Exhibit 10.2
 

SUBSCRIPTION AGREEMENT
 
THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is dated as of August 13, 2010,
by and between American Antiquities Incorporated, an Illinois corporation (the
“Company”), and ________________________________ (the “Subscriber”).
 
RECITALS:
 
WHEREAS, the Company and the Subscriber are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6), Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “1933 Act”).
 
WHEREAS, the Company has engaged in a private offering (the “Offering”) in which
the Subscriber agrees to purchase and the Company agrees to offer and sell (i)
its 8% Debenture (the “Debentures”) convertible into shares of its common stock
(the “Conversion Shares”) for aggregate gross proceeds of up to
$___________________ (the “Purchase Price”) and (ii) share purchase warrants
(the “Warrants”) in the form attached hereto as Exhibit A, to purchase shares of
the Company’s Common Stock (the “Warrant Shares”).
 
WHEREAS, the Company desires to enter into this Agreement to issue and sell the
Debentures and the Subscriber desires to purchase that principal amount of
Debentures set forth on the signature page hereto on the terms and conditions
set forth herein.
 
AGREEMENT:
 
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Subscriber hereby agree as
follows:
 
1.           Purchase and Sale of Debentures and Warrants.
 
(a)  Subject to the satisfaction or waiver of the terms and conditions of this
Agreement, on the Closing Date (as defined below), each Subscriber shall
purchase and the Company shall sell to each Subscriber the Debentures for the
portion of the Purchase Price designated on the signature pages hereto.

 
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(b)  On the Closing Date, the Company will issue and deliver Warrants to each
Subscriber.  One Warrant will be issued for each Conversion Share that would be
issued to the Subscriber if the Subscriber had converted its Debenture on the
Closing Date.  The exercise price to acquire a Warrant Share upon exercise of a
Warrant shall be $1.00.  The Warrants shall be exercisable until five years
after the issue date of the Warrants.

2.           Closing.  The issuance and sale of the Debentures and Warrants
shall occur on the closing date (the “Closing Date”), which shall be the date
that Subscriber funds representing the net amount due to the Company from the
Purchase Price of the Offering is transmitted by wire transfer or otherwise to
or for the benefit of the Company.  The consummation of the transactions
contemplated herein (the “Closing”) shall take place at the offices of The Crone
Law Group on such date and time as the Subscriber and the Company may agree
upon; provided, that all of the conditions set forth in Section 11 hereof and
applicable to the Closing shall have been fulfilled or waived in accordance
herewith.
 
3.           Subscriber Representations, Warranties and Covenants.  The
Subscriber hereby represents and warrants to and agrees with the Company that:

(a)           Organization and Standing of the Subscriber.   If such Subscriber
is an entity, such Subscriber is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.

(b)           Authorization and Power.   Such Subscriber has the requisite power
and authority to enter into and perform this Agreement and the other Transaction
Documents (as defined in Section 4(c)) and to purchase the Debentures being sold
to it hereunder.  The execution, delivery and performance of this Agreement and
the other Transaction Documents by such Subscriber and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate or partnership action, and no further consent or
authorization of such Subscriber or its Board of Directors, stockholders,
partners, members, as the case may be, is required.  This Agreement and the
other Transaction Documents have been duly authorized, executed and delivered by
such Subscriber and constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of such Subscriber enforceable against
such Subscriber in accordance with the terms thereof.

(c)           No Conflicts.   The execution, delivery and performance of this
Agreement and the other Transaction Documents and the consummation by such
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Subscriber’s
charter documents or bylaws or other organizational documents or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Subscriber is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
material adverse effect on such Subscriber).  Such Subscriber is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement and the other
Transaction Documents or to purchase the Debentures in accordance with the terms
hereof, provided that for purposes of the representation made in this sentence,
such Subscriber is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

 
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(d)           Acquisition for Investment. The Subscriber is acquiring the
Debentures solely for its own account for the purpose of investment and not with
a view to or for resale in connection with a distribution.  The Subscriber does
not have a present intention to sell the Debentures, nor a present arrangement
(whether or not legally binding) or intention to effect any distribution of the
Debentures to or through any person or entity.  The Subscriber acknowledges that
it is able to bear the financial risks associated with an investment in the
Debentures and that it has been given full access to such records of the Company
and the subsidiaries and to the officers of the Company and the subsidiaries and
received such information as it has deemed necessary or appropriate to conduct
its due diligence investigation and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company.  The Subscriber further acknowledges that the Subscriber
understands the risks of investing in development stage companies and that the
purchase of the Debentures involves substantial risks.

