SUBSCRIPTION AGREEMENT
Exhibit 4.2
SUBSCRIPTION
AGREEMENT (this “Agreement”) made as of the last date set forth on the signature
page hereof between TriCord Hurricane Holdings, Inc., a Nevada corporation. (the
“Company”), and the undersigned (the “Subscriber”).
W I T N E
S S E T H:
WHEREAS,
the Company is conducting a private offering (the “Offering”) consisting of up
to 1,000,000 shares of Common Stock, par value $0.0001 per share (the “Shares”);
and
WHEREAS,
the Subscriber desires to purchase that number of Shares set forth on the
signature page hereof on the terms and conditions hereinafter set
forth.
NOW,
THEREFORE, in consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I.
|
SUBSCRIPTION FOR
SHARES AND REPRESENTATIONS BY
SUBSCRIBER
|
1.1 Subject
to the terms and conditions hereinafter set forth, together with all amendments
thereof and supplements and exhibits thereto, the “Memorandum”), the Subscriber
hereby irrevocably subscribes for and agrees to purchase from the Company such
number of Shares, and the Company agrees to sell to the Subscriber as is set
forth on the signature page hereof, at a price equal to $0.50 per
Share. The purchase price is payable by personal or business check or
money order made payable to TriCord Hurricane Holdings, Inc. contemporaneously
with the execution and delivery of this Agreement by the
Subscriber. Alternatively, the purchase price may be wired directly
to the Company according to the following wire instructions:
1.2 The
Shares are being offered on a “best efforts-any or all” basis. There
is no minimum number of Shares required to be accepted before a closing may
occur and our company may close on subscriptions as they are tendered and
accepted and upon receipt of good funds. The minimum amount that will
be accepted from any Subscriber is $3,000. Prospective investors will
know whether all or a portion of the Shares offered hereby are subscribed
for. This offering shall terminate upon the earlier of (i) the sale
of all the Shares or (ii) at the discretion of our Company. The
Subscriber recognizes that the purchase of the Shares involves a high degree of
risk including, but not limited to, the following: (a) the Company remains a
development stage business without a limited operating history and requires
substantial funds in addition to the proceeds of the Offering; (b) an investment
in the Company is highly speculative, and only investors who can afford the loss
of their entire investment should consider investing in the Company and the
Shares; (c) the Subscriber may not be able to liquidate its investment; (d)
transferability of the Shares is extremely limited; (e) in the event of a
disposition, the Subscriber could sustain the loss of its entire investment; (f)
the Company has not paid any dividends since its inception and does not
anticipate paying any dividends; and (g) the Company may issue additional
securities in the future which have rights and preferences that are senior to
those of the Shares. Without limiting the generality of the
representations set forth in Section 1.5 below, the Subscriber represents that
the Subscriber has carefully reviewed Section II.B of this Agreement captioned
“Risk Factors.”
1
1.3 The
Subscriber represents that the Subscriber is an “accredited investor” as such
term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under
the Securities Act of 1933, as amended (the “Securities Act”), and that the
Subscriber is able to bear the economic risk of an investment in the Shares. The
Subscriber is referred to the section of the Memorandum entitled “Investor
Qualifications” and to the Confidential Prospective Purchaser Questionnaire for
a full explanation of the term “accredited investor”.
1.4 The
Subscriber hereby acknowledges and represents that (a) the Subscriber has
knowledge and experience in business and financial matters, prior investment
experience, including investment in securities that are non-listed, unregistered
and/or not traded on a national securities exchange nor on the The Nasdaq Stock
Market, Inc., or the Subscriber has employed the services of a “purchaser
representative” (as defined in Rule 501 of Regulation D), attorney and/or
accountant to read all of the documents furnished or made available by the
Company both to the Subscriber and to all other prospective investors in the
Shares to evaluate the merits and risks of such an investment on the
Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative nature
of this investment; and (c) the Subscriber is able to bear the economic risk
that the Subscriber hereby assumes.
