Document:

RealSource Residential 8-K 

 

EXHIBIT 4.2

 

NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

 

Form of

REALSOURCE RESIDENTIAL, INC.

 

COMMON STOCK PURCHASE WARRANT

 

	
Warrant No. __________

	
Original Issue Date:  __________, 2013

	
Initial Holder:  __________

	
No. of Shares Subject to Warrant: __________

	  	
Exercise Price Per Share: $2.00

	 	    Expiration Time:  5:00 p.m., New York time, on __________, 2018

 

   RealSource Residential, Inc., a Nevada corporation (the “Company”), hereby certifies that, for value received, the Initial Holder shown above, or its permitted registered assigns (the “Holder”), is entitled to purchase from the Company up to the number of shares of its common stock, par value $0.001 per share (the “Common Stock”), shown above (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at the initial exercise price per share shown above (the “Exercise Price”), at any time and from time to time on or after the original issue date indicated above (the “Original Issue Date”) and through and including the expiration time shown above (the “Expiration Time”), and subject to the following terms and conditions:

 

This Warrant is being issued pursuant to a Subscription Agreement, dated __________, 2013 (the “Subscription Agreement”), by and among the Company and the Initial Holder.

 

1.             Definitions.  In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Subscription Agreement.

 

2.             List of Warrant Holders.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder (which shall include the Initial Holder or, as the case may be, any registered assignee to which this Warrant is permissibly assigned hereunder from time to time).  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

3.             List of Transfers; Restrictions on Transfer. The Company shall register any transfer of all or any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Warrant that the Holder has in respect of this Warrant.

 

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4.             Exercise and Duration of Warrant.

 

(a)            All or any part of this Warrant shall be exercisable by the registered Holder in any manner permitted by this Section 4 at any time and from time to time on or after the Original Issue Date and through and including the Expiration Time.  At the Expiration Time, the portion of this Warrant not exercised prior thereto shall be and become void and of no value and this Warrant shall be terminated and shall no longer be outstanding.

 

(b)           The Holder may exercise this Warrant by delivering to the Company: (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), completed and duly signed, and (ii) payment by wire transfer of immediately available funds to an account designated by the Company of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised.  The Holder shall be required to deliver the original Warrant in order to effect an exercise hereunder.  The date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.”  Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

(c)           The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant pursuant to the terms hereof.

 

5.            Delivery of Warrant Shares.

 

(a)           Upon exercise of this Warrant, the Company shall promptly (but in no event later than ten (10) Trading Days after the Exercise Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise. The Holder, or any Person permissibly so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date.  If as of the time of exercise the Warrant Shares constitute restricted or control securities, the Holder, by exercising, agrees not to resell them except in compliance with all applicable securities laws.

 

(b)           To the extent permitted by law, the Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

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(c)           If the Company fails to cause its transfer agent to transmit to the Holder a certificate or the certificates (either physical or electronic) representing the Warrant Shares pursuant to the terms hereof by applicable delivery date, then, the Holder will have the right to rescind such exercise.

 

6.            Charges, Taxes and Expenses. Issuance and delivery of certificates for Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or the Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

7.            Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

 

8.            Reservation of Warrant Shares.  The Company covenants that it will at all times us its best efforts to reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares that are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

 

9.            Certain Adjustments to Exercise Price.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

(a)           Stock Splits and Dividends. If the outstanding shares of Common Stock shall be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in respect of Common Stock, the Exercise Price in effect immediately prior to such subdivision or at the record date of such dividend shall simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced.  If outstanding shares of Common Stock shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased.  When any adjustment is required to be made in the Exercise Price, the number of shares of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Exercise Price in effect immediately prior to such adjustment, by (ii) the Exercise Price in effect immediately after such adjustment.

 

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(b)           Merger Sale, Reclassification, etc. In case of any (i) consolidation or merger (including a merger in which the Company is the surviving entity), (ii) sale or other disposition of all or substantially all of the Company’s assets or distribution of property to shareholders (other than distributions payable out of earnings or retained earnings), or reclassification, change or conversion of the outstanding securities of the Company or of any reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such case the holder of this Warrant, upon the exercise hereof at any time thereafter shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise hereof prior to such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization, the stock or other securities or property to which such holder would have been entitled upon such consummation if such holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Section 9(a), and in each such case, the terms of this Section 9 shall be applicable to the shares of stock or other securities properly receivable upon the exercise of this Warrant after such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization.

 

(c)           No Net-Cash Settlement.  In no event will any Holder of this Warrant be entitled to receive a net-cash settlement in lieu of physical settlement in shares of Common Stock, regardless of whether any of such holder’s Warrant Shares are registered pursuant to an effective registration statement.

 

10.            No Fractional Shares.  No fractional Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing price of one Warrant Share as reported by the applicable trading market on the Exercise Date or round up such fractional share to a whole number.

 

11.            Notices.  Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be delivered in accordance with the procedures set forth in the Subscription Agreement.

 

10.            Warrant Agent. The Company shall serve as warrant agent under this Warrant.  At any time upon written notice to the Holder, the Company may appoint a new warrant agent.   Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act.  Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

11.            Miscellaneous.

 

(a)           This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.  Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing signed by the Company and the holders of a majority in interest of the Warrants of the Company voting as a single class, or their successors and assigns.

 

(b)           All questions concerning the governing law, construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Subscription Agreement.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Subscription Agreement.

