REGULATION D SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
EXHIBIT
10.9
0000
Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
REGULATION
D SUBSCRIPTION AGREEMENT
AND
INVESTMENT REPRESENTATION
SECTION
1
1.1 Subscription. The
undersigned, intending to be legally bound, hereby irrevocably subscribes for
and agrees to exchange a liability owed to it by Powersafe Technology Corp., a
Delaware corporation (the "Company") and/or a liability owed to it by
Amplification Technologies, Inc. (“ATI”), a Delaware corporation, a wholly owned
subsidiary of the Company, in a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”)
for the number of shares of Series D-1 Preferred Stock and Warrants indicated
below. The terms of the Series D-1 Preferred Stock and Warrants are more fully
described in the Certificate of Designation of the Preferred Stock and Warrant
Agreement attached hereto as Exhibits A and B,
respectively.
The
undersigned understands that the securities are being offered, exchanged and
issued by the Company in a transaction exempt from the registration requirements
of the Securities Act.
For
purposes of this agreement, the Series D-1 Preferred Stock shall be referred to
as the “Preferred Stock”, the shares of common stock of the Company issued upon
due conversion of the Preferred Stock in accordance with the terms thereof shall
be referred to as the “Converted Shares” and the shares of common stock of the
Company issued upon due conversion of the Warrants shall be referred to as the
“Warrant Shares”. The Preferred Stock, Warrants, Converted Shares and Warrant
Shares shall hereinafter be referred to collectively as the
“Shares”.
1.2 Registration
Penalty. The Company agrees to pay to the subscriber an amount
equal to one half of one percent (1/2%) of the aggregate purchase price of the
Shares acquired by the Subscriber pursuant to this Agreement (the
“Monthly
Payment”), calculated day-to-day on a 30/360 basis, each month beginning
November 1, 2009 until the date that the Company shall have prepared and filed
with the Securities and Exchange Commission a registration statement
covering the Converted Shares issuable upon conversion of the Preferred
Stock, and such registration statement shall have been declared effective under
the Securities Act, or the subscriber is then able to sell such Converted Shares
under Rule 144 promulgated pursuant to the Securities Act (the Monthly Fee to be
pro rated if this condition is satisfied with respect to only a portion of such
Converted Shares).
1.3 Release. The
undersigned understands and acknowledges that _______________________ dollars
($___________________) owed to it by the Company and/or ATI, are to be exchanged
for _____ shares of Series D-1 Preferred Stock (“Preferred Stock”) and ______
Warrants.
In
consideration of the issuance of the Preferred Stock and Warrants, the
undersigned hereby irrevocably and unconditionally releases, and forever
discharges the Company, ATI, and their officers, directors, stockholders,
employees, agents, representatives and affiliates and their respective
successors and assigns, and all persons, firms, corporations, and organizations
acting on their behalf (collectively referred to as the “Related Entities”) of
and from any and all actions, causes of actions, suits, potential lawsuits,
debts, charges, demands, complaints, claims, administrative proceedings,
liabilities, obligations, promises, agreements, controversies, damages and
expenses (including but not limited to compensatory, punitive or liquidated
damages, attorney’s fees and other costs and expenses incurred), of any kind or
nature whatsoever, whether presently known or unknown, which the undersigned may
have or claim to have against any of the Related Entities as of the date hereof
with respect to the payment of $______.
SECTION
2
2.1 Investor Representations and
Warranties. The undersigned hereby acknowledges, represents
and warrants to, and agrees with, the Company and its affiliates as
follows:
(a) Investment
Purposes. The undersigned is acquiring the Shares for his own
account as principal, not as a nominee or agent, for investment purposes only,
and not with a view to, or for, resale, distribution or fractionalization
thereof in whole or in part in any transactions that would be in violation of
the Securities Act or any state securities or "blue-sky" laws. No other person
has a direct or indirect beneficial interest in, and the undersigned does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to, the Shares or any part of the Shares for which the undersigned
is subscribing that would be in violation of the Securities Act or any state
securities or "blue-sky" laws.
