Exhibit 10.8
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made as of this ___ day
of June 2005, by and between Ronco Corporation, a Delaware corporation (the
"Company"), and the investor identified on the signature page to this Agreement
(the "Investor").
W I T N E S S E T H:
WHEREAS, the Investor desires to subscribe for, purchase and acquire from
the Company and the Company desires to sell and issue to the Investor the number
of shares (the "Shares") of the Company's Series A Convertible Preferred Stock,
$0.00001 par value per share (the "Preferred Stock"), set forth on the signature
page of this Agreement, upon the terms and conditions and subject to the
provisions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual premises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Purchase and Sale of the Shares. Subject to the terms and conditions of
this Agreement, the Investor subscribes for and agrees to purchase and acquire
from the Company and the Company agrees to sell and issue to the Investor the
Shares, in the manner set forth in Section 2 hereof, at the purchase price set
forth on the signature page of this Agreement (the "Purchase Price").
2. Terms of Purchase and Sale of the Shares. The closing of the
transactions contemplated hereby (the "Closing") shall take place on or before
the fifth full business day after the Notice Date (as such term is defined in
the Placement Agent Agreement dated as of May 23, 2005 (the "Placement Agent
Agreement"), between the Company and Xxxxxxx Xxxxxx Xxxxxx Inc. (the "Placement
Agent"), at the offices of the Company, or at such other time and place as the
Company and the Placement Agent may agree upon (the "Closing Date").
Contemporaneously with the delivery of this Agreement, the Investor shall
deliver to Sterling Bank (the "Escrow Agent") the Purchase Price by wire
transfer of immediately available funds pursuant to wire transfer instructions
given to the Investor by the Company. At the Closing, the Escrow Agent shall
deliver to the Company the Purchase Price by wire transfer of immediately
available funds pursuant to wire transfer instructions given to the Escrow Agent
by the Company, and the Company shall deliver to the Investor a certificate,
registered in the name of the Investor, representing the Shares. Notwithstanding
the foregoing, the obligations of the Company and the Investor hereunder are
subject to the Company's receipt of aggregate subscriptions for $50,000,000 in
aggregate proceeds for shares of Preferred Stock on or prior to June 30, 2005
(or such later Closing Date as may be agreed by the Company and the Placement
Agent), which date may be extended by the Company and the Placement Agent
pursuant to the terms of the Placement Agent Agreement.
3. Representations and Warranties of the Company. In order to induce the
Investor to enter into this Agreement, the Company represents and warrants to
the Investor as of the Closing Date the following:
(a) Authority. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
and has all requisite right, power, and authority to execute, deliver and
perform this Agreement.
(b) Subsidiaries. The Company has no direct or indirect Subsidiaries other
than those listed in Schedule 3(b). Except as disclosed in Schedule 3(b), the
Company owns, directly or indirectly, all of the capital stock of each
Subsidiary free and clear of any and all liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights.
(c) Enforceability. The execution, delivery, and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action. This Agreement has been duly executed and delivered by the Company, and,
upon its execution by the Investor, shall constitute the legal, valid, and
binding obligation of the Company, enforceable in accordance with its terms,
except to the extent that its enforceability is limited by bankruptcy,
insolvency, reorganization, or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
(d) No Violations. The execution, delivery, and performance of this
Agreement by the Company does not, and will not, violate or conflict with any
provision of the Company's Certificate of Incorporation or Bylaws and does not
and will not, with or without the passage of time or the giving of notice,
result in the breach of, or constitute a default, cause the acceleration of
performance, or require any consent under (except such consents as have been
obtained as of the date hereof), or result in the creation of any lien, charge
or encumbrance upon any property or assets of the Company pursuant to, any
material instrument or agreement to which the Company is a party or by which the
Company or its properties are bound, except such consents as have been obtained
as of the date hereof.
