NANO VIBRONIX, INC. FORM OF SUBSCRIPTION AGREEMENT CONVERTIBLE PROMISSORY NOTES
EXHIBIT 10.4
FORM OF SUBSCRIPTION AGREEMENT
CONVERTIBLE PROMISSORY NOTES
SUBSCRIPTION AGREEMENT (the “Agreement”) dated as of November __, 2011, between Nano Vibronix, Inc., a Delaware corporation (the “Company”), and the persons who execute this agreement as investors (collectively, the “Investors”).
WITNESSETH:
WHEREAS, the Company desires to sell to the Investors, and the Investors desire to purchase, up to $1,000,000 in aggregate principal amount of convertible promissory notes of the Company in substantially the form attached hereto as Exhibit 1 (the “Notes”).
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto hereby agree as follows:
| 1. | Purchase and Sale of Securities. |
1.1. Sale and Issuance of Notes. The Company shall sell to the Investors and the Investors shall purchase from the Company, up to $1,000,000 in aggregate principal amount of Notes for an aggregate purchase price of US$1,000,000.
1.2. The closing (the “Closing”) of the purchase and sale of the Notes hereunder shall take place within three (3) business days of the date of this Agreement or such other date agreed to by the Company and the Investors (the “Closing Date”). The Closing shall take place remotely by means of and concurrently with the electronic or facsimile exchange of documents and signatures at the Company or at such location as is mutually acceptable to the Investors and the Company. At the Closing:
(a) each Investor shall deliver to the Company by wire transfer as set forth below:
| Mellon Bank Pittsburdgh, PA | |
| ABA # : | 000000000 |
| FFC: | Xxxxxxx Xxxxx |
| Account # : | 101-1730 |
| Name on the account: | NanoVibronix Inc |
| FFC: | 831-07B23 |
or such other method of payment as the Company shall approve, an amount equal to the purchase price of the Note purchased by such Investor hereunder; and
(b) the Company shall issue and deliver to each Investor a Note in the name of the Investor, in the principal amount equal to the purchase price paid by such Investor; and
(c) the Company shall have obtained all requisite approvals and waivers of its Board of Directors and stockholders with respect to the transactions described herein and the amendment and restatement of the Company’s certificate of incorporation in substantially the form attached hereto as Exhibit 2 and shall have filed such certificate with the Secretary of State of the State of Delaware.
2. Representations and Warranties of the Company. The Company hereby makes the following representations and warranties only:
2.1 The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) has the corporate power and authority to own or lease its properties as and in the places where such business is conducted and to carry on its business as conducted, and (iii) is duly qualified as a foreign corporation authorized to do business in every jurisdiction where the failure to so qualify, individually or in the aggregate, would have a material adverse effect on the operations, assets, liabilities, financial condition or business of the Company or its subsidiary (“Material Adverse Effect”).
2.2 The Company’s subsidiary is duly incorporated and validly existing under the laws of its jurisdiction of incorporation and is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to so qualify would not have a Material Adverse Effect.
2.3 As of the date of this Agreement (assuming that the Restated Certificate has been filed) and as of the Closing, the Company (i) has the requisite corporate power and authority to execute, deliver and perform this Agreement and the other documents set forth in Section 1.2 above (“Transaction Documents”) and to incur the obligations herein and therein and (ii) has been authorized by all necessary corporate action to execute, deliver and perform this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby (the “Contemplated Transactions”).
2.4 Each of this Agreement and the other Transaction Documents is a valid and binding obligation of the Company enforceable in accordance with its terms except as limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding at law or equity).
2.5 As of the date of this Agreement (assuming that the Restated Certificate has been filed) and as of the Closing, the issuance of the Notes and the shares of Series B-1 Convertible Preferred Stock, par value $.001 per share, of the Company (“Preferred B Shares”) issuable upon a conversion of the Notes (the “Conversion Shares”) has been duly authorized by all necessary corporate action on the part of the Company and, when issued to, delivered to the Investors in accordance with this Agreement and the Notes, the Conversion Shares will be validly issued, fully paid and non-assessable.