 

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(c)           Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be shall be settled by arbitration in accordance with the provisions of Section 5(e) of the Subscription Agreement.  EACH PARTY HERETO (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(d)           The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

 

(e)           In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

(f)            Prior to exercise of this Warrant, the Holder hereof shall not, by reason of being a Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

 

(g)           No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

	 	REALSOURCE RESIDENTIAL, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

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REALSOURCE RESIDENTIAL, INC.

 

EXERCISE NOTICE

 

Ladies and Gentlemen:

 

(1)           The undersigned hereby elects to exercise the above-referenced Warrant with respect to [                          ] shares of Common Stock.  Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.

 

(2)           The holder shall pay the sum of $ ______________      to the Company in accordance with the terms of the Warrant.

 

(3)           Pursuant to this Exercise Notice, the Company shall deliver to the Holder ________________ Warrant Shares determined in accordance with the terms of the Warrant.

 

A certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)           Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

 

	
Dated:

	  	  	
HOLDER:

	  	  	  
	  	  	  
	  	  	
Print name

	  	  	  
	  	  	
By:

	  
	  	  	  	  
	  	  	
Title:

	  
	  	  	  	  

 

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REALSOURCE RESIDENTIAL, INC.

 

FORM OF ASSIGNMENT

To be completed and signed only upon transfer of Warrant

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _________________ the right represented by the within Warrant to purchase _________________ shares of Common Stock to which the within Warrant relates and appoints __________________ attorney to transfer said right on the books of the Company with full power of substitution in the premises.

 

	
Dated:

	  	  	
TRANSFEROR:

	  	  	  
	  	  	  
	  	  	
Print name

	  	  	  
	  	  	
By:

	  
	  	  	  	  
	  	  	
Title:

	  
	  	  	  	  
	  	  	  	  
	  	  	
TRANSFEREE:

	  	  	  
	  	  	  
	  	  	
Print name

	  	  	  
	  	  	
By:

	  
	  	  	  	  
	  	  	
Title:

	  
	
WITNESS:

	  	  	  
	  	  	
Address of Transferee:

	  	  	  	  
	
Print name

	  	  
	  	  	  	  
	  	  	  

    	8RealSource Residential 8-K 

 

EXHIBIT 10.1

 

Form of

 SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is dated as of _______________, 2013, by and between RealSource Residential, Inc., a Nevada corporation (the “Company”), and the subscriber signatory hereto (“Subscriber”).

WHEREAS, the Company and Subscriber are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the provisions of Section 4(a)(2) and/or Rule 506(b) of 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 “Act”); and

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to Subscriber, and Subscriber shall purchase the Company, Units of the Company (the “Units”), with each Unit consisting of: (i) a $10,000 face value 12% Series A Senior Unsecured Convertible Promissory Note of the Company (collectively, the “Notes”) and (ii) one detachable Common Stock Purchase Warrant (collectively, the “Warrants”) to purchase 10,000 shares of common stock, par value $0.001, of the Company (“Common Stock”) at an exercise price of $2.00 per share, at a purchase price of $10,000 for each Unit (the “Purchase Price”); and

 

WHEREAS, the offering of the Units (the “Offering”) is being conducted on a “best efforts/no minimum” basis with respect to 200 Units for an aggregate of $2,000,000 maximum being offered, and the Company shall have the option to accept up to an additional $250,000 (25 Units) above the maximum being offered if the Offering is oversubscribed;

WHEREAS, this Offering is being conducted pursuant to an Executive Summary/Risk Facotr Booklet describing the Offering (as the same may be amended or supplemented from time to time, the “Executive Summary”); and

WHEREAS, the Notes, the Warrants, and the shares of Common Stock issuable upon conversion of the Notes and the exercise of the Warrants (the “Conversion Shares”) are collectively referred to herein as the “Securities”.

NOW, THEREFORE, in consideration of the premises above, which are incorporated in this Agreement as if fully set forth below, and the mutual covenants and other agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Subscriber hereby agree as follows:

1.             Acceptance and Rejection; Closing; Conditions.

(a)           Acceptance or Rejection.

 

(i)            Upon execution, the Subscriber’s obligation to purchase the Units shall be irrevocable, and the Subscriber shall be legally bound to purchase the Units subject to the terms set forth in this Agreement.

 

(ii)           The Subscriber understands and agrees that the Company reserves the right to reject this subscription for the Units, in whole or in part, at any time prior to the closing (the “Closing”) of the purchase and sale of the Units for any or no reason, notwithstanding the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s subscription.

 

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(iii)          In the event of rejection of this subscription by the Company in accordance with Section 1(a)(ii), or the sale of the Units is not consummated for any reason, this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription shall thereafter have no force or effect, and the Company shall promptly return or cause to be returned to the Subscriber the purchase price remitted to the Company, without interest thereon or deduction therefrom.

 

(b)          Closing.  Each Closing shall take place at the offices of Ellenoff Grossman & Schole LLP, 150 E. 42nd Street, New York, NY 10017, or such other place as determined by the Company (including remotely via deliver of electronic documents).  The initial Closing shall take place on a Business Day promptly following the satisfaction of the conditions set forth in Section 1(c) below.  Each subsequent Closing shall take place at such times as determined by the Company (each closing date referred to as a “Closing Date”).  As used herein, “Business Day” shall mean from the hours of 9:00 a.m., Eastern time, through 5:00 p.m., Eastern time, of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed.

 

(c)           Closing Conditions.  The Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the following conditions precedent on or before the date such subscription is accepted (any or all of which may be waived by the Company and the Subscriber in his, her or its sole discretion):

 

(i)            On the Closing Date, no legal, administrative or regulatory action, suit or proceeding shall be pending which seeks to restrain or prohibit the transactions contemplated by this Agreement.