(e)           Information on Company.    Such Subscriber has been furnished with
or has had access to the EDGAR Website of the Commission and to the Company’s
filings made with the Commission available at the EDGAR website (hereinafter
referred to collectively as the “Reports”).  In addition, such Subscriber has
received in writing from the Company such other information concerning its
operations, financial condition and other matters as such Subscriber has
requested in writing, identified thereon as OTHER WRITTEN INFORMATION (such
other information is collectively, the “Other Written Information”), and
considered all factors such Subscriber deems material in deciding on the
advisability of investing in the Debentures.  Such Subscriber has relied on the
Reports and Other Written Information in making its investment decision.

(f)           Opportunities for Additional Information.  The Subscriber
acknowledges that the Subscriber has had the opportunity to ask questions of and
receive answers from, or obtain additional information from, the executive
officers of the Company concerning the financial and other affairs of the
Company.

 
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(g)           Information on Subscriber.   Subscriber is, and will be on the
Closing Date, an “accredited investor”, as such term is defined in Regulation D
promulgated by the Commission under the 1933 Act, is experienced in investments
and business matters, has made investments of a speculative nature and has
purchased shares or debt of United States publicly-owned companies in private
placements in the past and, with its representatives, has such knowledge and
experience in financial, tax and other business matters as to enable such
Subscriber to utilize the information made available by the Company to evaluate
the merits and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment.  Such
Subscriber has the authority and is duly and legally qualified to purchase and
own the Debentures.  Such Subscriber is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof.  The information
set forth on the signature page hereto regarding such Subscriber is accurate.

(h)           Compliance with 1933 Act.   Such Subscriber understands and agrees
that the Debentures have not been registered under the 1933 Act or any
applicable state securities laws, by reason of their issuance in a transaction
that does not require registration under the 1933 Act (based in part on the
accuracy of the representations and warranties of the Subscriber contained
herein), and that such Debentures must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration.  The Subscriber acknowledges that the
Subscriber is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”),
and that such person has been advised that Rule 144 permits resales only under
certain circumstances. The Subscriber understands that to the extent that Rule
144 is not available, the Subscriber will be unable to sell any Debentures
without either registration under the 1933 Act or the existence of another
exemption from such registration requirement.

(i)           Debentures Legend.  The Debentures shall bear the following or
similar legend:

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR  PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, OR
OTHERWISE.  NOTWITHSTANDING.”
 
 (j)   Communication of Offer.  The offer to sell the Debentures was directly
communicated to such Subscriber by the Company.  At no time was such Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.
 

 
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(k)           Restricted Securities.   Such Subscriber understands that the
Debentures have not been registered under the 1933 Act and such Subscriber will
not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
of the Debentures unless pursuant to an effective registration statement under
the 1933 Act, or unless an exemption from registration is
available.  Notwithstanding anything to the contrary contained in this
Agreement, such Subscriber may transfer (without restriction and without the
need for an opinion of counsel) the Debentures to its Affiliates (as defined
below) provided that each such Affiliate is an “accredited investor” under
Regulation D and such Affiliate agrees to be bound by the terms and conditions
of this Agreement. For the purposes of this Agreement, an “Affiliate” of any
person or entity means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such
person or entity.  Affiliate includes each Subsidiary of the Company.  For
purposes of this definition, “control” means the power to direct the management
and policies of such person or firm, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.

(l)           No Governmental Review.   Such Subscriber understands that no
United States federal or state agency or any other governmental or state agency
has passed on or made recommendations or endorsement of the Debentures or the
suitability of the investment in the Debentures nor have such authorities passed
upon or endorsed the merits of the offering of the Debentures.

(m)           Correctness of Representations.  Such Subscriber represents that
the foregoing representations and warranties are true and correct as of the date
hereof and, unless such Subscriber otherwise notifies the Company prior to the
Closing Date, shall be true and correct as of the Closing Date.  The Subscriber
understands that the Debentures are being offered and sold in reliance on a
transactional exemption from the registration requirement of Federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth herein in order to determine the applicability of such
exemptions and the suitability of the Subscriber to acquire the Debentures.
 
(n)           No Brokers.  Such Subscriber has taken any action which would give
rise to any claim by any person for brokerage commissions, finder’s fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.
 
