Exhibit 10.1
THE OZONE MAN, INC.
SUBSCRIPTION AGREEMENT
INSTRUCTIONS
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT
REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.
1. Fill in your name and amount of
investment on Page 1.
2. Individual Investors must
complete the requested information on
pages 10 and 11
and sign the signature page on Page 11.
3. Entity
Investors must complete the requested information on
pages 12 and 13,
and if applicable, page 14 and sign the
signature page on
page 13 and if applicable, page 14.
DELIVER THE EXECUTED AGREEMENTS TO:
The Ozone Man, Inc.
9454 Wilshire Blvd., Penthouse
Beverly Hills, CA 90212
Attn: Halden Shane
ALONG WITH PAYMENT FOR THE STOCK SUBSCRIBED FOR
WIRE FUNDS TO:
City National City Bank
_______________________
_______________________
(____) ____________
Contact: _____________
Account Number: _______________
Routing (ABA) Number: ________________
If you have any questions regarding this
form, please contact Halden
Shane for instructions at (310) 275-2255.
<PAGE>
Name of Investor _____________________________
Amount of Investment__________________________
SUBSCRIPTION AGREEMENT
The Ozone Man, Inc. ("Company") and the Investor hereby agree as
follows:
1. The Transaction. The Investor will purchase from the
Company and
the Company will sell to the Investor (i) 3,250 shares of Series
B
Stock Shares (the "Series B Stock"), for the purchase price of
$1,000.00 per share and (ii) an aggregate of 350,000 shares of
Common Stock of the Company for a purchase price of $5.00 per
share, Together (the "Purchase Price"). Each of the Company
and
the Investor (the "Parties") agree that the purpose of the
foregoing
transaction and the inducement for the proposed purchase of the
Subject Shares is to provide capital to assist the Company to
expand
through strategic acquisitions of established heating, ventilation,
and
air conditioning providers ("HVAC"), or similar service
companies
related to the core business of the Company, as well as to
expand its
sales revenues through advertising and marketing, all as
contemplated
herein or otherwise as mutually agreed upon by the Parties and
set
forth in the Purchase Agreement.
(a) Series B Stock. The Series B Stock shall be convertible
at an
exchange rate of 200 common shares for each Series B share
or a total of 650,000 shares at the option of the Investor, and
have a stated value per share of $1,000 . As further set forth
in
the Designations of Rights and Preferences of the Series B
Stock, the Series B Stock shall carry a cumulative dividend of
7.5% per annum and shall be senior in liquidation preference
to all other classes of preferred stock. The dividend is
payable
in kind, at the election of the Company. The Series B Stock
Shares may be redeemed exclusively by the Company.
2. Use of Proceeds. The proceeds from the sale of the subject
Shares
will be used by the Company as follows:
(a) M&A Reserves. As set forth above, the business plan
of the
Company is to acquire established third party providers of
certain HVAC and other services that management deems
strategic to expand the markets intended to be serviced by the
Company. The Company shall covenant to preserve the
$3,250,000 of the proceeds of the sale of the Series B Stock
for such acquisitions. The Series B shareholder shall have no
right of approval over the acquisition, and the rights under
this
section shall apply solely to the obligation of the Company to
acquire established HVAC companies or similar service
companies related to the core business of the Company. The
M&A Reserves shall be maintained in available funds at a
third
party financial institution (i.e. bank, brokerage firm, money
market fund or other investment instrument) mutually
acceptable to the Parties.
(b) Intentionally Omitted.
<PAGE>
(c) Intentionally Omitted.
(d) Expenses. Approximately $200,000 will be used to pay
commissions and the Investors expenses, including legal fees
of counsel to the Investor incurred in connection with legal
due diligence, the preparation of the Purchase Agreement and
negotiation and execution of the aforesaid license and
consulting agreement.
3. Investor Delivery of Documents and Payment. I hereby
tender to
the Company (i) the full purchase price of the Stock I am
purchasing
by check or wire and (ii) one manually executed copy of this
Subscription Agreement. If the Company does not receive
and
accept my subscription by the Termination Date, my payment will
be
returned to me without interest or deduction.
4. Offering to Accredited Investors. This offering is
limited to
accredited investors as defined in Section 2(15) of the Securities
Act
of 1933, as amended ("Securities Act"), and Rule 501
promulgated
thereunder, and is being made without registration under the
Securities Act in reliance upon the exemptions contained in
Sections
3(b), 4(2) and/or 4(6) of the Securities Act and applicable
state
securities laws. As indicated by the responses on the
signature page
hereof, the Investor is an accredited investor within the meaning
of
Section 2(15) of the Securities Act and Rule 501 promulgated
thereunder.
5. Closing and Delivery of Securities. Once my
subscription is
received and my payment is released to the Company, the
certificates
representing the shares of Stock will be delivered promptly to
me
along with a copy of a fully executed version of this
Agreement.
6. Representations and Warranties of the Company.
The Company
hereby represents and warrants to the Investor as follows:
6.1 Due Incorporation and Qualification. The Company
has been
duly incorporated, is validly existing and is in good standing
under the laws of its state of incorporation and is duly
qualified as a foreign corporation for the transaction of
business and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the conduct of
its
business requires such qualification, except where the failure
to so qualify would not have a material adverse effect on the
business, operations, assets, financial condition or prospects
of
the Company ("Material Adverse Effect"). The Company has
all requisite corporate power and authority necessary to own
or hold its properties and conduct its business.
6.2 Authorized Capital; Outstanding Securities. As of
the date
hereof, the Company's capitalization is as described in its SEC
filings. All of the issued and outstanding shares of
Common
Stock have been duly and validly authorized and issued and
are fully paid and non-assessable.