2.6 The Company shall at all times reserve and keep available sufficient Preferred B-1 Shares and common stock solely for issuance and delivery upon a conversion of the Notes.
| 2 |
3. Representations and Warranties and Agreement of the Investors. Each Investor represents and warrants to the Company as follows:
3.1. Authorization. Each Investor (i) has full power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to incur the obligations herein and therein and (ii) if applicable, has been authorized by all necessary corporate action to execute, deliver and perform this Agreement and the other Transaction Documents and to consummate the Contemplated Transactions. Each of this Agreement and the other Transaction Documents is a valid and binding obligation of Investor enforceable in accordance with its terms, except as limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors’ rights and the availability of equitable remedies (regardless of whether such enforceability is considered in a proceeding at law or equity).
3.2. Securities Laws Representations and Covenants of Investors.
(a) This Agreement is made with each Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement such Investor hereby confirms, that the Notes and any Conversion Shares to be received by such Investor will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof such that such Investor would constitute an “underwriter” under the Securities Act of 1933, as amended (the “Securities Act”). The Investor has not granted and shall not grant any right to any other person to acquire the Notes or the Conversion Shares except as permitted by the Securities Act and other applicable securities laws.
(b) Each Investor understands and acknowledges that the offering of the Notes pursuant to this Agreement will not be registered under the Securities Act or qualified under any other applicable securities laws on the grounds that the offering and sale of the Securities are exempt from registration and qualification and that the Company’s reliance upon such exemption is predicated upon such Investor’s representations set forth in this Agreement.
(c) Each Investor covenants that, unless the Notes, the Conversion Shares or any other securities of the Company received in respect of the foregoing have been registered pursuant to the Securities Act, such Investor will not dispose of such securities unless and until such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with an opinion of counsel reasonably satisfactory in form and substance to the Company and its counsel to the effect that (i) such disposition will not require registration under the Securities Act and (ii) appropriate action necessary for compliance with the Securities Act and any applicable state, local or foreign law has been taken. Therefore, such Investor may be required to hold such securities for an indeterminate period.
| 3 |
(d) Each Investor further represents that such Investor (i) is able to fend for itself in the Contemplated Transactions; (ii) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of such Investor’s prospective investment in the Notes; (iii) has the ability to bear the economic risks of such Investor’s prospective investment and can afford the complete loss of such investment; (iv) has received all the information it considers necessary or appropriate for deciding whether to purchase the Notes; (v) has had access to officers of the Company and an opportunity to ask questions of and receive satisfactory answers from such officers; (vi) qualifies as an “accredited investor” as such term is defined under Rule 501 promulgated under the Securities Act; and (vi) in the case a corporation, a partnership, a trust or other business entity, further represents by execution of this Agreement that it has not been organized for the purpose of purchasing the Securities.
(e) The maximum liability of the Company under this Agreement to each Investor shall not exceed the purchase price paid plus accrued interest by such Investor. An Investor may not bring any claim arising out of this Agreement unless written notice of the claim shall have been given to the Company no later than 3 months following the date that the Company's financial statements for the period ending 31 December 2011 shall be made available. This provision shall not affect an Investor’s ability to enforce payment due under the Notes.
(f) Each Investor shall provide all information and execute all documents that the Company shall deem necessary to prepare and file with the SEC a Form D concerning the sale of the Securities.
3.3. Legends. The Notes and all certificates for the Conversion Shares, and each certificate representing any other securities of the Company received in respect of the foregoing, and each certificate for any such securities issued to subsequent transferees of any such certificate shall bear a legend substantially in the following form:
“NEITHER THIS NOTE NOR ANY SECURITIES THAT MAY BE ISSUED UPON THE CONVERSION HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), STATE SECURITIES LAWS, OR LAWS OF ANY FOREIGN JURISDICTION. NEITHER THIS NOTE NOR ANY SUCH SECURITIES MAY BE SOLD, ASSIGNED, OFFERED, PLEDGED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR (II) THE COMPANY RECEIVING AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, ASSIGNMENT, OFFER, PLEDGE, OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND STATE SECURITIES LAWS.”
In addition, such cer`ificates shall bear any legend that, in the opinion of the Company’s counsel, is required under the other Transaction Documents or pursuant to any state, local or foreign law governing the Notes, the Conversion Shares and any other securities of the Company received in respect of the foregoing.
| 4 |
3.4. Brokers or Finders. Each Investor represents and warrants that neither the Company nor the Investor has incurred, directly or indirectly, as a result of any action taken by the Investor, any liability for brokerage of finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.
