EXHIBIT 3.02
SUBSCRIPTION AGREEMENT
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THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of September ___,
2004, by and among Renegade Venture (Nev.) Corporation, a Nevada corporation
(the "Company"), and the subscribers identified on the signature page hereto
(each a "Subscriber" and collectively "Subscribers").
WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "1933 Act").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers shall purchase, in the
aggregate, $1,100,000.00 (the "Purchase Price") of the Company's common stock,
$.001 par value (the "Common Stock" or "Shares"), and share purchase warrants in
the form attached hereto as Exhibit A (the "Warrants"), to purchase shares of
Common Stock (the "Warrant Shares"). The per Share Purchase Price shall be
$0.52, subject to adjustment as described in this Agreement. The Purchase Price
shall be payable to the Company on the Closing Date. The Common Stock, the
Warrants and the Warrant Shares are collectively referred to herein as the
"Securities"; and
WHEREAS, the aggregate proceeds of the sale of the Common Stock and the
Warrants contemplated hereby may be held in escrow pursuant to the terms of a
Funds Escrow Agreement which may be executed by the parties substantially in the
form attached hereto as Exhibit B (the "Escrow Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Subscribers hereby
agree as follows:
1. Purchase and Sale of Shares and Warrants. Subject to the
satisfaction (or waiver) of the conditions to Closing set forth in this
Agreement and the Escrow Agreement, each Subscriber shall purchase the Shares
and Warrants for the portion of the Purchase Price indicated on the signature
page hereto, and the Company shall sell such Shares and Warrants to the
Subscriber. The Purchase Price for the Shares and Warrants shall be paid in
cash. The entire Purchase Price shall be allocated to the Shares.
2. Escrow Arrangements; Form of Payment. Upon execution hereof by the
parties and pursuant to the terms of the Escrow Agreement, each Subscriber
agrees to make the deliveries required of such Subscriber as set forth in the
Escrow Agreement and the Company agrees to make the deliveries required of the
Company as set forth in the Escrow Agreement.
3. Warrants. On the Closing Date the Company will issue Warrants to
the Subscribers. One (1) Class A Warrant and one (1) Class B Warrant will be
issued for each two (2) Shares issued on the Closing Date. The per Warrant Share
exercise price to acquire a Warrant Share upon exercise of a Class A Warrant
shall be $1.00. The per Warrant Share exercise price to acquire a Warrant Share
upon exercise of a Class B Warrant shall be $1.36. Collectively, the Class A
Warrants and Class B Warrants are referred to herein as Warrants. The Warrants
shall be exercisable until five (5) years after the Closing Date, will have a
cashless exercise feature and be subject to Call by the Company as described in
Exhibit A hereto.
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4. Subscriber's Representations and Warranties. Each Subscriber hereby
represents and warrants to and agrees with the Company only as to such
Subscriber that:
(a) Information on Company. The Subscriber has been furnished
with or has had access at the XXXXX Website of the Commission to the Company's
Form SB-2 Registration Statement filed with the Commission on July 2, 2004, as
amended August 2, 2004 ("Pending Registration Statement") and Form 10-KSB for
the year ended December 31, 2003 as filed with the Commission, together with all
subsequently filed Forms 10-QSB, 8-K, and filings made with the Commission
available at the XXXXX website (hereinafter referred to collectively as the
"Reports"). In addition, the Subscriber has received in writing from the Company
such other information concerning its operations, financial condition and other
matters as the Subscriber has requested in writing (such other information is
collectively, the "Other Written Information"), and considered all factors
including, without limitation the risk factors set forth in the Company's most
recently filed SB-2 and SB-2A, which were filed respectively on July 2, 2004 and
August 2, 2004 ("Pending Registration Statement") discussed under the heading
"Risk Factors" the Subscriber deems material in deciding on the advisability of
investing in the Securities. The Subscriber has had full opportunity to conduct,
and has conducted, a complete and thorough due diligence investigation of the
Company, and such opportunity has been made available to the Subscriber's
professional representative(s) to ask questions of and receive answers from
representatives of the Company concerning the Company and its financial
condition and prospects, as well as request additional information necessary to
verify the accuracy of the Reports and Other Written Information provided to
Subscriber.
(b) Information on Subscriber. The Subscriber is organized and
validly existing under the laws of its formation. The Subscriber is, and will be
at the time of the issuance of the Common Stock and exercise of any of the
Warrants, an "accredited investor", as such term is defined in Regulation D
promulgated by the Commission under the 1933 Act, is experienced in investments
and business matters, has made investments of a speculative nature and has
purchased securities of United States publicly-owned companies in private
placements in the past and, with its representatives, has such knowledge and
experience in financial, tax and other business matters as to enable the
Subscriber to utilize the information made available by the Company to evaluate
the merits and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment. The
Subscriber has the authority and is duly and legally qualified to purchase and
own the Securities. The Subscriber is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof and the
Subscriber has no need for liquidity with respect to its investment in the
Company. The information set forth on the signature page hereto regarding the
Subscriber is accurate.
(c) Purchase of Common Stock and Warrants. The Subscriber was not
organized, either directly or indirectly, for the specific purpose of acquiring
the Securities and on the closing date, the Subscriber will purchase the Common
Stock and Warrants as principal for its own account and not with a view to any
distribution thereof.
(d) Compliance with Securities Act. The Subscriber understands
and agrees that the Securities have not been registered under the 1933 Act or
any applicable state securities laws, by reason of their issuance in a
transaction that does not require registration under the 1933 Act (based in part
on the accuracy of the representations and warranties of Subscriber contained
herein), and that such Securities must be held indefinitely unless a subsequent
disposition is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration. In any event, and subject to
compliance with applicable securities laws, the Subscriber may enter into lawful
hedging transactions with third parties, which may in turn engage in lawful
short sales of the Securities in the course of hedging the position they assume
and the Subscriber may also enter into short positions or other derivative
transactions relating to the Securities, or interests in the Securities, and
deliver the Securities, or interests in the Securities, to close out their short
or other positions or otherwise settle short sales or other transactions, or
loan or pledge the Securities, or interests in the Securities, to third parties
that in turn may dispose of these Securities.
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(e) Shares Legend. The Shares and the Warrant Shares shall bear
the following or similar legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO RENEGADE VENTURE (NEV.) CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED."
(f) Warrants Legend. The Warrants shall bear the following or
similar legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO RENEGADE VENTURE (NEV.) CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED."
(g) Stop Transfer Order. The Securities, when issued prior to the
effectiveness of the "Registration Statement" (as defined in Section 10 of this
Agreement), will be restricted securities. Subscriber agrees that, in order to
ensure compliance with the restrictions referenced at Section 4(e) & (f) herein,
the Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(h) Communication of Offer. The offer to sell the Securities was
directly communicated to the Subscriber by the Company. At no time was the
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer. At no time has
it been explicitly or implicitly represented, guaranteed or warranted to the
Subscriber by the Company, the agents or employees of Company or any other
person: (1) that a percentage of profit and/or amount or type of consideration
will be realized as a result of this investment; (2) that any cash dividends
from Company operations or otherwise will be made to shareholders by any
specific date or will be made at all; (3) that actual Company results, financial
or otherwise, will correspond with any predictions or projections that may have
been made available to Subscriber; or (3) that any specific tax benefits will
accrue as a result of an investment in the Company.
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(i) Authority; Enforceability. This Agreement and other
agreements delivered together with this Agreement or in connection herewith have
been duly authorized, executed and delivered by the Subscriber and are valid and
binding agreements enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity; and Subscriber has full corporate
power and authority necessary to enter into this Agreement and such other
agreements and to perform its obligations hereunder and under all other
agreements entered into by the Subscriber relating hereto.
(j) Restricted Securities. Subscriber understands that the
Securities have not been registered under the 1933 Act and such Subscriber will
not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
of the Securities unless (i) pursuant to an effective registration statement
under the 1933 Act, (ii) such Subscriber provides the Company with an opinion of
counsel, in a form reasonably acceptable to the Company, to the effect that a
sale, assignment or transfer of the Securities may be made without registration
under the 1933 Act, or (iii) Subscriber provides the Company with reasonable
assurances (in the form of seller and broker representation letters) that the
Shares or the Warrant Shares, as the case may be, can be sold pursuant to (A)
Rule 144 promulgated under the 1933 Act, or (B) Rule 144(k) promulgated under
the 1933 Act, in each case following the applicable holding period set forth
therein. Notwithstanding anything to the contrary contained in this Agreement,
such Subscriber may transfer (without restriction and without the need for an
opinion of counsel) the Securities to its Affiliates (as defined below) provided
that each such Affiliate is an "accredited investor" under Regulation D and such
Affiliate agrees to be bound by the terms and conditions of this Agreement.
For the purposes of this Agreement, an "Affiliate" of any
specified Subscriber means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with such
specified Subscriber. For purposes of this definition, "control" means the power
to direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
(k) No Governmental Review. Each Subscriber understands that no
United States federal or state agency or any other governmental or state agency
has passed on or made recommendations or endorsement of the Securities or the
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
(l) Correctness of Representations. Each Subscriber represents as
to such Subscriber that the foregoing representations and warranties are true
and correct as of the date hereof and, unless a Subscriber otherwise notifies
the Company prior to the Closing Date (as hereinafter defined), shall be true
and correct as of the Closing Date.
(m) Survival. The foregoing representations and warranties shall
survive the Closing Date for a period of two years.
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5. Company Representations and Warranties. The Company represents and
warrants to and agrees with each Subscriber that:
(a) Due Incorporation. The Company and each of its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the respective jurisdictions of their incorporation and have the
requisite corporate power to own their properties and to carry on their business
as now being conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
each jurisdiction where the nature of the business conducted or property owned
by it makes such qualification necessary, other than those jurisdictions in
which the failure to so qualify would not have a material adverse effect. For
purposes of this Agreement, a "material adverse effect" shall mean a material
adverse effect on the financial condition, results of operations, properties or
business of the Company taken as a whole.
(b) Outstanding Stock. All issued and outstanding shares of
capital stock of the Company and each of its subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable.
(c) Authority; Enforceability. This Agreement, the Common Stock,
the Warrants, the Escrow Agreement and any other agreements delivered together
with this Agreement or in connection herewith (collectively "Transaction
Documents") have been duly authorized, executed and delivered by the Company and
are valid and binding agreements enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity. The Company has
full corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform its obligations thereunder.
(d) Additional Issuances. There are no outstanding agreements or
preemptive or similar rights affecting the Company's common stock or equity and
no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or understandings with
respect to the sale or issuance of any shares of common stock or equity of the
Company or other equity interest in any of the subsidiaries of the Company
except for such disclosed rights of Xxxxxx Partners, LP, JG Capital, Inc. and as
described on Schedule 5(d) hereto.
(e) Consents. No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its affiliates, the American Stock Exchange, the National
Association of Securities Dealers, Inc., Nasdaq, SmallCap Market, the OTC
Bulletin Board ("Bulletin Board") nor the Company's shareholders is required for
the execution by the Company of the Transaction Documents and compliance and
performance by the Company of its obligations under the Transaction Documents,
including, without limitation, the issuance and sale of the Securities.
(f) No Violation or Conflict. Assuming the representations and
warranties of the Subscribers in Section 4 are true and correct, neither the
issuance and sale of the Securities nor the performance of the Company's
obligations under the Transaction Documents by the Company will:
(i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a default) under (A)
the articles or certificate of incorporation, charter or bylaws of the Company,
(B) to the Company's knowledge, any decree, judgment, order, law, treaty, rule,
regulation or determination applicable to the Company of any court, governmental
agency or body, or arbitrator having jurisdiction over the Company or any of its
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subsidiaries or over the properties or assets of the Company or any of its
affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its affiliates or subsidiaries is a party, by which the Company or any of its
affiliates or subsidiaries is bound, or to which any of the properties of the
Company or any of its affiliates or subsidiaries is subject, or (D) the terms of
any "lock-up" or similar provision of any underwriting or similar agreement to
which the Company, or any of its affiliates or subsidiaries is a party except
the violation, conflict, breach, or default of which would not have a material
adverse effect on the Company; or
(ii) result in the creation or imposition of any lien,
charge or encumbrance upon the Securities or any of the assets of the Company,
its subsidiaries or any of its affiliates; or
(iii) except as disclosed on Schedule 5(d), result in the
activation of any anti-dilution rights or a reset or repricing of any debt or
security instrument of any other creditor or equity holder of the Company, nor
result in the acceleration of the due date of any obligation of the Company; or
(iv) except as disclosed on Schedule 10.1, result in the
activation of any piggy-back registration rights of any person or entity holding
securities of the Company or having the right to receive securities of the
Company.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security
interests, liens, claims or other encumbrances, subject to restrictions upon
transfer under the 1933 Act and any applicable state securities laws;
(ii) have been, or will be, duly and validly authorized and
on the date of issuance of the Shares and upon exercise of the Warrants, the
Shares and Warrant Shares will be duly and validly issued, fully paid and
nonassessable (and if registered pursuant to the 1933 Act, and resold pursuant
to an effective registration statement will be free trading and unrestricted,
provided that each Subscriber complies with the prospectus delivery requirements
of the 1933 Act);
(iii) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of the
Company; and
(iv) will not subject the holders thereof to personal
liability by reason of being such holders.
