SUBSCRIPTION AND STANDBY COMMITMENT AGREEMENT
This
Subscription and Standby Commitment Agreement (this “Agreement”),
dated
as of September [__], 2007, is entered into by and among MangoSoft, Inc., a
Nevada corporation (the “Company”),
and
the persons listed on Schedule
A
hereto
(collectively, the “Purchasers,”
and
individually, a “Purchaser”).
PRELIMINARY
STATEMENTS
A. The
Company proposes to consummate a rights offering (the “Rights
Offering”)
pursuant to which the Company will extend to each holder of record of shares
of
its common stock, par value $0.001 per share (the “Common
Stock”),
as of
the close of business on [_________ __], 2007 (the “Record
Date”)
(such
holders of record, which include the Purchasers, being herein referred to as
the
“Offerees”),
[___]
of a right, for each share of Common Stock held by such Offeree as of the Record
Date, to purchase one share of Common Stock at a purchase price of $.50 per
share, for an aggregate purchase price of $1,200,000. Each Offeree who elects
to
exercise such rights in full may also oversubscribe for additional shares of
Common Stock at the same subscription price per share in an amount up to the
greater of (a) 50% of the number of full rights received by such Offeree or
(b)
100 shares of Common Stock.
B. The
Purchasers hold for their own account, directly and through banks, brokers
and
other nominees, in aggregate, 2,210,150 shares of Common Stock and accordingly,
will be extended rights in the Rights Offering to purchase for their own account
up to an aggregate of [____] shares of Common Stock.
C. To
assure
the sale of all of the shares of Common Stock in the Rights Offering, the
Purchasers desire, concurrently with the consummation of the Rights Offering,
to
(i) exercise in full their basic subscription privileges and (ii) subscribe
for
and purchase the difference between 2,400,000 shares of Common Stock and the
number of shares of Common Stock subscribed for and purchased pursuant to the
Rights Offering, all as more particularly set forth herein.
STATEMENT
OF AGREEMENT
In
consideration of the premises and the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to
be legally bound, agree as follows:
1. Basic
Commitment. Subject
to the terms and conditions hereof, each of the Purchasers agrees to exercise
in
full its basic subscription privileges to purchase shares of Common Stock in
the
Rights Offering (the “Basic
Shares”)
at the
Offering Price (the “Basic
Commitment”).
As
used herein, “Offering
Price”
shall
mean the per share purchase price for shares of Common Stock offered in the
Rights Offering.
2. Standby
Commitment.
(a) Each
of
the Purchasers agrees that, to the extent that 2,400,000 shares of Common Stock
are not subscribed for and purchased in the Rights Offering, and subject to
the
terms and conditions hereof, it will purchase from the Company for cash at
the
Offering Price the number of shares of Common Stock (the “Standby
Shares”
and
together with the Basic Shares, the “Shares”)
equal
to its Pro Rata Portion (as defined below) of the difference between 2,400,000
shares of Common Stock and the aggregate number of shares of Common Stock
subscribed for and purchased in the Rights Offering (the “Standby
Commitment”
and
together with the Basic Commitment, the “Commitment”).
(b) To
the
extent that any Purchaser defaults (a “Defaulting
Purchaser”)
in the
performance of its Standby Commitment hereunder, each other Purchaser shall
have
the right to purchase from the Company, in such Purchaser’s sole discretion and
subject to the terms and conditions hereof, for cash at the Offering Price
an
amount of shares of Common Stock up to its Non-Defaulting Pro Rata Portion
(as
defined below) of all the shares of Common Stock that such Defaulting Purchaser
would have been obligated to purchase pursuant to its Standby Commitment
hereunder but did not purchase (the “Defaulted
Shares”).
The
Company shall provide written notice to the non-Defaulting Purchasers of the
amount of Defaulted Shares within 2 business days following the failure of
the
Defaulting Purchaser to purchase the Defaulted Shares pursuant to the terms
and
conditions hereof. Each Purchaser shall have the right to purchase up to its
Non-Defaulting Pro Rata Portion of such Defaulted Shares at the Offering Price
by providing written notice to the Company within 2 business days of receipt
of
notice of Defaulted Shares by the Company specifying the number of Defaulted
Shares it elects to purchase pursuant to this Section 2(b). The closing of
any
such sale to a non-Defaulting Purchaser shall occur two business days after
the
Company’s receipt of such notice from such non-Defaulting Purchaser.
(c) As
used
in a provision herein, a Purchaser’s “Pro
Rata Portion”
shall
mean the percentage of the Standby Shares set forth opposite each Purchaser’s
name in Schedule
A
hereto.
As used in a provision herein, a Purchaser’s “Non-Defaulting
Pro Rata Portion”
shall
mean the quotient determined by dividing the Pro Rata Portion of such
Non-Defaulting Investor by the aggregate Pro Rata Portions owned by all
Non-Defaulting Investors electing to exercise their Default Purchase Right.
In
each case, the number of shares of Common Stock constituting a Purchaser’s Pro
Rata Portion shall be rounded to the nearest whole share and shall otherwise
be
equitably adjusted for fractional shares such that the total number of shares
to
be issued by the Company pursuant to the Rights Offering and the Standby
Commitment, assuming full performance of the Standby Commitment by the
Purchasers, is 2,400,000.
(d) Subject
to the terms and conditions set forth in this Agreement, and as described above,
the Company agrees to transfer and sell to the Purchasers, and the Purchasers
agree to purchase (on a several but not joint basis) from the Company, the
Shares.
(e) Without
the prior written consent of the Purchasers, the per share purchase price for
all shares of Common Stock offered and sold in the Rights Offering, including
all Standby Shares offered and sold to the Purchasers, shall not exceed $.50
and
the aggregate gross purchase price for all shares of Common Stock offered and
sold in the Rights Offering, including all Shares offered and sold to the
Purchasers, shall not exceed $1,200,000.
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(f) As
soon
as practicable following the expiration of the exercise period of the Rights
Offering (as the same may be extended) and promptly following its determination
of the number of shares of Common Stock validly subscribed for in accordance
with the terms of the Rights Offering, the Company shall notify the Purchasers
in writing of the number of Standby Shares, if any, to be purchased by the
Purchasers pursuant to the Standby Commitment.
(g) The
Company will pay all of its expenses associated with the Rights Offering,
including, without limitation, filing and printing fees, fees and expenses
of
any subscription and information agents, its counsel and accounting fees and
expenses, costs associated with clearing the Shares for sale under applicable
state securities laws and listing fees.
(h) All
Shares will be delivered with any and all issue, stamp, transfer, sales and
use,
or similar taxes or duties payable in connection with such delivery duly paid
by
the Company.
3. Closing;
Payment of Purchase Price and Fees.
(a) The
delivery of and payment for the Standby Shares, if any, shall take place at
the
offices of Xxxxxxxxx Xxxx & Brandeis, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 on the second business day following the satisfaction and/or waiver
of all of the conditions set forth herein (other than such conditions by their
nature to be satisfied at consummation) or at such other place and time as
is
mutually agreed to in writing by the parties hereto (the “Closing”
and
such date, the “Closing
Date”).
(b) On
the
Closing Date the Company shall deliver to each Purchaser the
following:
(i) stock
certificates representing the Standby Shares purchased by such Purchaser
hereunder, in the denominations and registered in the name of such Purchaser
or,
subject to the restrictions set forth herein, such other affiliates of such
Purchaser, as designated in writing by such Purchaser not later than five (5)
business days prior to the Closing Date;
(ii) a
certificate, dated as of the Closing Date, executed by an officer of the Company
certifying as to the fulfillment of the closing conditions specified in Sections
9(a)(i) and 9(a)(ii);
(iii) a
certificate, dated as of the Closing Date, and signed by a secretary or
assistant secretary of the Company as to (x) the Company’s organizational
documents and (y) resolutions of the board of directors (or committee thereof)
authorizing the execution and delivery of this Agreement and the consummation
and performance of the transactions contemplated hereby;
(iv) a
written
opinion of the Company’s counsel, dated as of the Closing Date, addressed to the
Purchasers in a form reasonably acceptable to the Purchasers as to the matters
set forth in Exhibit
A
hereto;
and
(v) such
other written instruments or documentation as may be reasonably necessary or
appropriate in order to document the satisfaction or waiver of the applicable
closing conditions set forth in Section 9 and as reasonably requested by the
Purchasers.
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(c) On
the
Closing Date each of the Purchasers shall deliver to the Company the
following:
(i) such
Purchaser’s purchase price for the Standby Shares by wire transfer of
immediately available funds to an account designated by the Company;
(ii) a
certificate, dated as of the Closing Date, executed by an officer of the
Purchaser certifying as to the fulfillment of the closing conditions specified
in Section 9(b)(i) and 9(b)(ii); and
(iii) such
other written instruments or documentation as may be reasonably necessary or
appropriate in order to document the satisfaction or waiver of the applicable
closing conditions set forth in Section 9 and as reasonably requested by the
Company.
4. Satisfaction
of the Commitment.
The
Purchasers may, in their sole discretion, satisfy the Commitment directly and/or
indirectly through one or more of their respective affiliates, separate accounts
within their control, or investment funds under their or their respective
affiliates’ management; provided,
however,
any
such non-Purchaser entities shall be required to make the representations,
warranties and covenants set forth in Section
6
to the
Company and that the Purchasers shall remain liable under this Agreement as
set
forth herein.
5. Representations
and Warranties of the Company.
(a) The
Company represents and warrants to the Purchasers as of the date hereof and
the
Closing as follows:
(i) Organization;
Authority; Qualification.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada. The Company (A) has full
corporate power and authority to own and operate its properties and assets
and
to conduct and carry on its business as it is now being conducted and operated,
and (B) is duly qualified to do business and is in good standing, and is duly
licensed, authorized or qualified to transact or conduct business, in each
jurisdiction in which the ownership or lease of real property or the conduct
of
its business requires it to be so licensed, authorized or qualified. True and
complete copies of the Company’s Articles of Incorporation (the “Articles
of Incorporation”)
and
its bylaws currently in effect have been delivered to the Purchasers.
-4-
(ii) Corporate
Authority, Authorization; Binding Obligation.
The
Company has full power and authority to execute and deliver this Agreement,
to
perform its obligations hereunder and to consummate the Rights Offering and
the
transactions contemplated by this Agreement. All corporate action on the part
of
the Company, its officers and its stockholders necessary for the authorization,
execution, delivery and performance of this Agreement, the consummation of
the
Rights Offering, the authorization, issuance and delivery of the Shares to
the
Purchasers and the performance of all of the Company’s obligations under this
Agreement has been or will be taken prior to Closing. This Agreement has been
duly and validly executed and delivered by the Company, and constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be limited
by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
and subject to general principals of equity (regardless of whether such
enforceability is considered in a proceeding in equity or law).
(iii) Ownership
of and Title to Shares; Exemption from Registration.
(A) The
Shares to be purchased by the Purchasers hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly authorized, validly issued, fully paid and
non-assessable shares of the capital stock of the Company, free of personal
liability. Upon consummation of the purchase of the Shares in accordance with
the terms of this Agreement, the Purchasers will own and acquire title to the
Shares (free and clear of any and all proxies, voting trusts, shareholder
agreements, pledges, liens, claims, charges, security interests, options,
restrictions on transfer or other legal or equitable encumbrance of any nature
whatsoever (other than the restrictions on transfer due to securities laws
or as
otherwise as provided for in this Agreement),
(B) The
Company represents and warrants that the offer and sale of the Shares to the
Purchasers in accordance with the terms and provisions of this Agreement is
being effected in accordance with the Securities Act of 1933 (as amended and
restated from time to time, the “Securities
Act”)
and
applicable state securities laws pursuant to (I) a private placement exemption
to the registration provisions of the Securities Act pursuant to Section 4(2)
of
the Securities Act (and Rule 506 of Regulation D promulgated under the
Securities Act), and (II) a similar exemption to the registration provisions
of
applicable state securities laws. Neither the Company nor anyone acting on
its
behalf has taken or hereafter will take any action that would cause the loss
of
such exemptions.
(iv) Capitalization.
(A) The
authorized capital stock of the Company consists of (A) 3,703,704 shares of
Common Stock, of which 3,413,038 shares are issued and outstanding and (B)
5,000,000 shares of Series B Convertible Preferred Stock, $0.001 par value
per
share (the “Series
B Preferred Stock”),
of
which 20,000 shares are issued and outstanding. All of the issued and
outstanding shares of Common Stock and Series B Preferred Stock have been duly
authorized and validly issued and are fully paid and nonassessable and were
issued in compliance with all applicable state and federal laws concerning
the
issuance of securities.
-5-
(B) Except
for the Series B Preferred Stock and the options and warrants set forth on
Schedule
5(a)(iv)
hereto,
(I) no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any securities from the Company
is authorized or outstanding, (II) there is not any commitment of the Company
to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to the holders of any securities of the Company
any evidences of indebtedness or any assets of the Company, (III) the Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its securities or to pay any dividend or make any other
distribution in respect thereof, (IV) no person or entity is entitled to any
preemptive or similar right with respect to the issuance of any securities
of
the Company, and (V) no person or entity has any rights to require the
registration of any securities of the Company under the Securities Act.