3.5. Buyout Proposal. If at any time (i) the Company receives from any third party (in which no stockholder has a significant interest) a bona fide offer or proposal (a “Buyout Proposal”) to purchase all of the shares of the Company, or all or substantially all of the assets of the Company, or to effect a merger or consolidation with the Company, which is conditioned upon the sale of all shares of the Company to such third party or stockholder approval and (ii) the holders of shares representing seventy five percent (75%) of the aggregate voting power of the Company approve the Buyout Proposal, then the Investors shall transfer their stock in the Company to such third party or shall vote in favor of the proposed Buyout Proposal, as applicable.
4. Miscellaneous.
4.1. Entire Agreement; Successors and Assigns. This Agreement (including all schedules and exhibits thereto) constitutes the entire contract between the parties relative to the subject matter hereof and thereof. Any previous agreement among the parties with respect to the sale of the Securities is superseded by this Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, successors and assigns of the parties. Except as expressly provided herein, nothing in this Agreement, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
4.2. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the State of New York without regard to principles of conflicts of law. Each party hereby irrevocably consents and submits to the jurisdiction of any New York State or United States Federal Court sitting in the State of New York, County of New York, over any action or proceeding arising out of or relating to this Agreement and irrevocably consents to the service of any and all process in any such action or proceeding by registered mail addressed to such party at its address shown below. Each party further waives any objection to venue in New York and any objection to an action or proceeding in such state and county on the basis of forum non-conveniens. Each party also waives any right to trial by jury.
4.3. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
4.4. Headings. The headings of the sections of this Agreement are for convenience and shall not by themselves determine the interpretation of this Agreement.
| 5 |
4.5. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery and if a fax number has been provided, upon delivery (with answerback confirmed), addressed to a party at its address and the fax number, if any, shown below or at such other address and fax number as such party may designate by three days advance notice to the other party.
Any notice to the Investors shall be sent to the addresses set forth on the signature pages hereof.
| .Any notice to the Company shall be sent to: | With a copy to: | ||
| Nano Vibronix Inc. | |||
| 000 Xxxxxxxx Xxxxxx | |||
| Xxxxxxxxxx, XX 00000 | Nano Vibronix, Inc. | ||
| Attention: Xx. Xxxxxx Xxxxx | Fax: x000 0 000 0000 | ||
| Fax: 000 000 0000 | |||
4.6. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or any other provision of this Agreement.
4.7. Expenses. Irrespective of whether the Closing is effected, the Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. Each Investor shall be responsible for all costs incurred by it in connection with the negotiation, execution, delivery and performance of this Agreement including, but not limited to, legal fees and expenses.
4.8 Amendments and Waivers. Any provision of this Agreement may be amended and the observance of any provision of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the aggregate then-outstanding principal amount of the Notes. Any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any Notes purchased under this Agreement at the time outstanding, and the Company.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
| 6 |
SIGNATURE PAGE
TO
NANO VIBRONIX INC.
IF the PURCHASER is an INDIVIDUAL, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement this __ day of ______________.
Amount of Subscription:
$_________
| Investor Name: | |
| Signature of Investor | |
| Social Security Number | |
| Address and Fax Number | |
ACCEPTED AND AGREED:
NANO VIBRONIX INC.
| By: | ||
| Name: | ||
| Title: |
| Dated: |
SIGNATURE PAGE
TO
IF the INTERESTS will be held as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement this __ day of ____________.
| Amount of Subscription: | |
| $ ____________ | Print Name of a Purchaser |
| Signature of a Purchaser | |
| Print Name of Spouse or Other Purchaser | |
| Signature of Spouse or Other Purchaser | |
| Social Security Number | |
| Address | |
ACCEPTED AND AGREED:
NANO VIBRONIX INC.
| By: | ||
| Name: | ||
| Title: |
| Dated: |
SIGNATURE PAGE
TO
NANO VIBRONIX INC.
IF the PURCHASER is a PARTNERSHIP, CORPORATION, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement this __ day of ______________.
| Amount of Subscription: | |||
| $ _____________ | |||
| Print Full Legal Name of Partnership, | |||
| Company, Trust or Other Entity | |||
| By: | |||
| (Authorized Signatory) | |||
| Name: | |||
| Title: | |||
| Address and Fax Number: |
| Employer Identification Number: | |||
| Date and State of Incorporation or Organization: |
| Date on which Taxable Year Ends: |
ACCEPTED AND AGREED:
NANO VIBRONIX INC.
| By: |
Name:
Title:
Dated:
