NARROWSTEP INC. SUBSCRIPTION AGREEMENT
Exhibit
10.1
NARROWSTEP
INC.
Narrowstep
Inc.
000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Gentlemen:
Reference
is hereby made to the Agreement and Plan of Merger, dated as of May 29, 2008,
among Onstream Media Corporation (“Onstream”), Onstream Merger Corp. (“Merger
Sub”) and Narrowstep Inc. (the Company”) and X. Xxxxxx Xxxxx XX, as amended by
First Amendment to Agreement and Plan of Merger, dated of even date herewith
(the “Merger Agreement”). The Merger Agreement provides for, among other things,
the merger of Merger Sub with and into the Company (the “Merger”). Capitalized
terms used herein have the respective meanings ascribed thereto in the Merger
Agreement unless otherwise defined herein.
The
undersigned desires to purchase shares of the Company’s Series A Preferred Stock
having substantially the terms and conditions described in Schedule I attached
hereto (the “Preferred Stock”) for an aggregate purchase price of $___________.
The parties hereto acknowledge that the only condition precedent to the
obligation of the undersigned to purchase the shares of Preferred Stock
subscribed for pursuant to this Subscription Agreement (this “Agreement”) is the
simultaneous consummation of the Merger and that an escrow agent selected by
the
Company shall hold the above referenced purchase price in escrow to be released
upon the undersigned’s purchase of the Preferred Stock in accordance with the
terms of this Agreement. In connection with the foregoing, the undersigned
agrees to execute and deliver an escrow agreement in form and substance
reasonably satisfactory to such escrow agent and the Company.
The
undersigned acknowledges that a certificate of relative rights, privileges
and
designations of the Preferred Stock (the “Certificate of Designation”) shall be
filed by the Company with the Secretary of State of Delaware prior to the
Effective Time of the Merger. In addition, the undersigned acknowledges that
(i)
on or prior to May 29, 2008 the Company entered into subscription agreements
for
the purchase by investors of an aggregate of $300,000 of Preferred Stock (the
original “Preferred Stock Investment”); and (ii) the Company intends to offer
additional shares of Preferred Stock in such amounts as determined by the
Company (the "Offering"). Assuming $700,000 of Preferred Stock is purchased
in
the Offering, the aggregate number of shares of Preferred Stock issued pursuant
to the Original Preferred Stock Investment and the Offering for an aggregate
purchase price of $1,000,000 will, subject to and in accordance with the terms
of the Merger Agreement, at the Effective Time, be automatically converted
into
and become the right to receive 2,000,000 shares of Onstream common stock,
par
value $0.001 per share.
In
connection with this Agreement, the undersigned subscriber represents and
acknowledges as follows:
Section
1. Access to Information.
The
Company has provided access to the undersigned and any investment advisor,
attorney, accountant and/or other purchaser representative acting on behalf
of
the undersigned (all of whom are hereinafter collectively referred to as
"purchaser representatives") copies of all filings made by the Company with
the
Securities and Exchange Commission (the “SEC”) on or prior to the date hereof
(the “SEC Filings”), and an opportunity to ask questions and receive answers
concerning the proposed business of the Company and the terms and conditions
of
the Merger and the Offering, and have provided to the undersigned and the
undersigned's purchaser representative(s), if any, an opportunity to obtain
any
and all additional information necessary to verify the accuracy of the
information which has been furnished.
Section
2. Reliance on Own Knowledge and Experience or
Purchaser Representative.
The
undersigned represents that it is (i) an institutional “accredited investor”
within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the
Securities Act of 1933, as amended (the “Act”), or (ii) a “qualified
institutional buyer” as such term is defined pursuant to Rule 144A promulgated
under the Act, as specified by the undersigned on the signature page to this
Agreement, and that he has had prior investment experience, including
investments in unregistered securities and is qualified by training and
experience in business and financial matters to evaluate the merits and risks
of
an investment such as the purchase of the Preferred Stock offered by the
Company.
Section
3. Subscriber's Acknowledgments.
The
Company has disclosed to me and the undersigned understands that:
(a) There
is
no present public market for the Preferred Stock and it is unlikely that a
public market for the Preferred Stock will develop in the future.
(c) Due
to
the absence of a public market for the Preferred Stock: (i) the undersigned
may
not be able to liquidate this investment in the event of an unexpected need
for
cash; (ii) transferability of the Preferred Stock is extremely limited; and
(iii) in the event of a disposition of the Preferred Stock, the undersigned
could sustain the loss of all or part of his investment in the Preferred
Stock.
(d) The
Preferred Stock has not been registered under the Act or State securities laws
and, therefore, the Preferred Stock cannot be resold or transferred unless
it is
subsequently registered under the Act and applicable State securities or "Blue
Sky" laws or exemptions from such registration are available.
(e) A
legend
summarizing the restrictions on the transfer of the Preferred Stock will be
made
on the Preferred Stock to be purchased by me.