(v) Noncontravention;
Consents.
The
execution and delivery of this Agreement by the Company does not, and the Rights
Offering and the consummation of the transactions contemplated hereby and
thereby will not, violate any material provision of law and will not conflict
with, or result in a breach of any of the terms of, or constitute a default
under, the Articles of Incorporation, the bylaws of the Company or any material
agreement, instrument or other restriction to which the Company is a party
or by
which the Company or any of its properties or assets is bound. No
consent, approval or authorization of, or declaration, registration or filing
with, any person, entity or governmental authority on the part of the Company
is
required for the valid execution, delivery and performance of this Agreement
or
the valid consummation of the Rights Offering or of the transactions
contemplated hereby and thereby, except for (A) the filing with the Secretary
of
State of the State of Nevada of an amendment to the Articles of Incorporation
to
increase the Company’s authorized capital by fifteen million (15,000,000) shares
of Common Stock, (B) the filing of all necessary amendments to the registration
statement on Form S-3, filed with the Securities & Exchange Commission (the
“SEC”)
on
July 3, 2007 (including all amendments and exhibits related thereto, the
“Registration
Statement”),
including all prospectuses related thereto and (C) such consents, approvals,
authorizations, declarations, registrations or filings (y) as may be required
under the Nasdaq National Market (“Nasdaq”)
rules
and regulation in order to consummate the Rights Offering or (z) as may be
required under state securities or blue sky laws in connection with the purchase
of Shares by any of the Purchasers, which filings, in the case of clauses (A)
through (C) above, have been or will be filed in a timely manner.
(vi) No
Conflicts, Violations or Defaults.
The
Company is not in conflict with, or in default or violation of, any law, order
or agreement applicable to the Company or by which any property or asset of
the
Company is bound or affected, except for such conflicts, defaults or violations
that are not, individually or in the aggregate, reasonably expected to have
(A)
any material adverse effect on the business, condition (financial or otherwise)
or results of operations of the Company or its subsidiaries, taken as a whole
or
(B) any material adverse effect on the ability of the Company to consummate
the
transactions contemplated by this Agreement (any of the foregoing being a
“Material
Adverse Effect”).
-6-
(vii) Registration
Rights.
Except
for the registration rights granted to the Subscribers (as defined below) in
the
Purchase Agreement, dated as of January 10, 2007 (the “Purchase
Agreement”),
by
and between the Company and the persons listed on Schedule A thereto (the
“Subscribers”),
the
Company has not granted or agreed to grant any registration rights, including
piggyback rights, to any person or entity.
(viii) Financial
Statements.
The
Company has previously provided to the Purchasers the audited balance sheet
and
statements of operations and changes in stockholders’ equity and cash flows of
the Company as of and for the year ended December 31, 2006 (the “Audited
Financial Statements”)
and
the unaudited balance sheet and the unaudited statements of operations and
changes in stockholders’ equity and cash flows of the Company as of and for the
six-month period ended June 30, 2007 (the “Unaudited
Financial Statements,”
and
together with the Audited Financial Statements, the “Financial
Statements”).
The
Financial Statements (A) comply as to form in all material respects with
applicable accounting requirements and published rules and regulations of the
SEC with respect thereto; (B) have been prepared in accordance with United
States generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods covered thereby (subject,
in the case of the Unaudited Financial Statements, to normal recurring year-end
adjustments and the absence of all required footnotes thereto); and (C) fairly
present in all material respects the financial condition, results of operations
and cash flows of the Company as of the respective dates thereof and for the
periods referred to therein. The Company has no liabilities or obligations
of
any nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations reflected on the Unaudited Financial Statements
or
that were incurred after June 30, 2007 in the ordinary course of business
consistent with past practice, which individually or in the aggregate are not
reasonably expected to be material.
(ix) Ordinary
Course.
Since
December 31, 2006, the Company has conducted its business only in the ordinary
course consistent with past practice, and there has not been:
(A) any
event, occurrence or development of a state or circumstances which has had
or is
reasonably expected to have a Material Adverse Effect;
(B) any
material damage, destruction or loss to any material asset or property owned
by
the Company, whether or not covered by insurance;
(C) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company’s
capital stock (other than in accordance with its terms) or any repurchase,
redemption or other acquisition by the Company of any outstanding shares of
capital stock or other securities of the Company;
(D) any
change in accounting methods, principles or practices by the Company, except
for
changes resulting from changes in GAAP; or
-7-
(E) any
agreement, commitment, arrangement or undertaking by the Company to perform
any
action described in clauses (A) through (D).
(x) Permitted
Offering.
The
acquisition of Shares by any Purchaser pursuant to this Agreement shall not
be
deemed to be a “Distribution Date” pursuant to that certain rights agreement by
and between the Company and Interwest Transfer Co. (the “Rights
Agent”),
dated
as of March 14, 2003, as amended by Amendment No. 1 between the Company and
the
Rights Agent, dated as of July 14, 2003 (the “Rights
Agreement”).
(xi) No
Broker’s Fees.
No
broker, investment banker, financial advisor or other person, is entitled to
any
broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
(xii) No
Untrue Statements or Omissions.
No
representation or warranty of the Company contained in this Agreement, and
no
statement relating to the Company contained in any other document, certificate
or other instrument delivered or to be delivered by or on behalf of the Company
pursuant to this Agreement or the Rights Offering, contains or will contain
any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not
misleading.
6. Representations,
Warranties and Covenants of Purchasers.
(a) Each
Purchaser severally, and not jointly, represents and warrants to the Company
as
of the date hereof and the Closing as follows:
(i) Organization;
Good Standing.
Such
Purchaser (if it is a legal entity) is duly organized, validly existing, and
in
good standing under the laws of the state of its organization.
(ii) Authority;
Enforceability.
Such
Purchaser (if it is a legal entity) is duly authorized to enter into this
Agreement and to perform its obligations hereunder. Upon the execution and
delivery of this Agreement by such Purchaser, this Agreement shall be
enforceable against such Purchaser in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws and subject to general principals
of
equity (regardless whether such enforceability is pursued at law or in equity).
-8-
(iii) Investment
Intent.
Such
Purchaser is a limited partnership and represents and warrants that the Shares
being purchased are being purchased or acquired solely for such Purchaser’s own
account, for investment purposes only and not with a view towards the
distribution or resale thereof to others. Such Purchaser acknowledges and
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 which
depends, in large part, upon such Purchaser’s representations as to investment
intention, investor status and related and other matters set forth herein.