 

(ii)           The Board of Directors of the Company shall have approved the issuance of the Securities pursuant to this Agreement in accordance with the applicable laws of the jurisdiction of the Company’s incorporation and expressly approved the assumption of this Agreement.

 

(iii)          The representations and warranties of Subscriber 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 made on the Closing Date.

 

(d)           Subscription.  Subject to the conditions set forth in Section 1(c) hereof, the Subscriber hereby subscribes for and agrees to purchase the number of Units indicated on the signature page hereof on the terms and conditions described herein.  The minimum number of Units that may be purchased by the Subscriber is one Unit.  Subscriptions for lesser amounts may be accepted at the sole discretion of the Company.

 

(e)           Purchase of Securities.  The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Units shall be $10,000 per Unit, for an aggregate purchase price as set forth on the signature page hereto (the “Aggregate Purchase Price”).  The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment for the Units subscribed for hereunder, payable in United States dollars, by check or wire transfer to an account identified by the Company.  The Subscriber understands and agrees that, subject to the terms of this Agreement and applicable laws, by executing this Agreement, he, she or it is entering into a binding agreement.

 

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2.             Representations and Warranties of Subscriber.  Subscriber represents and warrants to the Company as follows:

(a)           Subscriber acknowledges and understands that the Company is a start-up venture with very little current capital resources.  Therefore, an investment in the Company involves a very high degree of risk and should not be undertaken if the Subscriber cannot afford to lose the Subscriber’s entire investment in the Company.  The Subscriber acknowledges and confirms that the Subscriber can bear the economic risk of the purchase of the Securities, including a total loss of the Subscriber’s investment.  Subscriber acknowledges and agrees that such Subscriber’s investment in the Company is reasonable in relation to Subscriber’s net worth and financial needs.

(b)           Subscriber acknowledges and understands that the Company is not presently current in its filings with the Securities and Exchange Commission (the “SEC”) and, therefore, Subscriber does not have access to current information regarding the Company.

(c)           Subscriber is an “accredited investor” as defined by Rule 501 under the Act, and has such knowledge and experience in financial and business matters that Subscriber is capable of evaluating the merits and risks of Subscriber’s investment in the Securities, of making an informed investment decision with respect thereto, and has the ability and capacity to protect Subscriber’s interests.

(d)           Subscriber understands that the Securities are not presently registered and other than as set forth herein the Company has no obligation to register the Securities or assist the Subscriber in obtaining an exemption from registration.  Subscriber understands that the Securities will not be registered under the Act on the ground that the issuance thereof is exempt under Section 4(a)(2) of the Act and/or Regulation D as a transaction by an issuer not involving any public offering and that, in the view of the SEC, the statutory basis for the exception claimed would not be present if any of the representations and warranties of Subscriber contained in this Subscription Agreement or those of other purchasers of the Securities are untrue or, notwithstanding the Subscriber’s representations and warranties, the Subscriber currently has in mind acquiring any of the Securities for resale upon the occurrence or non-occurrence of some predetermined event.

(e)           Subscriber is purchasing the Securities subscribed for hereby for investment purposes and not with a view to distribution or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part thereof for any particular price, or at any particular time, or upon the happening of any particular event or circumstance, except selling, transferring, or disposing the Securities made in full compliance with all applicable provisions of the Act, the rules and regulations promulgated by the SEC thereunder, and applicable state securities laws; and that an investment in the Securities is not a liquid investment.

(f)            Subscriber acknowledges and understands that there exists no public market for the Securities, that no such public market may develop in the future, that the Securities, when issued, will be “restricted securities” and as a result, Subscriber acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from such registration is available.  Subscriber further acknowledges and understands that no active market exists for the Common Stock and that the Common Stock is only quoted and very sporadically traded on the OTC Market.  Subscriber is aware of the provisions of Rule 144 promulgated under the Act which permit resales of common stock purchased in a private placement subject to certain limitations and to the satisfaction of certain conditions provided for thereunder, including, among other things, the existence of a public market for the common stock, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of shares of common stock being sold during any three-month period not exceeding specified limitations.

 

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(g)           Subscriber acknowledges that Subscriber has had the opportunity to ask questions of, and receive answers from the Company or any authorized person acting on their behalf concerning the Company and its proposed business plan (including, without limitation, as described in the Executive Summary) and to obtain any additional information, to the extent possessed by the Company (or to the extent it could have been acquired by the Company without unreasonable effort or expense) necessary to verify the accuracy of the information received by Subscriber.  In connection therewith, Subscriber acknowledges that Subscriber has had the opportunity to discuss the Company’s business, management and financial affairs with the Company’s management or any authorized person acting on its behalf.  Subscriber has received and reviewed all the information concerning the Company and the Securities, both written and oral, that Subscriber desires (including, without limitation, the Executive Summary).  Without limiting the generality of the foregoing, Subscriber has been furnished with or has had the opportunity to acquire, and to review all information, both written and oral, that Subscriber desires with respect to the Company’s business, management, financial affairs, prospects and risks.  In determining whether to make this investment, Subscriber has relied solely on Subscriber’s own knowledge and understanding of the Company and its business based upon Subscriber’s own due diligence investigations and the information (if any) furnished pursuant to this paragraph.

(h)           Subscriber has all requisite legal and other power and authority to execute and deliver this Subscription Agreement and to carry out and perform Subscriber’s obligations under the terms of this Subscription Agreement.  This Subscription Agreement constitutes a valid and legally binding obligation of Subscriber, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other general principals of equity, whether such enforcement is considered in a proceeding in equity or law.