(h) Litigation. There is no pending or, to the best knowledge of
the Company, threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company, or any of its affiliates that would affect the execution by the Company
or the performance by the Company of its obligations under the Transaction
Documents. Except as disclosed in the Reports, there is no pending or, to the
best knowledge of the Company, basis for or threatened action, suit, proceeding
or investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company, or any of its affiliates which litigation
if adversely determined would have a material adverse effect on the Company.
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(i) Reporting Company. The Company is a publicly-held company
subject to reporting obligations pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and has a class of common
shares registered pursuant to Section 12(g) of the 1934 Act. Pursuant to the
provisions of the 1934 Act, the Company has timely filed all reports and other
materials required to be filed thereunder with the Commission during the
preceding twelve months.
(j) No Market Manipulation. The Company has not taken, and will
not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the common stock of the Company to facilitate the sale or resale of
the Securities or affect the price at which the Securities may be issued or
resold.
(k) Information Concerning Company. The Reports contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein. Since the date of the financial statements included in the
Reports, and except as modified in the Other Written Information or in the
Schedules hereto, there has been no material adverse change in the Company's
business, financial condition or affairs not disclosed in the Reports. The
Reports do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made.
(l) Defaults. The Company is not in violation of its articles of
incorporation or bylaws. The Company is (i) not in default under or in violation
of any other material agreement or instrument to which it is a party or by which
it or any of its properties are bound or affected, which default or violation
would have a material adverse effect on the Company, (ii) not in default with
respect to any order of any court, arbitrator or governmental body or subject to
or party to any order of any court or governmental authority arising out of any
action, suit or proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii) to
its knowledge not in violation of any statute, rule or regulation of any
governmental authority which violation would have a material adverse effect on
the Company.
(m) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Bulletin Board which if so integrated would eliminate the exemption for the
Offering as described in the second paragraph of this Agreement. The Company
will not conduct any offering other than the transactions contemplated hereby
that will be integrated with the offer or issuance of the Securities which if so
integrated would impair the exemption for the Offering (as defined in Section
7(c) of this Agreement).
(n) No General Solicitation. Neither the Company, nor any of its
affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 0000 Xxx) in connection with the offer or sale
of the Securities.
(o) Listing. The Company's common stock is quoted on the Bulletin
Board. The Company has not received any oral or written notice that its common
stock is not eligible nor will become ineligible for quotation on the Bulletin
Board nor that its common stock does not meet all requirements for the
continuation of such quotation and the Company satisfies and as of the Closing
Date, the Company will satisfy all the requirements for the continued quotation
of its common stock on the Bulletin Board.
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(p) No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, which are not
disclosed in the Reports and Other Written Information, other than those
incurred in the ordinary course of the Company's businesses since December 31,
2003 and which, individually or in the aggregate, would reasonably be expected
to have a material adverse effect on the Company's financial condition.
(q) No Undisclosed Events or Circumstances. Since December 31,
2003, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.
(s) Capitalization. The authorized and outstanding capital stock
of the Company as of the date of this Agreement and the Closing Date is set
forth on Schedule 5(s) hereto. There are no options, warrants, or rights to
subscribe to, securities, rights or obligations convertible into or exchangeable
for or giving any right to subscribe for any shares of capital stock of the
Company except as set forth on Schedule 5(s). All of the outstanding shares of
Common Stock of the Company have been duly and validly authorized and issued and
are fully paid and nonassessable.
(t) Dilution. The Company's executive officers and directors
understand the nature of the Securities being sold hereby and recognize that the
issuance of the Securities may have a dilutive effect on the equity holdings of
other holders of the Company's equity or rights to receive equity of the
Company. The board of directors of the Company has concluded, in its good faith
business judgment, that the issuance of the Securities is in the best interests
of the Company. The Company specifically acknowledges that its obligation to
issue the Warrant Shares upon exercise of the Warrants is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company or parties entitled to
receive equity of the Company.
(u) No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company, including but not limited to disputes or
conflicts over payment owed to such accountants and lawyers.
(v) Investment Company. The Company is not an Affiliate of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(w) Correctness of Representations. The Company represents that
the foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless the Company otherwise notifies the
Subscribers prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date.
(x) Survival. The foregoing representations and warranties shall
survive the Closing Date for a period of two years.
6. Regulation D Offering. The offer and issuance of the Securities to
the Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
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Act and/or Rule 506 of Regulation D promulgated thereunder. On the Closing Date,
the Company will provide an opinion reasonably acceptable to Subscriber from the
Company's legal counsel opining on the availability of an exemption from
registration under the 1933 Act as it relates to the offer and issuance of the
Securities and other matters reasonably requested by Subscribers. A form of the
legal opinion is annexed hereto as Exhibit C. The Company will provide, at the
Company's expense, such other legal opinions in the future as are reasonably
necessary for the resale of the Common Stock and exercise of the Warrants and
resale of the Warrant Shares.
7. Finder/Legal Fees.
(a) Finder's Fee. The Company on the one hand, and each
Subscriber (for himself only) on the other hand, agree to indemnify the other
against and hold the other harmless from any and all liabilities to any persons
claiming brokerage commissions or finder's fees other than the parties
identified on Schedule 7 (each a "Finder" and collectively "Finders") on account
of services purported to have been rendered on behalf of the indemnifying party
in connection with this Agreement or the transactions contemplated hereby and
arising out of such party's actions. Anything to the contrary in this Agreement
notwithstanding, each Subscriber is providing indemnification only for such
Subscriber's own actions and not for any action of any other Subscriber. Each
Subscriber's liability hereunder is several and not joint. The Company agrees
that it will pay the Finders, in the aggregate, a cash finder's fee of six
percent (6%) of the Purchase Price ("Finder's Fees") directly out of the funds
held pursuant to the Escrow Agreement. The Finders will also be paid by the
Company six percent (6%) of the cash proceeds received by the Company from
exercise of the Warrants (collectively "Warrant Exercise Compensation"). The
Warrant Exercise Compensation must be paid by the Company to the Finders within
five (5) business days after each receipt by the Company of Warrant exercise
cash proceeds. The Company represents that there are no other parties entitled
to receive fees, commissions, or similar payments in connection with the
Offering except the Finder.
(b) Finder's Warrants. On the Closing Date, the Company will
issue to the Finders Warrants similar to and carrying the same rights as the
Warrants issuable to the Subscribers ("Finder's Warrants"). The Finders will
receive, the aggregate, seven and one-half (7-1/2) Warrants for each one hundred
(100) Shares and Warrants issued on the Closing Date to the Subscribers. Such
Warrant shall be exercisable at a price per Warrant Share equivalent to the
Shares and Class A and Class B Warrants giving rise to such issuance (i.e.
$0.52, $1.00, and $1.36). The Finder's Warrants will not be subject to Call by
the Company. All the representations, covenants, warranties, undertakings,
remedies, liquidated damages, indemnification, and other rights including but
not limited to reservation and registration rights made or granted to or for the
benefit of the Subscribers are hereby also made by the Company and granted to
the holders of Finder's Warrants. A form of Finder's Warrant is annexed hereto
as Exhibit D.
(c) Legal Fees. The Company shall pay to Grushko & Xxxxxxx, P.C.,
a fee of $16,250 ("Legal Fees") as reimbursement for services rendered to the
Subscribers in connection with this Agreement and the purchase and sale of the
Shares and Warrants (the "Offering") and acting as Escrow Agent for the
Offering. The Finders will allocate to Grushko & Xxxxxxx, P.C. an amount of
Finder's Warrants designated on Schedule 7 hereto. The Legal Fees will be
payable on the Closing Date out of funds held pursuant to the Escrow Agreement.
8.1. Covenants of the Company. The Company covenants and agrees with
the Subscribers as follows:
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(a) Stop Orders. The Company will advise the Subscribers,
promptly after it receives notice of issuance by the Commission, any state
securities commission or any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.
(b) Listing. The Company shall promptly secure the listing of the
shares of Common Stock and the Warrant Shares upon each national securities
exchange, or automated quotation system upon which they are or become eligible
for listing (subject to official notice of issuance) and shall use its
commercially reasonable best efforts to maintain such listing so long as any
Shares or Warrants are outstanding. The Company will maintain the listing of its
Common Stock on the American Stock Exchange, Nasdaq SmallCap Market, Nasdaq
National Market System, Bulletin Board, or New York Stock Exchange (whichever of
the foregoing is at the time the principal trading exchange or market for the
Common Stock (the "Principal Market")) or other market with the reasonable
consent of Subscribers holding a majority of the Shares and Warrant Shares, and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide the Subscribers copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common Stock
from any Principal Market. As of the date of this Agreement and the Closing
Date, the Bulletin Board is and will be the Principal Market.
(c) Market Regulations. The Company shall notify the Commission,
the Principal Market and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall take
all other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Securities to the Subscribers and promptly provide copies thereof to Subscriber.
(d) Reporting Requirements. From the date of this Agreement and
until the sooner of (i) two (2) years after the Closing Date, or (ii) until all
the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitation, the Company will (v) cause its Common Stock
to continue to be registered under Section 12(b) or 12(g) of the 1934 Act, (x)
comply in all respects with its reporting and filing obligations under the 1934
Act, (y) comply with all reporting requirements that are applicable to an issuer
with a class of shares registered pursuant to Section 12(b) or 12(g) of the 1934
Act, as applicable, and (z) comply with all requirements related to any
registration statement filed pursuant to this Agreement. The Company will use
its commercially reasonable best efforts not to take any action or file any
document (whether or not permitted by the 1933 Act or the 1934 Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said acts until two (2) years after
the Closing Date. Until the earlier of the resale of the Common Stock and the
Warrant Shares by each Subscriber or at least two (2) years after the Warrants
have been exercised, the Company will use its commercially reasonable best
efforts to continue the listing or quotation of the Common Stock on the
Principal Market or other market or exchange identified in Section 5(e) above,
and will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market. The Company
agrees to timely file a Form D with respect to the Securities if required under
Regulation D and to provide a copy thereof to each Subscriber promptly after
such filing.
(e) Use of Proceeds. The Company undertakes to use the proceeds
of the Subscribers' funds for the purposes set forth on Schedule 8(e) hereto.
Except as set forth on Schedule 8(e), the Purchase Price may not and will not be
used for accrued and unpaid officer and director salaries, payment of financing
related debt, redemption of outstanding notes or equity instruments of the
Company nor non-trade obligations outstanding on the Closing Date.
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(f) Reservation. Prior to the Closing Date, the Company
undertakes to reserve, pro rata, on behalf of each Subscriber and holder of a
Warrant, from its authorized but unissued common stock, a number of common
shares equal to the amount of Warrant Shares issuable upon exercise of the
Warrants.
(g) Taxes. From the date of this Agreement and until the sooner
of (i) two (2) years after the Closing Date, or (ii) until all the Shares and
Warrant Shares have been resold or transferred by all the Subscribers pursuant
to the Registration Statement or pursuant to Rule 144, without regard to volume
limitations, the Company will promptly pay and discharge, or cause to be paid
and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefore.
(h) Insurance. From the date of this Agreement and until the
sooner of (i) two (2) years after the Closing Date, or (ii) until all the Shares
and Warrant Shares have been resold or transferred by all the Subscribers
pursuant to the Registration Statement or pursuant to Rule 144, without regard
to volume limitations, the Company will keep its assets which are of an
insurable character insured by financially sound and reputable insurers against
loss or damage by fire, explosion and other risks customarily insured against by
companies in the Company's line of business, in amounts sufficient to prevent
the Company from becoming a co-insurer and not in any event less than one
hundred percent (100%) of the insurable value of the property insured; and the
Company will maintain, with financially sound and reputable insurers, insurance
against other hazards and risks and liability to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated and to the extent available on commercially reasonable terms.