Such
Purchaser understands that, in the view of the SEC, among other things, a
purchase with a present intent to distribute or resell would represent a
purchase and acquisition with an intent inconsistent with its representation
to
the Company, and the SEC might regard such a transfer as a deferred sale for
which the registration exemption is not available. Such Purchaser agrees and
consents to the placement of a legend on the certificate(s) representing the
Shares purchased and acquired hereunder, stating that such Shares have not
been
registered under the Securities Act or applicable state securities laws. Such
legend shall be removed promptly following such time as a registration statement
under the Securities Act covering any such Shares is declared effective by
the
SEC.
(iv) Certain
Risks.
Such
Purchaser is fully aware that (A) the Shares represent equity securities in
a
corporate entity that has an accumulated deficit; (B) no return on investment,
whether through distributions, appreciation, transferability or otherwise,
and
no performance by, through or of the Company, has been promised, assured,
represented or warranted by the Company, or by any director, officer, employee,
agent or representative thereof; (C) while the Common Stock is presently quoted
and traded on the Over-the-Counter Bulletin Board, the Shares subscribed for
and
purchased under this Agreement have not been registered under applicable federal
or state securities laws, and thus may not be sold, conveyed, assigned or
transferred unless registered under such laws or unless an exemption from
registration is available under such laws, as more fully described below; (D)
there can be no assurances that the Company’s Common Stock will continue to be
quoted, traded or listed for trading or quotation on the OTCBB or on any other
organized market or quotation system; and (E) that the purchase of the Common
Stock is a speculative investment, involving a degree of risk, and is suitable
only for a person or entity of adequate financial means who has no need for
liquidity in this investment in that, among other things, (x) such person or
entity may not be able to liquidate their investment in the event of an
emergency or otherwise, (y) transferability is limited, and (z) in the event
of
a dissolution or otherwise, such person or entity could sustain a complete
loss
of their entire investment.
(v) Sophisticated
Investor.
(i)
Such Purchaser has adequate means of providing for such Purchaser’s current
financial needs and possible contingencies and has no need for liquidity of
such
Purchaser’s investment in the Shares; (ii) such Purchaser is able to bear the
economic risks inherent in an investment in the Shares and that an important
consideration bearing on its ability to bear the economic risk of the purchase
of the Shares is whether such Purchaser can afford a complete loss of such
Purchaser’s investment in the Shares and such Purchaser represents and warrants
that such Purchaser can afford such a complete loss; and (iii) such Purchaser
has such knowledge and experience in business, financial, investment and banking
matters (including, but not limited to investments in restricted, non-listed
and
non-registered securities) that such Purchaser is capable of evaluating the
merits, risks and advisability of an investment in the Shares.
(vi) QIB.
Such
Purchaser is a “Qualified Institutional Buyer” within the meaning of Rule
144A(a)(1)(i), (ii), (iii), (iv) or (vi) under the Securities Act.
-9-
(vii) Documents,
Information and Access.
(A)
Such Purchaser’s decision to purchase the Shares is not based on any
promotional, marketing or sales materials, and (B) such Purchaser and its
representatives have been afforded, prior to purchase thereof, the opportunity
to ask questions of, and to receive answers from, the Company and its
management, and has had access to all documents and information which such
Purchaser deems material to an investment decision with respect to the purchase
of the Shares hereunder. Such Purchaser acknowledges and understands that the
Company is a public reporting company, that annual, quarterly and other reports
are, from time to time, filed by the Company with the SEC under the Securities
Exchange Act of 1934, and that such Purchaser can obtain a copy of any such
reports, without charge, from certain public information offices maintained
by
the SEC, from the internet at xxx.xxx.xxx or from the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 5(a) of this Agreement or the right of a Purchaser to rely
thereon.
(viii) No
Registration, Review or Approval.
Such
Purchaser acknowledges and understands that the limited private offering and
sale of the Shares pursuant to this Agreement has not been reviewed or approved
by the SEC or by any state securities commission, authority or agency, and
is
not registered under the Securities Act or under the securities or “blue sky”
laws, rules or regulations of any state. Such Purchaser acknowledges,
understands and agrees that the Shares are being offered and sold hereunder
pursuant to (A) a private placement exemption to the registration provisions
of
the Securities Act pursuant to Section 4(2) of the Securities Act (and Rule
506
of Regulation D promulgated under the Securities Act), and (B) a similar
exemption to the registration provisions of applicable state securities laws.
(ix) Transfer
Restrictions.
Such
Purchaser will not transfer any Shares purchased under this Agreement unless
such Shares are registered under the Securities Act and under any applicable
state securities or “blue sky” laws (collectively, the “Securities
Laws”),
or
unless an exemption is available under such Securities Laws, and that the
Company may, if it chooses, where an exemption from registration is claimed
by
such Purchaser, condition any transfer of the Shares out of such Purchaser’s
name on an opinion of counsel reasonably satisfactory to the Company, to the
effect that the proposed transfer does not require registration under the
Securities Act.
(x) Reliance.
Such
Purchaser understands, acknowledges and appreciates that the Company is relying
upon all of the representations, warranties, covenants, understandings,
acknowledgements and agreements contained in this Agreement in determining
whether to accept this subscription and to sell and issue the Shares to such
Purchaser.
(xi) No
General Solicitation.
Such
Purchaser shall not, and shall not permit any of its directors, officers,
employees, affiliates and agents to, engage in any activity in connection with
its purchase of Shares that constitutes a “general solicitation” or would
otherwise cause the Company to fail to satisfy the manner of offering
limitations set forth in Rule 502(c) under the Securities Act in connection
with
the Rights Offering.
(xii) Accuracy
of Representations and Warranties.
All of
the representations, warranties, understandings and acknowledgements that such
Purchaser has made herein are true and correct in all material respects as
of
the date of execution hereof, and that such Purchaser will perform and comply
fully in all material respects with all covenants and agreements set forth
herein, and such Purchaser covenants and agrees that until the Closing, such
Purchaser shall inform the Company as promptly as reasonably practicable in
writing of any changes in any of the representations or warranties provided
or
contained herein.
-10-
7. Covenants
of the Company.
(a) The
Company agrees that:
(i) The
Company shall conduct the Rights Offering and the transactions contemplated
hereby in compliance with the Securities Act and all other applicable local,
state or federal securities laws.
(ii) The
Company shall reimburse the Purchasers, up to the amount of $50,000, for all
documented and reasonable out-of-pocket expenses of the Purchasers related
to
the Rights Offering and the transactions contemplated hereby, including without
limitation reasonable fees and expenses of Stroock & Stroock & Xxxxx
LLP, upon the earlier of the consummation of the Rights Offering or the
termination of this Agreement, so long as none of the Purchasers shall be in
material breach of its obligations under this Agreement at the time of such
termination.
