto as Exhibit A.] Investor hereby tenders for such Stock the total amount of ________________________
($ _________), to be held in escrow pending the Company’s approval of this subscription. If the Company
declines to accept this subscription, it will forthwith return the property or proceeds thereof to Investor without
interest or reduction.
2. Investor has not retained a financial and/or investment advisor (the “Investment Advisor” or “Purchaser
Representative”) to advise Investor with respect to this investment. If Investor have retained a Purchaser
Representative, his name, address and phone number are as follows:
Name:___________________________________ Phone: (____)______________
City:_______________________ State:_________________ Zip:____________
If such a Purchaser Representative has been retained, Investor acknowledges receipt of a statement from him
relating to any past or future relationships between such Purchaser Representative and the Company or its
3. Investor hereby represents and warrants that:
(a) Investor is at least twenty-one (21) years old.
(b) Investor has prior investment experience or has consulted with a professional Investment
Advisor, attorney or accountant concerning this investment.
(c) Investor is an "accredited investor" as defined as follows: The term "accredited investor"
includes all persons meeting the definition of "accredited investor" provided under Rule 501(a)
of Regulation D adopted by the Securities and Exchange Commission (17 Code of Federal
Regulations, Section 230.501(a)). Such definition includes, but is not limited to, (i) any natural
person whose individual net worth, or joint net worth with such persons spouse, at the time of
this purchase of Stock exceeds $1,000,000, or (ii) any natural person who had an individual
income in excess of $200,000 in each of the two (2) most recent years, or joint income with
such 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, or (iii) any entity in which all
of the equity owners are accredited investors. A corporation, partnership or other entity shall be
counted as one purchaser. If, however, that entity is organized for the specific purpose of
acquiring the Stock hereby offered and is not an entity in which all of the equity owners are
accredited investors, then each beneficial owner of equity securities or equity interests in the
entity shall count as a separate purchaser for purposes of these restrictions.
4. In connection with this Subscription, Investor further represents, acknowledges and agrees that:
(a) I recognize that the purchase of the Stock is a long-term investment which involves a high
degree of risk.
(b) I am aware of the fact that the Stock has not been registered, nor is registration contemplated
under the Securities Act of 1933, as amended (the "Act"), or under the securities laws ("Blue
Sky Laws") of any state, but are being offered pursuant to exemptions from the registration
requirements of federal and state securities laws. Accordingly, such Security must be held
indefinitely unless they are subsequently registered under said securities laws or unless, in the
opinion of counsel for the Company, a sale or transfer of such Security may be made without
registration there under. I am further aware that I may not be able to make any sales or transfers
of the Stock and that any transfer will require the prior approval of the Company. Such
approval will be at the sole discretion of the Company.
(c) I have prior investment experience, including investment in restricted securities, I recognize the
highly speculative nature of this investment and I am able to bear the financial risk of the loss of
my entire investment in the Company.
(d) I hereby acknowledge that my Investment Advisor or Purchaser Representative, if any, has fully
disclosed to me, in writing, the relationship, if any, between him/her or any of his/her affiliates
and the persons, firms or corporations involved in any way in this offering or referred to in any
materials furnished to me by the Company, as well as the Compensation, if any, received or to
be received as a result of such relationship.
(e) I and my Investment Advisor, attorney or accountant, if any, have been provided, during the
course of this transaction, by the Company with all pertinent and material information,
documents, books and records regarding the Company and this investment which we have
requested or desired to know, all such information, documents, books and records which could
be reasonably provided have been made available for our inspection and review; and such
information, documents, books and records have, in our opinion, afforded me and my advisor
with all the same information that would be provided us in a registration statement filed under
the Act. We have additionally been afforded the opportunity to ask questions to, and receive
answers from, the Company concerning the terms and conditions of this offering, and/or any
additional information we have requested.
(f) I understand that this Stock offering by the Company has not been reviewed by the regulatory
authorities of any state because of the Company’s intent that this offering be a nonpublic
offering pursuant to SEC Regulation D, and that if all of the conditions and regulations of SEC
Regulation D are not complied with, the offering will be resubmitted to appropriate Federal
and/or State authorities for amended exemption. I understand that any offering literature used in
connection with this offering has not been pre-filed with or reviewed by any regulatory
authorities. This Stock is being purchased for my own account for investment, and not for
distribution or resale to others. I agree that I will not sell or otherwise transfer these securities
unless they are registered under the Act or unless an exemption from registration is available. I
represent that I have adequate means of providing for my current needs and possible personal
contingencies and that I have no need for liquidity of this investment.