(i) Books and Records. From the date of this Agreement and until
the sooner of (i) two (2) years after the Closing Date, or (ii) until all the
Shares and Warrant Shares have been resold or transferred by all the Subscribers
pursuant to the Registration Statement or pursuant to Rule 144, without regard
to volume limitations, the Company will keep true records and books of account
in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
(j) Governmental Authorities. From the date of this Agreement and
until the sooner of (i) two (2) years after the Closing Date, or (ii) until all
the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitations, the Company shall duly observe and conform
in all material respects to all valid requirements of governmental authorities
relating to the conduct of its business or to its properties or assets.
(k) Intellectual Property. From the date of this Agreement and
until the sooner of (i) two (2) years after the Closing Date, or (ii) until all
the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitations, the Company shall maintain in full force
and effect its corporate existence, rights and franchises and all licenses and
other rights to use intellectual property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.
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(l) Properties. From the date of this Agreement and until the
sooner of (i) two (2) years after the Closing Date, or (ii) until all the Shares
and Warrant Shares have been resold or transferred by all the Subscribers
pursuant to the Registration Statement (as defined in Section 10.1(iv) hereof)
or pursuant to Rule 144, without regard to volume limitations, the Company will
keep its properties in good repair, working order and condition, reasonable wear
and tear excepted, and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto; and the Company will
at all times comply with each provision of all leases to which it is a party or
under which it occupies property if the breach of such provision could
reasonably be expected to have a Material Adverse Effect.
(m) Confidentiality/Public Announcement. From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to Rule
144, without regard to volume limitations, the Company agrees that except in
connection with a Form 8-K or the Registration Statement, it will not disclose
publicly or privately the identity of the Subscribers unless expressly agreed to
in writing by a Subscriber or only to the extent required by law and then only
upon five days prior notice to Subscriber. In any event and subject to the
foregoing, the Company undertakes to file a Form 8-K or make a public
announcement describing the Offering not later than the first business day after
the Closing Date. In the Form 8-K or public announcement, the Company will
specifically disclose the amount of common stock outstanding immediately after
each Closing. A form of the proposed Form 8-K or public announcement to be
employed in connection with the Closing Date is annexed hereto as Exhibit E.
(n) Further Registration Statements. Except for a registration
statement filed on behalf of the Subscribers pursuant to Section 10 of this
Agreement or in connection with the securities identified on Schedule 10.1
hereto, the Company will not file any registration statements, including but not
limited to Form S-8, with the Commission or with state regulatory authorities,
without the consent of the Subscribers holding 65% of the outstanding Shares and
Warrant Shares, until one hundred and eighty (180) days after the actual
effective date of the Registration Statement described in Section 10.1(iv) of
this Agreement ("Actual Effective Date") during which such Registration
Statement shall have been current and available for use in connection with the
public resale of the Shares and Warrant Shares ("Exclusion Period"). Nor will
the Company allow any registration statement except for the Registration
Statement to be declared effective by the Commission prior to the Actual
Effective Date except that provided a Non-Registration Event has not occurred
and the Company has diligently attempted to obtain the effectiveness of the
Registration Statement, then the Pending Registration Statement may be declared
effective on or after November 15, 2004.
(o) Blackout. The Company undertakes and covenants that until the
first to occur of (i) the end of the Exclusion Period, or (ii) until all the
Shares and Warrant Shares have been resold pursuant to a registration statement
or Rule 144, the Company will not enter into any acquisition, merger, exchange
or sale or other transaction that could have the effect of delaying the
effectiveness of any pending registration statement or causing an already
effective registration statement to no longer be effective or current for a
period of fifteen (15) or more days.
(p) Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Subscriber
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such
Subscriber shall have agreed in writing to receive such information. The Company
understands and confirms that each Subscriber shall be relying on the foregoing
representations in effecting transactions in securities of the Company.
12
(q) Limited Standstill. The Company will deliver to the
Subscribers on or before the Closing Date and enforce the provisions of
irrevocable lockup agreements ("Limited Standstill Agreements") in the forms
annexed hereto as Exhibit F, with the parties identified on Schedule 8(q)
hereto.
8.2. Covenants of the Subscriber. The Subscribers, each for itself,
covenant and agree with the Company that provided a Non-Registration Event (as
defined in Section 10.4) has not occurred and no other liquidated damages have
accrued hereunder, then until the end of the Exclusion Period [as defined in
Section 8(n)], each Subscriber will not, without prior approval by the Company,
sell in open market transactions on any trading day an amount of Company Shares
in excess of such Subscriber's Proportionate Share (as set forth on the
signature page hereto) of 12.5% of the trading volume of the Company's Common
Stock for such trading day as reported by Bloomberg L.P. Each Subscriber may
sell up to its Proportionate Share of 37.5% of the reported trading volume of
the Company's Common Stock for such Proportionate Share percentages that
accumulated and were not sold on prior trading days pursuant to the previous
sentence.
9. Covenants of the Company and Subscriber Regarding Indemnification.
(a) The Company agrees to indemnify, hold harmless, reimburse and
defend the Subscribers, the Subscribers' officers, directors, agents,
affiliates, control persons, and principal shareholders, against any claim,
cost, expense, liability, obligation, loss or damage (including reasonable legal
fees) of any nature, incurred by or imposed upon the Subscriber or any such
person which results, arises out of or is based upon (i) any material
misrepresentation by Company or breach of any warranty by Company in any of the
Transaction Documents; or (ii) after any applicable notice and/or cure periods,
any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company under any Transaction Documents other
than its obligations under Section 10 of this Agreement.
(b) Each Subscriber agrees to indemnify, hold harmless, reimburse
and defend the Company and each of the Company's officers, directors, agents,
affiliates, control persons against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company or any such person which results, arises
out of or is based upon (i) any material misrepresentation by such Subscriber in
this Agreement or in any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by such Subscriber of any
covenant or undertaking to be performed by such Subscriber hereunder, or any
other agreement entered into by the Company and Subscribers, relating hereto.
(c) In no event shall the liability of any Subscriber or
permitted successor hereunder or under any other agreement delivered in
connection herewith be greater in amount than the dollar amount of the net
proceeds actually received by such Subscriber upon the sale of Registrable
Securities (as defined herein).
(d) The procedures set forth in Section 10.6 shall apply to the
indemnifications set forth in Sections 9(a) and 9(b) above.
10.1. Registration Rights. The Company hereby grants the following
registration rights to holders of the Securities.
(i) On one occasion, for a period commencing ninety-one (91) days
after the Closing Date, but not later than two (2) years after the Closing Date
("Request Date"), upon a written request therefor from any record holder or
holders of more than 50% of the Shares issued and Warrant Shares actually issued
13
upon exercise of the Warrants, the Company shall prepare and file with the
Commission a registration statement under the 1933 Act registering the Shares
and Warrant Shares (collectively "Registrable Securities") which are the subject
of such request for unrestricted public resale by the holder thereof.
Registrable Securities shall not include (i) Securities which are already
registered for resale in an effective registration statement, (ii) included for
registration in a pending registration statement, or (iii) which have been
issued without further transfer restrictions after a sale or transfer pursuant
to Rule 144 under the 1933 Act. Upon the receipt of such request, the Company
shall promptly give written notice to all other record holders of the
Registrable Securities that such registration statement is to be filed and shall
include in such registration statement Registrable Securities for which it has
received written requests within ten (10) days after the Company gives such
written notice. Such other requesting record holders shall be deemed to have
exercised their demand registration right under this Section 10.1(i).
(ii) If the Company at any time proposes to register any of its
securities under the 1933 Act for sale to the public, whether for its own
account or for the account of other security holders or both, except with
respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Registrable Securities for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Subscribers or Holder pursuant to an effective registration statement, each
such time it will give at least fifteen (15) days' prior written notice to the
record holder of the Registrable Securities of its intention so to do. Upon the
written request of the holder, received by the Company within ten (10) days
after the giving of any such notice by the Company, to register any of the
Registrable Securities not previously registered, the Company will, subject to
the terms of this Agreement, use its commercially reasonable best efforts to
cause such Registrable Securities as to which registration shall have been so
requested to be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition of the Registrable Securities so registered
by the holder of such Registrable Securities (the "Seller" or "Sellers"). In the
event that any registration pursuant to this Section 10.1(ii) shall be, in whole
or in part, an underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 10.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 10.1(ii)
without thereby incurring any liability to the Seller.
(iii) If, at the time any written request for registration is
received by the Company pursuant to Section 10.1(i), the Company has determined
to proceed with the actual preparation and filing of a registration statement
under the 1933 Act in connection with the proposed offer and sale for cash of
any of its securities for the Company's own account and the Company actually
does file such other registration statement, such written request shall be
deemed to have been given pursuant to Section 10.1(ii) rather than Section
10.1(i), and the rights of the holders of Registrable Securities covered by such
written request shall be governed by Section 10.1(ii).
(iv) The Company shall file with the Commission not later than
thirty (30) days after the Closing Date an amendment to the Pending Registration
Statement or if the Commission requests in writing that the Registrable
Securities be removed from the Pending Registration Statement, then within
fifteen (15) days after such written request (the later of such dates being the
"Filing Date"), the Company will file another registration statement on form
SB-2, and use its commercially reasonable best efforts to cause to be declared
effective within ninety (90) days after the Closing Date (the "Effective Date"),
14
such registration statement (the "Registration Statement") (or such other form
that it is eligible to use) in order to register the Registrable Securities for
resale and distribution under the 1933 Act. The Company will register not less
than a number of shares of common stock in the aforedescribed registration
statement that is equal to the Shares and all of the Warrant Shares issuable
upon exercise of the Warrants and Finder's Warrants. The Registrable Securities
shall be reserved and set aside exclusively for the benefit of each Subscriber
and Warrant holder, pro rata, and not issued, employed or reserved for anyone
other than each such Subscriber and Warrant holder. The Registration Statement
will immediately be amended or additional registration statements will be
immediately filed by the Company as necessary to register additional shares of
Common Stock to allow the public resale of all Common Stock included in and
issuable by virtue of the Registrable Securities. Without the written consent of
the Subscriber, no securities of the Company other than the Registrable
Securities will be included in the Registration Statement except as disclosed on
Schedule 10.1. It shall be deemed a Non-Registration Event (as defined in
Section 10.4 of this Agreement) if at any time after the actual effective date
of the Registration Statement ("Actual Effective Date"), the Company has
registered for unrestricted resale on behalf of each Subscriber fewer than all
the Shares and Warrant Shares issuable upon exercise of the Warrants and
Finder's Warrants.
10.2. Registration Procedures. If and whenever the Company is required
by the provisions of Section 10.1 to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:
(a) subject to the timelines provided in this Agreement, prepare
and file with the Commission a registration statement required by Section 10,
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as herein provided), and promptly
provide to the holders of the Registrable Securities copies of all filings and
Commission letters of comment and notify Subscribers and Grushko & Xxxxxxx, P.C.
(by telecopier and by email to Xxxxxxxxx@xxx.xxx) within four (4) hours of (i)
notice that the Commission has no comments or no further comments on the
Registration Statement, and (ii) the declaration of effectiveness of the
registration statement, (failure to timely provide notice as required by this
Section 10.2(a) shall be a material breach of the Company's obligation hereunder
and a Non-Registration Event as defined in Section 10.4 of this Agreement;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until such registration statement has been effective for a period of two (2)
years, and comply with the provisions of the 1933 Act with respect to the
disposition of all of the Registrable Securities covered by such registration
statement in accordance with the Sellers' intended method of disposition set
forth in such registration statement for such period;
(c) furnish to the Sellers, at the Company's expense, such number
of copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or their disposition of the securities
covered by such registration statement;
(d) use its commercially reasonable best efforts to register or
qualify the Registrable Securities covered by such registration statement under
the securities or "blue sky" laws of such jurisdictions as the Sellers shall
request in writing, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
15
(e) if applicable, list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock of the Company is then listed;
(f) immediately notify the Sellers when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event of which the Company has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and
(g) provided same would not be in violation of the provision of
Regulation FD under the 1934 Act, make available for inspection by the Sellers,
and any attorney, accountant or other agent retained by the Seller or
underwriter, all publicly available, non-confidential financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.