<PAGE>
6.3 No Preemptive Rights; Registration Rights. There
are no
preemptive or other rights to subscribe for or purchase, or any
restriction upon the voting or transfer of, any shares of
Common
or Preferred B Stock or other securities of the Company, under
the Certificate of Incorporation or By-Laws of the Company or
under any agreement or other outstanding instrument to which
the Company is a party or by which it is bound.
6.4 Private Offering Exemption; Offering Documents.
The
Subscription Agreement does not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated
therein or necessary to make the statements therein, in the light
of
the circumstances under which they were made, not
misleading.
The Common and Preferred B Stock conforms in all material
respects to the descriptions thereof contained herein.
Assuming
that (i) a proper Form D is filed in accordance with Rule 503
of
Reg D, (ii) the offer and the sale of the Commonand Preferred B
Stock was made in compliance with Rule 502(c) of Reg D
and/or Section 4(2) of the Securities Act, and (iii) the
representations of the Subscribers in the Subscription
Agreements
signed by them are true and correct (which facts will not be
independently verified by the Company), the sale of Common and
Preferred B Stock in the Offering is exempt from registration
under the Securities Act and is in compliance with Reg D.
6.5 Due Authorization. The Company has full right,
power and
authority to enter into this Subscription Agreement, to issue
the
Common and Preferred B Stock and to perform all of its
obligations hereunder and thereunder. This Subscription
Agreement and Common and Preferred B Stock, when executed
and delivered, will have been, duly authorized by all necessary
corporate action and no further corporate action or approval is
or
will be required for their respective execution, delivery and
performance. This Subscription Agreement and Common and
Preferred B Stock, upon execution and delivery will constitute,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as the
enforceability thereof may be limited by bankruptcy or other
laws
now or hereafter in effect relating to or affecting creditors'
rights
generally, (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to
equitable defenses and to the discretion of the court before
which
any proceedings therefore may be brought and (iii) that the
enforceability of the indemnification and contribution
provisions
of the respective agreements may be limited by the federal and
state securities laws and public policy.
6.6 Non-Contravention; Consents. The Company's
execution and
delivery of the Subscription Agreement and the incurrence of
the
obligations herein set forth, and the consummation of the
transactions contemplated herein will not (i) conflict with, or
constitute a breach of, or a default under, the certificate of
incorporation or by-laws of the Company, or any contract, lease
or other agreement or instrument to which the Company is a
party or in which the Company has a beneficial interest or by
which the Company is bound; (ii) violate any existing
applicable
law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or
business
(collectively, "Laws"), except where such violation(s) would
not,
singly or in the aggregate, result in a Material Adverse
Effect; or
(iii) have any effect on any permit, certification,
registration,
approval, consent, license or franchise (collectively,
"Permits")
<PAGE>
necessary for the Company to own or lease and operate any of
its
properties or to conduct its business, except for such effects
as
would not, singly or in the aggregate, have a Material Adverse
Effect. No consent, permit, approval, authorization, order
of, or
filing with, any court or governmental authority or any other
third
party is required to consummate the transactions contemplated
by
this Subscription Agreement.
6.7 Valid Issuances. The Common and Preferred B Stock,
when
issued and delivered in accordance with the terms of this
Subscription Agreement, will be duly and validly
issued. The
holders of the Common and Preferred B Stock will not be subject
to personal liability by reason of being such holders and will
not
be subject to the preemptive rights of any holders of any
security
of the Company or similar contractual rights granted by the
Company.
6.8 No Right to Purchase. The issuance of the Common
Stock will
not give any holder of any of the Company's outstanding shares
of Common Stock or warrants (i) the right to purchase any
additional shares of Common Stock or any other securities of
the
Company, or (ii) the right to purchase any securities at a reduced
price.
6.9 Conduct of Business; Compliance with Law. The
Company has
all requisite corporate power and authority, and has all
necessary
Permits, to own or lease its properties and conduct its
business,
except where the failure to have such Permits would not have a
Material Adverse Effect. The Company is not in violation of,
and
has been operating its business in compliance with all such
Permits, except where such noncompliance would not have a
Material Adverse Effect. The Company is in compliance with
all
Laws, except where noncompliance, singly or in the aggregate,
would not have a Material Adverse Effect. The Company is
not
in violation of any term or provision of its certificate of
incorporation or by-laws.
6.10 Title to Property; Insurance. The Company has good
and
marketable title to, or valid and enforceable leasehold estates
in,
all items of real and personal property (tangible and
intangible)
owned or leased by it, free and clear of all liens,
encumbrances,
claims, security interests, defects and restrictions of any
material
nature whatsoever, except such as would not, singly or in the
aggregate, have a Material Adverse Effect. The Company
has
adequately insured its properties against loss or damage by fire
or
other casualty and maintains such insurance in adequate
amounts.
6.11 Employee Matters. The Company has generally enjoyed
a
satisfactory employer-employee relationship with its employees
and is in compliance in all material respects with all federal,
state
and local laws and regulations respecting the employment of its
employees and employment practices, terms and conditions of
employment and wages and hours relating thereto. There are
no
pending investigations involving the Company by any government
Department of Labor or any other governmental agency
responsible for the enforcement of employment laws and
regulations. There is no unfair labor practice charge or
complaint
against the Company pending before a Labor Relations Board or
any strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or any
predecessor entity. No questions concerning representation
exist
<PAGE>
respecting the employees of the Company and no collective
bargaining agreement or modification thereof is
current