(b) Authority. The
undersigned has full power and authority to enter into this Agreement, the
execution and delivery of this Agreement has been duly authorized, if
applicable, and this Agreement constitutes a valid and legally binding
obligation of the undersigned.
(c) No General
Solicitation. The undersigned is not subscribing for the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio; or presented at any seminar or similar
gathering; or any solicitation of a subscription by a person, other than Company
personnel, previously not known to the undersigned.
(d) Investment
Experience. The undersigned, or the undersigned’s professional
advisors, has such knowledge and experience in finance, securities, taxation,
investments and other business matters as to evaluate investments of the kind
described in this Agreement. By reason of the business and financial experience
of the undersigned or his professional advisors (who are not affiliated with or
compensated in any way by the Company or any of its affiliates or selling
agents), the undersigned or his advisors can protect his own interests in
connection with the transactions described in this Agreement. The undersigned is
able to afford the loss of his entire investment in the Shares.
(e) Exemption from
Registration. The undersigned acknowledges his understanding
that the offering and sale of the Shares is intended to be exempt from
registration under the Securities Act. In furtherance thereof, in
addition to the other representations and warranties of the undersigned made
herein, the undersigned further represents and warrants to and agrees with the
Company and its affiliates as follows:
(1) The
undersigned has the financial ability to bear the economic risk of his
investment, has adequate means for providing for his current needs and personal
contingencies and has no need for liquidity with respect to his investment in
the Company; and
(2) The
undersigned has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of the prospective
investment in the Shares. The undersigned also represents it has not
been organized for the purpose of acquiring the Shares; and
(3) The
undersigned has been provided an opportunity for a reasonable period of time
prior to the date hereof to obtain additional information concerning the
offering of the Shares, the Company and all other information to the extent the
Company possesses such information or can acquire it without unreasonable effort
or expense.
(4) The
undersigned understands that the Shares are not being registered under the
Securities Act, or the securities laws of any state in reliance upon exemptions
therefrom for private offerings. The undersigned understands that the
Shares must be held indefinitely unless the sale thereof is subsequently
registered under the Securities Act and applicable state securities laws or
exemptions from such registration are available. All certificates
evidencing the undersigned Shares will bear a legend stating that the Shares
have not been registered under the Securities Act or state securities laws and
they may not be resold unless they are registered under the Securities Act and
applicable state securities laws or exempt therefrom.
(f) Economic
Considerations. The undersigned is not relying on the Company,
or its affiliates or agents with respect to economic considerations involved in
this investment. The undersigned has relied solely on its own
advisors.
(g) No Other Company
Representations. No representations or warranties have been
made to the undersigned by the Company, or any officer, employee, agent,
affiliate or subsidiary of the Company, other than the representations of the
Company contained herein, and in subscribing for Shares the undersigned is not
relying upon any representations other than those contained herein.
(h) Accredited
Investor. The undersigned is an “Accredited Investor” as that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act, and as specifically indicated in Exhibit C to this Agreement.
(i) State
Residency. The undersigned’s principal residence (if
subscriber is an individual) or principal business address, as applicable,
is in the state indicated on the signature page, and the undersigned has no
present intention to move such residence or principal business address, as
applicable, from such State.
(j) Legend. Each
certificate representing the Shares shall be endorsed with the following legend,
in addition to any other legend required to be placed thereon by applicable
federal or state securities laws:
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR WITHOUT AN
EXEMPTION THEREFROM OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.”
The
undersigned consents to the Company making a notation on its records or giving
instructions to any transfer agent of the Company in order to implement the
restrictions on transfer of the Shares set forth in this Section
(k) Potential Loss of
Investment. The undersigned understands that an investment in
the Shares is a speculative investment which involves a high degree of risk and
the potential loss of his entire investment. The
undersigned has received and reviewed the filings made by the Company with the
SEC. The undersigned understands and acknowledges that as a result
thereof, he may lose his entire investment in the Company.