-2-
(f) The
Preferred Stock has not been registered under the Act in reliance upon an
exemption under the provisions of that Act which depends, in part, upon the
investment intention of the purchaser. In this connection, the undersigned
understands that it is the position of the SEC that the statutory basis for
such
exemption would not be present if the representation of the purchaser merely
meant that its present intention was to hold such Preferred Stock for a short
period, such as the capital gains period of the Internal Revenue Code, for
a
deferred sale, for a market rise, or for a sale if the market does not rise
(assuming that a market develops) for a year, or for any other fixed period.
The
undersigned realizes that, in the view of the SEC, a purchase now with an intent
to resell would represent a purchase with an intent inconsistent with this
investment representation, and the SEC might regard such a sale or disposition
as a deferred sale to which the exemption is not available.
(g) An
investment in the Company involves considerable risks not associated with other
investments, including without limitation, the risks identified in the SEC
Filings.
(h) No
Federal or State agency has made any finding or determination as to the fairness
of the investment, nor have they made any recommendation or endorsement
concerning the Preferred Stock.
(i) This
Subscription Agreement is not revocable by the undersigned and the undersigned
is submitting this Agreement intending to be legally bound thereby.
(j) The
undersigned acknowledges that he has reviewed the SEC Filings to the extent
he
deemed necessary or advisable. The undersigned has had an opportunity to ask
questions of and has received answers from the Company concerning any of the
information contained in the SEC Filings and any other information requested
by
the undersigned regarding the Merger, the Offering and the business and
operations of the Company.
Section
4. Subscriber Representations.
The
undersigned represents and warrants as follows:
(a) The
undersigned is acquiring the Preferred Stock for his own account for investment
only and not for or with a view to resale or distribution. The undersigned
has
not entered into any contract, undertaking, agreement or arrangement with any
person to sell, transfer or pledge to such person or anyone else the Preferred
Stock which he is subscribing to purchase and the undersigned has no present
plans or intentions to enter into any such contract, undertaking, agreement
or
arrangement.
(b) The
undersigned can bear the economic risk of losing his entire investment in the
Preferred Stock. The undersigned is prepared to bear the economic risk of this
investment for an indefinite time.
(c) The
overall commitment of the undersigned to investments which are not readily
marketable is not disproportionate to his net worth, and an investment in the
Preferred Stock will not cause such overall commitment to become excessive.
The
undersigned's need for diversification in his investment portfolio will not
be
impaired by an investment in the Company.
-3-
(d) The
undersigned has adequate means of satisfying his short term needs for cash
and
has no present need for liquidity which would require him to sell his Preferred
Stock.
(e) The
undersigned has substantial experience in making investment decisions of this
type and/or he is relying on his own advisors in making this investment decision
and, therefore, either alone or together with its advisors, he has such
knowledge and experience in financial and business matters that he is capable
of
evaluating the merits and risks of an investment in the Company.
(f) The
principal business address of the undersigned, or if the undersigned is an
individual, his principal residence, is in the state indicated in the address
beneath his signature at the end of this Agreement. Unless otherwise indicated,
all communications, contacts and discussions relating to the Offering occurred
in the state in which the undersigned maintains its office, or if the
undersigned is an individual, in the state in which he maintains his
residence.
Section
5. Reliance on Representations.
The
undersigned acknowledges and understands that the Company and its directors,
officers, employees, agents and representatives are relying upon the
information, representations and agreements contained in this Agreement and
upon
any other information which has been furnished by the undersigned in determining
that the undersigned is a suitable investor and that this investment is duly
authorized and in deciding to accept the undersigned's subscription for the
Preferred Stock.
Section
6. Agreements
of the Undersigned Subscriber.
The
undersigned hereby agrees as follows:
(a) This
offer may be accepted or rejected, in whole or in part, in the sole discretion
of the Company.
(b) In
the
event this offer to purchase is accepted, the undersigned agrees to execute
all
documents in connection therewith deemed necessary or advisable by the Company
in its sole discretion.
(c) Any
Preferred Stock acquired pursuant to the Offering will not be sold or otherwise
transferred: (i) without the prior written consent of the Company, which consent
shall be conditioned on receipt of an opinion of counsel reasonably satisfactory
to the Company to the effect that such proposed transfer is being made pursuant
to the registration requirements of the Act or pursuant to an exemption
therefrom and complies in all respects with any applicable state securities
or
"Blue Sky" laws, or (ii) without registration under the Act and applicable
State
securities or "Blue Sky" laws.
-4-
(d) In
the
event the subscription is not accepted, any money tendered will be refunded
in
full without interest and without deduction within a reasonable period of
time.
Section
7. Representations Relating to Authority.
If
the
undersigned subscriber is a corporation, partnership, trust or other entity,
the
undersigned represents and warrants that:
(a) It
is
duly incorporated or organized, validly existing and in good standing in its
state of incorporation or organization and in all other jurisdictions in which
the character of its business makes such qualification necessary.