1.5 The
Subscriber hereby acknowledges receipt and careful review of this Agreement,
including the Risk Factors detailed in Section II.B, including all exhibits
thereto, and any documents which may have been made available upon request as
reflected therein (collectively referred to as the “Offering Materials”) and
hereby represents that the Subscriber has been furnished by the Company during
the course of the Offering with all information regarding the Company, the terms
and conditions of the Offering and any additional information that the
Subscriber has requested or desired to know, and has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the Company and the
terms and conditions of the Offering.
1.6 (a) In
making the decision to invest in the Shares the Subscriber has relied solely
upon the information provided by the Company in the Offering
Materials. To the extent necessary, the Subscriber has retained, at
its own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and the
purchase of the Shares hereunder. The Subscriber disclaims reliance
on any statements made or information provided by any person or entity in the
course of Subscriber’s consideration of an investment in the Shares other than
the Offering Materials.
(b) The
Subscriber represents that (i) the Subscriber was contacted regarding the sale
of the Shares by the Company (or an authorized agent or representative thereof)
with whom the Subscriber had a prior substantial pre-existing relationship and
(ii) no Shares were offered or sold to it by means of any form of general
solicitation or general advertising, and in connection therewith, the Subscriber
did not (A) receive or review any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or (B)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising.
2
1.7 The
Subscriber hereby represents that the Subscriber, either by reason of the
Subscriber’s business or financial experience or the business or financial
experience of the Subscriber’s professional advisors (who are unaffiliated with
and not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly), has the capacity to protect the Subscriber’s
own interests in connection with the transaction contemplated
hereby.
1.8 The
Subscriber hereby acknowledges that the Offering has not been reviewed by the
U.S. Securities and Exchange Commission (the “SEC”) nor any state regulatory
authority since the Offering is intended to be exempt from the registration
requirements of Section 5 of the Securities Act pursuant to Regulation D
promulgated thereunder. The Subscriber understands that the Shares
have not been registered under the Securities Act or under any state securities
or “blue sky” laws and agrees not to sell, pledge, assign or otherwise transfer
or dispose of the Shares unless they are registered under the Securities Act and
under any applicable state securities or “blue sky” laws or unless an exemption
from such registration is available.
1.9 The
Subscriber understands that the Shares have not been registered under the
Securities Act by reason of a claimed exemption under the provisions of the
Securities Act that depends, in part, upon the Subscriber’s investment
intention. In this connection, the Subscriber hereby represents that
the Subscriber is purchasing the Shares for the Subscriber’s own account for
investment and not with a view toward the resale or distribution to
others. The Subscriber, if an entity, further represents that it was
not formed for the purpose of purchasing the Shares.
1.10 The
Subscriber understands that there is no public market for the Shares and that no
market may develop for any of such Shares. The Subscriber understands
that even if a public market develops for such Shares, Rule 144 promulgated
under the Securities Act requires for non-affiliates (“Rule 144”), among other
conditions, a one-year holding period prior to the resale (in limited amounts)
of securities acquired in a non-public offering without having to satisfy the
registration requirements under the Securities Act. The Subscriber
understands and hereby acknowledges that the Company is under no obligation to
register any of the Shares under the Securities Act or any state securities or
“blue sky” laws other than as set forth in Article V.
1.11 The
Subscriber agrees that if and to the extent required by an underwriter of the
Company’s Shares in an initial public offering, the undersigned will execute a
“lock-up” agreement regarding some or all of the undersigned’s Shares thereby
agreeing not to sell such Shares for a period of time after completion of the
public offering whether or not such Shares are included in the public
offering.
1.12 The
Subscriber consents to the placement of a legend on any certificate or other
document evidencing the Shares that such Shares have not been registered under
the Securities Act or any state securities or “blue sky” laws and setting forth
or referring to the restrictions on transferability and sale thereof contained
in this Agreement. The Subscriber is aware that the Company will make
a notation in its appropriate records with respect to the restrictions on the
transferability of such Shares. The legend to be placed on each certificate
shall be in form substantially similar to the following:
3
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE
SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
1.13 The
Subscriber understands that the Company will review this Agreement and is hereby
given authority by the Subscriber to call Subscriber’s bank or place of
employment or otherwise review the financial standing of the Subscriber; and it
is further agreed that the Company, at its sole discretion, reserves the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription, to accept subscriptions for
fractional Shares and to close the Offering to the Subscriber at any time and
that the Company will issue stop transfer instructions to its transfer agent
with respect to such Shares.
1.14 The
Subscriber hereby represents that the address of the Subscriber furnished by
Subscriber on the signature page hereof is the Subscriber’s principal residence
if Subscriber is an individual or its principal business address if it is a
corporation or other entity.
1.15 The
Subscriber represents that the Subscriber has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement and
to purchase the Shares. This Agreement constitutes the legal, valid
and binding obligation of the Subscriber, enforceable against the Subscriber in
accordance with its terms.
1.16 If the
Subscriber is a corporation, partnership, limited liability company, trust,
employee benefit plan, individual retirement account, Xxxxx Plan, or other
tax-exempt entity, it is authorized and qualified to invest in the Company and
the person signing this Agreement on behalf of such entity has been duly
authorized by such entity to do so.
1.17 The
Subscriber acknowledges that at such time, if ever, as the Shares are registered
(as such term is defined in Article V hereof), sales of the Shares will be
subject to state securities laws.
1.18 (a) The
Subscriber agrees not to issue any public statement with respect to the
Subscriber’s investment or proposed investment in the Company or the terms of
any agreement or covenant between them and the Company without the Company’s
prior written consent, except such disclosures as may be required under
applicable law or under any applicable order, rule or regulation.
(b) The
Company agrees not to disclose the names, addresses or any other information
about the Subscribers, except as required by law; provided, that the Company may
use the name of the Subscriber for any offering or in any registration statement
filed pursuant to Article V in which the Subscriber’s Shares are
included.
4
1.19 The
Subscriber understands that the Shares are being offered and sold in reliance on
specific exemptions from the registration requirements of federal and state
securities laws and that the Company and the principals and controlling persons
thereof are relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments, and understandings set forth herein in
order to determine the applicability of such exemptions and the undersigned’s
suitability to acquire Shares.
1.20 The
Subscriber agrees to hold the Company and its directors, officers, employees,
affiliates, controlling persons and agents and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of (a) any sale
or distribution of the Shares by the Subscriber in violation of the Securities
Act or any applicable state securities or “blue sky” laws; or (b) any false
representation or warranty or any breach or failure by the Subscriber to comply
with any covenant made by the Subscriber in this Agreement or any other document
furnished by the Subscriber to any of the foregoing in connection with this
transaction.
II.
|
REPRESENTATIONS BY AND
COVENANTS OF THE COMPANY
|
The
Company hereby represents and warrants to the Subscriber that:
2.1 Organization, Good Standing
and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has full corporate power and authority to conduct its
business.
2.2 Authorization;
Enforceability. The Company has all corporate right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. All corporate action on the part of the Company,
its directors and stockholders necessary for the (i) authorization execution,
delivery and performance of this Agreement by the Company; and (ii)
authorization, sale, issuance and delivery of the Shares contemplated hereby and
the performance of the Company’s obligations hereunder has been
taken. This Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company 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
equitable remedies, and to limitations of public policy. The Shares,
when issued and fully paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable. The issuance
and sale of the Shares contemplated hereby will not give rise to any preemptive
rights or rights of first refusal on behalf of any person which have not been
waived in connection with this offering.
2.3 Capitalization.
The capitalization of the Company, without listing the shares
to be purchased by the Subscribers hereto is as follows:
(i) The
authorized capital stock of the Company consists of 100,000,000 shares of Common
Stock, par value $0.0001 per share.
(ii) As
of November 27, 2007, the issued and outstanding capital stock of the Company
consisted of 4,189,462 shares of Common Stock. The shares of issued
and outstanding capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights. All such shares have been issued in compliance with
applicable securities laws.
5
(iii) With
the exception of the foregoing in this Section 2.3, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock. Except as set forth herein,
(A) no securities of the Company are entitled to preemptive or similar rights,
and no person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by this Agreement; and (B) the issue and sale of the
shares purchased hereby will not obligate the Company to issue shares of Common
Stock or other securities to any person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. There are
no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
2.4 Subsidiaries. The
Company’s wholly-owned operating subsidiary is TriCord Hurricane Products, Inc.,
a corporation originally organized under the laws of Florida as a limited
liability company and subsequently converted to a corporation on November 19,
2007 (“TriCord Hurricane Products”).
