SUBSCRIPTION AGREEMENT
Exhibit
10.2 Subscription Agreement
dated March 30, 2009
THIS SUBSCRIPTION AGREEMENT
(this "Agreement"),
is dated as of March 30, 2009, by and among Attitude Drinks Inc., a
Delaware 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 "SEC"
and/or "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 Subscriber, as provided herein, and the Subscribers
in the aggregate, shall purchase for $180,000 (the "Purchase Price") promissory
notes of the Company ("Note"
or "Notes")
at an original issue discount of 10% for the principal amount of up to
$200,000 (the principal amount of each Subscriber's Note will be determined by
dividing such Subscriber's Purchase Price by .90) ("Note Principal"), in the form
annexed hereto as Exhibit A;
and share purchase warrants (the "Warrants"), in the form
annexed hereto as Exhibit B,
to purchase shares of Common Stock (the "Warrant Shares"). The Notes
and Shares of the Company's Common Stock, $.001 par value (the "Common Stock") issuable upon
conversion of the Notes ("Shares"), the Warrants and
the Warrant Shares issuable upon exercise of the Warrants are collectively
referred to herein as the "Securities"; and
WHEREAS,
the aggregate proceeds of the sale of the Notes contemplated hereby shall
be held in escrow pursuant to the terms of a Funds Escrow Agreement to be
executed by the parties, substantially in the form annexed hereto as Exhibit C (the "Escrow
Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Subscriber hereby
agree as follows:
1. Closing.
Subject to the satisfaction or waiver of the terms and conditions of this
Agreement, on the Closing Date, Subscriber shall purchase and the Company shall
sell to the Subscribers Notes in the principal amount of $200,000. The "Closing Date" shall be the
date that subscriber funds representing the net amount due the Company from the
Purchase Price is transmitted by wire transfer or otherwise to or for the
benefit of the Company.
2. Security
Interest. On or about October 23, 2007, certain lenders were granted a
security interest in the assets of the Company, including ownership of the
Subsidiaries (as defined in Section 5(a) of this Agreement) and in the assets of
the Subsidiaries, which security interest was memorialized in a "Security Agreement" and "Collateral Agent Agreement"
dated October 23, 2007, as amended on or about January 8, 2008, September
29, 2008, and January 27, 2009, respectively. The Subsidiaries guaranteed the
Company's obligations under the Transaction Documents [as defined in Section
5(c)]. Such guaranties were memorialized in a "Subsidiary Guaranty". The
Security Agreement and Collateral Agent Agreement are hereby amended to include
the Subscribers and the Company agrees that the Subscribers are hereby made
parts to the Security Agreement and Collateral Agent Agreement as Lenders
therein and their interests in the Obligations (as defined in the Security
Agreement) are pari pasu in proportion to their specific Obligation amounts and
of equal priority with each other. The Company will execute such other
agreements, documents and financing statements reasonably requested by the
Subscribers to memorialize and further protect the security interest described
herein, which will be filed at
the Company's expense with the jurisdictions, states and counties designated by
the Subscribers. The Company will also execute all such documents reasonably
necessary in the opinion of Subscribers to memorialize and further protect the
security interest described herein.
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3. Warrants. On the
Closing Date, the Company will issue and deliver Class A Warrants to the
Subscribers. One Class A Warrant will be issued for every two Shares which would
be issued on the Closing Date assuming the complete conversion of the Note on
the Closing Date at the Conversion Price. The exercise price to acquire a
Warrant Share upon exercise of a Class A Warrant shall be equal to $0.05,
subject to reduction as described in the Class A Warrant. The Class A Warrants
shall be exercisable until five years after the issue date of the Warrants. Each
holder of the Warrants is granted the registration rights set forth in this
Agreement. The Warrant exercise price and number of Warrant Shares issuable upon
exercise of the Warrants shall be equitably adjusted to offset the effect of
stock splits, stock dividends, and similar events, and as otherwise described in
this Agreement and the Warrant.
4. Subscriber Representations
and Warranties. Each Subscriber hereby represents and warrants to and
agrees with the Company only as to such Subscriber that:
(a) Organization and Standing of
the Subscribers. If such Subscriber is an entity, such Subscriber is a
corporation, partnership or other entity duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization.