(i)            Subscriber has carefully considered and has discussed with the Subscriber’s legal, tax, accounting and financial advisors, to the extent the Subscriber has deemed necessary, the suitability of this investment and the transactions contemplated by this Subscription Agreement for the Subscriber’s particular federal, state, local and foreign tax and financial situation and has independently determined that this investment and the transactions contemplated by this Subscription Agreement are a suitable investment for the Subscriber.  Subscriber has relied solely on such advisors and not on any statements or representations of the Company or any of its agents.  Subscriber understands that Subscriber (and not the Company) shall be responsible for Subscriber’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Subscription Agreement.

(j)            This Subscription Agreement does not contain any untrue statement of a material fact or omit any material fact concerning Subscriber.

(k)           There are no actions, suits, proceedings or investigations pending against Subscriber or Subscriber’s assets before any court or governmental agency (nor, to Subscriber’s knowledge, is there any threat thereof) which would impair in any way Subscriber’s ability to enter into and fully perform Subscriber’s commitments and obligations under this Subscription Agreement or the transactions contemplated hereby.

(l)            The execution, delivery and performance of and compliance with this Subscription Agreement and the issuance of the Securities will not result in any violation of, or conflict with, or constitute a default under, any of Subscriber’s articles of incorporation, by-laws, operating agreement, partnership agreement, or trust agreement, if applicable, or any agreement to which Subscriber is a party or by which it is bound, nor result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of Subscriber or the Securities.  If Subscriber is an individual, Subscriber has legal capacity to execute and deliver this Subscription Agreement.

 

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(m)          Subscriber recognizes that no federal, state or foreign agency has reviewed, recommended or endorsed the purchase of the Securities or any facts or circumstances related thereto.

(n)           Subscriber is aware that the Company is a recently-formed development stage company with no operations and no commitments for any additional capital that may be needed in the future.  Subscriber acknowledges that it has experience in evaluating the risks of investing in early stage development companies.

(o)           Subscriber understands that any and all certificates representing the Securities and any and all securities issued in replacement thereof or in exchange therefor shall bear the following legend or one substantially similar thereto, which Subscriber has read and understands:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”

In addition, the certificates representing the Securities, and any and all securities issued in replacement thereof or in exchange therefor, shall bear such legend as may be required by the securities laws of (or based on) the jurisdiction in which Subscriber resides.

(p)           Because of the legal restrictions imposed on resale, Subscriber understands that the Company shall have the right to note stop-transfer instructions in its stock transfer records, and Subscriber has been informed of the Company’s intention to do so.  Any sales, transfers, or other dispositions of the Securities by Subscriber, if any, will be made in compliance with the Securities Act and all applicable rules and regulations promulgated thereunder.

(q)           Subscriber represents that (i) Subscriber has (and could be reasonably assumed to have) the ability and capacity to protect his/her/its interests in connection with this investment; or (ii) Subscriber has a pre-existing personal or business relationship with either the Company or any affiliate thereof of such duration and nature as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of the Company or such affiliate and is otherwise personally qualified to evaluate and assess the risks, nature and other aspects of this investment.

(r)            Subscriber further represents that the address of Subscriber set forth below is his/her principal residence (or, if Subscriber is a company, partnership or other entity, the address of its principal place of business); that Subscriber is purchasing the Securities for Subscriber’s own account and not, in whole or in part, for the account of any other person; and that Subscriber has not formed any entity, and is not an entity formed, for the purpose of purchasing the Securities.

    	5

    	 

    
 

(s)           Subscriber understands that the Company shall have the unconditional right to accept or reject this subscription, in whole or in part, for any reason or without a specific reason, in the sole and absolute discretion of the Company (even after receipt and clearance of Subscriber’s funds).  This Subscription Agreement is not binding upon the Company until accepted in writing by an authorized officer of the Company.  In the event that this subscription is rejected, then Subscriber’s subscription funds (to the extent of such rejection) will be promptly returned in full without interest thereon or deduction therefrom.

(t)           Subscriber has not been furnished with any oral representation or oral information in connection with or in any way relating to the Offering or the business or prospects of the Company that is not contained in, or is in any way contrary to or inconsistent with, statements made in this Subscription Agreement or the disclosures contained in the Executive Summary.

(u)           Subscriber represents that Subscriber is not subscribing for the Securities as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over the Internet, television or radio or presented at any seminar or meeting or any public announcement (including via social media) or filing of or by the Company or any of their affiliates, agents or representatives.

            (v)           Subscriber has carefully read and agrees to each of the terms and provisions of this Subscription Agreement.

(w)          Subscriber acknowledges that no representations or warranties have been made to Subscriber by the Company, or any officer, employee, agent, affiliate or subsidiary of the Company, other than the representations of the Company contained herein, and in subscribing for the Securities the Subscriber is not relying upon any representations other than those contained in this Subscription Agreement.

(x)           Subscriber represents and warrants that Subscriber has kept and will keep confidential any information made available in connection with its investigation of the Company and its intended business and agrees that all such information shall be kept in confidence by the Subscriber and neither be used by the Subscriber for the Subscriber’s personal benefit (other than in connection with this Subscription) nor disclosed to any third party for any reason (other than Subscriber’s legal and tax advisors) notwithstanding that the Subscriber’s Subscription may not be accepted by the Company.  Subscriber will not undertake any purchases of the Company’s securities while in possession of material non-public information regarding the Company (it being agreed and acknowledged by the Subscriber that the contents of the Executive Summary constitute material non-public information within the meaning of the U.S. federal securities laws).