(e) Capitalization. The authorized capital stock of the Company consists
of: 500,000,000 shares of Common Stock $0.00001 par value per share, of which
40,507,500 shares were issued and outstanding as of May 20, 2005, representing
455,140 shares on a post reverse stock split basis (the "Reverse Stock Split"),
and 20,000,000 shares of preferred stock, $0.00001 par value per share, of which
no shares were designated, issued or outstanding as of May 20, 2005. As of May
20, 2005, the Company had no outstanding options and warrants to purchase shares
of Common Stock. Upon issuance in accordance with the terms of this Agreement
against payment of the Purchase Price therefore, the Shares will be duly and
validly issued, fully paid, and nonassessable with no personal liability
attaching to the ownership thereof and free and clear of all liens imposed by or
through the Company, and, assuming the accuracy of the representations and
warranties of the Investor and all other purchasers of shares of Preferred Stock
in the offering contemplated by the Placement Agent Agreement, (including
without limitation, those set forth in the Investor's Questionnaire, a copy of
which is attached hereto as Exhibit A (the "Investor's Questionnaire")), will be
issued in accordance with a valid exemption from the registration or
qualification provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities laws (the "State Acts").
The shares of Common Stock issuable upon conversion of the Shares (the
"Conversion Shares") will be duly authorized upon the effectiveness of the
Reverse Stock Split, and upon issuance of the Conversion Shares upon proper
conversion of the Shares, in accordance with the terms thereof, the Conversion
Shares will be validly issued, fully paid and non-assessable.
(f) Exchange Act Filing. During the twelve (12) calendar months
immediately preceding the date of this Agreement, all reports and statements
required to be filed by the Company with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder, have been filed. Such filings,
together with all documents incorporated by reference therein, are referred to
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as "Exchange Act Documents." Each Exchange Act Document, as amended, conformed
in all material respects to the requirements of the Exchange Act and the rules
and regulations thereunder, and no Exchange Act Document, as amended, at the
time each such document was filed, included any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) Company Financial Statements. The audited financial statements,
together with the related notes of the Company at June 30, 2003 and June 30,
2004, and for the years then ended, included in the Company's Annual Report on
Form 10-KSB for the year ended June 30, 2004, and the audited financial
statements of the Company at December 31, 2004, and for the six months then
ended included in the Company's Quarterly Report on Form 10-QSB for the quarter
ended December 31, 2004, respectively, fairly present in all material respects,
on the basis stated therein and on the date thereof, the financial position of
the Company at the respective dates therein specified and its results of
operations and cash flows for the periods then ended (subject to, in the case of
the unaudited financial statements, normal audit adjustments). The audited
financial statements, together with the related notes of the Predecessor
Entities (as defined in the Private Placement Memorandum of the Company dated
May 23, 2005, as may be amended or supplemented (the "PPM")), at December 31 for
each of the years then ended for 2000 through 2003 included in the PPM, and the
audited financial statements of the Predecessor Entities at September 30, 2004
for the nine months then ended included in the PPM, respectively, fairly present
in all material respects, on the basis stated therein and on the date thereof,
the financial position of the Predecessor Entities at the respective dates
therein specified and their results of operations and cash flows for the periods
then ended. Such statements and related notes have been prepared in accordance
with generally accepted accounting principles in the United States applied on a
consistent basis except as expressly noted therein (provided that the unaudited
financial statements lack footnotes and other presentation items).
(h) No Material Liabilities. Except for liabilities or obligations not
individually in excess of $100,000, and as set forth on Schedule 3(h), since
December 31, 2004, the Company has not incurred any material liabilities or
obligations, direct or contingent, except in the ordinary course of business and
except for liabilities or obligations reflected or reserved against on the
Company's balance sheet as of December 31, 2004, and there has not been any
change, or to the knowledge of the Company, development or effect (individually
or in the aggregate) that is or is reasonably likely to be, materially adverse
to the condition (financial or otherwise), business, prospects, or results of
operations of the Company and the Subsidiaries considered as a whole (a
"Material Adverse Effect") or any change in the capital or material increase in
the long-term debt of the Company, nor has the Company declared, paid, or made
any dividend or distribution of any kind on its capital stock.
(i) No Disputes Against Company. Except as disclosed in the Exchange Act
Documents or set forth set forth on Schedule 3(i), there is no material pending
or, to the knowledge of the Company, threatened (a) action, suit, claim,
proceeding, or investigation against the Company, at law or in equity, or before
or by any Federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (b)
arbitration proceeding against the Company, (c) governmental inquiry against the
Company, or (d) any action or suit by or on behalf of the Company pending or
threatened against others.