10.3. Provision of Documents. In connection with each registration
described in this Section 10, each Seller will furnish to the Company in writing
such information and representation letters with respect to itself and the
proposed distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
10.4. Non-Registration Events. The Company and the Subscribers agree
that the Sellers will suffer damages if the Registration Statement is not filed
by the Filing Date and not declared effective by the Commission by the Effective
Date, and any registration statement required under Section 10.1(i) or 10.1(ii)
is not filed within 60 days after written request and declared effective by the
Commission within 120 days after such request, and maintained in the manner and
within the time periods contemplated by Section 10 hereof, and it would not be
feasible to ascertain the extent of such damages with precision. Accordingly, if
(i) the Registration Statement is not filed on or before the Filing Date, (ii)
is not declared effective on or before the sooner of the Effective Date, or
within three (3) business days of receipt by the Company of a written or oral
communication from the Commission that the Registration Statement will not be
reviewed or that the Commission has no further comments, (iii) if the
registration statement described in Sections 10.1(i) or 10.1(ii) is not filed
within 60 days after such written request, or is not declared effective within
120 days after such written request, or (iv) any registration statement
described in Sections 10.1(i), 10.1(ii) or 10.1(iv) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
within fifteen (15) business days by an effective replacement or amended
registration statement) for a period of time which shall exceed 30 days in the
aggregate per year (defined as a period of 365 days commencing on the date the
Registration Statement is declared effective) or more than 20 consecutive days
(each such event referred to in clauses (i), (ii), (iii) and (iv) of this
Section 10.4 is referred to herein as a "Non-Registration Event"), then the
Company shall deliver to the holder of Registrable Securities, as Liquidated
Damages, an amount equal to three percent (3%) for each thirty days or part
thereof of the pendency of such Non-Registration Event of the Purchase Price of
the Shares owned of record by such holder which are subject to such
Non-Registration Event. The Company must pay the Liquidated Damages in cash
within ten (10) days after the end of each thirty (30) day period or shorter
part thereof for which Liquidated Damages are payable. In the event a
Registration Statement is filed by the Filing Date but is withdrawn prior to
being declared effective by the Commission, then such Registration Statement
will be deemed to have not been filed. All oral or written and accounting
comments received from the Commission relating to the Registration Statement
must be responded to within fifteen (15) business days. Failure to timely
respond is a Non-Registration Event for which Liquidated Damages shall accrue
and be payable by the Company to the holders of Registrable Securities at the
same rate set forth above. Notwithstanding the foregoing, the Company shall not
be liable to the Subscriber under this Section 10.4 for any events or delays
occurring as a consequence of the acts or omissions of the Subscribers contrary
to the obligations undertaken by Subscribers in this Agreement.
16
10.5. Expenses. All expenses incurred by the Company in complying with
Section 10, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including reasonable counsel
fees) incurred in connection with complying with state securities or "blue sky"
laws, fees of the National Association of Securities Dealers, Inc., transfer
taxes, fees of transfer agents and registrars, and costs of insurance for all
Sellers are called "Registration Expenses." All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities, including
any fees and disbursements of any additional counsel to the Seller, are called
"Selling Expenses." The Company will pay all Registration Expenses in connection
with the registration statement under Section 10. Selling Expenses in connection
with each registration statement under Section 10 shall be borne by the Seller
and may be apportioned among the Sellers in proportion to the number of shares
sold by the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.
10.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Securities
under the 1933 Act pursuant to Section 10, the Company will, to the extent
permitted by law, indemnify and hold harmless the Seller, each officer of the
Seller, each director of the Seller, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 10, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 10.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any case to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller, or
any such controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the 1933 Act pursuant to Section 10, each Seller severally but
not jointly will, to the extent permitted by law, indemnify and hold harmless
the Company, and each person, if any, who controls the Company within the
meaning of the 1933 Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the 1933 Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the 1933 Act pursuant to Section 10, any preliminary prospectus
17
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the net proceeds actually received by the Seller from the sale of Registrable
Securities covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 10.6(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 10.6(c), except and only if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 10.6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties, as a group, shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution in
the event of joint liability under the 1933 Act in any case in which either (i)
a Seller, or any controlling person of a Seller, makes a claim for
indemnification pursuant to this Section 10.6 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 10.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
not provided under this Section 10.6; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
18
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
10.7. Delivery of Unlegended Shares.
(a) Within three (3) business days (such third (3rd) business day
being the "Unlegended Shares Delivery Date") after the business day on which the
Company has received (i) a written notice that Registrable Securities have been
sold either pursuant to the Registration Statement or Rule 144 under the 1933
Act, (ii) a representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable, have been satisfied, and (iii) the
original share certificates representing the shares of Common Stock that have
been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Subscriber and/or Subscriber's broker regarding
compliance with the requirements of Rule 144, the Company at its expense, (y)
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to its transfer agent (with copies to Subscriber) an appropriate instruction and
opinion of such counsel, directing the delivery of shares of Common Stock
without any legends including the legend set forth in Section 4 above, issuable
pursuant to any effective and current Registration Statement described in
Section 10 of this Agreement or pursuant to Rule 144 under the 1933 Act (the
"Unlegended Shares"); and (z) cause the transmission of the certificates
representing the Unlegended Shares together with a legended certificate
representing the balance of the unsold shares of Common Stock, if any, to the
Subscriber at the address specified in the notice of sale, via express courier,
by electronic transfer or otherwise on or before the Unlegended Shares Delivery
Date. Transfer fees shall be the responsibility of the Seller.
(b) In lieu of delivering physical certificates representing the
Unlegended Shares, if the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program,
upon request of a Subscriber, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber's prime Broker with DTC through its Deposit Withdrawal Agent
Commission system. Such delivery must be made on or before the Unlegended Shares
Delivery Date.
(c) The Company understands that a delay in the delivery of the
Unlegended Shares pursuant to Section 10 hereof later than two business days
after the Unlegended Shares Delivery Date could result in economic loss to a
Subscriber. As compensation to a Subscriber for such loss, the Company agrees to
pay late payment fees (as liquidated damages and not as a penalty) to the
Subscriber for late delivery of Unlegended Shares in the amount of $100 per
business day after the Delivery Date for each $10,000 of purchase price of the
Unlegended Shares subject to the delivery default. If during any 360 day period,
the Company fails to deliver Unlegended Shares as required by this Section 10.7
for an aggregate of thirty (30) days, then each Subscriber or assignee holding
Securities subject to such default may, at its option, require the Company to
redeem all or any portion of the Shares and Warrant Shares subject to such
default at a price per share equal to 120% of the Purchase Price of such Common
Stock and Warrant Shares ("Unlegended Redemption Amount"). The amount of the
aforedescribed liquidated damages that have accrued or paid for the twenty day
period prior to the receipt by the Subscriber of the Unlegended Redemption
Amount shall be credited against the Unlegended Redemption Amount. The Company
shall pay any payments incurred under this Section in immediately available
funds upon demand.
19
(d) In addition to any other rights available to a Subscriber, if
the Company fails to deliver to a Subscriber Unlegended Shares as required
pursuant to this Agreement, within seven (7) business days after the Unlegended
Shares Delivery Date and the Subscriber purchases (in an open market transaction
or otherwise) shares of common stock to deliver in satisfaction of a sale by
such Subscriber of the shares of Common Stock which the Subscriber was entitled
to receive from the Company (a "Buy-In"), then the Company shall pay in cash to
the Subscriber (in addition to any remedies available to or elected by the
Subscriber) the amount by which (A) the Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of common stock so
purchased exceeds (B) the aggregate purchase price of the shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares, together with
interest thereon at a rate of 15% per annum, accruing until such amount and any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if a Subscriber purchases
shares of Common Stock having a total purchase price of $10,000 to cover a
Buy-In with respect to $10,000 of purchase price of shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares, the Company shall
be required to pay the Subscriber $1,000, plus interest. The Subscriber shall
provide the Company written notice indicating the amounts payable to the
Subscriber in respect of the Buy-In.
(e) In the event a Subscriber shall request in writing delivery
of Unlegended Shares as described in Section 10.7(e) and the Company is required
to deliver such Unlegended Shares pursuant to Section 10.7(e), the Company may
not refuse to deliver Unlegended Shares based on any claim that such Subscriber
or any one associated or affiliated with such Subscriber has been engaged in any
violation of law, or for any other reason, unless, the Company files for an
injunction or temporary restraining order from a court, on notice, restraining
and or enjoining delivery of such Unlegended Shares or exercise of all or part
of said Warrant shall have been sought and obtained and the Company has posted a
surety bond for the benefit of such Subscriber in the amount of 110% of the
amount of the aggregate purchase price of the Common Stock and Warrant Shares
which are subject to the injunction or temporary restraining order, which bond
shall remain in effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such Subscriber to the
extent Subscriber obtains judgment in Subscriber's favor.
11. (a) Right of First Refusal. The Company and Xxxxxx Partners LP, as
the sole Investor entered into a certain Stock Purchase Agreement as of May 31,
2004 ("SPA"), pursuant to Section 6.10 of the SPA, Xxxxxx Partners LP was
granted certain rights of first refusal. The Company grants the identical rights
to the Subscribers and undertakes to obtain the consent of Xxxxxx Partners LP to
share such rights with the Subscribers pari passu and in portion to the relative
investments of Xxxxxx Partners LP and the Subscribers pursuant to the SPA and
this Agreement.
(b) Offering Restrictions. Except as disclosed in the Reports or
Other Written Information filed with the Commission or made available to the
Subscriber prior to the Closing Date, or in connection with Excepted Issuances,
the Company will not issue any equity, convertible debt or other securities
convertible into common stock on any terms more favorable to such other investor
than any of the terms of the Offering, until after the Exclusion Period without
the prior written consent of the Subscribers holding a majority of the
outstanding Shares and Warrant Shares, which consent may be withheld for any
reason.
(c) Favored Nations Provision. Other than the Excepted Issuances,
if at any time Shares are still held by a Subscriber, if the Company shall
offer, issue or agree to issue any common stock or securities convertible into
or exercisable for shares of common stock (or modify any of the foregoing which
may be outstanding at any time prior to the Closing Date) to any person or
entity at a price per share or conversion or exercise price per share which
shall be less than the Conversion Price, without the consent of each Subscriber
holding such Shares, then the Company shall issue, for each such occasion,
additional shares of Common Stock to each Subscriber so that the average per
20
share purchase price of the shares of Common Stock issued to the Subscriber (of
only the Common Stock still owned by the Subscriber) is equal to such other
lower price per share. The delivery to the Subscriber of the additional shares
of Common Stock shall be not later than the closing date of the transaction
giving rise to the requirement to issue such additional shares of Common Stock.
The Subscriber is granted the registration rights described in Section 10 hereof
in relation to such additional shares of Common Stock except that the Filing
Date and Effective Date vis-a-vis such additional common shares shall be,
respectively, the sixtieth (60th) and one hundred and twentieth (120th) date
after the closing date giving rise to the requirement to issue the additional
shares of Common Stock. For purposes of the issuance and adjustment described in
this paragraph, the issuance of any security of the Company carrying the right
to convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the issuance of such convertible security, warrant,
right or option and again upon any subsequent issuances of shares of Common
Stock upon exercise of such conversion or purchase rights if such issuance is at
a price lower than the per Share Purchase Price. The rights of the Subscriber
set forth in this Section 12 are in addition to any other rights the Subscriber
has pursuant to this Agreement and any other agreement referred to or entered
into in connection herewith.
(d) Maximum Exercise of Rights. In the event the exercise of the
rights described in Sections 11(a) and 11(c) would result in the issuance of an
amount of common stock of the Company that would exceed the maximum amount that
may be issued to a Subscriber calculated in the manner described in Section 10
of the Warrant, then the issuance of such additional shares of common stock of
the Company to such Subscriber will be deferred in whole or in part until such
time as such Subscriber is able to beneficially own such common stock without
exceeding the maximum amount set forth calculated in the manner described in
Section 10 of the Warrant. The determination of when such common stock may be
issued shall be made by each Subscriber as to only such Subscriber.
12. Miscellaneous.
(a) Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Renegade Venture (Nev.)
Corporation, 0000 X. Xxxx Xxxxxx, Xxxxxx, XX 00000, Attn: Xxxx X. Xxxxxx,
President, telecopier: (000) 000-0000, with a copy by telecopier only to: Xxxxx
Xxx, Esq., 0000 X. Xxxx Xxxxxx, Xxxxxx, XX 00000, telecopier: (000) 000-0000,
(ii) if to the Subscribers, to: the one or more addresses and telecopier numbers
indicated on the signature pages hereto, with an additional copy by telecopier
only to: Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx 00000, telecopier number: (000) 000-0000, and (iii) if to the Finders, to:
the one or more addresses and telecopier numbers indicated on Schedule 7 hereto.