II.A. BUSINESS
DESCRIPTION
2.A.1 The
Company was organized on November 21, 2007 under the laws of the state of
Nevada.
2.A.2 The
Company acquired a 100% interest in its wholly-owned operating subsidiary
TriCord Hurricane Products, Inc. through a share exchange transaction
consummated on November 30, 2007.
2.A.3 The
Company, through its wholly-owned operating subsidiary, TriCord Hurricane
Products, has developed a Hurricane Safety System designed to prevent damage to
both the roof and a building’s supporting structure during
hurricanes.
2.A.4 The
Company intends to develop and market its Hurricane Safety System as a product
that will be adaptable to residential and commercial buildings, small aircraft,
land parked boats and other non-protected valuable un-housed
property.
2.A.5 In
addition to the information contained in this Section II.A., the Company has
furnished each Subscriber with a copy of its Business Overview and Product
Description Synopsis and Product Description DVD, which are attached hereto as
Exhibit A and Exhibit B, respectively, and are incorporated herein by
reference.
II.B. MANAGEMENT
6
2.B.1 Xxxxxxx X. Xxxx – President
and Chief Executive Officer. Xx. Xxxx most recently was a
co-founder of Xxxxx Xxxxxxxx Media, Inc. and since 1975 has been involved in
numerous entrepreneurial activities. He has been a Director, held
senior executive positions and acted as a management consultant and business
development advisor to a broad range of start-up companies. He has
developed and executed business plans and the launch of new businesses,
consulted management of companies in general management activities, corporate
development, sales and marketing, product development and financial
management.
Prior to joining Xxxxx Xxxxxxxx Media
in 2003, Xx. Xxxx was Vice President of Business Development for Microphonics,
Inc., providing strategy development and analysis, financial modeling, primary
and secondary research. Xx. Xxxx received his B.S.B.A. degree from
the University of Tulsa in 1973.
2.B.2. Xxxxx Xxxxxxx – Vice
President, Sales & Marketing. Xx. Xxxxxxx is, most
recently, the founder and President of The Xxxxxxx Company – A full service
advertising and marketing agency located in Tulsa, Oklahoma. Established in
2002, this agency was created to answer to the industry-specific needs of a
major client, and has currently expanded the original clientele to include
numerous industries. Previously, Xx. Xxxxxxx was the founder and President of
TwoRows Restaurant & Brewery with numerous locations in major cities in
Texas, before selling his interest.
Xx.
Xxxxxxx has been involved in numerous entrepreneurial activities and business
start-ups over the past years. He served as director of a publicly
traded company, held executive positions, and acted as a management consultant
and business development advisor to a broad range of start-up companies and
Native American Nations. Xx. Xxxxxxx received his B.S. degree from the
University of Oklahoma in 1979.
II.C. RISK
FACTORS
2.C.1 The Company has a limited
operating history. The Company can provide no assurance that
it will be able to achieve or sustain revenue growth or profitability in the
future. Its operations are subject to the risks and competition
inherent in the establishment of a business enterprise. Unanticipated problems,
expenses, and delays are frequently encountered in establishing a new business
and marketing and developing products. These include, but are not limited to,
competition, the need to develop customers and market expertise, market
conditions, sales, marketing and governmental regulation. Our failure to meet
any of these conditions would have a materially adverse effect upon us and may
force us to reduce or curtail our operations. Revenues and profits, if any, will
depend upon various factors. We may not achieve our business objectives and the
failure to achieve such goals would have an adverse impact on our
business.
2.C.2 The Company may fail to
establish and maintain beneficial relationships. The Company
intends to establish relationships with retailers and insurance
providers. However, there is intense competition for these
relationships and the Company may not be able to attract and retain these group
s interest in light of competitors with larger budgets and pre-existing
relationships.
7
2.C.3 Economic Factors. Consumer spending
on hurricane prevention items is questionable and could fluctuate in any
economic condition. Shifts in consumer spending habits or a loss of disposable
income due to adverse economic, political or other financial conditions could
have a profound impact on the Company’s business. The Company’s ability to sell
Hurricane Safety Systems is directly affected by the consumer’s belief that the
Company’s products will mitigate personal property damage and whether they
personally think they will be in the path of a destructive
hurricane.
2.C.4 Ability to Manage
Growth. The Company’s
ability to manage its growth effectively will require continuing enhancement of
its operational, financial and management systems. In addition, the Company must
successfully hire, train, motivate and manage additional employees. There can be
no assurance that the Company can successfully manage rapid growth.
2.C.5 Sensitivity to Changes in
Netting, Module Materials and Peripheral Costs. Materials
costs are the Company’s most significant variable expense. The financial model
relies on assumptions of materials costs that could prove
inaccurate. A large increase in the cost of materials, distribution
or shipping rates could dramatically impact the Company’s financial
performance.
2.C.6 Dependence of Senior
Management The Company’s future
performance is largely dependent on the personal efforts and abilities of its
management and possibly other future key personnel. The Company’s ability to
operate its business could be seriously harmed if the Company loses or fails to
retain senior managers and other key employees. While the Company’s
key management are equity holders, the loss of their skills could seriously harm
the Company and its prospects to remain an ongoing business
concern.
2.C.7
Inability to Hire,
Train, and Retain Additional Personnel. To grow the
business successfully, the Company will need to recruit, retain, and motivate
additional highly skilled sales, marketing, finance, and operations personnel.
Inability to hire, train and retain a sufficient number of qualified employees
will impair growth. In particular, the Company will need to expand the sales and
marketing organizations in order to increase market awareness of its product and
to increase revenue.
2.C.8 Changing Weather
Patterns. There are no guarantees that the current forecasts
and predictions for the increasing number and intensity of hurricanes will come
to fruition. World and local weather predictions are often wrong and
cannot be relied upon for planning purposes or financial projections to sales of
hurricane related products.
2.C.9
Liquidity. The
Company could experience events that cause it to lack the capital to run the
day-to-day business or to fulfill obligations. In the event that the Company’s
plans or assumptions change or prove to be inaccurate or if the proceeds of the
investment or cash flow from operations prove to be insufficient (due to
unanticipated expenses, slow payment, difficulties, problems or otherwise), the
Company may be required to seek additional debt or equity financing or curtail
its expansion activities. Such financing may be on terms and conditions that are
more favorable than those received by investors in the Series A Preferred Stock
offering.
8
III.
|
TERMS OF
SUBSCRIPTION
|
3.1 Certificates
representing the Shares purchased by the Subscriber pursuant to this Agreement
will be prepared for delivery to the Subscriber within 15 business days
following the closing at which such purchase takes place. The Subscriber hereby
authorizes and directs the Company to deliver the certificates representing the
Shares purchased by the Subscriber pursuant to this Agreement directly to the
Subscriber’s residential or business address indicated on the signature page
hereto.
IV.
|
CONDITIONS TO
OBLIGATIONS OF THE
SUBSCRIBERS
|
4.1 The
Subscriber’s obligation to purchase the Shares at the Closing at which such
purchase is to be consummated is subject to the fulfillment on or prior to such
Closing of the following conditions, which conditions may be waived at the
option of each Subscriber to the extent permitted by law:
(a) Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by the Company on or prior to the date of such Closing shall have been performed
or complied with in all material respects.
(b) No Legal Order
Pending. There shall not then be in effect any legal or other
order enjoining or restraining the transactions contemplated by this
Agreement.
(c) No Law Prohibiting or
Restricting Such Sale. There shall not be in effect any law,
rule or regulation prohibiting or restricting such sale or requiring any consent
or approval of any person, which shall not have been obtained, to issue the
Shares (except as otherwise provided in this Agreement).
V.
|
REGISTRATION
RIGHTS
|
5.1 Definitions. As
used in this Agreement, the following terms shall have the following
meanings.
(a) The term
“Holder” shall mean any person owning or having the right to acquire Registrable
Securities or any permitted transferee of a Holder.
(b) The terms
“register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or order of effectiveness of such
registration statement or document.