(iii) The
Company shall furnish the Purchasers with such information regarding itself
and
its subsidiaries as the Purchasers may reasonably request.
8. Covenants
of both the Company and the Purchasers.
(a) The
Company and each of the Purchasers agrees that:
(i) It
will
use reasonable best efforts to take, or cause to be taken, all actions, and
to
do, or cause to be done, and to assist and cooperate with the other parties
in
doing, all things reasonably necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated hereby.
(ii) It
will
promptly deliver to the other parties hereto written notice of any matter,
event
or development that is or could (A) render any representation or warranty made
by it herein inaccurate or incomplete in any respect or (B) constitute or result
in a breach by it of, or a failure by it to comply with, any covenant
herein.
(iii) It
will
consult with each other party before issuing, and provide each other party
the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or court
process.
-11-
9. Conditions
to Closing.
(a) The
obligation of each of the Purchasers to purchase the Shares and consummate
the
transactions contemplated herein shall be subject to the satisfaction (or waiver
by such Purchaser) on or prior to the Closing of each of the following
conditions:
(i) The
representations and warranties of the Company contained in Section 5(a) that
are
qualified as to materiality shall be true and correct in all respects on and
as
of the date hereof and as of the Closing, with the same force and effect as
though made on and as of such date, except to the extent that any representation
or warranty is made as of a specified date, in which case such representation
or
warranty shall be true and correct as of such specified date, and the
representations and warranties that are not so qualified shall be true and
correct in all material respects on and as of the date hereof and as of the
Closing, with the same force and effect as though made on and as of such date,
except to the extent that any representation or warranty is made as of a
specified date, in which case such representation or warranty shall be true
and
correct in all material respects as of such specified date;
(ii) The
Company shall have performed or complied with, in all material respects, its
covenants required to be performed or complied with under this Agreement through
the Closing;
(iii) No
provision of any applicable law or regulation and no judgment, injunction,
order, decree or other legal restraint shall have been enacted, adopted or
issued that prohibits or threatens to prohibit the consummation of the Rights
Offering or the transactions contemplated hereby;
(iv) The
Company shall have delivered to Purchasers all of the certificates, opinions,
instruments and documents required to be delivered by the Company to the
Purchasers pursuant to Section 3(b) hereof;
(v) The
Company shall have filed with the Secretary of State of the State of Nevada
an
amendment to the Articles of Incorporation to increase the Company’s authorized
capital by fifteen million (15,000,000) shares of Common Stock;
(vi) The
Company shall have included in the Registration Statement by way of an amendment
thereto (the “Amendment
to Registration Statement”)
(I)
all shares of Common Stock purchased by the Purchasers pursuant to the Purchase
Agreement and (II) all Shares purchased by the Purchasers pursuant to this
Agreement, and the Amendment to Registration Statement shall have become
effective. The Company shall have paid all expenses related to the Registration
Statement, the Amendment to Registration Statement and the Rights Offering,
including, without limitation, filing and printing fees, fees and expenses
of
any subscription and information agents, its counsel and accounting fees and
expenses, costs associated with clearing the Shares for sale under applicable
state securities laws and listing fees;
-12-
(vii) The
Company shall have: (I) provided the Purchasers with a reasonable opportunity
to
review the Amendment to Registration Statement, and shall have duly considered
in good faith any comments of the Purchasers and their respective counsel;
(II)
advised the Purchasers promptly of the time when the Amendment to Registration
Statement became effective or any prospectus or prospectus supplement was filed
and shall have furnished the Purchasers with copies thereof; and (III) advised
the Purchasers promptly after it received notice of any comments or inquiries
by
the SEC (and furnished the Purchasers with copies of any correspondence related
thereto), of the issuance by the SEC of any stop order or of any order
preventing the use of the Registration Statement, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
SEC
for the amending or supplementing of the Registration Statement or for
additional information, and in each such case, shall have provided the
Purchasers with a reasonable opportunity to review any such comments, inquiries,
requests or other communications from the SEC and to review any amendment or
supplement to the Registration Statement before any filing with the SEC, and
shall have duly considered in good faith any comments consistent with this
Agreement and any other reasonable comments of the Purchasers and their
respective counsel and (IV) there shall be no stop order or any order preventing
or suspending the use of the Registration Statement or suspending the
qualification of any Shares for sale in any jurisdiction;
(viii) Since
the
date of this Agreement, there shall not have occurred any changes or events
that, individually or in the aggregate, would reasonably be expected to result
in a Material Adverse Effect; and
(ix) The
Company shall have amended the Rights Agreement to provide that (A) any
Purchaser who by virtue of the transactions contemplated by this Agreement
(including but not limited to the Rights Offering) would otherwise be deemed
to
be an “Acquiring Person” (as that term is defined in the Rights Agreement) shall
instead be deemed to have the same status as a “Grandfathered Stockholder” under
the Rights Agreement as such definition is amended in accordance with the
immediately following subclause (B), and (B) the definition of “Grandfathered
Stockholder” as currently set forth in the Rights Agreement shall be amended to
eliminate the remainder of the definition after the phrase “(ii) and any
Permitted Transferee…” by putting a period at the end of such
phrase.
(b) The
obligation of the Company to issue and sell the Shares and consummate the
transactions contemplated herein shall be subject to the satisfaction (or waiver
by the Company) on or prior to the Closing of each of the following
conditions:
(i) The
representations and warranties of the Purchasers contained in Section 6(a)
that
are qualified as to materiality shall be true and correct in all respects on
and
as of the date hereof and as of the Closing, with the same force and effect
as
though made on and as of such date, except to the extent that any representation
or warranty is made as of a specified date, in which case such representation
or
warranty shall be true and correct as of such specified date, and the
representations and warranties that are not so qualified shall be true and
correct in all material respects on and as of the date hereof as of the Closing,
with the same force and effect as though made on and as of such date, except
to
the extent that any representation or warranty is made as of a specified date,
in which case such representation or warranty shall be true and correct in
all
material respects as of such specified date;
-13-
(ii) The
Purchasers shall have performed or complied with, in all material respects,
their covenants required to be performed or complied with under this Agreement
through the Closing; provided,
however,
that if
any such failure of this condition to be satisfied is satisfied by any other
Purchaser purchasing the Shares as described in Section 2(b), then this
condition shall be deemed satisfied; and
(iii) No
provision of any applicable law or regulation and no judgment, injunction,
order, decree or other legal restraint shall have been enacted, adopted or
issued that prohibits or threatens to prohibit the consummation of the Rights
Offering or the transactions contemplated hereby.