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(j) Approvals. Other than the filing of the Certificate of Designation of
Preferences, Rights and Limitations of the Series A Preferred Stock, which the
Company undertakes to file with the Delaware Secretary of State prior to the
Closing, (i) the execution, delivery, and performance by the Company of this
Agreement and the Registration Rights Agreement (as hereinafter defined), (ii)
the offer and sale of the Shares, and (iii) the issuance of the Conversion
Shares upon due conversion of the Shares require no consent of, action by or in
respect of, or filing with, any Person, governmental body, agency, or official
other than those consents that have been obtained and filings that have been
made pursuant to applicable state securities laws and post sale filings pursuant
to applicable state and federal securities laws, which the Company undertakes to
file within the applicable time period.
(k) Compliance. Except as set forth on Schedule 3(k), neither the Company
nor any Subsidiary (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement, or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator, or
governmental body, or (iii) is or has been in violation of any statute, rule, or
regulation of any governmental authority, including without limitation all
foreign, federal, state, and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. The Company is in compliance with the applicable requirements of the
Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations
thereunder, except where such noncompliance could not have or reasonably be
expected to result in a Material Adverse Effect.
(l) Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses, and other
similar rights that are necessary or material for use in connection with their
respective businesses as described in the PPM and which the failure to so have
could, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect (collectively, the "Intellectual Property
Rights"). Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any person. To the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another person of any of the Intellectual Property
Rights, except where such infringement could not have or reasonably be expected
to result in a Material Adverse Effect.
(m) Transactions With Affiliates and Employees. Except as described in the
PPM, none of the officers or directors of the Company and, to the knowledge of
the Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers, and directors), including any contract, agreement, or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
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to or from any officer, director, or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee, or partner.
(n) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act rules 13a-14 and 15d-14) for
the Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company's Form 10-KSB or 10-QSB, as
the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of a
date within 90 days prior to the filing date of the Form 10-QSB for the
Company's most recently ended fiscal quarter (such date, the "Evaluation Date").
The Company presented in its most recently filed Form 10-KSB or Form 10-QSB the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no significant changes in the
Company's internal controls (as such term is defined in Item 307(b) of
Regulation S-K under the Exchange Act) or, to the Company's knowledge, in other
factors that could significantly affect the Company's internal controls.
(o) Solvency. Based on the financial condition of the Company as of the
date immediately subsequent to the Closing Date (and assuming that the Closing
shall have occurred), (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(p) Certain Fees. Except as may be due to the Placement Agent from the
Company, or as provided on Schedule 3(p), no brokerage or finder's fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank, or
other person with respect to the transactions contemplated by this Agreement.
The Investor shall have no obligation with respect to any Placement Agent fees
or with respect to any claims (other than such fees or commissions owed by an
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Investor pursuant to written agreements executed by the Investor which
fees or commissions shall be the sole responsibility of such Investor)
made by or on behalf of other persons for fees of a type contemplated in
this Section that may be due in connection with the transactions
contemplated by this Agreement.
(q) Certain Registration Matters. Assuming the accuracy of the
Investor's representations and warranties set forth in Section 4, no
registration under the Securities Act is required for the offer and sale
of the Shares by the Company to the Investor hereunder.
(r) Listing and Maintenance Requirements. Except as specified in the
Exchange Act Documents, the Company has not, in the two years preceding
the date hereof, received notice from any stock exchange or automated
dealer quotation system to the effect that the Company is not in
compliance with the listing or maintenance requirements thereof. The
Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with the listing and
maintenance requirements for continued listing of the Common Stock on the
OTC Bulletin Board.
(s) Investment Company. The Company is not, and is not an
"affiliate" of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(t) No Additional Agreements. The Company does not have any
agreement or understanding with any Investor with respect to the
transactions contemplated by this Agreement and the Registration Rights
Agreement on terms that differ from those set forth in this Agreement and
the Registration Rights Agreement.
(u) Disclosure. The Company confirms that neither it nor any person
acting on its behalf has provided the Investor or its agents or counsel
with any information that the Company believes would constitute material,
non-public information following the announcement of the Closing. The
Company understands and confirms that the Investor will rely on the
foregoing representations and covenants in effecting transactions in
securities of the Company. All disclosure provided to the Investor
regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company (including the disclosure
in the PPM and the Company's representations and warranties set forth in
this Agreement) are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
4. Representations and Warranties of the Investor. In order to induce the
Company to enter into this Agreement, the Investor represents and warrants to
the Company the following:
(a) Authority. If a corporation, partnership, limited partnership,
limited liability company, or other form of entity, the Investor is duly
organized or formed, as the case may be, validly existing, and in good
standing under the laws of its jurisdiction of organization or formation,
as the case may be. The Investor has all requisite individual or entity
right, power, and authority to execute, deliver, and perform this
Agreement.