5. Investor hereby consents and agrees to the following:
(a) To the reservation by the Company of the unrestricted right to reject, cancel or rescind any
subscription and to close the offer at any time;
(b) That the Company may reject, cancel or rescind this or any subscription at any time if it is
discovered that any prospective investor to this offering is not an accredited investor, as such
term is defined in Rule 501 under Regulation D of the Act;
(c) That the Company may refuse to transfer the Stock received under this Subscription out of my
name if such a request for transfer is not accompanied by an opinion of counsel acceptable to
the Company that neither the sale nor the proposed transfer results in a violation of the Act, or
any applicable state Blue Sky Laws;
(d) To the placement of a legend on any certificate evidencing the Stock that I have purchased
stating that such Stock has not been registered under the Act and setting forth or referring to the
restrictions on transferability and sale thereof; and
(e) To a notation in the Company’s appropriate records or with the Company’s transfer agent with
respect to the restriction on the transferability of the stock.
6. Investor acknowledges that the Company is relying upon his/her representations relating to investor’s net
worth and other information supplied by investor in determining his/her suitability as an investor. In view thereof,
Investor represents and covenants that the information supplied by him/her, or Investor’s Advisors or
Representatives, to the Company in connection with Investor’s purchase of Stock does not omit any material
items and is true, accurate and correct in all respects. Investor will promptly notify the Company prior to the date
of this offering if such information becomes inaccurate or incomplete in any respect whatsoever.
7. Investor, by reason of his/her knowledge and experience in financial and business matters, believes it is
capable of evaluating the risks and merits of this investment. In reaching the conclusion that Investor desires to
acquire the Stock to which it is subscribing, Investor has carefully evaluated his/her financial resources and
investment position, and the risks associated with this investment, and acknowledge that Investor is able to bear
the economic risks of this investment.
8. Investor understands that no federal or state agency has recommended or endorsed the purchase of Stock
contemplated herein or passed upon the adequacy or accuracy of the information set forth in this or any other
9. In connection with Investor’s purchase of Securities, Investor hereby represents that he/she is a resident
and citizen of the State indicated below and that any Stock purchased by Investor is being purchased for
Investor’s own account for investment and not with a view to distribution or resale and that Investor has no
immediate plans to sell, pledge, transfer or hypothecate this Stock. Investor authorizes the Company to rely upon
the representations in this letter in the making of the sale of Stock to him/her and agrees to indemnify and hold
harmless the Company in the event that the representations made by Investor in this letter should prove to be
10. Investor acknowledges that neither the Company nor any person acting on its behalf offered to sell the
Stock by means of any form of general solicitation or advertising. Investor further acknowledges and agrees that
he/she has been given any and all time requested by Investor in making the decision to purchase the Stock, and
Investor hereby agrees that no pressure or duress of any kind was applied on Investor by the Company or any
other person or entity to influence his/her decision to purchase the Stock.
11. Investor acknowledges that it has been advised to consult with an attorney regarding legal matters
concerning the Company and to consult with a tax advisor regarding the tax consequences of investing in the
12. Investor recognizes that the securities laws and regulations of the United States, including the state in
which the Company is incorporated, may impose additional requirements relating to this offering and Investor’s
purchase of Stock. Investor hereby agrees to execute and to comply with the terms of any additions, supplements
or amendments to this Subscription and Suitability Agreement which are required by the Company.
13. For purposes of this Subscription Agreement, pronouns shall be deemed to refer to whatever gender and
number the identity of the persons or entities involved may require, and words in the singular shall be construed as
though in the plural or in the plural as though in the singular, wherever the context so admits.
14. The agreements and representations herein set forth shall become effective and binding upon Investor, his
or her heirs, legal representatives, successors and assigns upon the acceptance of this Subscription by the
Company. Investor hereby agrees that this Subscription is irrevocable and that the representations and warranties
contained herein shall survive the acceptance of its Subscription.
15. Investor hereby acknowledges that he/she wishes to invest in the Company pursuant to the provisions of
this Subscription Agreement and hereby applies for the subscription set forth above. Investor understands and
agrees that executing his or her signature below will bind Investor to this Agreement.
IN WITNESS WHEREOF, Investor has executed this Agreement as of the _____ day of
* Investor must fill out completely the following Investor Questions:
Investor’s Full Name ___________________________________________________________________
I.D., S.S. or EIN Number (if any) _________________________________________________________
Company Name (if needed) ______________________________________________________________
Address (of primary residence or principle place of business)_____________________________________
City __________________ State _____________ Country _________________
MANNER IN WHICH TITLE IS TO BE HELD:
___ Individual(s) ___ Partnership ___ Corporation ___ Trust
If joint ownership, please designate one of the following:
Joint Tenants with Right of Survivorship Community Property Tenants in Common
If a Profit Sharing Plan is the purchaser, is the Profit Sharing Plan self-directed?
STOCK PURCHASE AGREEMENT (if needed)]