10. Termination.
(a) This
Agreement may be terminated at any time by mutual written consent of the Company
and the Purchasers.
(b) The
Company shall be entitled to terminate this Agreement by giving written notice
thereof to the Purchasers in the event that (i) any Purchaser materially
breaches this Agreement and such breach cannot be cured or, if curable, shall
continue unremedied for a period of 10 days following receipt of written notice
thereof from the Company; provided,
that if
any such breach is cured by any other Purchaser purchasing the Shares as
described in Section 2(a), then such breach shall be deemed cured or (ii) the
Rights Offering shall not have been consummated on or before December 31, 2007,
other than such failure resulting from any breach by the Company of its
obligations hereunder.
(c) Each
Purchaser shall be entitled to terminate this Agreement by giving written notice
thereof to the Company in the event that (i) the Company materially breaches
this Agreement and such breach cannot be cured or, if curable, shall continue
unremedied for a period of 10 days following receipt of notice thereof from
the
Purchasers, (ii) satisfaction of the conditions set forth in Section
9(a)(i)-(ix)
becomes
impossible, or (iii) the Rights Offering shall not have been consummated on
or
before December 31, 2007, other than due to the any failure resulting from
any
breach by Purchasers of their obligations hereunder.
(d) Each
of
the events set forth in subsection (b) above may be waived by the written
agreement of the Company, in its sole and absolute discretion.
(e) Each
of
the events set forth in subsection (c) above may be waived by the written
agreement of all of the Purchasers not then in material breach of their
respective obligations under this Agreement, in their sole and absolute
discretion.
(f) Upon
termination of this Agreement under Section 10(b) or 10(c), this Agreement
shall
terminate upon delivery of such notice as described in Section 10(b) or 10(c),
and no party hereto shall have any continuing liability or obligation hereunder;
provided,
however,
that
(i) nothing
contained herein shall release any party hereto from liability for any breach
or
non-performance of their respective obligations hereunder prior to the date
of
such termination and (ii) nothing contained herein shall release the Company
from its liability to pay the Purchasers the expense reimbursement pursuant
to
Section
7(a)(ii).
-14-
11. Indemnification.
(a) Indemnification
Generally.
Whether
or
not the Rights Offering is consummated or this Agreement or the Commitment
is
terminated, the Company (in such capacity, the “Indemnifying Party”)
shall indemnify and hold harmless the Purchasers, their respective affiliates
and their respective officers, directors, employees, agents and controlling
persons (each an “Indemnified Person”) from and against any and all
losses, claims, damages, liabilities and reasonable expenses, joint or several,
to which any such Indemnified Person may become subject arising out of or in
connection with any claim, challenge, litigation, investigation or proceeding
with respect to this Agreement, the Rights Offering, the Commitment, the
Registration Statement and any prospectus related thereto or the transactions
contemplated thereby or thereby, including, without limitation, distribution
of
rights, purchase and sale of Basic Shares in the Rights Offering and purchase
and sale of Standby Shares pursuant to the Standby Commitment, or any breach
of
the Company of this Agreement, regardless of whether any of such Indemnified
Persons is a party thereto, and to reimburse such Indemnified Persons for any
reasonable legal or other reasonable out-of-pocket expenses as they are incurred
in connection with investigating, responding to or defending any of the
foregoing, provided that the foregoing indemnification will not, as to any
Indemnified Person, apply to losses, claims, damages, liabilities or expenses
to
the extent that they are finally judicially determined to have resulted from
(i)
any breach of this Agreement by such Indemnified Person, (ii) bad faith, gross
negligence or willful misconduct on the part of such Indemnified Person or
(iii)
statements or omissions in the Registration Statement or any prospectus related
thereto or any amendment or supplement thereto made in reliance upon or in
conformity with information relating to the Purchasers furnished to the Company
in writing by or on behalf of the Purchasers expressly for use in the
Registration Statement or any prospectus related thereto or any amendment or
supplement thereto. If for any reason the foregoing indemnification is
unavailable to any Indemnified Person or insufficient to hold it harmless,
then
the Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Person as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect not only the relative benefits
received by the Indemnifying Party on the one hand and such Indemnified Person
on the other hand but also the relative fault of the Indemnifying Party, on
the
one hand, and such Indemnified Person, on the other hand, as well as any
relevant equitable considerations. The indemnity, reimbursement and contribution
obligations of the Indemnifying Party under this Section 11 shall be in addition
to any liability that the Indemnifying Party may otherwise have to an
Indemnified Person and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Indemnifying
Party and any Indemnified Person.
-15-
(b) Certain
Procedures. Promptly after receipt by an Indemnified Person of notice of the
commencement of any claim, litigation, investigation or proceeding relating
to
this Agreement, the Registration Statement or any prospectus related thereto
or
any of the transactions contemplated thereby (“Proceedings”), such
Indemnified Person will, if a claim is to be made hereunder against the
Indemnifying Party in respect thereof, notify the Indemnifying Party in writing
of the commencement thereof; provided that (i) the omission so to notify the
Indemnifying Party will not relieve it from any liability that it may have
hereunder except to the extent it has been materially prejudiced by such failure
and (ii) the omission so to notify the Indemnifying Party will not relieve
it
from any liability that it may have to an Indemnified Person otherwise than
on
account of this Section 11. In case any such Proceedings are brought against
any
Indemnified Person and it notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party will be entitled to participate therein, and,
to
the extent that it may elect by written notice delivered to such Indemnified
Person, to assume the defense thereof, with counsel reasonably satisfactory
to
such Indemnified Person, provided that if the defendants in any such Proceedings
include both such Indemnified Person and the Indemnifying Party and such
Indemnified Person shall have concluded that there may be legal defenses
available to it that are different from or additional to those available to
the
Indemnifying Party, such Indemnified Person shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate
in
the defense of such Proceedings on behalf of such Indemnified Person. Upon
receipt of notice from the Indemnifying Party to such Indemnified Person of
its
election so to assume the defense of such Proceedings and approval by such
Indemnified Person of counsel, the Indemnifying Party shall not be liable to
such Indemnified Person for expenses incurred by such Indemnified Person in
connection with the defense thereof (other than reasonable costs of
investigation) unless (i) such Indemnified Person shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the Indemnifying Party shall not be liable for the expenses of more than one
separate counsel, approved by Investors, representing the Indemnified Persons
who are parties to such Proceedings), (ii) the Indemnifying Party shall not
have
employed counsel reasonably satisfactory to such Indemnified Person to represent
such Indemnified Person within a reasonable time after notice of commencement
of
the Proceedings or (iii) the Indemnifying Party shall have authorized in writing
the employment of counsel for such Indemnified Person.