(c) The term
“Registrable Securities” shall mean: the shares of Common Stock, par value
$_____, issuable upon conversion of the Shares, provided, however, that
securities shall only be treated as Registrable Securities if and only for so
long as they (A) have not been disposed of pursuant to a registration statement
declared effective by the SEC; (B) have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
so that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale; (C) are held by a Holder or a
permitted transferee of a Holder pursuant to Section 5.10; and (D) may not be
disposed of under Rule 144(k) under the Securities Act without
restriction.
9
5.2 Reserved.
5.3 Piggyback
Registration. At any time after the date hereof, if the
Company shall determine to register for its account or for the account of others
any of its equity securities, the Company shall include in such registration
statement the Registrable Securities, provided, however, that the Company made
reduce the number of Registrable Securities registered pro rate in view of
market conditions. If the Company reduces the number of Registrable Securities
in accordance with the foregoing, no party shall sell shares under such
registration statement other than the Company and the party, if any, invoking a
“demand” registration. The Company shall not grant “piggy-back” registration
rights to any party if such “piggy-back” rights would reduce the number of
Registrable Securities being registered in such registration without the consent
of the Holders of at least two thirds of the Registrable
Securities.
5.4 Registration
Procedures. Whenever required under this Article V to include
Registrable Securities in a Company registration statement, the Company shall,
as expeditiously as reasonably possible:
(a) Use best
efforts to (i) cause such registration statement to become effective, and (ii)
cause such registration statement to remain effective until the earliest to
occur of (A) such date as the sellers of Registrable Securities (the “Selling
Holders”) have completed the distribution described in the registration
statement and (B) such time that all of such Registrable Securities are no
longer, by reason of Rule 144(k) under the Securities Act, required to be
registered for the sale thereof by such Holders. The Company will
also use its best efforts to, during the period that such registration statement
is required to be maintained hereunder, file such post-effective amendments and
supplements thereto as may be required by the Securities Act and the rules and
regulations thereunder or otherwise to ensure that the registration statement
does not contain any untrue statement of material fact or omit to state a fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that if applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permits, in lieu of
filing a post-effective amendment that (i) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (ii) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the Company may incorporate by reference information
required to be included in (i) and (ii) above to the extent such information is
contained in periodic reports filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) in the
registration statement.
(b) Prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Make
available for inspection upon reasonable notice during the Company’s regular
business hours by each Selling Holder, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such Selling Holder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Selling Holder, underwriter,
attorney, accountant or agent in connection with such registration
statement.
10
(d) Furnish
to the Selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus as amended or supplemented from time to time, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(e) Use best
efforts to register and qualify the securities covered by such registration
statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the Selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
(f) In the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each Selling Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(g) Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, (i) when the registration statement or any post-effective
amendment and supplement thereto has become effective; (ii) of the issuance by
the SEC of any stop order or the initiation of proceedings for that purpose (in
which event the Company shall make every effort to obtain the withdrawal of any
order suspending effectiveness of the registration statement at the earliest
possible time or prevent the entry thereof); (iii) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iv) of the happening of any event as a result
of which the prospectus included 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 the light of the circumstances then
existing.
(h) Comply
with all applicable rules and regulations of the SEC and make generally
available to its security holders earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 50 calendar days after
the end of any 3-month period (or 105 calendar days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering, and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company, after the effective date of a registration
statement, which statements shall cover said period.
11
(i) If the
offering is underwritten and at the request of any Selling Holder, use its best
efforts to furnish on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration: (i) opinions dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters and the transfer agent for the Registrable
Securities so delivered, respectively, to the effect that such registration
statement has become effective under the Securities Act and such Registrable
Securities are freely tradable, and covering such other matters as are
customarily covered in opinions of issuer’s counsel delivered to underwriters
and transfer agents in underwritten public offerings and (ii) a letter dated
such date from the independent public accountants who have certified the
financial statements of the Company included in the registration statement or
the prospectus, covering such matters as are customarily covered in accountants’
letters delivered to underwriters in underwritten public offerings.
5.5 Furnish
Information. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any Selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be reasonably required by the Company to
effect the registration of such Holder’s Registrable Securities.
5.6 Registration
Expenses. The Company shall bear and pay all registration
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registration pursuant to Section 5.2
or Section 5.3.