(b) It
has
full power and authority to enter into, deliver and perform this Agreement
and
it has taken all action required to authorize the execution and delivery of
this
Agreement and to consummate the transactions contemplated hereby. This Agreement
is the valid and binding obligation of the subscriber, enforceable against
it in
accordance with its terms and the person signing such documents on behalf of
the
subscriber has been duly authorized to act on behalf of and to bind the
subscriber.
(c) The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not violate any provision of the
certificate of incorporation and by-laws or the partnership agreement, trust
agreement or limited liability company operating agreement, as applicable,
or
any agreement or contract to which the subscriber is a party or by which it
is
bound, or any applicable law, ordinance, rule or regulation of any governmental
body having jurisdiction over the subscriber or its business or any order,
judgment or decree applicable to the subscriber.
Section
8. Consent
to Merger.
The
undersigned subscriber hereby consents to, ratifies and approves the Merger
and
consents to, ratifies and approves the Merger Agreement. If requested by the
Company or Onstream, the undersigned hereby agrees to execute a separate consent
evidencing the consent of the undersigned as a holder of Preferred Stock to
the
approval of the Merger and the adoption of the Merger Agreement and to take
such
actions as may be reasonably requested to evidence such consent and
approval.
Section
9. Indemnification.
The
undersigned subscriber agrees to indemnify and hold harmless the Company and
each director, officer, employee, agent or representative thereof from and
against any and all loss, damage or liability and all related costs and expenses
(including but not limited to, reasonable attorney's fees and costs of
investigation) due to or arising out of a breach of any covenant, representation
or warranty made by him in this Agreement.
-5-
Section
10. Miscellaneous.
(a) All
notices or other communications given or made hereunder shall be in writing
and
shall be delivered or mailed by registered or certified mail, return receipt
requested, postage prepaid to the undersigned at the address set forth below
and
to the Company at the address set forth above.
(b) Notwithstanding
the place where this Agreement may be executed by any of the parties hereto,
the
parties expressly agree that all the terms and provisions hereof shall be
governed by, and construed in accordance with, the laws of the State of New
York
without regard to the choice of law principles thereof.
(c) This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and may be amended only by a writing
executed by all parties.
(d) Whenever
required by the context hereof, the singular shall include the plural, and
vice-versa; the masculine shall include the feminine and neuter genders, and
vice-versa; and the word "person" shall include an individual, corporation,
partnership, trust, estate or other entity.
Section
11. Foreign Person.
(check
one)
¨
The
undersigned hereby certifies that he is not a "foreign person" within the
meaning of Section 7701(a)(30) of the Internal Revenue Code and agrees to notify
the Company prior to becoming a foreign person as so defined. A "foreign person"
is a person who is not a citizen or resident of the United States.
¨
The
undersigned hereby certifies that he is a "foreign person" within the meaning
of
Section 7701(a)(30) of the Internal Revenue Code.
Section
12. Subscription.
The
undersigned hereby subscribes for shares of Preferred Stock at the aggregate
purchase price indicated below:
Purchase
Price: $______________
The
check
of the undersigned in the amount indicated above, payable to the Company, or
a
wire transfer or delivery to the account of the Company, will be delivered
to
the Company upon demand and, in any event, prior to the Effective
Time.
-6-
THE
UNDERSIGNED SUBCRIBER HEREBY REPRESENTS AND WARRANTS TO THE COMPANY THAT IT
IS:
¨
an
institutional “accredited investor” within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act of 1933, as
amended.
¨
a
“qualified institutional buyer” as such term is defined pursuant to Rule 144A
under the Securities Act of 1933, as amended.
|
NAME AND ADDRESS OF SUBSCRIBER:
|
|
|
|
|
|
|||
|
Telephone
Number
|
Signature,
if individual
|
||
|
By:
|
|||
|
Social
Security Number
|
|||
|
or
Taxpayer I.D. No.
|
|||
|
TITLE,
if applicable
|
|||
Company Acceptance:
Accepted
on ___________________, 2008
| NARROWSTEP INC. | |
|
By:
|
|
|
Title:
|
|
-7-
Schedule
I
Material
Terms of Series A Preferred Stock
The
Series A Preferred Stock shall be entitled to such dividends as may be declared
by the board of Directors from time to time out of funds legally available
therefor.
Upon
any
liquidation, dissolution or winding up of the Company, the holders of the Series
A Preferred Stock shall be entitled to a liquidation preference equal to the
stated value of the shares of Series A Preferred Stock held by them together
with all unpaid dividends in respect thereof.
Holders
of Series A Preferred Stock shall have no voting rights except as may be
provided by applicable law.
No
shares
of any class or series ranking prior to the Series A Preferred Stock as to
dividends or upon liquidation may be issued without the approval of the holders
of a majority of the Series A Preferred Stock then outstanding.
The
holders of the Series A Preferred Stock shall have no right to convert the
Series A Preferred Stock into Common Stock or any other security of the Company
and shall have no right to force the redemption or repurchase of the Series
A
Preferred Stock by the Company.
-8-