(c) Limitations.
The Indemnifying Party shall not be liable for any settlement of any Proceedings
effected without its written consent (which consent shall not be unreasonably
withheld). If any settlement of any Proceeding is consummated with the written
consent of the Indemnifying Party or if there is a final judgment for the
plaintiff in any such Proceedings, the Indemnifying Party agrees to indemnify
and hold harmless each Indemnified Person from and against any and all losses,
claims, damages, liabilities and expenses by reason of such settlement or
judgment in accordance with, and subject to the limitations of, the provisions
of this Section 11. Notwithstanding anything in this Section 11 to the contrary,
if at any time an Indemnified Person shall have requested the Indemnifying
Party
to reimburse such Indemnified Person for legal or other expenses in connection
with investigating, responding to or defending any Proceedings as contemplated
by this Section 11, the Indemnifying Party shall be liable for any settlement
of
any Proceedings effected without its written consent if (i) such settlement
is
entered into more than 60 days after receipt by the Indemnifying Party of such
request for reimbursement and (ii) the Indemnifying Party shall not have
reimbursed such Indemnified Person in accordance with such request prior to
the
date of such settlement. The Indemnifying Party shall not, without the prior
written consent of an Indemnified Person (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
Proceedings in respect of which indemnity has been sought hereunder by such
Indemnified Person unless (a) such settlement includes an unconditional release
of such Indemnified Person in form and substance satisfactory to such
Indemnified Person from all liability on the claims that are the subject matter
of such Proceedings and (b) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
-16-
12. Amendments.
This
Agreement may not be modified, amended or supplemented except in a writing
signed by the parties hereto.
13. Governing
Law.
THIS
AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT,
AND
ANY CLAIM OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (WHETHER
BASED
ON CONTRACT, TORT, OR ANY OTHER LEGAL THEORY), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE GOVERNED BY
AND
INTERPRETED, CONSTRUED AND DETERMINED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF
THE STATE OF NEW YORK (WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISION THAT
WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION).
14. Jurisdiction:
BY ITS
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS TO AND ACCEPTS THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED
IN
THE BOROUGH OF MANHATTAN OR XXX XXXXXX XX XXX XXXXX XX XXX XXXX LOCATED IN
THE
COUNTY OF NEW YORK FOR ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR BASED
UPON THIS AGREEMENT OR ANY MATTER RELATING TO IT, AND WAIVES ANY OBJECTION
THAT
SUCH PARTY MAY HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM OR DOES NOT HAVE PERSONAL JURISDICTION OVER SUCH
PARTY.
15. Waiver
of Trial by Jury.
THE
PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY
OF
ANY CLAIM OR CAUSE OF ACTION, OR IN ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY
THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER LEGAL THEORY).
EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANOTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS
SECTION.
-17-
16. Specific
Performance.
It is
understood and agreed by the Company and the Purchasers that money damages
would
not be a sufficient remedy for any breach of this Agreement by any party hereto
and each non-breaching party shall be entitled to specific performance and
injunctive or other equitable relief as a remedy of any such breach, including,
without limitation, an order of a bankruptcy court requiring any party to comply
promptly with any of its obligations hereunder.
17. Headings.
The
headings of the Sections, paragraphs and subsections of this Agreement are
inserted for convenience only and shall not affect the interpretation
hereof.
18. Successors
and Assigns.
This
Agreement is intended to bind and inure to the benefit of the parties hereto
and
their respective successors, assigns, heirs, executors, administrators and
representatives. Except as set forth herein, the Company shall not assign its
rights, duties or obligations under this Agreement without the prior written
consent of the Purchasers. Each Purchaser shall have the right to assign its
Commitment in the manner contemplated by Section 4 hereof, provided
that no
such assignment shall effect such Purchaser’s obligations under this Agreement.
19. No
Third-Party Beneficiaries.
Except
for the provisions of Section 11 (which shall be for the benefit of the
Indemnified Persons), this Agreement shall be solely for the benefit of the
parties hereto and no other person or entity shall be a third party beneficiary
hereof.
20. Prior
Negotiations; Entire Agreement.
This
Agreement constitutes the entire agreement of the parties and supersedes all
prior negotiations with respect to the subject matter hereof, except that the
parties hereto acknowledge that any confidentiality agreements heretofore
executed among the parties shall continue in full force and effect.
21. Expenses.
Except
as otherwise provided in Section
7(a)(ii),
all
costs and expenses incurred in connection with this Agreement shall be paid
by
the party incurring such cost or expense.
22. Counterparts.
This
Agreement may be executed in any number of counterparts by the parties on
different counterparts signature pages, all of which taken together shall
constitute one and the same agreement. Any of the parties may execute this
Agreement by signing any such counterparts, and each such counterpart, including
a facsimile counterpart, shall for all purposes be deemed to be an
original.
23. Severability.
The
illegality, invalidity, or unenforceability of any provision of this Agreement
under the law of any jurisdiction shall not affect its legality, validity or
enforceability under the law of any other jurisdiction nor the legality,
validity or enforceability of any other provision.
24. Notices.
All
notices and other communications under this Agreement shall be in writing,
sent
contemporaneously to all of the parties hereto, and deemed given when delivered
by hand or by facsimile during standard business hours (from 8:00 a.m. to 6:00
p.m.) at the place of receipt at the addresses and facsimile numbers set forth
below, with a copy to each person identified thereon.
-18-
|
If
to the Company, to:
|
|
Xx.
Xxxx Xxxxxxx
|
|
Chief
Executive Officer
|
|
MangoSoft,
Inc.
|
|
00
Xxxxxxxxxx Xxx
|
|
Xxxxxx,
XX 00000
Fax:
(000) 000-0000
|
|
with
a copy to :
|
|
Xxxxxxxx
X. Xxxxxxxx, Esq.
|
|
Xxxxxxxxx
Xxxx & Brandeis, LLP
|
|
000
Xxxxx Xxxxxx
|
|
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
|
If
to any Purchaser, to the address for such Purchaser
set
forth on Schedule
A
hereto, with copies
simultaneously
by like means to:
|
|
Southpaw
Asset Management LP
|
|
0
Xxxxxxxxx Xxxxxx Xxxx
|
|
Xxxxx
Xxxxx
|
|
Xxxxxxxxx,
XX 00000
|
|
Attention:
Xxxxx X. Xxxxx
Fax:
(000) 000-0000
|
|
in
each case, with a copy to:
|
|
Stroock
& Stroock & Xxxxx LLP
|
|
000
Xxxxxx Xxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Attention:
Xxxxx Xxxxxxxx
Fax:
(000) 000-0000
|
25. Survival.
All
representations, warranties and covenants and other provisions made by the
parties hereto shall be considered to have been relied upon by the parties
and
shall (i) survive the execution, delivery and performance of this Agreement,
and
(ii) in the case of any termination of this Agreement, shall cease to apply
except as set forth in Section 10(f) hereof.
