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Exhibit
10.2
CONVERTIBLE PROMISSORY
NOTE SUBSCRIPTION AGREEMENT
This Convertible Promissory
Note Subscription Agreement (the “Agreement”) is made
and dated as of
, 2005, by and between Wilson Brothers USA, Inc., an Illinois
corporation (the “Company”), and the undersigned
subscriber (the “Subscriber”).
WHEREAS, the Company is
offering for sale a convertible promissory note of the Company in
the form attached to this Agreement as Exhibit A (the
“Note”) in the principal amount set forth opposite such
subscriber’s name on the signature page hereof in a private
placement offering (the “Offering”); and
WHEREAS, the Subscriber
wishes to subscribe for and purchase the Note.
NOW, THEREFORE, the parties
hereby agree as follows:
4. SUBSCRIPTION
AGREEMENT
1.1 Subscription for
Note . The Subscriber hereby subscribes for and agrees to
purchase, subject to the terms and conditions of this Agreement,
the Note in the principal amount set forth upon the signature page
hereof. This subscription and agreement represent an irrevocable
offer by the Subscriber to subscribe for said Note, except as
expressly provided herein. This Agreement, subject to the terms
hereof, shall become a contract for the sale of said Note upon the
acceptance hereof by the Company on or before April 15, 2005 or
such later date to which the Offering is extended by the Company
(the “Termination Date”).
1.2 Right to Accept or
Reject . The Company reserves the unrestricted right to accept
or reject this or any other subscription, in whole or in part, to
borrow less than the principal amount of the Note subscribed for
herein, and to withdraw its offer at any time.
1.3 Payment . This
subscription offer is accompanied by (i) a check payable to the
order of the Company in an amount equal to the principal amount of
the Note (or written confirmation of a corresponding wire transfer
to an account identified by the Company); and (ii) the original
copy of this Agreement, with Schedule A hereto, completed and
signed by the Subscriber. Upon acceptance by the Company, the
Company will execute and deliver the Note to the
Subscriber.
1.4 Non-Acceptance .
If this subscription is not accepted by the Company by the
Termination Date, the subscription by the Subscriber herein shall
cease to be effective, the funds of such Subscriber shall be
returned to the Subscriber in full, without interest, and,
notwithstanding any provision herein to the contrary, this
Agreement shall be void and of no effect whatsoever and shall not
bind the Company in any manner or respect.
1.5 Subscriber’s
Representations and Warranties . The Subscriber hereby makes
the representations and warranties set forth below with the express
intention that they be relied upon by the Company in determining
the suitability of the Subscriber to purchase the Note. If the
Subscriber is purchasing the Note subscribed for hereby in a
fiduciary capacity, the representations and warranties set forth
herein are made on behalf of the person or persons for whom the
Subscriber is so purchasing.
(a) If the Subscriber is an
individual, he or she is a citizen of the United States, at least
21 years of age and a bona fide resident and domiciliary (not a
temporary or a transient resident) of the state shown in Schedule
A, and has no intention of becoming a resident of any other state
or jurisdiction.
(b) The Subscriber is fully
aware that the Note subscribed for hereunder and the shares of
capital stock of the Company issuable upon conversion of the Note
have not been registered under the Securities Act of 1933, as
amended (the “Act”), or under any applicable state
securities law. The Subscriber further understands that the Note is
being sold and the shares of capital stock of the Company issuable
upon conversion of the Note will be issued in reliance on the
exemptions from the registration requirements of the Act and in
reliance on exemptions from the registration requirements of
various state securities laws, on the grounds that the Offering has
been limited to investors who or which qualify as accredited
investors under the requirements of Rule 501(a) promulgated under
the Act.
(c) The Subscriber is
acquiring the Note for his own account (or in such fiduciary
capacity as is indicated) as principal for the Subscriber’s
investment and not with a view to resale or
distribution.
(d) Immediately prior to
execution of this Agreement by the Subscriber, the Subscriber was
able to bear the economic risk of the investment contemplated
hereby, and either:
(i) The Subscriber had such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of the prospective
investment; or
(ii) The Subscriber and the
Subscriber’s purchaser representative together had such
knowledge and experience in financial and business matters that
they were capable of evaluating the merits and risks of the
prospective investment.
(e) The Subscriber (or the
Subscriber’s purchaser representative if the Subscriber has
authorized such):
(i) acknowledges that the
Company has given the Subscriber the opportunity to review the
Company’s Form 10-KSB for the fiscal year ended December 31,
2003, Form 10-QSB for the quarters ended March 31, 2004, June 30,
2004 and September 30, 2004 (the “Company SEC Reports”)
and all of the other Securities and Exchange Commission filings of
the Company; and
(ii) has been given the
opportunity to ask questions of, and receive answers from, the
officers of the Company concerning the terms and conditions of the
Offering and to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense
that is necessary to verify the accuracy of the information that
was otherwise provided, and the Subscriber has not been furnished
any other offering literature or prospectus.
(f) The Subscriber recognizes
that purchase of the Note involves substantial risks and has taken
full cognizance of and understands such risks. In deciding whether
to purchase the Note subscribed for herein, the Subscriber has
weighed these risks against the potential return.
(g) Considering all relevant
factors in the Subscriber’s financial (and, if an individual,
personal) circumstances, the Subscriber is able to bear the
economic risk of the investment. The Subscriber has adequate means
of providing for the Subscriber’s current needs (and, if an
individual, possible personal contingencies) and has no need in the
foreseeable future for liquidity of the investment in the Note. The
Subscriber’s financial responsibility, measured by net worth
and after-tax income, is such that the subscription for and
purchase of the Note hereunder is not material when compared to the
Subscriber’s total financial capacity.