(l) Investment
Commitment. The undersigned's overall commitment to
investments which are not readily marketable is not disproportionate to the
undersigned's
net
worth, and an investment in the Shares will not cause such overall commitment to
become excessive.
(m) Receipt of
Information. The undersigned has received all documents,
records, books and other information pertaining to the undersigned’s investment
in the Company that has been requested by the undersigned.
(n) No
Reliance. Other than as set forth herein, the undersigned is
not relying upon any other information, representation or warranty by the
Company or any officer, director, stockholder, agent or representative of the
Company in determining to invest in the Shares. The undersigned has
consulted, to the extent deemed appropriate by the undersigned, with the
undersigned’s own advisers as to the financial, tax, legal and related matters
concerning an investment in the Shares and on that basis believes that his or
its investment in the Shares is suitable and appropriate for the
undersigned.
(o) No Governmental
Review. The undersigned is aware that no federal or state
agency has (i) made any finding or determination as to the fairness of this
investment, (ii) made any recommendation or endorsement of the Shares or the
Company, or (iii) guaranteed or insured any investment in the Shares or any
investment made by the Company.
(p) Price of
Shares. The undersigned understands that the price of
the Shares offered hereby was determined by the Company without reference to the
assets or book value of the Company. The undersigned further
understands that there is a substantial risk of further dilution of his or its
investment in the Company.
SECTION
3
Company’s Representations
and Warranties. The Company represents and warrants to the
undersigned as follows:
(a) Organization of the
Company. The Company is a corporation duly organized and
validly existing and in good standing under the laws of the State of
Delaware.
(b) Authority. (a) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to issue the Shares;
(b) the execution and delivery of this Agreement by the Company and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required; and (c) this Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable
bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general
application.
(c) Exemption from Registration;
Valid Issuances. The sale and issuance of the Shares, in
accordance with the terms and on the bases of the representations and warranties
of the undersigned set forth herein, may and shall be properly issued by the
Company to the undersigned pursuant to any applicable federal or state law. When
issued and paid for as herein provided, the Shares shall be duly and validly
issued, fully paid, and non-assessable. Neither the sales of the Shares pursuant
to, nor the Company's performance of its obligations under, this Agreement shall
result in the creation or imposition of any liens, charges, claims or other
encumbrances upon the Shares or any of the assets of the Company. The Shares
shall not subject the undersigned to personal liability by reason of the
ownership thereof.
(d) No General Solicitation or
Advertising in Regard to this Transaction. Neither the Company
nor any of its affiliates nor any person acting on its or their behalf (a) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of Regulation D) or general advertising with respect to any of the
Shares, or (b) made any offers or sales of any security or solicited any offers
to buy any security under any circumstances that would require registration of
the Common Stock under the Securities Act.
SECTION
4
4.1 Indemnity. The
undersigned agrees to indemnify and hold harmless the Company, its officers and
directors, employees and its affiliates and their respective successors and
assigns and each other person, if any, who controls any thereof, against any
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the undersigned to comply
with any covenant or agreement made by the undersigned herein or in any other
document furnished by the undersigned to any of the foregoing in connection with
this transaction.
4.2 Modification. Neither
this Agreement nor any provisions hereof shall be modified, discharged or
terminated except by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.
4.3 Notices. Any
notice, demand or other communication which any party hereto may be required, or
may elect, to give to anyone interested hereunder shall be sufficiently given if
(a) deposited, postage prepaid, in a United States mail letter box, registered
or certified mail, return receipt requested, addressed to such address as may be
given herein, (b) delivered personally at such address, (c) upon the expiration
of twenty four (24) hours after transmission, if sent by facsimile if a
confirmation of transmission is
produced
by the sending machine (and a copy of each facsimile promptly shall be sent by
ordinary mail), (d) upon the expiration of twenty four (24) hours
after transmission, if sent by email if a confirmation of transmission is
produced by the sending computer (and a copy of each email transmission promptly
shall be sent by ordinary mail) or (e) on the third business day, if
sent by overnight recognized courier, in each case to the parties at their
respective addresses set forth below their signatures to this Agreement (or at
such other address for a party as shall be specified by like notice; provided
that the notices of a change of address shall be effective only upon receipt
thereof).