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(b) Enforceability. The execution, delivery, and performance of this
Agreement by the Investor have been duly authorized by all requisite
partnership or corporate action, as the case may be. This Agreement has
been duly executed and delivered by the Investor, and, upon its execution
by the Company, shall constitute the legal, valid, and binding obligation
of the Investor, enforceable in accordance with its terms, except to the
extent that its enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of
equity.
(c) No Violations. The execution, delivery, and performance of this
Agreement by the Investor do not and will not, with or without the passage
of time or the giving of notice, result in the breach of, or constitute a
default, cause the acceleration of performance, or require any consent
under, or result in the creation of any lien, charge or encumbrance upon
any property or assets of the Investor pursuant to, any material
instrument or agreement to which the Investor is a party or by which the
Investor or its properties may be bound or affected, and, do not or will
not violate or conflict with any provision of the articles of
incorporation or bylaws, partnership agreement, operating agreement, trust
agreement, or similar organizational or governing document of the
Investor, as applicable.
(d) Knowledge of Investment and its Risks. The Investor has
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of Investor's investment in the
Shares. The Investor understands that an investment in the Company
represents a high degree of risk and there is no assurance that the
Company's business or operations will be successful. The Investor has
considered carefully the risks attendant to an investment in the Company,
and that, as a consequence of such risks, the Investor could lose
Investor's entire investment in the Company.
(e) Investment Intent. The Investor hereby represents and warrants
that (i) the Shares are being acquired for investment for the Investor's
own account, and not as a nominee or agent and not with a view to the
resale or distribution of all or any part of the Shares, and the Investor
has no present intention of selling, granting any participation in, or
otherwise distributing any of the Shares within the meaning of the
Securities Act, (ii) the Shares are being acquired in the ordinary course
of the Investor's business, and (iii) the Investor does not have any
contracts, understandings, agreements, or arrangements, directly or
indirectly, with any person and/or entity to distribute, sell, transfer,
or grant participations to such person and/or entity with respect to, any
of the Shares. The Investor is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding the
Shares published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(f) Investor Status. The Investor is an "Accredited Investor" as
that term is defined by Rule 501 of Regulation D promulgated under the
Securities Act and the information provided by the Investor in the
Investor's Questionnaire is truthful, accurate, and complete. The Investor
is not registered as a broker-dealer under Section 15 of the Exchange Act.
(g) Disclosure. The Investor has reviewed information provided by
the Company in connection with the decision to purchase the Shares,
consisting of the Company's publicly available filings with the SEC and
the information contained therein. The Company has provided the Investor
with all the information that the Investor has requested in connection
with the decision to purchase the Shares. The Investor further represents
that the Investor has had an opportunity to ask questions and receive
answers from the Company regarding the business, properties, prospects,
and financial condition of the Company. All such questions have been
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answered to the full satisfaction of the Investor. Neither such inquiries
nor any other investigation conducted by or on behalf of the Investor or
its representatives or counsel shall modify, amend, or affect the
Investor's right to rely on the truth, accuracy, and completeness of the
disclosure materials and the Company's representations and warranties
contained herein.
(h) No Registration. The Investor understands that Investor may be
required to bear the economic risk of Investor's investment in the Company
for an indefinite period of time. The Investor further understands that
(i) neither the offering nor the sale of the Shares has been registered
under the Securities Act or any applicable State Acts in reliance upon
exemptions from the registration requirements of such laws, (ii) the
Shares and the Conversion Shares must be held by he, she or it
indefinitely unless the sale or transfer thereof is subsequently
registered under the Securities Act and any applicable State Acts, or an
exemption from such registration requirements is available, (iii) except
as set forth in the Registration Rights Agreement between the Company and
the Investor, the Company is under no obligation to register any of the
Shares or the Conversion Shares on the Investor's behalf or to assist the
Investor in complying with any exemption from registration, and (iv) the
Company will rely upon the representations and warranties made by the
Investor in this Subscription Agreement in order to establish such
exemptions from the registration requirements of the Securities Act and
any applicable State Acts.