21
(b) Closing. The consummation of the transactions contemplated
herein shall take place at the offices of Grushko & Xxxxxxx, P.C., 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, upon the satisfaction of all
conditions to Closing set forth in this Agreement.
(c) Entire Agreement; Assignment. This Agreement and other
documents delivered in connection herewith represent the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties. Neither the Company nor the
Subscribers have relied on any representations not contained or referred to in
this Agreement and the documents delivered herewith. Except as set forth in this
Agreement, no right or obligation of any party hereto shall be assigned by that
party without prior notice to and the written consent of the other party.
(d) Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
(e) Law Governing this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts of laws. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. The parties and the individuals
executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction
of such courts and waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
(f) Specific Enforcement, Consent to Jurisdiction. The Company
and Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.
Subject to Section 12(e) hereof, each of the Company, Subscriber and any
signator hereto in his personal capacity hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction in New York of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
(g) Independent Nature of Subscribers. The Company acknowledges
that the obligations of each Subscriber under the Transaction Documents are
several and not joint with the obligations of any other Subscriber, and no
Subscriber shall be responsible in any way for the performance of the
obligations of any other Subscriber under the Transaction Documents. The Company
acknowledges that the decision of each Subscriber to purchase Securities has
been made by such Subscriber independently of any other Subscriber and
independently of any information, materials, statements or opinions as to the
22
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company which
may have been made or given by any other Subscriber or by any agent or employee
of any other Subscriber, and no Subscriber or any of its agents or employees
shall have any liability to any Subscriber (or any other person) relating to or
arising from any such information, materials, statements or opinions. The
Company acknowledges that nothing contained in any Transaction Document, and no
action taken by any Subscriber pursuant hereto or thereto (including, but not
limited to, the (i) inclusion of a Subscriber in the Registration Statement and
(ii) review by, and consent to, such Registration Statement by a Subscriber)
shall be deemed to constitute the Subscribers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Subscribers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. The
Company acknowledges that each Subscriber shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of the Transaction Documents, and it shall not be necessary for any other
Subscriber to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that it has elected to provide all Subscribers
with the same terms and Transaction Documents for the convenience of the Company
and not because Company was required or requested to do so by the Subscribers.
The Company acknowledges that such procedure with respect to the Transaction
Documents in no way creates a presumption that the Subscribers are in any way
acting in concert or as a group with respect to the Transaction Documents or the
transactions contemplated thereby.
(h) Equitable Adjustment. The Securities and the purchase prices
of Securities shall be equitably adjusted to offset the effect of stock splits,
stock dividends, pro rata distributions of property or equity interests of the
Company to its shareholders.
(i) Limitation of Damages. The only damages payable for a
violation of any term or condition of this Agreement with respect to which
liquidated damages are expressly provided shall be such liquidated damages. The
foregoing limitation shall not be construed to limit Subscribers' rights
pursuant to Section 12(f) of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
23
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (A)
--------------------------------------------
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
RENEGADE VENTURE (NEV.) CORPORATION
a Nevada corporation
By:_________________________________
Name:
Title:
Dated: as of September ____, 2004
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SUBSCRIBER PURCHASE PRICE SHARES CLASS A WARRANTS CLASS B WARRANTS PROPORTIONATE SHARE
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $650,000.00 1,250,000 625,000 625,000 59.09%
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxx, Lichtenstein
Fax: 000-00-00000000
--------------------------------
(Signature)
--------------------------------
Print Name and Title
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (B)
--------------------------------------------
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
RENEGADE VENTURE (NEV.) CORPORATION
a Nevada corporation
By:_________________________________
Name:
Title:
Dated: as of September ____, 2004
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SUBSCRIBER PURCHASE PRICE SHARES CLASS A WARRANTS CLASS B WARRANTS PROPORTIONATE SHARE
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
XXXXXXXXXXX LIMITED PARTNERSHIP $200,000.00 384,616 192,308 192,308 18.18%
C/o Canaccord Capital Corporation
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
Fax: (000) 000-0000
--------------------------------
(Signature)
--------------------------------
Print Name and Title
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (C)
--------------------------------------------
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
RENEGADE VENTURE (NEV.) CORPORATION
a Nevada corporation
By:_________________________________
Name:
Title:
Dated: as of September ____, 2004
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SUBSCRIBER PURCHASE PRICE SHARES CLASS A WARRANTS CLASS B WARRANTS PROPORTIONATE SHARE
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
WHALEHAVEN CAPITAL FUND LIMITED $150,000.00 288,462 144,231 144,231 13.64%
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
--------------------------------
(Signature)
--------------------------------
Print Name and Title
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (D)
--------------------------------------------
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
RENEGADE VENTURE (NEV.) CORPORATION
a Nevada corporation
By:_________________________________
Name:
Title:
Dated: as of September ____, 2004
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
SUBSCRIBER PURCHASE PRICE SHARES CLASS A WARRANTS CLASS B WARRANTS PROPORTIONATE SHARE
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
GREENWICH GROWTH FUND LIMITED $100,000.00 192,308 96,154 96,154 9.09%
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
--------------------------------
(Signature)
--------------------------------
Print Name and Title
------------------------------------ ---------------- ----------- ------------------- ------------------ --------------------
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibit A Form of Warrants
Exhibit B Escrow Agreement
Exhibit C Form of Legal Opinion
Exhibit D Form of Finder's Warrants
Exhibit E Public Disclosure
Exhibit F Form of Limited Standstill Agreement
Schedule 5(d) Disclosure Schedule
Schedule 5(s) Capitalization
Schedule 8(q) Parties to Limited Standstill Agreements
Schedule 7 Finders
Schedule 8(e) Use of Proceeds
Schedule 10.1 Other Securities to be Registered
1
EXHIBIT A
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO RENEGADE VENTURE (NEV.) CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED.
Right to Purchase _________ shares of Common Stock
of Renegade Venture (Nev.) Corporation (subject to
adjustment as provided herein)
FORM OF COMMON STOCK PURCHASE WARRANT CLASS A AND CLASS B
No. 2004-001 Issue Date: September ____, 2004
RENEGADE VENTURE (NEV.) CORPORATION, a corporation organized under the laws
of the State of Nevada (the "Company"), hereby certifies that, for value
received, ALPHA CAPITAL AKTIENGESELLSCHAFT, Xxxxxxxxx 0, 0000 Xxxxxxxxxxx,
Vaduz, Lichtenstein, Fax: 000-00-00000000, or its assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company at
any time after the Issue Date until 5:00 p.m., E.S.T on the fifth anniversary
after the Closing Date (as defined in the Subscription Agreement) (the
"Expiration Date"), up to _________ fully paid and nonassessable shares of the
common stock of the Company (the "Common Stock"), $.001 par value per share at a
per share purchase price of [Class A - $1.00; Class B - $1.36] in lawful money
of the United States. The aforedescribed purchase price per share, as adjusted
from time to time as herein provided, is referred to herein as the "Purchase
Price." The number and character of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided herein. The Company may reduce the
Purchase Price without the consent of the Holder. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain
Subscription Agreement (the "Subscription Agreement"), dated September ____,
2004, entered into by the Company and the Holder.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Renegade Venture (Nev.) Corporation
and any corporation which shall succeed or assume the obligations of Renegade
Venture (Nev.) Corporation hereunder.
(b) The term "Common Stock" includes (a) the Company's Common Stock, $.001
par value per share, as authorized on the date of the Subscription Agreement,
and (b) any other securities into which or for which any of the securities
described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
2
1. Exercise of Warrant.
--------------------
1.1. Number of Shares Issuable upon Exercise. From and after the Issue
Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and surrender of the original Warrant within seven (7)
days of exercise, to the Company at its principal office or at the office of its
Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire
transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect.
1.3. Partial Exercise. This Warrant may be exercised in part (but not
for a fractional share) by surrender of this Warrant in the manner and at the
place provided in subsection 1.2 except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of whole shares of Common Stock designated by the Holder in the Subscription
Form by (b) the Purchase Price then in effect. On any such partial exercise, the
Company, at its expense, will forthwith issue and deliver to or upon the order
of the Holder hereof a new Warrant of like tenor, in the name of the Holder
hereof or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may request, the whole number of shares of Common Stock for which such
Warrant may still be exercised.
1.4. Fair Market Value. Fair Market Value of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:
(a) If the Company's Common Stock is traded on an exchange or is
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ"), National Market System, the NASDAQ SmallCap Market or the
American Stock Exchange, LLC, then the closing or last sale price, respectively,
reported for the last business day immediately preceding the Determination Date;
(b) If the Company's Common Stock is not traded on an exchange or
on the NASDAQ National Market System, the NASDAQ SmallCap Market or the American
Stock Exchange, Inc., but is traded in the over-the-counter market, then the
average of the closing bid and ask prices reported for the last business day
immediately preceding the Determination Date;
(c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Holder and the Company agree,
or in the absence of such an agreement, by arbitration in accordance with the
rules then standing of the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided; or
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.
3
1.5. Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the Holder hereof acknowledge in
writing its continuing obligation to afford to such Holder any rights to which
such Holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the Holder of the Warrants
pursuant to Subsection 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent (as hereinafter described) and shall accept, in
its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
1.7. Delivery of Stock Certificates, etc. on Exercise. The Company
agrees that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within five (5) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly
and validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such Holder shall be entitled on such exercise, plus,
in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.
1.8 Common Stock Legend. The Holder acknowledges and agrees that the
shares of Common Stock of the Company, and, until such time as the Common Stock
has been registered under the 1933 Act and sold in accordance with an effective
Registration Statement, or exemption from registration, certificates and other
instruments representing any of the Common Stock shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR APPLICABLE STATE SECURITIES LAWS. THESE SHARES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO RENEGADE
VENTURE (NEV.) CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
4
2. Cashless Exercise.
------------------
(a) If a Registration Statement as defined in the Subscription
Agreement ("Registration Statement") is effective and the Holder may sell its
shares of Common Stock upon exercise hereof, this Warrant may be exercisable in
whole or in part for cash only as set forth in Section 1 above. If no such
Registration Statement is available, payment upon exercise may be made at the
option of the Holder either in (i) cash, wire transfer or by certified or
official bank check payable to the order of the Company equal to the applicable
aggregate Purchase Price, (ii) by delivery of Common Stock issuable upon
exercise of the Warrants in accordance with Section (b) below ("Cashless
Exercise") or (iii) by a combination of any of the foregoing methods, for the
number of Common Stock specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable to the holder per the terms of this Warrant) and the holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities)
determined as provided herein.
(b) If the Fair Market Value of one share of Common Stock is greater
than the Purchase Price (at the date of calculation as set forth below) and no
Registration Statement relating to the shares of Common Stock underlying this
Warrant is effective, in lieu of exercising this Warrant for cash, the holder
may elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being cancelled) by surrender of this Warrant at
the principal office of the Company together with the properly endorsed
Subscription Form in which event the Company shall issue to the holder a number
of shares of Common Stock computed using the following formula:
X=Y (A-B)
-------
A
Where X= the number of shares of Common Stock to be issued to
the holder
Y= the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised,
the portion of the Warrant being exercised
(at the date of such calculation)
A= the Fair Market Value of one share of the
Company's Common Stock (at the date of such
calculation)
B= Purchase Price (as adjusted to the date of such
calculation)
(c) The Holder may employ the cashless exercise feature described
above only during the pendency of a Non-Registration Event as described in
Section 10 of the Subscription Agreement.
For purposes of Rule 144 promulgated under the 1933 Act, it is intended,
understood and acknowledged that the Commission currently has interpreted Rule
144 to mean that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares shall be deemed to have commenced, on the date this Warrant
was originally issued pursuant to the Subscription Agreement.
3. Adjustment for Reorganization, Consolidation, Merger, etc.
----------------------------------------------------------
3.1. Reorganization, Consolidation, Merger, etc. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
5
Warrant, on the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrants after the effective date of
such dissolution pursuant to this Section 3 to a bank or trust company (a
"Trustee") having its principal office in New York, NY, as trustee for the
Holder of the Warrants.
3.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the Other Securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full force
and effect after the consummation of the transaction described in this Section
3, then only in such event will the Company's securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered to
the Trustee as contemplated by Section 3.2.
