Accredited Investors

RULE 506 OF REGULATION D PROVIDES THAT THE ISSUER CAN OFFER THE SHARES FOR INVESTMENT ONLY TO
(1) NOT MORE THAN THIRTY-FIVE (35) PERSONS WHOM THE COMPANY HAS REASONABLE GROUNDS TO BELIEVE (ALONE OR WITH THEIR REPRESENTATIVES) HAVE SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL MATTERS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF INVESTING IN THE COMPANY AND
(2) TO AN UNLIMITED NUMBER OF PERSONS WHO SATISFY THE REQUIREMENTS OF AN “ACCREDITED INVESTOR” AS SET FORTH IN REGULATION D.

Usually, for purposes of a private offering, a qualifying “accredited investor” is a person who meets any of the following conditions:

A. any director or executive officer of the Company;

B. any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of the investment exceeds $1,000,000; or

C. any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

Accredited investors also include benefit plans that meet one or more of the following standards:

A. the benefit plan is a defined contribution plan in which (i) the benefit plan provides for segregated accounts for each of its participants; (ii) each of the participants has sole investment directive powers over his or her vested funds and, with respect to this investment, a particular participant is exercising such powers; and, (iii) the particular participant is an accredited investor;

B. the benefit plan has total assets in excess of $5,000,000;

C. the benefit plan fiduciary (as ERISA defines such term) is making the investment decision, and is either (i) a bank as defined in Securities Act of 1933 §3(a)(2), (ii) an insurance company as defined in Securities Act of 1933 §2(13), or (iii) a registered investment adviser; or

D. if a self-directed benefit plan, with investment decisions made solely by persons that are accredited investors.

A trust may also be an accredited investor if

(i) the trust has total assets in excess of $5,000,000;

(ii) the trust was not formed for the sole purpose of acquiring the Shares; and,

(iii) the purchase of the Shares is directed by a person who is an accredited investor or who with his or her purchaser representative has such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the prospective investments.

With regard to non-accredited investors, the suitability factors are as follows: He/she

(i) has a net worth (inclusive of house, furnishings and automobiles) (A) in excess of $250,000 or (B) had an individual income in excess of $75,000 in each of the two most recent years and reasonably expects to reach the same income in the current year,

(ii) can bear the economic risk of losing his or her entire investment herein, and

(iii) has, alone or together with his or her Purchaser Representative (as herein-after defined), such knowledge and experience in financial matters that he/she is capable of evaluating the relative risks and merits of this investment.

In addition to the foregoing, prior to being offered an opportunity to invest, each prospective subscriber must specify to the Company in writing that:

(i) he or she is acquiring the Shares for investment only and not with a view to resale or distribution;

(ii) he or she is able to bear the economic risk of losing his or her entire investment;

(iii) his or her overall commitment to investments which are not readily marketable is not disproportionate to his or her net worth and his or her investment in the Shares will not cause such an overall disproportion to his or her net worth and his or her investment in the Shares will not cause such overall commitment to become excessive;

(iv) he or she has adequate means of providing for his or her current needs and personal contingencies and has no need for liquidity in his or her investment in the Shares; and
(v) he or she has substantial experience in making investment decisions of this type or is relying on his or her own investor advisor in making this investment decision.

Additional disclaimer to use with investors

The foregoing suitability standards represent minimum suitability requirements for investors and the satisfaction of such standards by an investor does not necessarily mean that the Shares are a suitable investment. Investor representations will be reviewed to determine the suitability of prospective investors and the Company will have the right to refuse to permit any prospective investor to invest in the Shares for any reason in its discretion. The Company may also, in circumstances it deems appropriate, modify such requirements. Moreover, the Company may not accept subscriptions for the Shares in the order in which received.

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