5.7 Underwriting
Requirements. In connection with any offering involving an
underwriting of shares of the Company’s capital stock, the Company shall not be
required under Section 5.3 to include any of the Holders’ Registrable Securities
in such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder who is a
holder of Registrable Securities and is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single “selling
stockholder,” and any pro-rata reduction with respect to such “selling
stockholder” shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
“selling stockholder,” as defined in this sentence.
5.8 Delay of
Registration. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Article.
12
5.9 Indemnification. In
the event that any Registrable Securities are included in a registration
statement under this Article V:
(a) To the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, 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 indemnity agreement contained in this
Section 5.9(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the
extent permitted by law, each Selling Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, or the Exchange
Act, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.9(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the
indemnity agreement contained in this Section 5.9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that, in no
event shall any indemnity under this Section 5.9(b) exceed the greater of the
cash value of the (i) gross proceeds from the Offering received by such Holder
or (ii) such Holder’s investment pursuant to this Agreement as set forth on the
signature page attached hereto.
13
(c) Promptly
after receipt by an indemnified party under this Section 5.9 of notice of the
commencement of any action (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.9, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel selected by the indemnifying party and approved
by the indemnified party (whose approval shall not be unreasonably withheld);
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.9.
(d) If the
indemnification provided for in this Section 5.9 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall
control.
(f) The
obligations of the Company and Holders under this Section 5.9 shall survive the
completion of the Offering.
5.10 Permitted
Transferees. The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Article
V may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities, to (a) any partner or retired partner of a
Holder that is a partnership, or (b) any family member or trust for the benefit
of any individual Holder, provided that (i) such Holder gives prior written
notice to the Company; (ii) such transferee agrees to comply with the terms and
provisions of this Agreement; (iii) such transfer is otherwise
in compliance with this Agreement; and (iv) such transfer is otherwise
effected in accordance with applicable securities laws. Except as
specifically permitted by this Section 5.10, the rights of a Holder with respect
to Registrable Securities as set out herein shall not be transferable to any
other Person, and any attempted transfer shall cause all rights of such Holder
therein to be forfeited.
14
5.11 Termination
of Registration Rights. The rights to cause the Company to register
Registrable Securities under this Article V shall terminate upon the earlier of
(a) the third anniversary of the closing of an initial public offering of the
Company’s Common Stock, at a per share price not less than two times the
original purchase price of $1.00 (as adjusted for stock splits and other
recapitalizations) and aggregate proceeds of not less than $5,000,000, and (b)
(i) the Company’s Common Stock is publicly traded or (ii) the Holder is entitled
to sell all of its Registrable Securities pursuant to Rule 144 under the
Securities Act.
VI.
|
MISCELLANEOUS
|
6.1 Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested, or
delivered by hand against written receipt therefor, addressed as
follows:
if to the
Company, to it at:
0000 X.
00xx
Xxxxxx
Xxxxx, XX
00000
Attn:
Xxxxxxx Xxxx, President
With a
copy to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx
Xxx Xxxx,
XX 00000
Attn: Xxxxxxx
Xxxxxxxxx, Esq.
if to the
Subscriber, to the Subscriber’s address indicated on the signature page of this
Agreement.
Notices
shall be deemed to have been given or delivered on the date of mailing, except
notices of change of address, which shall be deemed to have been given or
delivered when received.
6.2 Except as
otherwise provided herein, this Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Agreement may not be discharged except by performance in accordance with its
terms or by a writing signed by the party to be charged.
6.3 Subject
to the provisions of Section 5.10, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
15
6.4 Upon the
execution and delivery of this Agreement by the Subscriber, this Agreement shall
become a binding obligation of the Subscriber with respect to the purchase of
Shares as herein provided, subject, however, to the right hereby reserved by the
Company to enter into the same agreements with other subscribers and to add
and/or delete other persons as subscribers.
6.5 NOTWITHSTANDING
THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE
PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW. THE
PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL DISTRICT COURTS SITUATED THEREIN AND AGREE TO
SAID VENUE.
6.6 In order
to discourage frivolous claims the parties agree that unless a claimant in any
proceeding arising out of this Agreement succeeds in establishing his claim and
recovering a judgment against another party (regardless of whether such claimant
succeeds against one of the other parties to the action), then the other party
shall be entitled to recover from such claimant all of its/their reasonable
legal costs and expenses relating to such proceeding and/or incurred in
preparation therefor.
6.7 The
holding of any provision of this Agreement to be invalid or unenforceable by a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
6.8 It is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
6.9 All of
the representations and warranties contained in this Subscription Agreement
shall survive execution and delivery of this Subscription Agreement and the
undersigned’s investment in the Company.
6.10 This
Subscription Agreement shall be governed by, interpreted under, and construed in
accordance with, the internal laws of the State of New York applicable to
agreements made and to be performed within the State of Florida without regard
to the principles of conflicts-of-law thereof.
6.11 The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
16
6.12 This
Agreement may be executed in two or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the same
instrument.
6.13 Nothing
in this Agreement shall create or be deemed to create any rights in any person
or entity not a party to this Agreement.
IN
WITNESS WHEREOF, the undersigned have executed this Subscription Agreement as of
_____________________, 2007.
17
SUBSCRIPTION
AGREEMENT COUNTERPART SIGNATURE PAGE
[COMPANY
OR TRUST]
The
undersigned hereby represents, warrants and covenants that the undersigned is
duly authorized by the prospective investor to take all requisite action on the
part of the prospective investor listed below to enter into this Agreement and,
further, that the prospective investor has all requisite authority to enter into
such Agreement.
The
undersigned represents and warrants that each of the above representations,
agreements or understandings set forth herein applies to the prospective
investor and that the undersigned has authority under the charter, by-laws,
corporate resolutions or trust agreement of such prospective investor to execute
this Agreement.
Name
of Company (Please type or print)
|
|
By:
|
||
Name | |||
Title | |||
Number of
Shares Amount
of check enclosed:
Subscribed
for:
_________________ $___________________
18
SUBSCRIPTION
AGREEMENT COUNTERPART SIGNATURE PAGE
[PARTNERSHIP]
If the
prospective investor is a PARTNERSHIP, complete the following and enclose a true
copy of the Partnership Agreement of the prospective investor:
The
undersigned hereby represents, warrants and covenants that the undersigned is a
general partner of the prospective investor named below, is duly authorized by
the prospective investor to enter into this Agreement, and that the prospective
investor has all requisite authority to enter into this Agreement and set forth
below are the names of all Partners of the prospective investor.
The
undersigned represents and warrants that each of the above representations,
agreements or undertakings set forth herein applies to the prospective investor
and that the undersigned is authorized by such prospective investor to execute
this Agreement.
Name
of Partnership (Please type or
print)
|
|
By:
|
||
Name | |||
Title | |||
Names of
Partners: Signature:
(Add
additional sheets if necessary)
Number of
Shares
Amount of check enclosed:
Subscribed
for:
_________________
$___________________
19
SUBSCRIPTION
AGREEMENT COUNTERPART SIGNATURE PAGE
[INDIVIDUAL]
If the
prospective investor is an individual, please execute this Agreement
below.
Name
of individual (Please type or
print)
|
|
By:
|
||
Name | |||
|
And
(if applicable)
|
By:
|
|
||
Name
|
|||
HOW
SHARES WILL BE HELD:
Individually ______
JTWROS
______
TBTE ______
Number of
Shares Amount
of check enclosed:
Subscribed
for:
_________________ $____________________
*If
investment is taken in joint names, both must sign.
20
[ACCEPTANCE
PAGE FOR SUBSCRIPTION AGREEMENT]
Agreed to
and accepted as of ____________________, 2007.
TRICORD
HURRICANE HOLDINGS INC.
|
|||
|
By:
|
||
Name | |||
Title | |||
21
CERTIFICATE
OF SIGNATORY
(To be
completed if Shares are
being
subscribed for by an entity)
I,
____________________________, am the ____________________________ of
__________________________________________ (the “Entity”).
I certify
that I am empowered and duly authorized by the Entity to execute and carry out
the terms of the Subscription Agreement and to purchase and hold the Shares, and
certify further that the Subscription Agreement has been duly and validly
executed on behalf of the Entity and constitutes a legal and binding obligation
of the Entity.
IN
WITNESS WHEREOF, I have set my hand this ________ day of _________________,
2007
_______________________________________
(Signature)
22