3.4 Price Adjustment.
(a) Share Issuance. Until the Expiration Date, if the Company
shall issue any Common Stock except for the Excepted Issuances (as defined in
the Subscription Agreement), prior to the complete exercise of this Warrant for
a consideration less than the Purchase Price that would be in effect at the time
of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced to such other lower issue price. For purposes of
this adjustment, the issuance of any security or debt instrument of the Company
carrying the right to convert such security or debt instrument into Common Stock
or of any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Purchase Price upon the issuance of the above-described
security, debt instrument, warrant, right, or option.
(b) Earnings. In the event the Company earns between $2,000,000
and $1.00 in net after tax earnings as reported for the fiscal year ending
December 31, 2004, from recurring operations before any non-recurring items, the
Purchase Price shall be reduced proportionately by 0% if such earnings are
$2,000,000 and by 99% if the earnings are $1.00 or less. For example, if the
Company earns $1,600,000 (i.e. 20% below $2,000,000), then the Purchase Price
shall be reduced by 20%. Such reduction shall be made at the time the December
31, 2004 financial results are publicly announced or reported and shall be
calculated on the Issue Date in effect on the first date the earnings are
publicly announced or reported. In the event the Company earns $1.00 or less,
the Purchase Price shall be reduced by 99%. The adjustment to the Purchase
Price, if any, based on earnings is in addition to the adjustment described in
Section 3.4(a) above.
6
(c) Other Reductions. The adjustments to the Purchase Price
described in this Section 3.4 are in addition to the other rights of the Holder
described in the Subscription Agreement.
4. Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.
5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 11 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrants, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the "Transferor Endorsement Form") and together with
an opinion of counsel reasonably satisfactory to the Company that the transfer
of this Warrant will be in compliance with applicable securities laws, the
Company at its expense, twice, only, but with payment by the Transferor of any
applicable transfer taxes, will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor. No such transfers shall result
in a public distribution of the Warrant.
7
8. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Holder of this Warrant has been granted certain
registration rights for the shares underlying this Warrant by the Company. These
registration rights are set forth in the Subscription Agreement. The terms of
the Subscription Agreement are incorporated herein by this reference.
10. Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date nor may the Company exercise its right to give a
Call Notice (as defined in Section 11) in connection with that number of Common
Stock which would be in excess of the sum of (i) the number of Common Stock
beneficially owned by the Holder and its affiliates on an exercise date or Call
Date, and (ii) the number of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date or Call Date, which would result in beneficial ownership by
the Holder and its affiliates of more than 9.99% of the outstanding Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 9.99%. The restriction described in
this paragraph may be revoked upon sixty-one (61) days prior notice from the
Holder to the Company. The Holder may allocate which of the equity of the
Company deemed beneficially owned by the Subscriber shall be included in the
9.99% amount described above and which shall be allocated to the excess above
9.99%.
11. Call. The Company shall have the option to "call" the Warrants (the
"Warrant Call"), one or more times, in accordance with and governed by the
following:
(a) The Company shall exercise the Warrant Call by giving to the
Warrant Holder a written notice of call (the "Call Notice") during the period in
which the Warrant Call may be exercised. The effective date of each Call Notice
(the "Call Date") is the date on which notice is effective under the notice
provision of Section 15 of this Warrant.
(b) The Company's right to exercise the Warrant Call shall commence
thirty trading days after the Actual Effective Date as defined in the
Subscription Agreement.
(c) The number of shares of Common Stock to be issued upon exercise of
the Warrant which are subject to a Call Notice must be registered in a
registration statement effective from twenty-two trading days prior to the Call
Date and through the date such Common Stock is actually delivered to the Warrant
Holder ("Delivery Date").
(d) A Call Notice may be given not sooner than ten (10) trading days
after the prior Call Date.
(e) A Call Notice may be given by the Company only within ten trading
days after the Common Stock has had a closing price as reported for the
Principal Market (as defined in the Subscription Agreement) of not less than one
hundred and fifty percent (150%) of the Purchase Price for fifteen (15)
consecutive trading days ("Lookback Period"), and the average daily trading
volume on the Principal Market during the Lookback Period of not less than
140,000 Common Shares.
8
(f) The Common Stock must be listed on the Principal Market for the
Lookback Period and through the Delivery Date.
(g) The Company shall not have received a notice from the Principal
Market during the sixty (60) calendar days prior to a Call Date that the Company
or the Common Stock does not meet the requirements for continued quotation,
listing or trading on the Principal Market.
(h) The Company and the Common Stock shall meet the requirements for
continued quotation, listing or trading on the Principal Market for the Lookback
Period and through the Delivery Date.
(i) Unless otherwise agreed to by the Holder of this Warrant, a Call
Notice must be given to all Warrant Holders who receive Warrants similar to this
Warrant (in terms of exercise price and other principal terms) issued on or
about the same Issue Date as this Warrant, in proportion to the amounts of
Common Stock which may be purchased by the respective Warrant Holders in
accordance with the respective Warrants held by each.
(j) The Warrant Holder shall exercise his Warrant rights and purchase
the Called Common Stock and pay for same within thirty (30) days after the Call
Date. If the Warrant Holder fails to timely pay the amount required by the
Warrant Call, the Company's sole remedy shall be to cancel a corresponding
amount of this Warrant.
(k) The Company may not exercise the right to Call this Warrant after
the occurrence of a default by the Company of a material term of this Warrant or
the Subscription Agreement.
12. Warrant Agent. The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to Section
1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.
13. Transfer on the Company's Books. Until this Warrant is transferred on
the books of the Company, the Company may treat the registered holder hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
14. Warrant Exercise Compensation. The Company has agreed to pay to certain
Finders identified in the Subscription Agreement Warrant Exercise Compensation
as described in the Subscription Agreement equal to six percent (6%) of the cash
proceeds payable to the Company upon exercise of the Warrant. The Warrant
Exercise Compensation will be paid by the Company to the Broker not later than
the fifth (5th) business day after the Company receives cash proceeds from the
exercise of this Warrant. The Holder of the Warrant has no obligation or
responsibility to pay Warrant Exercise Compensation.
15. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
9
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company to: Renegade Venture (Nev.)
Corporation, 0000 X. Xxxx Xxxxxx, Xxxxxx, XX 00000, Attn: Xxxx X. Xxxxxx,
President, telecopier: (000) 000-0000, with a copy by telecopier only to: Xxxxx
Xxx, Esq., 0000 X. Xxxx Xxxxxx, Xxxxxx, XX 00000, telecopier: (000) 000-0000,
and (ii) if to the Holder, to the address and telecopier number listed on the
first paragraph of this Warrant, with a copy by telecopier only to: Grushko &
Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
telecopier number: (000) 000-0000.
16. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York. Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
10
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
RENEGADE VENTURE (NEV.) CORPORATION
By:
--------------------------------
Name:
Title:
Witness:
-----------------------------
11
Exhibit A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: RENEGADE VENTURE (NEV.) CORPORATION
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):
___ ________ shares of the Common Stock covered by such Warrant; or
___ the maximum number of shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2.
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):
___ $__________ in lawful money of the United States (which sum reflects the
concession amount described in Section 14 of the Warrant; and/or
___ the cancellation of such portion of the attached Warrant as is exercisable
for a total of _______ shares of Common Stock (using a Fair Market Value of
$_______ per share for purposes of this calculation); and/or
___ the cancellation of such number of shares of Common Stock as is necessary,
in accordance with the formula set forth in Section 2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.
The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to _____________________________________________________
whose address is _________________________________________________
______________________________________ .
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act"), or pursuant to an exemption from
registration under the Securities Act.
Dated:___________________ ___________________________________
(Signature must conform to name of
holder as specified on the face of
the Warrant)
___________________________________
___________________________________
(Address)
12
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of RENEGADE VENTURE (NEV.) CORPORATION to which the
within Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of RENEGADE VENTURE (NEV.) CORPORATION with full power of substitution in the
premises.
------------------- ----------------------------- -----------------------------
Transferees Percentage Transferred Number Transferred
------------------- ----------------------------- -----------------------------
------------------- ----------------------------- -----------------------------
------------------- ----------------------------- -----------------------------
------------------- ----------------------------- -----------------------------
Dated:
----------------, -------- -----------------------------------
(Signature must conform to name of
holder as specified on the face of
the warrant)
Signed in the presence of:
---------------------------------- -----------------------------------
(Name) -----------------------------------
(address)
ACCEPTED AND AGREED: -----------------------------------
[TRANSFEREE] -----------------------------------
(address)
----------------------------------
(Name)
13
EXHIBIT B
FUNDS ESCROW AGREEMENT
----------------------
This Agreement is dated as of the ____ day of September, 2004 among
Renegade Venture (Nev.) Corporation, a Nevada corporation (the "Company"), the
Subscribers identified on Schedule A hereto (each a "Subscriber" and
collectively "Subscribers"), and Grushko & Xxxxxxx, P.C. (the "Escrow Agent"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Subscribers have entered into a Subscription
Agreement calling for the sale by the Company to the Subscriber of $.001 par
value Common Stock of the Company ("Common Stock") for an aggregate purchase
price of up to $1,100,000.00 and the issuance of Warrants in the amounts set
forth on Schedule A hereto; and
WHEREAS, the parties hereto require the Company to deliver the Common Stock
and Warrants against payment therefor, with such Common Stock, Warrants and the
Escrowed Funds to be delivered to the Escrow Agent to be held in escrow and
released by the Escrow Agent in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Subscription Agreement shall have the meanings given to
such terms in the Subscription Agreement. Whenever used in this Agreement, the
following terms shall have the following respective meanings:
(a) "Agreement" means this Agreement and all amendments made hereto
and thereto by written agreement between the parties;
(b)"Closing Date" shall have the meaning set forth in Section 12(b) of
the Subscription Agreement;
(c)"Escrowed Payment" means an aggregate cash payment of up to
$1,100,000.00 which is the Purchase Price as defined in the Subscription
Agreement;
14
(d) "Finders" shall have the meanings set forth in Section 7 of the
Subscription Agreement;
(e) "Finder's Fee" shall have the meaning set forth in Section 7(a) of
the Subscription Agreement;
(f) "Finder's Warrants" shall have the meaning set forth in Section
7(b) of the Subscription Agreement;
(g) "Legal Fees" shall have the meaning set forth in Section 7(c) of
the Subscription Agreement;
(h) "Legal Opinion" means the original signed legal opinion referred
to in Section 6 of the Subscription Agreement;
(i) "Limited Standstill Agreements" shall have the meaning set forth
in Section 8(q) of the Subscription Agreement;
(j) "Shares" shall have the meaning set forth in Section 1 of the
Subscription Agreement;
(k) "Subscription Agreement" means the Subscription Agreement (and the
exhibits thereto) entered into or to be entered into by the parties in reference
to the sale and purchase of the Shares and Warrants;
(l) "Warrants" shall have the meaning set forth in Section 3 of the
Subscription Agreement, and shall herein refer to Class A and Class B Warrants;
(m) Collectively, the executed Subscription Agreement executed by the
Company, the Shares, Warrants, Legal Opinion, executed Limited Standstill
Agreements, and Finder's Warrants are referred to as "Company Documents"; and
(n) Collectively, the Escrowed Payment and the Subscription Agreement
executed by the Subscribers are referred to as "Subscriber Documents".
1.2. Entire Agreement. This Agreement along with the Company Documents and
the Subscriber Documents constitute the entire agreement between the parties
hereto pertaining to the Company Documents and Subscriber Documents and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. There are no warranties,
representations and other agreements made by the parties in connection with the
subject matter hereof except as specifically set forth in this Agreement, the
Company Documents and the Subscriber Documents.
1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
15
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party (which
shall be the party which receives an award most closely resembling the remedy or
action sought) shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Agreement or
any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
1.7. Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 1.6 hereof, each of the Company and Subscriber hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Company Deliveries. On or about the date hereof, the Company shall
deliver to the Escrow Agent the executed Subscription Agreement, the Shares,
Warrants, Finder's Warrants, and Legal Opinion (collectively, the "Company
Documents").
2.2. Subscriber Deliveries. On or before the Closing Date, each Subscriber
shall deliver to the Escrow Agent its portion of the Purchase Price, and the
executed Subscription Agreement (collectively, the "Subcriber Documents"). The
Escrowed Payment will be delivered pursuant to the following wire transfer
instructions:
Citibank, N.A.