(b) Authorization and Power.
Such Subscriber has the requisite power and authority to enter into and
perform this Agreement and the other Transaction Documents and to purchase the
Notes being sold to it hereunder. The execution, delivery and performance of
this Agreement and the other Transaction Documents by such Subscriber and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate or partnership action, and no further
consent or authorization of such Subscriber or its Board of Directors,
stockholders, partners, members, as the case may be, is required. This Agreement
and the other Transaction Documents have been duly authorized, executed and
delivered by such Subscriber and constitutes, or shall constitute when executed
and delivered, a valid and binding obligation of such Subscriber enforceable
against such Subscriber in accordance with the terms thereof.
(c) No Conflicts. The
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation by such Subscriber of the transactions
contemplated hereby and thereby or relating hereto do not and will not (i)
result in a violation of such Subscriber's charter documents or bylaws or other
organizational documents or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument or obligation to which
such Subscriber is a party or by which its properties or assets are bound, or
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental agency applicable to such Subscriber or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on such
Subscriber). Such Subscriber is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement and the other Transaction Documents or to
purchase the Securities in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, such Subscriber is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Company herein.
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(d) Information on Company.
Such Subscriber has been furnished with or has had access at the XXXXX
Website of the Commission to the Company's audited financial statements for the
period ended March 31, 2008 filed on July 2, 2008 and unaudited financial
statements for the period ended December 31, 2008
filed on March 5, 2009 (hereinafter referred to collectively as the "Reports"). Such financial
statements were prepared pursuant to Generally Accepted Accounting Principles in
the United States and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries, if any, as of and for
the dates thereof and the results of operations and cash flows for the periods
then ended, subject to normal, immaterial adjustments. In addition, such
Subscriber may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as such
Subscriber has requested in writing, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the "Other
Written
Information"), and considered all factors such Subscriber deems material
in deciding on the advisability of investing in the Securities.
(e)
Information on
Subscriber. Such Subscriber is, and will be at the time of the conversion
of the Notes, 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 such 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. Such Subscriber
has the authority and is duly and legally qualified to purchase and own the
Securities. Such Subscriber is able to bear the risk of such investment for an
indefinite period and to afford a complete loss thereof. The information set
forth on the signature page hereto regarding such Subscriber is
accurate.
(f)
Purchase of Notes and
Warrants. On the Closing Date, such Subscriber will purchase the Notes
and Warrants as principal for its own account for investment only and not with a
view toward, or for resale in connection with, the public sale or any
distribution thereof.
(g) Compliance with Securities
Act. Such 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 such 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. Such Subscriber will comply with all applicable rules and
regulations in connection with the sales of the Securities including laws
relating to short sales.
(h) Shares Legend. The
Shares, and the Warrant Shares shall bear the following or similar
legend:
"THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, NOR
APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR (B)
AN
OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR (H) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."
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(i)
Warrants Legend.
The Warrants shall bear the following or
similar legend:
"NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B)
AN OPINION OF
COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES."
(j) Note
Legend. The Note shall bear the following legend:
"NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR (B)
AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES. "
(k) Communication of Offer.
The offer to sell the Securities was directly communicated to such
Subscriber by the Company. At no time was such 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.
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(l)
Authority;
Enforceability. This Agreement and other agreements delivered
together with this Agreement or in connection herewith have been duly
authorized, executed and delivered by such 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 such Subscriber has full 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 such Subscriber relating hereto.
(m) Restricted Securities.
Such 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 pursuant
to an effective registration statement under the 1933 Act, or unless an
exemption from registration is available. 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 person or entity means any other person or entity directly or
indirectly controlling, controlled by or under direct or indirect common control
with such person or entity. Affiliate includes each Subsidiary of the Company.
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.
(n) No Governmental Review.
Such 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.
(o) Correctness of
Representations. Each Subscriber represents only as to such Subscriber
that the foregoing representations and warranties are true and correct as of the
date hereof and, unless such Subscriber otherwise notifies the Company prior to
the Closing Date shall be true and correct as of the Closing Date.
(p) Survival. The
foregoing representations and warranties shall survive the Closing
Date.
5.
Company
Representations and Warranties. The Company represents and warrants to
and agrees
with each Subscriber that:
(a) Due Incorporation.