4.           Company Representations and Warranties.  The Company represents and
warrants to and agrees with each Subscriber that:

 
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(a)  Due Incorporation.  The Company is a corporation or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has the requisite
corporate power to own its properties and to carry on its business as presently
conducted.  The Company is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
a Material Adverse Effect.  For purposes of this Agreement, a “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, or financial condition of the Company and its Subsidiaries
individually, or in the aggregate and/or any condition, circumstance, or
situation that would prohibit or otherwise materially interfere with the ability
of the Company to perform any of its obligations under this Agreement in any
material respect. For purposes of this Agreement, “Subsidiary” means, with
respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 30% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors or other managing body of such
entity, (ii) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership or limited liability
company or (iii) in the case of a trust, estate, association, joint venture or
other entity, the beneficial interest in such trust, estate, association
or other entity business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such entity.
 
(b)           Outstanding Stock.  All issued and outstanding shares of capital
stock and equity interests in the Company have been duly authorized and validly
issued and are fully paid and non-assessable.
 
(c)           Authority; Enforceability.  This Agreement, the Debentures, and
any other agreements delivered together with this Agreement or in connection
herewith (collectively, the “Transaction Documents”) have been duly authorized,
executed and delivered by the Company and are valid and binding agreements of
the Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity.  The Company has full corporate power and
authority necessary to enter into and deliver the Transaction Documents and to
perform its obligations thereunder.
 
(d)           Consents.  No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its Affiliates, the Over The Counter Bulletin Board (the
“Bulletin Board”) or the Company’s shareholders is required for the execution by
the Company of the Transaction Documents and compliance and performance by the
Company of its obligations under the Transaction Documents, including, without
limitation, the issuance and sale of the Debentures.  The Transaction Documents
and the Company’s performance of its obligations thereunder have been approved
by the Company’s Board of Directors.  No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority in the world, including without
limitation, the United States, or elsewhere is required by the Company or any
Affiliate of the Company in connection with the consummation of the transactions
contemplated by this Agreement, except as would not otherwise have a Material
Adverse Effect or the consummation of any of the other agreements, covenants or
commitments of the Company or any Subsidiary contemplated by the other
Transaction Documents. Any such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of filings, be
made within the time prescribed by law.

 
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(f)           No Violation or Conflict.  Assuming the representations and
warranties of the Subscriber in Section 3 are true and correct, neither the
issuance nor sale of the Debentures nor the performance of the Company’s
obligations under this Agreement and all other Transaction Documents entered
into by the Company relating thereto will:
 
(i)   violate, conflict with, result in a breach of, or constitute a default (or
an event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A) the articles or certificate
of incorporation, charter or bylaws of the Company, or (B) to the Company’s
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates; or
 
(ii)           result in the creation or imposition of any lien, charge or
encumbrance upon the Debentures or any of the assets of the Company or any of
its Subsidiaries.
 
(g)          The Debentures.  The Debentures upon issuance:
 
(i)           are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject only to restrictions upon transfer under
the 1933 Act and any applicable state securities laws;

(ii)          have been, or will be, duly and validly authorized and on the date
of issuance of the Conversion Shares, the Conversion Shares will be duly and
validly issued, fully paid and nonassessable;
 
(iii)         will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company or
rights to acquire securities of the Company; and
 
(iv)         will not subject the holders thereof to personal liability by
reason of being such holders.
 
(h)           Litigation.  There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates that would affect the execution by the Company or the
complete and timely performance by the Company of its obligations under the
Transaction Documents.  
 
(i)           Information Concerning Company.  The Reports contain all material
information relating to the Company and its operations and financial condition
as of their respective dates which information is required to be disclosed
therein.   The Reports, including the financial statements included therein do
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,
taken as a whole, not misleading in light of the circumstances and when made.

 
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(k)           No General Solicitation.  Neither the Company, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 1933 Act) in connection with the offer or sale
of the Debentures.

(l)           Reporting Company.  The Company is a publicly-held company subject
to reporting obligations pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended (the “1934 Act”).  Pursuant to the provisions of the 1934
Act, the Company has filed all reports and other materials required to be filed
thereunder with the Commission during the preceding twelve months.
 
(m)         Survival.  The foregoing representations and warranties shall
survive for a period of one year after the Closing Date.
 
(n)          No Brokers.  Neither the Company nor any Subsidiary has taken any
action which would give rise to any claim by any person for brokerage
commissions, finder’s fees or similar payments relating to this Agreement or the
transactions contemplated hereby.
 
5.           Registration Rights.
 
(a)   Registration Statement Requirements.  The Company shall file with the
Commission a Form S-1 registration statement (the “Registration Statement”) (or
such other form that it is eligible to use) in order to register all or such
portion of the Registrable Shares as permitted by the Commission (provided that
the Company shall use diligent efforts to advocate with the Commission for the
registration of all of the Registrable Shares) pursuant to Rule 415 for resale
and distribution under the 1933 Act as soon as practicable after the Closing
Date, and use its reasonable efforts to cause the Registration Statement to be
declared effective.  The Company will register not less than 100% of the
Conversion Shares in the Registration Statement (the “Registrable Shares”).
 
   (b)           Registration Procedures. If and whenever the Company is
required by the provisions of Section 5(a) to effect the registration of any
Registrable Shares under the 1933 Act, the Company will, as expeditiously as
possible:
 
(i)   prepare and file with the Commission a registration statement with respect
to such securities and use it commercially reasonable efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby;
 
(ii)  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 such
registration statement has been effective for the earlier of (a) a period of one
(1) year, and (b) the date on which the Registrable Shares can been sold by the
Subscriber pursuant to Rule 144 without volume restrictions;
 
 
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(iii)  notify the Subscriber within twenty-four hours of the Company’s becoming
aware that a prospectus relating thereto is required to be delivered under the
1933 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 or which
becomes subject to a Commission, state or other governmental order suspending
the effectiveness of the registration statement covering any of the Registrable
Shares. Each Subscriber hereby covenants that it will not sell any Registrable
Shares pursuant to such prospectus during the period commencing at the time at
which the Company gives such Subscriber notice of the suspension of the use of
such prospectus and ending at the time the Company gives such Subscriber notice
that such Subscriber may thereafter effect sales pursuant to the prospectus, or
until the Company delivers to such Subscriber or files with the Commission an
amended or supplemented prospectus.
 
(c)           Provision of Documents.  It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Shares of a particular Subscriber that
such Subscriber shall furnish to the Company in writing such information and
representation letters, including a completed form of the selling securityholder
questionnaire, with respect to itself and the proposed distribution by it as the
Company may reasonably request to assure compliance with federal and applicable
state securities laws.
 
(d)           Expenses.  All expenses incurred by the Company in complying with
Section 5, including, without limitation, all registration and filing fees,
printing expenses (if required), 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 FINRA, transfer taxes, and fees of
transfer agents and registrars, are called “Registration Expenses.” The Company
will pay all Registration Expenses in connection with any registration statement
described in Section 5.

 
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           (e)           Indemnification and Contribution.
 
(i)  In the event of a registration of any Registrable Shares under the 1933 Act
pursuant to Section 5, the Company will, to the extent permitted by law,
indemnify and hold harmless the Subscriber, each of the officers, directors,
agents, Affiliates, members, managers, control persons, and principal
shareholders of the Subscriber, each underwriter of such Registrable Shares
thereunder and each other person, if any, who controls such Subscriber or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Subscriber, or such
underwriter or controlling person may become subject under the 1933 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 Shares was registered under the 1933 Act pursuant
to Section 5, 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 in
light of the circumstances when made, and will subject to the provisions of
Section 5(e)(iii) reimburse the Subscriber, 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 shall not be liable to
the Subscriber to the extent that any such damages arise out of or are based
upon an untrue statement or omission made in any preliminary prospectus if (i)
the Subscriber failed to send or deliver a copy of the final prospectus
delivered by the Company to the Subscriber with or prior to the delivery of
written confirmation of the sale by the Subscriber to the person asserting the
claim from which such damages arise, and the final prospectus would have
corrected such untrue statement or alleged untrue statement or such omission or
alleged omission, or (ii) 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 Subscriber in writing specifically for use in such
registration statement or prospectus.
 
(ii)  In the event of a registration of any of the Registrable Shares under the
1933 Act pursuant to Section 5, each Subscriber severally but not jointly will,
to the extent permitted by law, indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of the 1933
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 1933 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 1933
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 Shares were registered under the 1933 Act
pursuant to Section 5, 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 any such loss, claim, damage,
liability or action, provided, however, that the Subscriber 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 Subscriber, as such,
furnished in writing to the Company by such Subscriber specifically for use in
such registration statement or prospectus.

 
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(iii)  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 5(e)(iii) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 5(e)(iii), except and only 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 5(e)(iii) 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
indemnifying party shall have reasonably concluded that there may be reasonable
defenses available to indemnified party 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, as a group, shall have the right to
select one separate counsel, reasonably satisfactory to the indemnified and
indemnifying party, 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.
 