0000 0xx Xxxxxx
Xxx Xxxx, XX 00000, XXX
16
ABA Number: 0210-00089
For Credit to: Grushko & Xxxxxxx, XXXX Trust Account
Account Number: 00000000
2.3. Intention to Create Escrow Over Company Documents and Subscriber
Documents. The Subscriber and Company intend that the Company Documents and
Subscriber Documents shall be held in escrow by the Escrow Agent pursuant to
this Agreement for their benefit as set forth herein.
2.4. Escrow Agent to Deliver Company Documents and Subscriber Documents.
The Escrow Agent shall hold and release the Company Documents and Subscriber
Documents only in accordance with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Company Documents and Subscriber Documents as
follows:
(a) On the Closing Date, the Escrow Agent will simultaneously release
(i) the Company Documents to the Subscriber; (ii) the Subscriber Documents to
the Company; (iii) the Legal Fees to the Subscriber's attorneys together with
the Finder's Warrants described in Section 7(c) of the Subscription Agreement,
and (iv) the Finder's Fee and Finder's Warrants to the Finders.
(b) All funds to be delivered to the Company shall be delivered
pursuant to the wire instructions to be provided in writing by the Company to
the Escrow Agent.
(c) Notwithstanding the above, upon receipt by the Escrow Agent of
joint written instructions ("Joint Instructions") signed by the Company and the
Subscriber, it shall deliver the Company Documents and Subscriber Documents in
accordance with the terms of the Joint Instructions.
(d) Notwithstanding the above, upon receipt by the Escrow Agent of a
final and non-appealable judgment, order, decree or award of a court of
competent jurisdiction (a "Court Order"), the Escrow Agent shall deliver the
Company Documents and Subscriber Documents in accordance with the Court Order.
Any Court Order shall be accompanied by an opinion of counsel for the party
presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the Court
Order has competent jurisdiction and that the Court Order is final and
non-appealable.
(e) In the event executed Subscription Agreements executed by
Subscribers for an aggregate Purchase Price of up to $1,100,000.00 and Escrowed
Payments for an aggregate of up to $1,100,000.00 have not been received by the
Escrow Agent on or before September 15, 2004, the Escrow Agent shall immediately
release the Company Documents to the Company and release the Subscriber
Documents and Escrowed Payments to the Subscribers.
3.2. Acknowledgement of Company and Subscriber; Disputes. The Company and
the Subscriber acknowledge that the only terms and conditions upon which the
Company Documents and Subscriber Documents are to be released are set forth in
Sections 3 and 4 of this Agreement. The Company and the Subscriber reaffirm
their agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Company Documents and Subscriber Documents. Any
dispute with respect to the release of the Company Documents and Subscriber
Documents shall be resolved pursuant to Section 4.2 or by agreement between the
Company and Subscriber.
17
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Subscriber and Company acknowledge and agree that the Escrow
Agent (i) shall not be responsible for or bound by, and shall not be required to
inquire into whether either the Subscriber or Company is entitled to receipt of
the Company Documents and Subscriber Documents pursuant to, any other agreement
or otherwise; (ii) shall be obligated only for the performance of such duties as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
may rely on and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any fact
stated therein or the propriety or validity or the service thereof; (iv) may
assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care than Escrow Agent gives its own similar property; and (vi) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.
(b)The Subscriber and Company acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and that the Escrow Agent shall
not be liable for any action taken by Escrow Agent in good faith and believed by
Escrow Agent to be authorized or within the rights or powers conferred upon
Escrow Agent by this Agreement. The Subscriber and Company, jointly and
severally, agree to indemnify and hold harmless the Escrow Agent and any of
Escrow Agent's partners, employees, agents and representatives for any action
taken or omitted to be taken by Escrow Agent or any of them hereunder, including
the reasonable fees of outside counsel and other reasonable costs and expenses
of defending itself against any claim or liability under this Agreement, except
in the case of gross negligence or willful misconduct on Escrow Agent's part
committed in its capacity as Escrow Agent under this Agreement. The Escrow Agent
shall owe a duty only to the Subscriber and Company under this Agreement and to
no other person.
(c) The Subscriber and Company jointly and severally agree to
reimburse the Escrow Agent for reasonable outside counsel fees, to the extent
authorized hereunder and incurred in connection with the performance of its
duties and responsibilities hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving five (5) days prior written notice of resignation to the Subscriber
and the Company. Prior to the effective date of the resignation as specified in
such notice, the Subscriber and Company will issue to the Escrow Agent a Joint
Instruction authorizing delivery of the Company Documents and Subscriber
Documents to a substitute Escrow Agent selected by the Subscriber and Company.
If no successor Escrow Agent is named by the Subscriber and Company, the Escrow
Agent may apply to a court of competent jurisdiction in the State of New York
for appointment of a successor Escrow Agent, and to deposit the Company
Documents and Subscriber Documents with the clerk of any such court.
18
(e) The Escrow Agent does not have and will not have any interest in
the Company Documents and Subscriber Documents, but is serving only as escrow
agent, having only possession thereof. The Escrow Agent shall not be liable for
any loss resulting from the making or retention of any investment in accordance
with this Escrow Agreement.
(f) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(g) The Escrow Agent shall be permitted to act as counsel for the
Subscriber in any dispute as to the disposition of the Company Documents and
Subscriber Documents, in any other dispute between the Subscriber and Company
which is unrelated to the Escrow Agreement, whether or not the Escrow Agent is
then holding the Company Documents and Subscriber Documents and continues to act
as the Escrow Agent hereunder.
(h) The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution: Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Company Documents and
Subscriber Documents, or if the Escrow Agent shall in good faith be uncertain as
to its duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Company Documents and Subscriber Documents pending receipt
of a Joint Instruction from the Subscriber and Company, or (ii) deposit the
Company Documents and Subscriber Documents with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent shall
give written notice thereof to the Subscriber and the Company and shall
thereupon be relieved and discharged from all further obligations pursuant to
this Agreement. The Escrow Agent may, but shall be under no duty to, institute
or defend any legal proceedings which relate to the Company Documents and
Subscriber Documents. The Escrow Agent shall have the right to retain counsel if
it becomes involved in any disagreement, dispute or litigation on account of
this Agreement or otherwise determines that it is necessary to consult counsel.
(b) The Escrow Agent is hereby expressly authorized to comply with and
obey any Court Order. In case the Escrow Agent obeys or complies with a Court
Order, the Escrow Agent shall not be liable to the Subscriber and Company or to
any other person, firm, corporation or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon the release of all of
the Company Documents and Subscriber Documents or at any time upon the agreement
in writing of the Subscriber and Company.
5.2. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
19
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
(a) If to the Company, to:
Renegade Venture (Nev.) Corporation
0000 X. Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, President
Fax: (000) 000-0000
With a copy by telecopier only to:
Xxxxx Xxx, Esq.
0000 X. Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
(b) If to the Subscribers, to: the addresses and fax numbers listed on
Schedule A hereto
(c) If to the Finder, to: the addresses and fax numbers listed on Schedule
7 to the Subscription Agreement.
(d) If to the Escrow Agent, to:
Grushko & Xxxxxxx, P.C.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith. In the
event the Escrowed Payment is deposited in an interest bearing account, each
Subscriber shall be entitled to receive its pro rata portion of any accrued
interest thereon, but only if the Escrow Agent receives from such Subscriber the
Subscriber's United States taxpayer identification number and other requested
information and forms.
20
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or
obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. This Agreement shall enure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile transmission and delivered by facsimile
transmission. 5.7.
21
Agreement. Each of the undersigned states that he has read the foregoing
Funds Escrow Agreement and understands and agrees to it.
RENEGADE VENTURE (NEV.)
CORPORATION
the "Company"
By:
--------------------------------
-----------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT
"Subscriber"
-----------------------------------
XXXXXXXXXXX LIMITED PARTNERSHIP
"Subscriber"
-----------------------------------
WHALEHAVEN CAPITAL FUND LIMITED
"Subscriber"
-----------------------------------
GREENWICH GROWTH FUND LIMITED
"Subscriber"
ESCROW AGENT:
-----------------------------------
GRUSHKO & XXXXXXX, P.C.
22
SCHEDULE A TO FUNDS ESCROW AGREEMENT
------------------------------------
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
SUBSCRIBER PURCHASE SHARES CLASS A CLASS B
PRICE WARRANTS WARRANTS
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
ALPHA CAPITAL $650,000.00 1,250,000 625,000 625,000
AKTIENGESELLSCHAFT
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxx, Lichtenstein
Fax: 000-00-00000000
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
XXXXXXXXXXX LIMITED $200,000.00 384,616 192,308 192,308
PARTNERSHIP
C/o Canaccord Capital Corporation
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
Fax: (000) 000-0000
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
WHALEHAVEN CAPITAL FUND $150,000.00 288,462 144,231 144,231
LIMITED
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
GREENWICH GROWTH FUND $100,000.00 192,308 96,154 96,154
LIMITED
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
TOTAL $1,100,000.00 2,115,386 1,057,693 1,057,693
-------------------------------------------- ------------------- ---------------------- -------------------- --------------------
23
EXHIBIT E
PUBLIC DISCLOSURE
The Company will prepare and file SEC Form 8-K, inclusive of the Subscription
Agreement as an Exhibit thereto, as well as issuing a press release on Tuesday,
September 7, 2004 to make public the equity investment as set forth in the
Subscription Agreement and ancillary documents.
24
EXHIBIT F
LIMITED STANDSTILL AGREEMENT
This AGREEMENT (the "Agreement") is made as of the 1st day of September, 2004,
by the signators hereto (each a "Holder"), in connection with his ownership of
shares of Renegade Venture (Nev.) Corporation, a Nevada corporation (the
"Company").
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which consideration are hereby acknowledged, Holder agrees as follows:
1. Background.
-----------
a. Holder is the beneficial owner of the amount of shares of the Common
Stock, $.001 par value, of the Company ("Common Stock").
x. Xxxxxx acknowledges that the Company has entered into or will enter into
agreements (the "Subscription Agreement") with subscribers (the "Subscribers")
to the Company's Common Stock and Warrants, for the sale of an aggregate of
$1,000,000.04 of Common Stock and Warrants to the Subscribers (the "Offering").
Holder understands that, as a condition to proceeding with the Offering, the
Subscribers have required, and the Company has agreed to assist the Subscribers
in obtaining, an agreement from the Holder to refrain from selling any
securities of the Company from the date of the Subscription Agreement until May
31, 2005 (the "Restriction Period").
2. Share Restriction.
------------------
a. Holder hereby agrees that during the Restriction Period, the Holder will
not sell or otherwise dispose of any shares of Common Stock or any options,
warrants or other rights to purchase shares of Common Stock or any other
security of the Company which Holder owns or has a right to acquire as of the
date hereof, other than (i) in connection with an offer made to all shareholders
of the Company or any merger, consolidation or similar transaction involving the
Company, or (ii) with the prior written consent of the Subscribers, which shall
not be unreasonably withheld. Holder further agrees that the Company is
authorized to and the Company agrees to place "stop orders" on its books to
prevent any transfer of shares of Common Stock or other securities of the
Company held by Holder in violation of this Agreement.
b. Any subsequent issuance to and/or acquisition of shares by Holder will
be subject to the provisions of this Agreement.
c. Notwithstanding the foregoing restrictions on transfer, the Holder may,
at any time and from time to time during the Restriction Period, transfer the
Common Stock (i) as bona fide gifts or transfers by will or intestacy, (ii) to
any trust for the direct or indirect benefit of the undersigned or the immediate
family of the Holder, provided that any such transfer shall not involve a
disposition for value, (iii) to a partnership which is the general partner of a
partnership of which the Holder is a general partner, provided, that, in the
case of any gift or transfer described in clauses (i), (ii) or (iii), each donee
or transferee agrees in writing to be bound by the terms and conditions
contained herein in the same manner as such terms and conditions apply to the
undersigned. For purposes hereof, "immediate family" means any relationship by
blood, marriage or adoption, not more remote than first cousin.
25
3. Miscellaneous.
--------------
a. At any time, and from time to time, after the signing of this Agreement
Holder will execute such additional instruments and take such action as may be
reasonably requested by the Subscribers to carry out the intent and purposes of
this Agreement.
b. This Agreement shall be governed, construed and enforced in accordance
with the laws of the State of New York, except to the extent that the securities
laws of the state in which Holder resides and federal securities laws may apply.
c. This Agreement contains the entire agreement of the Holder with respect
to the subject matter hereof.
d. This Agreement shall be binding upon Holder, its legal representatives,
successors and assigns.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Holder has
executed this Agreement as of the day and year first above written.
HOLDER:
--------------------------------
(Signature of Holder)
--------------------------------
(Print Name of Holder)
--------------------------------
Number of Shares of Common Stock
Beneficially Owned
COMPANY:
RENEGADE VENTURE (NEV.)
CORPORATION
By:
-----------------------------
26
LIMITED STANDSTILL AGREEMENT
This AGREEMENT (the "Agreement") is made as of the 1st day of September, 2004,
by the signators hereto (each a "Holder"), in connection with his ownership of
shares of Renegade Venture (Nev.) Corporation, a Nevada corporation (the
"Company").
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which consideration are hereby acknowledged, Holder agrees as follows:
1. Background.
-----------
a. Holder is the beneficial owner of a warrant for the exercise of up to
720,000 shares at an exercise price of $0.34 per share of the Common Stock,
$.001 par value, of the Company ("Common Stock").
x. Xxxxxx acknowledges that the Company has entered into or will enter into
agreements (the "Subscription Agreement") with subscribers (the "Subscribers")
to the Company's Common Stock and Warrants, for the sale of an aggregate of
$1,000,000.00 of Common Stock and Warrants to the Subscribers (the "Offering").
Holder understands that, as a condition to proceeding with the Offering, the
Subscribers have required, and the Company has agreed to assist the Subscribers
in obtaining an agreement from the Holder to refrain from selling 620,000 of the
720,000 shares underlying the warrant having an exercise price of $0.34 per
share of the Common Stock of the Company for a period of time from the present
until the sooner of (i) ninety (90) days after the registration statement
covering the securities sold in the Offering has been effective under the
Securities Act of 1933 (the "Act"), (ii) the price of the Common Stock of the
Company trades at $0.68 per share or higher (the "Restriction Period"), (iii)
Subscribers no longer own any Securities (as defined in the Subscription
Agreement), or (iv) by operation of law, provided that any distributee agrees to
be subject to this Agreement.
2. Share Restriction.
------------------
a. Holder hereby agrees that during the Restriction Period, the Holder will
not sell or otherwise dispose of the shares of Common Stock specifically set
forth in this Agreement and that this Agreement will not apply to any other
stock, options, warrants or other rights to purchase shares of Common Stock or
any other security of the Company which Holder owns or has a right to acquire.
Holder further agrees that the Company is authorized to and the Company agrees
to place "stop orders" on its books to prevent any transfer of the specific
shares of Common Stock restricted by this Agreement.
b. Any subsequent issuance to and/or acquisition of shares by Holder will
not be subject to the provisions of this Agreement.
c. Notwithstanding the foregoing restrictions on transfer, the Holder may,
at any time and from time to time during the Restriction Period, transfer the
Common Stock (i) as bona fide gifts or transfers by will or intestacy, (ii) to
any trust for the direct or indirect benefit of the undersigned or the immediate
family of the Holder, provided that any such transfer shall not involve a
disposition for value, (iii) to a partnership which is the general partner of a
partnership of which the Holder is a general partner, provided, that, in the
case of any gift or transfer described in clauses (i), (ii) or (iii), each donee
or transferee agrees in writing to be bound by the terms and conditions
contained herein in the same manner as such terms and conditions apply to the
undersigned. For purposes hereof, "immediate family" means any relationship by
blood, marriage or adoption, not more remote than first cousin.
27
3. Miscellaneous.
--------------
a. At any time, and from time to time, after the signing of this Agreement
Holder will execute such additional instruments and take such action as may be
reasonably requested by the Subscribers to carry out the intent and purposes of
this Agreement.
b. This Agreement shall be governed, construed and enforced in accordance
with the laws of the State of New York, except to the extent that the securities
laws of the state in which Holder resides and federal securities laws may apply.
c. This Agreement contains the entire agreement of the Holder with respect
to the subject matter hereof.
d. This Agreement shall be binding upon Holder, its legal representatives,
successors and assigns.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Holder has
executed this Agreement as of the day and year first above written.
HOLDER:
JG Capital, Inc.
--------------------------------
Xxxx Xxxxxxxxxx
President
--------------------------------
Number of Shares underlying Warrants
subject to restriction.
COMPANY:
RENEGADE VENTURE (NEV.)
CORPORATION
By:
------------------------------
Xxxx Xxxxxx, President
28
SCHEDULE 5(d)
DISCLOSURE SCHEDULE
The authorized and outstanding capital stock of the Company is as follows:
28,080,000 shares of common stock
Holders of more than a 5% beneficial interest:
----------------------------------------------
Holder Shares
------ ------
Xxxxxx Partners, L.P. 9,600,000
Xxxx Xxxxxx 2,900,000
Xxx Xxxxxx 2,700,000
Perugia Design 2,000,000
Seajay Holdings 1,500,000
(The Seajay shares have been voided by the company and are to be cancelled
pursuant to litigation filed by the Company)
Warrant Holders, Option Holders and Stock/Option Plans
------------------------------------------------------
1) Xxxxxx Partners, L.P.
a) entitled to issuance of an additional 14,400,000 shares of common
stock upon exercise of warrants
b) entitled to preemptive/right of first refusal rights upon the issue of
any equity securities by Company.
2) JG Capital
a) entitled to issuance of 1,800,000 shares of common stock upon exercise
of previously issued warrants.
b) Entitled to issuance of shares of common stock upon the exercise of
warrants issued in connection with this Subscription Agreement.
3) Xxx Xxxxxx
a) entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
29
4) Xxxx Xxxxxx
a) entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
5) Xxxx Xxxxx
a) entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
6) Xxxxxxxx Xxxxxx
a) entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
7) Finders as defined in this Subscription Agreement
a) entitled to issuance of shares of common stock upon the exercise of
warrants issued in connection with this Subscription Agreement.
8) Employees of Company
a) entitled to shares of common stock upon the exercise of options or
awards of stock issued pursuant to an existing employee stock option
or stock compensation plan as reported in the Company 10KSB.
Company Stock/Option Plans
--------------------------
1) The Company has an existing 2002 Compensatory Stock option Plan for
directors and officers of Renegade Venture and its subsidiary Xxxxxxxx
Aerospace Technologies, Inc. which has reserved a maximum of 3,000,000
shares of common stock of which 2,820,000 shares of common stock remain
available to be issued; and
2) The Company has an existing 2003 Employee Stock Compensation Plan for
employees of Xxxxxxxx Aerospace Technologies, Inc. which has reserved a
maximum of 5,000,000 shares of common stock of which 2,200,000 shares of
common stock remain available to be issued.
3) The Company has resolved to establish a standard Employee Stock Option Plan
(ESOP), not to exceed 8.5% of the issued common stock of the Company, which
will be vested evenly over 5 years, as set forth in the Stock Purchase
Agreement with Xxxxxx Partners, L.P.
30
SCHEDULE 5(s)
CAPITALIZATION
The authorized and outstanding capital stock of the Company is as follows:
28,080,000 shares of common stock
Holders of more than a 5% beneficial interest:
----------------------------------------------
Holder Shares
------ ------
Xxxxxx Partners, L.P. 9,600,000
Xxxx Xxxxxx 2,900,000
Xxx Xxxxxx 2,700,000
Perugia Design 2,000,000
Seajay Holdings 1,500,000
(The Seajay shares have been voided by the company and are to be cancelled
pursuant to litigation filed by the Company)
Warrant Holders, Option Holders and Stock/Option Plans
------------------------------------------------------
1) Xxxxxx Partners, L.P.
b) entitled to issuance of an additional 14,400,000 shares of common
stock upon exercise of warrants
c) entitled to preemptive/right of first refusal rights upon the issue of
any equity securities by Company.
2) JG Capital
a. entitled to issuance of 1,800,000 shares of common stock upon exercise
of previously issued warrants.
b. Entitled to issuance of shares of common stock upon the exercise of
warrants issued in connection with this Subscription Agreement.
3) Xxx Xxxxxx
a. entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
4) Xxxx Xxxxxx
a. entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
31
5) Xxxx Xxxxx
a. entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
6) Xxxxxxxx Xxxxxx
a. entitled to shares of common stock upon the exercise of options as
reported in the Company 10KSB.
7) Finders as defined in this Subscription Agreement
a. entitled to issuance of shares of common stock upon the exercise of
warrants issued in connection with this Subscription Agreement.
8) Employees of Company
a. entitled to shares of common stock upon the exercise of options or
awards of stock issued pursuant to an existing employee stock option
or stock compensation plan as reported in the Company 10KSB.
Company Stock/Option Plans
--------------------------
1) The Company has an existing 2002 Compensatory Stock option Plan for
directors and officers of Renegade Venture and its subsidiary Xxxxxxxx
Aerospace Technologies, Inc. which has reserved a maximum of 3,000,000
shares of common stock of which 2,820,000 shares of common stock remain
available to be issued; and
2) The Company has an existing 2003 Employee Stock Compensation Plan for
employees of Xxxxxxxx Aerospace Technologies, Inc. which has reserved a
maximum of 5,000,000 shares of common stock of which 2,200,000 shares of
common stock remain available to be issued.
3) The Company has resolved to establish a standard Employee Stock Option Plan
(ESOP), not to exceed 8.5% of the issued common stock of the Company, which
will be vested evenly over 5 years, as set forth in the Stock Purchase
Agreement with Xxxxxx Partners, L.P.
32
SCHEDULE 7
----------
FINDER
------
------------------------------ ------------------------------------ --------------------------
FINDER CASH FINDER'S FEES PAYABLE IN FINDER'S WARRANTS *
CONNECTION WITH PURCHASE PRICE AND
WARRANT EXERCISE COMPENSATION
------------------------------ ------------------------------------ --------------------------
JG CAPITAL, INC. Two-Thirds of amount payable 60% of Finder's Warrants
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
------------------------------ ------------------------------------ --------------------------
HEZA HOLDING, INC. One-Third of amount payable 20% of Finder's Warrants
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
------------------------------ ------------------------------------ --------------------------
GRUSHKO & XXXXXXX, P.C. ** -0- 20% of Finder's Warrants
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
------------------------------ ------------------------------------ --------------------------
* Each recipient of Finder's Warrants will receive a pro rata portion of the
Finder's Warrants having exercise prices of $0.52, $1.00 and $1.36. The
aggregate amount of Finder's Warrants having an exercise price of $0.52 shall be
158,654 Finder's Warrants. The aggregate amount of Finder's Warrants having an
exercise price of $1.00 shall be 79,327 Finder's Warrants. The aggregate amount
of Finder's Warrants having an exercise price of $1.36 shall be 79,327 Finder's
Warrants.
** Pursuant to Section 7(c) and not as a Finder.
33
SCHEDULE 8(e)
USE OF PROCEEDS
Purpose Total
------- -----
1) Acquisition of assets formerly owned by
Xxxxxxxx Aviation under an agreement
with the Bankruptcy Estate. $750,000.00
2) Working Capital $198,960.00
3) JG Capital, Inc. (Finder's Fee) $ 44,000.00
4) JG Capital, Inc. (Placement Agent fee $ 68,790.00
for Xxxxxx transaction)
5) HEZA Holding, Inc. (Finder's Fee) $ 22,000.00
6) Grushko & Xxxxxxx, P.C. (Legal Fees) $ 16,250.00
Total $1,100,000.00
34
SCHEDULE 8(q)
PARTIES TO LIMITED STANDSTILL AGREEMENT
1) Xxx Xxxxxx
2) Xxxx Xxxxxx
3) Perugia Design
4) JG Capital, Inc.
35
SCHEDULE 10.1
OTHER SECURITIES TO BE REGISTERED
Securities to be Registered
---------------------------
1) Xxxxxx Partners, L.P.
a) 9,600,000 shares of common stock
b) 14,400,00 shares of common stock underlying warrants
2) JG Capital
a) 1,800,000 shares of common stock underlying warrants previously issued
b) shares of common stock underlying warrants issued in connection with
this Subscription Agreement.
3) Xxxxx Xxxxxx
a) 1,000,000 shares of common stock issued pursuant to an acquisition of
World Jet Corporation.
4) Finders
a) any shares of common stock underlying warrants issued to the Finders
named in this Subscription Agreement.
5) Company ESOP
a) the Company has resolved to establish a standard Employee Stock Option
Plan (ESOP), not to exceed 8.5% of the issued common stock of the
Company, which will be vested evenly over 5 years, as set forth in the
Stock Purchase Agreement with Xxxxxx Partners, L.P.
36
