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