The Company is a corporation or other entity duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite
corporate power to own its properties and to carry on its business as presently
conducted. The Company 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, prospects, properties or business of the Company and its
Subsidiaries taken as a whole. For purposes of this Agreement, "Subsidiary" means, with
respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 30% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors or other managing body of such
entity, (ii) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership
or limited liability company or (iii) in the case of a trust, estate,
association, joint venture or other entity, the beneficial interest in such
trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity. The Company's Subsidiaries as of the Closing
Date are set forth on Schedule
5(a).
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(b) Outstanding Stock.
All issued and outstanding shares of capital stock of the Company and
each Subsidiary have been duly authorized and validly issued and are fully paid
and non-assessable.
(c) Authority; Enforceability.
This Agreement, the Note, the Warrants, 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 Subsidiaries (as applicable) and are valid and binding agreements
of the Company and Subsidiaries, and are 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 Subsidiaries or other equity
interest in the Company except as described on Schedule 5(d). The Common
Stock of the Company on a fully diluted basis outstanding as of the last
Business Day preceding the Closing Date is set forth on Schedule 5(d).
(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, or
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. The Transaction Documents and the Company's
performance of its obligations thereunder has been unanimously approved by the
Company's Board of Directors.
(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 this Agreement
and all other agreements entered into by the Company relating thereto 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 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 is a party, by which the Company or any of its Affiliates is bound, or
to which any of the properties of the Company or any of its Affiliates 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
is a party except the violation, conflict, breach, or default of which would not
have a Material Adverse Effect; or
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(ii) result in
the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
as described herein; or
(iii) except as
described in 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) will
result in the triggering 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 upon exercise of the
Warrants, the Warrant Shares will be duly and validly issued, fully paid and
non-assessable;
(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;
(iv) will not
subject the holders thereof to personal liability by reason of being such
holders; and
(v) assuming
the representations warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.
(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.
(i) No Market Manipulation.
The Company and its Affiliates have 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 to facilitate the sale or resale of the Securities or affect
the price at which the Securities may be issued or resold.
(j) Information Concerning
Company. The Reports and Other Written Information 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 Event relating to the Company's business,
financial condition or affairs not disclosed in the Reports. The Reports and
Other Written Information 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, taken as
a whole, not misleading in light of the circumstances when
made.
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(k)
Stop Transfer.
The Company will not issue any stop transfer order or other order
impeding the sale, resale or delivery of any of the Securities, except as may be
required by any applicable federal or state securities laws and if so required
only if contemporaneous notice of such instruction is given to the
Subscriber.
(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, (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) not in
violation of any statute, rule or regulation of any governmental authority which
violation would have a Material Adverse Effect.
(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 ofthe OTC Bulletin Board ("Bulletin Board") which would
impair the exemptions relied upon in this Offering or the Company's ability to
timely comply with its obligations hereunder. Neither the Company nor any of its
Affiliates will take any action or steps that would cause the offer or issuance
of the Securities to be integrated with other offerings or issuances which would
impair the exemptions relied upon in this Offering or the Company's ability to
timely comply with its obligations hereunder. 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 that would impair the exemptions
relied upon in this Offering or the Company's ability to timely comply with its
obligations hereunder.
(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)
No Undisclosed Liabilities.
The Company has no liabilities or obligations which are material,
individually or in the aggregate, other than those incurred in the ordinary
course of the Company businesses since the date of the most recent financial
statements of the Company contained in the Reports and which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect,
except as disclosed in the Reports or on Schedule 5(o).
(p)
No Undisclosed Events or
Circumstances. 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.
(q)
Capitalization.
The authorized and outstanding capital stock of the Company and
Subsidiaries as of the date of this Agreement and the Closing Date (not
including the Securities) are set forth in the Reports or on Schedule 5(d). Except as set
forth on Schedule 5(d),
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 or any of its
Subsidiaries.
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(r) 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
will have a potential 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.
(s) No Disagreements with
Accountants and Lawyers. There are no material disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise between
the Company and the accountants and lawyers presently employed by the Company,
including but not limited to disputes or conflicts over payment owed to such
accountants and lawyers, nor have there been any such disagreements during the
two years prior to the Closing Date.