 

(y)           If the Subscriber is a corporation, partnership, limited liability company, trust, or other entity, the person executing this Subscription Agreement hereby represents and warrants that the above representations and warranties shall be deemed to have been made on behalf of such entity and the Subscriber has made the same after due inquiry to determine the truthfulness of such representations and warranties.

(z)           If the Subscriber is a corporation, partnership, limited liability company, trust, or other entity, it represents that: (i) it is duly organized, validly existing and in good standing in its jurisdiction of incorporation or organization and has all requisite power and authority to execute and deliver this Subscription Agreement and purchase the Securities as provided herein; (ii) its purchase of the Securities will not result in any violation of, or conflict with, any term or provision of the charter, by-laws or other organizational documents of Subscriber or any other instrument or agreement to which the Subscriber is a party or is subject; (iii) the execution and delivery of this Subscription Agreement and Subscriber’s purchase of the Securities has been duly authorized by all necessary action on behalf of the Subscriber; (iv) all of the documents relating to the Subscriber’s subscription to the Securities have been duly executed and delivered on behalf of the Subscriber and constitute a legal, valid and binding agreement of the Subscriber; and (v) has not been organized for the specific purpose of purchasing the Securities (unless all beneficial owners of the Subscriber are “accredited investors”) and is not prohibited from so purchasing the Securities.

 

    	6

    	 

    
 

 

3.             Representations and Warranties of the Company.  The Company represents and warrants to Subscriber as follows:

(a)           The Company is duly organized and validly existing as corporations in good standing under the laws of its state of incorporation.

(b)           The Company has the corporate power and authority to enter into, deliver and perform this Subscription Agreement and the agreements to be entered into therewith.

(c)           All necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance of this Subscription Agreement by the Company, and the issuance and sale of the Securities to be sold by the Company pursuant to this Subscription Agreement.

(d)           This Subscription Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

(d)           The Securities.  The Securities 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 Securities Act and any applicable state securities laws;

(ii)           have been, or will be, duly and validly authorized and on their respective dates of issuance of the Units and the Conversion Shares, such Units and Conversion Shares will be duly and validly issued, fully paid and non-assessable;

(iii)          will not subject the holders thereof to personal liability by reason of being such holders; and

(iv)          assuming the representations and warranties of Subscriber as set forth in Section 2 hereof are true and correct, will not result in a violation of Section 5 under the Securities Act.

(e)           No General Solicitation.  Neither the Company, 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 Securities Act) in connection with the offer or sale of the Securities.

(f)           Private Placement.  Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to Subscriber as contemplated hereby.

 

    	7

    	 

    
 

 

4.             Indemnification; Insider Trading Prohibition.

(a)           Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company and its officers, directors, employees, agents, counsel, control persons and principal stockholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Company or any such person which results, arises out of or is based upon (i) any material misrepresentation by Subscriber or breach of any representation or warranty by Subscriber in this Agreement or in any Exhibits or Schedules attached hereto in any transaction document, or other agreement delivered pursuant hereto or in connection herewith, now or after the date hereof; or (ii) after any applicable notice and/ or cure periods, any breach or default in performance by Subscriber of any covenant or undertaking to be performed by Subscriber hereunder, or any other agreement entered into by Subscriber and the Company relating hereto.

(b)           If any action shall be brought against an indemnified party in respect of which indemnity may be sought pursuant to this Agreement, the indemnified shall promptly notify the indemnifying party in writing, and indemnifying party shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the indemnified party.  Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of indemnified party except to the extent that (i) the employment thereof has been specifically authorized by indemnifying party in writing, (ii) the indemnifying party has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the indemnifying party and the position of indemnified party, in which case the indemnifying party shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The indemnifying party will not be liable to the indemnified party under this Agreement (y) for any settlement by an indemnified party effected without the indemnifying party’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to the indemnified party’s breach of any of the representations, warranties, covenants or agreements made by the indemnified party in this Agreement.

(c)           Until the public disclosure by the Company of the Offering, the Subscriber hereby agrees to (i) refrain from (a) engaging in any transactions with respect to the publicly traded capital stock of the Company or securities exercisable or convertible into or exchangeable for any shares of capital stock of the Company and (b) entering into any transaction which would have the same effect, or entering into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the publicly traded capital stock capital stock of the Company and (ii) indemnify and hold harmless the Company and its officers, directors, employees, agents, counsel, control persons and principal stockholders against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any violation of this Section 4(c) by the Subscriber.

(d)           The Subscriber, whether in its own capacity or through a representative, agent or affiliate, agrees that it will not enter into or effect any “short sales” of any publicly traded capital stock of the Company or any hedging, stabilization or other similar transaction, whether on a U.S. domestic exchange, Over-the-Counter Bulletin Board or the Pink Sheets or any foreign exchange for a period commencing on the issuance of the Securities and ending one year after any registration statement covering the shares of Conversion Shares has been declared effective by the SEC.

 

    	8

    	 

    
 

 

(e)           The Subscriber agrees to indemnify and hold harmless the Company and its officers, directors, employees, agents, counsel, control persons and principal stockholders from and against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty (or any omission which results in any representation or warranty being false) by the Subscriber, or the Subscriber’s breach of, or failure to comply with, any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to the Company and its officers, directors, employees, agents, counsel, control persons and principal stockholders in connection with the Offering.

 

5.             Miscellaneous.

(a)           Notices.  Any notice or other document required or permitted to be given or delivered to the parties hereto shall be in writing and sent: (i) by fax if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid) or (c) by a recognized overnight delivery service (with charges prepaid).