4.4 Counterparts. This
Agreement may be executed through the use of separate signature pages or in any
number of counterparts and by facsimile, and each of such counterparts shall,
for all purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
Signatures may be facsimiles.
4.5 Binding
Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and
assigns. If the undersigned is more than one person, the obligation
of the undersigned shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and his heirs, executors,
administrators and successors.
4.6 Entire
Agreement. This Agreement and the documents referenced herein
contain the entire agreement of the parties and there are no representations,
covenants or other agreements except as stated or referred to herein and
therein.
4.7 Assignability. This
Agreement is not transferable or assignable by the undersigned.
4.8 Applicable Law; Arbitration;
Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles. The parties hereby irrevocably consent to
the in personam jurisdiction and venue of in a Rabbinical Court in Brooklyn, New
York under the principal of ZABLU (whereby each party picks one arbitrator and
the two selected arbitrators pick a third arbitrator). If there is any
litigation regarding the arbitration or otherwise relating to this section 4.8,
the parties hereto irrevocably consent to the jurisdiction of the courts of the
State of New York and of any federal court located in such State in connection
with any action or proceeding arising out of or relating to this
Warrant. EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
4.9 Pronouns. The
use herein of the masculine pronouns "him" or "his" or similar terms shall be
deemed to include the feminine and neuter genders as well and the use herein of
the singular pronoun shall be deemed to include the plural as well.
4.10 Further
Assurances. Upon request from time to time, the undersigned
shall execute and deliver all documents and do all other acts that may be
necessary or desirable, in the reasonable opinion of the Company or its counsel,
to effect the subscription for the Shares in accordance herewith.
SIGNATURE
PAGE
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day and year this
subscription has been accepted by the Company as set forth below.
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Number
of Shares Subscribed For:
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Print
Name of Subscriber
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By.
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(Signature
of Subscriber or Authorized Signatory)
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Address:
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Telephone:
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Fax:
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Social
Security Number or other Taxpayer Identification Number
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If the
Shares will be held as joint tenants, tenants in common, or community property,
please complete the following:
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Print
name of spouse or other co-subscriber
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Signature
of spouse or other co-subscriber
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Print
manner in which Shares will be
held
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Social
Security Number or other Taxpayer Identification Number
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If the
Shares have been purchased through a broker or other intermediary, please
identify such entity:
ACCEPTANCE
OF SUBSCRIPTION
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Name
of Subscriber
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ACCEPTED
BY:
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By:
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Name:
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Title:
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Date: _______________________,
2009
Accepted
for __________________________ Number of Series D-1 Preferred
Shares
Exhibit
C
ACCREDITED INVESTOR
STATUS
The
undersigned subscriber represents that it is an Accredited Investor on the basis
that it is (check one):
_____(i) A
bank as defined in Section 3(a)(2) of the Act, or a savings and loan association
or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting
in its individual or fiduciary capacity; a broker or dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934; an insurance company as
defined in Section 2(13) of the Act; an investment company registered under the
Investment Company Act of 1940 (the “Investment Company Act”) or a business
development company as defined in Section 2(a)(48) of the Investment Company
Act; a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; a plan established and maintained by a state, its political
subdivisions or any agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which is either a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors.
_____(ii) A
private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
_____(iii) An
organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000.
_____(iv) A
director or executive officer of the Company.
_____(v) A
natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his or her purchase exceeds $1,000,000.
_____(vi) A
natural person who had an individual income in excess of $200,000 in each of the
two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year.
_____(vii) A
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective
investment).
_____(viii) An
entity in which all of the equity owners are accredited
investors. (If this alternative is checked, the Subscriber must
identify each equity owner and provide statements signed by each demonstrating
how each is qualified as an accredited investor. Further, the
Subscriber represents that it has made such investigation as is reasonably
necessary in order to verify the accuracy of this
alternative.)