(i) Transfer Restrictions. The Investor will not transfer any of the
Shares or the Conversion Shares unless such transfer is registered or
exempt from registration under the Securities Act and such State Acts,
and, if requested by the Company in the case of an exempt transaction, the
Investor has furnished an opinion of counsel reasonably satisfactory to
the Company that such transfer is so exempt. The Investor understands and
agrees that (i) the certificates evidencing the Shares and the Conversion
Shares will bear appropriate legends indicating such transfer restrictions
placed upon the Shares and the Conversion Shares, (ii) the Company shall
have no obligation to honor transfers of any of the Shares or the
Conversion Shares in violation of such transfer restrictions, and (iii)
the Company shall be entitled to instruct any transfer agent or agents for
the securities of the Company to refuse to honor such transfers.
(j) Principal Address. The Investor's principal residence, if an
individual, or principal executive office, if an entity, is set forth on
the signature page of this Subscription Agreement.
5. Independent Nature of Investor's Obligations and Rights. The
obligations of the Investor under this Agreement, the Registration Rights
Agreement, and any other documents delivered in connection herewith and
therewith (collectively, the "Transaction Documents") are several and not joint
with the obligations of any other purchaser of Shares, and the Investor shall
not be responsible in any way for the performance of the obligations of any
other purchaser of Shares under any Transaction Document. The decision of the
Investor to purchase Shares pursuant to the Transaction Documents has been made
by the Investor independently of any other purchaser of Shares. Nothing
contained herein or in any Transaction Document, and no action taken by any
purchaser of Shares pursuant thereto, shall be deemed to constitute such
purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the purchasers of Shares are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. The Investor acknowledges
that no other purchaser of Shares has acted as agent for the Investor in
connection with making its investment hereunder and that no other purchaser of
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Shares will be acting as agent of the Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. The Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other purchaser of Shares to be joined as an additional party
in any proceeding for such purpose.
6. Acknowledgement of Investor. The Shares of Preferred Stock being
offered through the PPM will be issued after the closing of the FTK Transactions
and the closing of the Ronco Asset Purchase (each as defined and described in
the PPM). At the closing of the FTK Transactions the board of directors and
management of FTK (the "Outgoing FTK Board") will resign and be replaced by the
persons identified in the "Management" section of the PPM (the "Company Board").
The Investor does hereby acknowledge that: (i) the information and disclosure
included in the PPM was compiled and prepared on behalf of Ronco Marketing
Corporation ("RMC") based on due diligence performed by or at the request of RMC
concerning FTK and the Predecessor Entities (as defined in the PPM); (ii) the
members of the Outgoing FTK Board make no representations or warranties of any
kind or nature with respect to the accuracy or completeness of any information,
including financial information, included in the PPM, and (iii) the Outgoing FTK
Board disclaims any responsibility or liability whatsoever for the accuracy or
completeness of such information contained in the PPM. The Investor does hereby
release the members of the Outgoing FTK Board from any responsibility or
liability whatsoever for the accuracy or completeness of information, including
financial information, included in the PPM. This Subscription Agreement shall be
reviewed by the Company Board and, if accepted, executed at the direction of the
Company Board and such execution shall take place after the resignation of the
Outgoing FTK Board. The Investor acknowledges that they shall not have made an
investment in the Preferred Stock until such time as this Agreement has been
accepted and executed by the Company.
7. Right to Withdraw Subscription. The Investor shall have the right to
withdraw the amount of the Purchase Price set forth on the signature page of
this Agreement from the Escrow Account up until such time as Notice, as
described in Section 18, has been sent to the Investor by the Company that the
FTK Closing (as defined in the PPM) has been completed (the "FTK Closing
Notice"). Thereafter, the Investor shall not have the right to withdraw the
Purchase Price from the Escrow Account. In order for the Investor to exercise
the withdrawal right provided for in this Section 7, the Investor must fax such
withdrawal election to the Placement Agent to the attention of Xxxxx Xxxxxx at
Xxxxxxx Xxxxxx Xxxxxx Inc. (facsimile number 646-349-1776). All withdrawal
elections must be received by the Placement Agent prior to the time the FTK
Closing Notice is sent in order to be effective.
8. Prospectus Delivery Requirement. The Investor hereby covenants with the
Company not to make any sale of the Shares or the Conversion Shares without
complying with the provisions hereof and of the Registration Rights Agreement,
and without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied (unless the Investor is selling such Shares or
the Conversion Shares in a transaction not subject to the prospectus delivery
requirement).
9. Stockholder Approval. The Company represents and warrants to the
Investor that the vote of the Company's Stockholders will not be required to
approve the issuance of the Shares or the Conversion Shares.
10. Indemnification of Investor. In addition to the indemnity provided in
the Registration Rights Agreement, the Company will indemnify and hold the
Investor and its directors, officers, stockholders, members, managers, partners,
employees and agents (each, an "Investor Party") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs, and
reasonable attorneys' fees and costs of investigation (collectively, "Losses")
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that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach, or inaccuracy of any representation, warranty,
covenant, or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation, and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.
11. Non-Public Information. Subsequent to the Closing, the Company
covenants and agrees that neither it nor any other person acting on its behalf
will provide Investor or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto Investor shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that Investor shall be relying on the foregoing representations in
effecting transactions in securities of the Company.
12. Further Assurances. The parties hereto will, upon reasonable request,
execute and deliver all such further assignments, endorsements and other
documents as may be necessary in order to perfect the purchase by the Investor
of the Shares.
13. Entire Agreement; No Oral Modification. This Agreement contains the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings with respect
thereto and may not be amended or modified except in a writing signed by both of
the parties hereto.
14. Binding Effect; Benefits. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors
and assigns; however, nothing in this Agreement, expressed or implied, is
intended to confer on any other person other than the parties hereto, or their
respective heirs, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
16. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the United States of America and New
York, both substantive and remedial. Any judicial proceeding brought against
either of the parties to this agreement or any dispute arising out of this
Agreement or any matter related hereto shall be brought in the courts of the
State of New York, New York County, or in the United States District Court for
the Southern District of New York and, by its execution and delivery of this
agreement, each party to this Agreement accepts the jurisdiction of such courts.
17. Prevailing Parties. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party shall be entitled to receive and the
nonprevailing party shall pay upon demand reasonable attorneys' fees in addition
to any other remedy.
18. Notices. All communication hereunder shall be in writing and, if sent
to you shall be mailed, delivered, telegraphed or sent by facsimile or
electronic mail, and confirmed to an Investor at the address set forth on the
signature page of this Agreement, or if sent to the Company, shall be mailed,
10
delivered, telegraphed or sent by facsimile or electronic mail and confirmed to
the Company at 00000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000: Attention: Xxxxxxx
Xxxxx, President and Chief Executive Officer, telephone number (000) 000-0000
and facsimile number (000) 000-0000.
19. Headings. The section headings herein are included for convenience
only and are not to be deemed a part of this Agreement.
[Signature on following page]
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
RONCO CORPORATION, a Delaware corporation
By:
-------------------------------------
Name:
Its:
[Counterpart Signature Pages Attached]
Counterpart Signature Page to Subscription Agreement
INVESTOR
---------------------------------------
By:
----------------------------------
---------------------------------------
Print Name and Title
---------------------------------------
---------------------------------------
---------------------------------------
Principal Residence or Executive Office
---------------------------------------
IRS Tax Identification No.
---------------------------------------
Telephone Number
---------------------------------------
Fax Number
---------------------------------------
E-mail Address
$
X =
---------------- ------------------------ -----------------------
Number of Shares Price per Share Purchase Price
Exhibit A
Investor's Questionnaire
Schedule 3(b)
Subsidiaries
------------------------------------- ------------------------------- -----------------------------------------
Subsidiary Place of Incorporation Liens
------------------------------------- ------------------------------- -----------------------------------------
Ronco Marketing Corporation Delaware None
------------------------------------- ------------------------------- -----------------------------------------
------------------------------------- ------------------------------- -----------------------------------------
Schedule 3(h)
Material Liabilities
None
Schedule 3(i)
Disputes Against Company
None
Schedule 3(k)
Compliance
None
Schedule 3(p)
Certain Fees
Name Amount of Fee
Mr. Xxxxx Xxxxxxxx $350,000
Coll International LLC $400,000 plus non-accountable expenses
Xxxxxxxxxxx Equity Partners LLC $400,000 plus non-accountable expenses
Content Holdings $1,000,000 plus non-accountable expenses