If to the Company, at:

 

RealSource Residential, Inc.

2089 Fort Union Blvd.

Salt Lake City, UT  84121

Fax: (801) 563-3937

Attention: President

If to the Subscriber, at its address set forth on the signature page to this Subscription Agreement, or such other address as Subscriber shall have specified to the Company in writing.

(b)           Entire Agreement; Assignment.  This Agreement represents the entire agreement between the parties hereto with respect to the subject matter hereof and may be terminated, modified, waived or amended only by a writing executed and delivered by both parties.  Neither the Company nor Subscriber has relied on any representations not contained or referred to in this Agreement.   No right or obligation of a party shall be assigned or otherwise transferred without prior notice to and the written consent of the other party.  Any assignment or transfer in violation of the foregoing shall be null and void.

(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 Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Nevada, as such laws are applied by the Nevada courts within the borders of such state, except with respect to the conflicts of law provisions thereof, and shall be binding upon the Subscriber and the Subscriber’s heirs, estate, legal representatives, successors and permitted assigns and shall inure to the benefit of the Company and their respective successors and assigns.

 

    	9

    	 

    
 

 

(e)           Arbitration.   Except as otherwise provided in Section 6(f) below, a dispute between the parties with respect to the provisions set forth herein shall be settled by arbitration in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association (the “AAA Rules”) by an arbitrator who is mutually agreeable to the parties to such dispute.  If the parties are unable to agree upon an arbitrator, one arbitrator shall be selected in accordance with the AAA Rules and any judgment upon the award rendered by such arbitrator may be entered in any court of competent jurisdiction.  All proceedings in any such arbitration shall be conducted in Salt Lake City, Utah.  Each party to such arbitration shall be responsible for their respective costs and expenses associated therewith.  Upon a final determination by the arbitrator with respect to the dispute, the arbitrator shall notify the parties thereto in writing.  Jurisdiction of such arbitrator shall be exclusive to the disputes arising out of or relating to this Agreement between the parties.  The parties to such dispute shall not have the right to appeal such determination or to otherwise submit a dispute hereunder to a court of law, except as otherwise provided in Section 6(f) below.  Each of the parties expressly agrees and acknowledges that all disputes between the parties are subject to the alternative dispute resolution procedures of this Section 6(e), except as otherwise provided in Section 6(f) below.  EACH PARTY HERETO (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(f)            Specific Enforcement, Consent to Jurisdiction.  The Company and Subscriber acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. Any action brought by either party against the other to compel arbitration or for specific enforcement or injunction relief shall be brought only in the state courts of Salt Lake City, Utah or in the federal courts located in the Salt Lake City, Utah.  The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any such action instituted under this Section 6(f) 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 with respect to any such actions.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding under this Section 6(f) 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.  The Company and 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 such suit, action or proceeding is improper.

(g)           Drafting.  This Agreement shall not be construed for or against a party based upon authorship.

(h)           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 or any other legal entity and a government or any department or agency thereof.

 

    	10

    	 

    
 

 

(i)            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.

(j)            No Assignment.  Subscriber agrees not to transfer or assign this Subscription Agreement or any of Subscriber’s interest herein and further agrees that the transfer or assignment of the Securities acquired pursuant hereto shall be made only in accordance with all applicable laws.

(k)           No Revocation.  Subscriber agrees that Subscriber cannot cancel, terminate, or revoke this Subscription Agreement or any agreement of Subscriber made hereunder, and this Subscription Agreement shall survive the death or legal disability of Subscriber and shall be binding upon Subscriber’s heirs, executors, administrators, successors, and permitted assigns.

(l)            Counsel.  Subscriber acknowledges that it has been advised and has had the opportunity to consult with Subscriber’s own attorney and other advisors regarding this Subscription Agreement and Subscriber has done so to the extent that Subscriber deems appropriate.

 

[Signature Page Follows]

 

    	11

    	 

    
 

 

Signature Page for Individuals:

IN WITNESS WHEREOF, Subscriber agrees to purchase the Units indicated below and has caused this Subscription Agreement to be executed as of the date indicated below.

	  	  	  	  	  	  	  	  	 
	  	
$

	  	  	  	 
	  	
Purchase Price (face value of Note)

	  	
Number of Units

	 
	  	  	  	  	  	 
	  	  	  	  	 
	  	
Print or Type Name

	  	
Print or Type Name (Joint-owner)

	 
	  	  	  	  	  	 
	  	  	  	  	 
	  	
Signature

	  	
Signature (Joint-owner)

	 
	  	  	  	  	  	 
	  	  	  	  	 
	  	
Date

	  	
Date (Joint-owner)

	 
	  	  	  	  	  	 
	  	  	  	  	 
	  	
Social Security Number

	  	
Social Security Number (Joint-owner)

	 
	  	  	  	  	  	 
	  	  	  	  	 
	  	
Address

	  	
Address (Joint-owner)

	 
	  	  	  	  	  	 
	  	  	  	  	  	 
	  	______Joint Tenancy	  	______Tenants in Common	 

    	S-1

    	 

    
 

Signature Page for Partnerships, Corporations or Other Entities:

IN WITNESS WHEREOF, Subscriber has caused this Subscription Agreement to be executed as of the date indicated below.