6.      Closing Conditions.
 
(a)   The obligation hereunder of the Subscriber to acquire and pay for the
Debentures is subject to the satisfaction or waiver, at or before the Closing,
of each of the conditions set forth below. These conditions are for the
Subscriber’s sole benefit and may be waived by the Subscriber at any time in its
sole discretion.
  
(i)  The representations and warranties of the Company contained in this
Agreement shall have been true and correct on the date of this Agreement and
shall be true and correct on the Closing Date as if given on and as of the
Closing Date (except for representations given as of a specific date, which
representations shall be true and correct as of such date), and on or before the
Closing Date the Company shall have performed all covenants and agreements of
the Company contained herein or in any of the other Transaction Documents
required to be performed by the Company on or before the Closing Date; and
 
(ii) The Transaction Documents have been duly executed and delivered by the
Company to the Subscriber.
 
(b)  The obligation hereunder of the Company to issue and sell the Debentures to
the Purchaser is subject to the satisfaction or waiver, at or before the
Closing, of each of the conditions set forth below. These conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion.
 
 
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(i)   The representations and warranties of the Subscriber in this Agreement and
each of the other Transaction Documents to which the Subscriber is a party shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time, except for representations and
warranties that are expressly made as of a particular date, which shall be true
and correct in all material respects as of such date;
 
(ii)  The Purchase Price for the Debentures has been delivered to the Company;
and
 
(iii) The Transaction Documents to which the Subscriber is a party have been
duly executed and delivered by the Subscriber to the Company.
 
7.           Miscellaneous.
 
(a)  Notices.  All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:

If to the Company, to:
Pet Airways, Inc.
777 E. Atlantic Ave, #C2-264
Delray Beach, FL 33483

 
If to the Subscriber:
To the address and facsimile number listed on the signature page of this
Agreement

 
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(b)  Entire Agreement; Amendment. This Agreement and the other Transaction
Documents contain the entire understanding and agreement of the parties with
respect to the matters covered hereby and, except as specifically set forth
herein or in the Transaction Documents, neither the Company nor the Subscriber
makes any representations, warranty, covenant or undertaking with respect to
such matters and they supersede all prior understandings and agreements with
respect to said subject matter, all of which are merged herein. No provision of
this Agreement nor any of the Transaction Documents may be waived or amended
other than by a written instrument signed by the Company and the Subscriber, and
no provision hereof may be waived other than by a written instrument signed by
the party against whom enforcement of any such waiver is sought.
 
 (c)  Counterparts/Execution.  This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.  This Agreement
may be executed by facsimile transmission, PDF, electronic signature or other
similar electronic means with the same force and effect as if such signature
page were an original thereof.
 
(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 only in the state courts of New York or in the federal courts located in
the state and county of New York.  The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens.  The parties executing
this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the in personam
jurisdiction of such courts and hereby irrevocably 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.  Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection
with this Agreement or any other Transaction Documents by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by
law.
 
(e)    Consent to Jurisdiction.  The Company and the Subscriber hereby
irrevocably waive, and agree not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.

 
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(f)  Captions: Certain Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term “person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
 
(j)   Severability.  In the event that any term or provision of this Agreement
shall be finally determined to be superseded, invalid, illegal or otherwise
unenforceable pursuant to applicable law by an authority having jurisdiction and
venue, that determination shall not impair or otherwise affect the validity,
legality or enforceability: (i) by or before that authority of the remaining
terms and provisions of this Agreement, which shall be enforced as if the
unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
 
[Signature Pages Follow]
 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
  
Please acknowledge your acceptance of the foregoing Subscription Agreement
with _____________________________ by signing and returning a copy to the
Company whereupon it shall become a binding agreement.

PRINCIPAL AMOUNT OF DEBENTURES =   ______________  (the “Purchase Price”)

     
Signature
 
Signature (if purchasing jointly)
           
Name Typed or Printed
 
Name Typed or Printed
           
Entity Name
 
Entity Name
           
Address
 
Address
           
City, State and Zip Code
 
City, State and Zip Code
           
Telephone - Business
 
Telephone - Business
           
Telephone – Residence
 
Telephone – Residence
           
Facsimile – Business
 
Facsimile - Business
           
Facsimile – Residence
 
Facsimile – Residence
           
Tax ID # or Social Security #
 
Tax ID # or Social Security #

Name in which securities should be issued:   _________________________________
 
Dated:                         __, 2010
 
 
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This Subscription Agreement is agreed to and accepted as of              __,
2010.
 
AMERICAN ANTIQUITIES INCORPORATED
 
By:  
   
Name:
 
Title:

 
 
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