(h) The Subscriber fully
understands and agrees that the Subscriber must bear the economic
risk of investment in the Note for an indefinite period of time
because, among other reasons, the Note being subscribed for
hereunder and the shares of capital stock of the Company issuable
upon conversion of the Note have not been registered under the Act
or under applicable state securities laws; there is no public
market for the Note; there are substantial restrictions on the
transferability of the Note being subscribed for hereunder and the
shares of capital stock of the Company issuable upon conversion of
the Note; the Subscriber may not be able to avail himself of the
provisions of Rule 144 adopted by the Securities and Exchange
Commission under the Act; and it may not be possible for the
Subscriber to liquidate the investment. The Subscriber further
understands that the Company is under no obligation to register the
Note or the shares of capital stock of the Company issuable upon
conversion of the Note.
(i) The Subscriber has sought
such accounting, legal and tax advice as the Subscriber has
considered necessary to make an informed investment
decision.
(j) The Subscriber is aware
that no federal or state agency has made any finding or
determination as to the fairness of investment in the Note, nor any
recommendation or endorsement of any such investment.
(k) The Subscriber
acknowledges that if a purchaser representative has been utilized
by the Subscriber in evaluating the investment as contemplated
hereby, the Subscriber has been advised by such purchaser
representative as to the merits and risks of the investment in
general and the suitability of the investment for the Subscriber in
particular, and such purchaser representative has co-executed this
Agreement.
(l) The Subscriber has
received, completed and returned to the Company Schedule A relating
to the Subscriber’s general ability to bear the risks of an
investment in the Company and suitability as an investor in a
private offering, and the Subscriber hereby affirms the correctness
of the answers to Schedule A and all other written or oral
information concerning the Subscriber’s suitability provided
to the Company by, or on behalf of, the Subscriber.
(m) The Subscriber
acknowledges and is aware that the Note is a speculative investment
which involves a high risk of loss by the Subscriber of his or its
entire investment in the Company.
(n) The Subscriber agrees to
indemnify and hold harmless the Company and its affiliates from any
liability, loss or expense (including reasonable attorney’s
fees, judgments, fines and amounts paid in settlement, payable as
incurred) if the Subscriber, alone or with others, breaches any of
the representations or warranties contained in this subscription
offer.
1.6 Entity
Representations . If this subscription is by a corporation,
partnership, limited liability company, association, joint stock
company, trust or unincorporated organization, such entity hereby
represents that it was not organized for the purpose of acquiring
the Note. If the Subscriber is a partnership, each partner of such
partnership hereby represents that each representation by the
Subscriber set forth herein is correct both as to the partnership
and as if made by such partner personally.
1.7 Agent
Representations . If this subscription is executed by a person
acting in a representative capacity for a corporation or trust, or
as an agent for any person or entity, such person represents that
it has full authority to execute this Agreement in such capacity
and on behalf of such corporation, trust, person or
entity.
1.8 Survival of the
Agreement . The subscription herein shall survive the death or
disability of any Subscriber, and this Agreement shall be binding
upon the heirs, executors, administrators, successors and assigns
of any such Subscriber. All pronouns and any variation thereof used
herein shall be deemed neuter, singular or plural as the identity
of the Subscriber may require.
5. RESTRICTIONS ON
TRANSFERS
2.1 Certificate
Legends . Each Note shall be stamped or otherwise imprinted
with a legend in the following form (in addition to any other
legend required under applicable state securities laws or
otherwise):
THIS NOTE AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO
REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
2.2 Transfers in
Violation . Any sale, assignment, transfer, pledge,
hypothecation, mortgage or disposition of the Note or any of the
shares of capital stock of the Company issuable upon conversion of
the Note, by gift or otherwise, that is in violation of any
provision of this Agreement shall be void and of no effect
whatsoever, and shall not be recognized by the Company as
transferring any interest in any of the Note or the shares of
capital stock of the Company issuable upon conversion of the
Note.
6. COMPANY
REPRESENTATIONS
The Company makes the
following representations and warranties with the express intention
they be relied upon by the Subscriber in purchasing the
Note.
3.1 Organization . The
Company is duly incorporated, validly existing and in good standing
under the laws of the State of Illinois, with full power and
authority to conduct its business as it is currently being
conducted and to own its assets.
3.2 Corporate Power .
The Company has all requisite corporate power to execute and
deliver this Agreement and the Note and to carry out and perform
its obligations under the terms of this Agreement and the
Note.
3.3 Authorization .
All corporate action on the part of the Company, its directors and
its shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Company and the
issuance and delivery of the Note and the reservation of the equity
securities issuable upon exercise of the Note has been taken or
will be taken. This Agreement and the Note, when executed and
delivered by the Company, shall constitute valid and binding
obligations of the Company enforceable in accordance with their
terms, subject to laws of general application relating to
bankruptcy, insolvency, the relief of debtors and, with respect to
rights to indemnity, subject to federal and state securities
laws.
3.4 Capitalization .
The authorized capital stock of the Company consists of 30,000,000
shares of common stock and 5,000,000 shares of preferred stock,
each having a par value of $0.01 per share. As of November 12,
2004, 10,021,532 shares of common stock and no shares of preferred
stock were issued and outstanding. All of the issued and
outstanding shares of Company capital stock have been duly
authorized and validly issued and are fully paid and
non-assessable.
3.5 Compliance with Other
Instruments . The execution, delivery and performance of this
Agreement and th
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