	  	  	  	  	  	  	  	  	  
	
$

	 	  	  	  	  	  	  
	  	Total Purchase Price	  	  	  	
Number of Units

	  	  
	  	(face value of Note)	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	 	  	  	  	  	  
	Print or Type Name of Entity	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	  	  
	Address	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	 	  	  	  
	Taxpayer I.D. No. (if applicable)	  	  	  	
Date

	  	  
	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  	  
	
By:

	 	  	  	  	  
	
Signature:

	  	  	  	  
	Name:	  	  	  	
Print or Type Name and Indicate

	  	  
	Title:	  	  	  	
Title or Position with Entity

	  	  

    	S-2

    	 

    
 

Acceptance:

IN WITNESS WHEREOF, the Company has caused this Subscription Agreement to be executed, and the foregoing subscription accepted, as of the date indicated below, as to ________ Units.

 

	 	
REALSOURCE RESIDENTIAL, INC.

	 
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

Date: _____________________, 2013

 

    	S-3

    	 

    
 

 

LIST OF EXHIBITS

 

Exhibit A             Investor Questionnaire

    	  

    	 

    
 

 

EXHIBIT A

 

CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

To RealSource Residential, Inc.:

 

The information contained in this questionnaire is being furnished to RealSource Residential, Inc., a Nevada corporation (the “Company”) by the subscriber executing this questionnaire (the “Investor”) so that the Company may determine if the Investor is qualified to purchase the Securities to be issued by the Company in a private offering under the Securities Act of 1933, as amended (“Securities Act”). The Investor understands that the Company will rely upon the following information for purposes of making such determination, and that the Securities will not be registered under the Securities Act in reliance upon an exemption from registration for private offerings.

 

All information contained in this Questionnaire will be treated confidentially. However, the Investor understands and agrees that the Company may present this Questionnaire to such persons as it deems appropriate if called upon to establish that: (i) the offer and sale of the Securities is exempt from registration under the Securities Act or any other applicable securities laws; (ii) the Company are in compliance with U.S. federal and other applicable laws; or (iii) the Company have a defense based on the information in this Questionnaire against any lawsuit, action or other proceeding brought against it by any person.

 

All capitalized terms used but not defined in this Exhibit A shall have the meanings ascribed to such terms in the Subscription Agreement to which this Exhibit is attached.

 

Questionnaire:

 

If the Securities subscribed for, or are to be owned, by more than one person, each co-Investor must complete a separate Investor Questionnaire and sign the signature page.

 

All questions must be answered.  If the appropriate answer is “None” or “Not Applicable,” please so state. Please attach additional sheets if necessary to complete your answers to any item.

 

1.         General Information Regarding Investor

 

	 	(a)	Name of Investor:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Additional Investor:	 	 	 	 
	 	 	(i.e., Joint Tenant)	 	 	 	 
	 	 	 	 	 	 	 
	 	(b)	If a Corporation or other entity,	 	 	 	 
	 	 	 	 	 	 	 
	 	 	type of entity (i.e., corporation,	 	 	 	 
	 	 	
partnership, trust, etc.)

	 	 	 	 
	 	 	
and address of principal

	 	 	 	 
	 	 	place of business:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	                Telephone number:	 	 	 	 
	 	 	                Facsimile number:	 	 	 	 
	 	 	                 E-Mail Address:	 	 	 	 

 

    	A-1

    	 

    
 

 

	 	(c)	If individual, home address:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	                Telephone number:	 	 	 	 
	 	 	                Facsimile number:	 	 	 	 
	 	 	                 E-Mail Address:	 	 	 	 
	 	 	 	 	 	 	 
	 	(d)	Taxpayer Identification No.	 	 	 	 
	 	 	
or Social Security No.:

	 	 	 	 
	 	 	 	 	 	 	 
	 	(e)	Tax year end of Investor:	 	 	 	 
	 	 	 	 	 	 	 
	 	(f)	If a Corporation or other entity,	 	 	 	 
	 	 	
 nature of business:

	 	 	 	 
	 	 	 	 	 	 	 
	 	(g)	If a Corporation or other entity,	 	 	 	 
	 	 	
 date and jurisdiction of formation:

	 	 	 	 
	 	 	 	 	 	 	 
	 	(h)	If a Corporation or other entity,	 	 	 	 
	 	 	
 number of equity owners:

	 	 	 	 

                                   

	
  

	
2.

	
Information Regarding Corporate Officer or Other Authorized Person Executing This Questionnaire on Behalf of Investor (Complete as applicable)

 

	 	(a)	Name:	 	 	 	 
	 	 	 	 	 	 	 
	 	(b)	Current position or title:	 	 	 	 

 

	 	3.	Investment Qualification: “Accredited Investor” Criteria

 

	 	
A.

	
EACH INVESTOR THAT IS AN INDIVIDUAL MUST CHECK OR OTHERWISE MARK ALL OF THE FOLLOWING STATEMENTS THAT ARE APPLICABLE TO SUCH INDIVIDUAL

 

______ I am an Accredited Investor because I had an individual income (defined below) of more than $200,000 in each of the two most recent years or joint income with my spouse in excess of $300,000 in each of such years (including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation), and I reasonably expect to have an individual income in excess of $200,000 (or a joint income with my spouse of $300,000) in the current year.

 

______ I am an Accredited Investor because I have an individual net worth (defined below), or my spouse and I have a joint net worth, in excess of $1,000,000;

 

    	A-2

    	 

    
 

 

______ I am not an Accredited Investor because I do not meet either of the above criteria.  (Note:  Only Accredited Investors may purchase Securities in this Offering.)

 

For purposes of this Investor Questionnaire, “individual income” means adjusted gross income as reported for Federal income tax purposes, less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) the amount of losses claimed as a limited partner in a limited Company (as reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code, (iv) amounts contributed to an IRA ‘or Keogh retirement plan, and (v) alimony paid; for this purpose, “joint income” shall equal the combined individual incomes of an individual and his or her spouse.