-19-
26. Interpretation.
(a) This
Agreement includes the Schedules and any documents attached as exhibits to
this
Agreement.
(b) The
Schedules may supplement, change, or supersede other provisions of this
Agreement. If there is any inconsistency between the provisions of the Schedules
and the other provisions of this Agreement, the Schedules will
prevail.
(c) Terms
used in the singular or the plural include the plural and the singular,
respectively; “includes” and “including” are not limiting; and “or” is not
exclusive.
(d) Section,
Schedule, and other headings and captions are included solely for convenience
of
reference and are not intended to affect the interpretation of any provisions
of
this Agreement.
(e) This
Agreement shall be deemed to have been jointly drafted, and no provision of
it
shall be interpreted or construed for or against any Party because such Party
purportedly prepared or requested such provision, any other provision, or this
Agreement as a whole.
-20-
IN
WITNESS WHEREOF, the parties have caused this Subscription and Standby
Commitment Agreement to be executed as of the date first written
above.
| MANGOSOFT, INC. | |
| By |
|
| Name: |
|
| Title: |
|
[Signature
Page to Subscription and Standby Commitment Agreement]
IN
WITNESS WHEREOF, the parties have caused this Subscription and Standby
Commitment Agreement to be executed as of the date first written
above.
PURCHASERS:
XXXXX
XXXXX
| By: |
|
| Name: Xxxxx Xxxxx | |
[Signature
Page to Subscription and Standby Commitment Agreement]
IN
WITNESS WHEREOF, the parties have caused this Subscription and Standby
Commitment Agreement to be executed as of the date first written
above.
XXX
XXXXX
|
By:
|
|
| Name: Xxx Xxxxx | |
[Signature
Page to Subscription and Standby Commitment Agreement]
IN
WITNESS WHEREOF, the parties have caused this Subscription and Standby
Commitment Agreement to be executed as of the date first written
above.
|
SOUTHPAW
CREDIT OPPORTUNITY
MASTER
FUND LP
|
|
| By: |
|
| Name: | |
| Title: | |
[Signature
Page to Subscription and Standby Commitment Agreement]
SCHEDULE
A
Schedule
of Purchasers
|
Name
and Address
|
Pro
Rata Portion
|
|
Xxxxx
Xxxxx
000
Xxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx, XX 00000
|
48.485%
|
|
Xxx
Xxxxx
000
Xxxxx Xxxxxx
Xxx.
00-X
Xxx
Xxxx, XX 00000
|
18.182%
|
|
Southpaw
Credit Opportunity Master Fund LP
0
Xxxxxxxxx Xxxxxx Xxxx
Xxxxx
Xxxxx
Xxxxxxxxx,
XX 00000
|
33.333%
|
|
Total:
|
100%
|
B-1
SCHEDULE
5(a)(iv)
|
Shares
of Common Stock Reserved for
Issuance
Pursuant to Options
|
[296,287]1
|
|
Issued
and Outstanding Options
|
[179,652]3
|
Rights
issued pursuant to the Rights Agreement, dated as of March 14, 2003 by and
between the Company and Interwest Transfer Co., Inc.
1
[From the Purchase Agreement. To be updated by the Company.]
B-2
EXHIBIT
A
Opinion
of Counsel
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1.
|
The
Company is a corporation validly existing and in good standing under
the
laws of the State of Nevada and has all requisite corporate power
and
authority to own, lease and operate its properties and to carry on
its
business as now being conducted.
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|
2.
|
The
Shares to be issued pursuant to the Agreement have been duly authorized
and, when issued as contemplated by the Agreement, will be validly
issued,
fully paid and nonassessable and free of preemptive rights pursuant
to law
or in the Company’s Articles of
Incorporation.
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|
3.
|
The
Company has the requisite corporate power and authority to execute
and
deliver the Agreement and all requisite power, authority and financial
ability to perform its obligations thereunder, and to consummate
the
transactions contemplated thereby. The Rights Offering, the execution
and
delivery of the Agreement and the consummation and performance by
the
Company of the transactions contemplated by the Rights Offering and
the
Agreement have been duly authorized by all requisite corporate action.
The
Agreement has been duly and validly executed and delivered by the
Company
and (assuming the due authorization, execution and delivery thereof
by the
Purchasers) constitutes the valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as the
enforceability of which may otherwise be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other
similar laws affecting the enforcement of creditors’ rights generally,
public policy and general equitable
principles.
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|
4.
|
The
execution and delivery of the Agreement by the Company does not,
and the
Rights Offering and the consummation of the transactions contemplated
hereby and thereby will not, (i) violate any material provision of
law and
will not (ii) conflict with, or result in a breach of any of the
terms of,
or constitute a default under, the Articles of Incorporation, the
bylaws
of the Company or any material agreement, instrument or other restriction
to which the Company is a party or by which the Company or any of
its
properties or assets is bound or (iii) result in the creation of
any lien
on any property or asset of the Company or any of its
subsidiaries.
|
|
5.
|
Assuming
that the representations of the Purchasers contained in the Agreement
are
true, correct and complete and assuming compliance by the Purchasers
with
their covenants set forth in the Agreement, it is not necessary in
connection with the offer, sale and delivery of the Shares to the
Purchasers to register the Common Stock under the Securities Act
of 1933,
as amended, or under the securities or blue sky laws in any applicable
state.
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B-3
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6.
|
No
consent, approval or authorization of, or declaration, registration
or
filing with, any person, entity or governmental authority on the
part of
the Company is required for the valid execution, delivery and performance
of the Agreement or the valid consummation of the Rights Offering
or of
the transactions contemplated by the Rights Offering and the Agreement,
except for (A) the filing with the Secretary of State of the State
of
Nevada of an amendment to the Articles of Incorporation to increase
the
Company’s authorized capital by fifteen million (15,000,000) shares of
Common Stock, (B) the filing of all necessary amendments to the
registration statement on Form S-3, filed with the Securities &
Exchange Commission on July 3, 2007, including all prospectuses related
thereto and (C) such consents, approvals, authorizations, declarations,
registrations or filings (y) as may be required under the Nasdaq
National
Market rules and regulation in order to consummate the Rights Offering
or
(z) as may be required under state securities or blue sky laws in
connection with the purchase of Shares by any of the Purchasers,
which
filings, in the case of clauses (A) through (C) above, have been
or will
be filed in a timely manner.
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B-4