 

Explanation. In calculating “net worth”, you include all of your assets (other than your primary residence) whether liquid or illiquid, such as cash, stock, securities, personal property and real estate based on the fair market value of such property MINUS all debts and liabilities (other than a mortgage or other debt secured by your primary residence).

 

In the event that the amount of any mortgage or other indebtedness secured by your primary residence exceeds the fair market value of the residence and the mortgagee or other lender has recourse to you personally for any deficiency, that excess liability should also be deducted from your net worth.

 

	 	
B.

	
EACH CORPORATION, PARTNERSHIP, LIMITED LIABILITY COMPANY AND OTHER ENTITY THAT IS NOT A TRUST MUST CHECK OR OTHERWISE MARK ALL OF ‘THE FOLLOWING STATEMENTS THAT ARE APPLICABLE TO SUCH ENTITY:

 

______ The corporation, partnership, limited liability company or other entity is accredited because it is a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity.

 

______ A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity;

 

______ A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;

 

______ An insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”) or a business development company at defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

 

______ A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of Title I of the Employee Retirement Income Securities Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

 

    	A-3

    	 

    
 

 

______ The corporation, partnership, limited liability company or other entity is accredited because it was not formed for the specific purpose of acquiring the Securities and has total assets in excess of $5,000,000.

 

______ The corporation, partnership, limited liability company or other entity is accredited because it is an entity all, of whose equity owners are Accredited Investors. Exhibit 1 to this Investor Questionnaire must be completed by all of its equity owners.

 

______ The corporation, partnership, limited liability company or other entity is accredited for reasons other than those set forth above (Please attach explanation).

 

______ The corporation, partnership, limited liability company or other entity is not accredited. (Note:  Only Accredited Investors may purchase Securities in this Offering.)

 

	 	
C.

	
EACH TRUST MUST CHECK OR OTHERWISE MARK ALL OF THE FOLLOWING STATEMENTS THAT ARE APPLICABLE TO SUCH TRUST:

 

______ The trust is accredited because it has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring the Securities, and its purchase will be directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.

 

______ The trust is accredited because the grantors of the trust may revoke the trust at any time and regain title to the trust assets and retain sole investment control over the assets of the trust, and all of the grantors are individual accredited investors. Exhibit 1 to this Investor Questionnaire must be completed by all grantors of the trust.

 

______ The Trust is not accredited. (Note: Only Accredited Investors may purchase Securities in this Offering.)

 

	 	
D.

	
EACH ESTATE MUST CHECK OR OTHERWISE MARK ALL OF THE FOLLOWING STATEMENTS THAT ARE APPLICABLE TO SUCH ESTATE:

 

______ The estate is accredited because the executor(s), administrator(s) or personal representative(s) is(are) an accredited investor. Exhibit 1 to this Investor Questionnaire must be completed by the executor(s), administrator(s) or personal representative(s) of the estate.

 

______ The estate is not accredited. (Note: Only Accredited Investors may purchase Securities in this Offering.)

 

4.           Representations and Warranties of Investor.  The Investor (and any individual signing on behalf of and Investor that is an entity) represents and warrants to the Company, as or on behalf of the Investor, that (a) the information in the Subscription Agreement and Questionnaire is true, complete and accurate and may be relied upon by the Company; and (b) the Subscriber will notify the Company immediately of any material adverse change in such information occurring prior to the acceptance of Investor’s subscription for the Securities.  Investor understands that the representations contained in this Questionnaire are made hereby primarily for the purpose of qualifying Investor as an Accredited Investor. Investor hereby further represents and warrants that the information furnished in this Questionnaire is true and correct in all respects and that all documents attached by Investor to this Questionnaire are complete and correct as of the date hereof. Investor understands that a false representation may constitute a violation of law, and that any person who suffers damage as a result of a false representation may have a claim against Investor for damages.

 

    	A-4

    	 

    
 

 

	 	 	 
	Individual Signature:	 	  Entity Signature:	 
	 	 	 
	 	 	 	 	 
	 	 	By:	 
	Name (Print)	 	 	 	 
	 	 	Name (Print)
	 	 	 	 	 
	 	 	Title

 

FOR INVESTORS THAT ARE ENTITIES (i.e., NOT INDIVIDUALS)

 

I hereby certify that set forth below is a complete list of all owners of equity interests in, or grantors of, or executors, administrators or personal representatives of, a _______________________ (fill in corporation, partnership or other type of entity that is subscribing for Securities) existing under the laws of ________________________ (fill in state or country in which Investor is organized). I also certify that each such owner, grantor or executor has signed in the space opposite his name, and that each such owner or grantor understands that if he or she marks “yes” under “Accredited Investor,” he or she represents that he or she is an Accredited Investor.

 

	 	 
	 	Signature of authorized corporate officer,
	 	general partner, trustee or executor

	 	 	 	 	 	 
	Name of 

Shareholder, Partner, 

Member, Trustee, Grantor 

Executor, Administrator	 	
Accredited

Investor

	 	
Signature

	 	 	 	
(please check “yes” or “no”)

	 	 
	 	 	 	 	 	 
	
1.

	 	  	
_________Yes         _________No

	  	  
	
2.

	 	  	

_________Yes         _________No

	  	  
	
3.

	 	  	
_________Yes         _________No

	  	  
	
4.

	 	  	
_________Yes         _________No

	  	  
	
5.

	 	  	

_________Yes         _________No

	  	  

    	A-5

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