(t) Investment Company.
Neither the Company nor any Affiliate of the Company is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(u) Foreign Corrupt Practices.
Neither the Company, nor to the knowledge of the Company, any agent or
other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made
any unlawful payment to foreign or domestic government officials or employees or
to any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended.
(v) DTC Status. The
Company's transfer agent is a participant in, and the Common Stock is eligible
for transfer pursuant to, the Depository Trust Company Automated Securities
Transfer Program. The name, address, telephone number, fax number, contact
person and email address of the Company transfer agent is set forth on Schedule 5(v)
hereto.
(w) 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 Stock registered pursuant to Section 12(g) of the 0000 Xxx. The
Company is not a "shell company" as that term is employed in the 1933
Act.
(x) Solvency. Based on
the financial condition of the Company as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the Notes
hereunder, (i) the Company's fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).
-9-
(y) Company Predecessor and
Subsidiaries. The Company makes each of the representations contained in
Sections 5(a), (b), (c), (d), (e), (0, (h), (j), (1), (o), (p), (q), (s), (t),
and (u) of this Agreement, as same relate to the Subsidiary of the Company. All
representations made by or relating to the Company
of a historical or prospective nature and all undertakings described in Sections
9(g) through 9(1) shall relate, apply and refer to the Company and its
predecessors. The Company represents that it owns 100% of the outstanding equity
of the Subsidiaries and rights to receive equity of the Subsidiaries free and
clear of all liens, encumbrances and claims, except as set forth on Schedule 5(d).
No person or entity other than the Company has the right to receive any
equity interest in the Subsidiaries.
(z)
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.
(AA) Survival. The
foregoing representations and warranties shall survive the Closing Date.
6.
Regulation D
Offering/Legal Opinion. 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
Act and/or Rule 506 of Regulation D promulgated thereunder. On the Closing Date,
the Company will provide an opinion reasonably acceptable to the Subscribers
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 D.
The Company will provide, at the Company's expense, such other legal
opinions, if any, as are reasonably necessary in each Subscriber's opinion for
the issuance and resale of the Common Stock issuable upon exercise of the
Warrants pursuant to an effective registration statement, Rule 144 under the
1933 Act or an exemption from registration.
7.1.
Conversion of
Note.
(a) Upon the
conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering, an
opinion of counsel to assure that the Company's transfer agent shall issue stock
certificates in the name of Subscriber (or its permitted nominee) or such other
persons as designated by Subscriber and in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon such
conversion. The Company warrants that no instructions other than these
instructions have been or will be given to the transfer agent of the Company's
Common Stock and that the certificates representing such shares shall contain no
legend other than the usual 1933 Act restriction from transfer legend. If and
when a Subscriber sells the Shares, assuming (i) a registration statement
including such Shares for registration filed with the Commission is effective
and the prospectus, as supplemented or amended, contained therein is current and
(ii) such Subscriber or its agent confirms in writing to the transfer agent that
such Subscriber has complied with the prospectus delivery requirements, the
Company will reissue the Shares without restrictive legend and the Shares will
be free-trading, and freely transferable. In the event that the Shares are sold
in a manner that complies with an exemption from registration, the Company will
promptly instruct its counsel to issue to the transfer agent an opinion
permitting removal of the legend indefinitely, if pursuant to Rule 144(b)(1Xi)
of the 1933 Act, or for 90 days if pursuant to the other provisions of Rule 144
of the 1933 Act, provided that Subscriber delivers all reasonably requested
representations in support of such opinion.
(b) A
Subscriber will give notice of its decision to exercise its right to convert the
Note, interest, or part thereof by telecopying, or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as Exhibit A to
the Note) to the Company via confirmed telecopier transmission or otherwise
pursuant to Section 13(a) of this Agreement. Such Subscriber will not be
required to surrender the Note until the Note has been fully converted or
satisfied. Each date on which a Notice of Conversion is telecopied to the
Company in accordance with the provisions hereof by 6 PM Eastern Time ("ET") (or
if received by the Company after 6
PM ET then the next business day) shall be deemed a "Conversion Date." The Company
will itself or cause the Company's transfer agent to transmit the Company's
Common Stock certificates representing the Shares issuable upon conversion of
the Note to such Subscriber via express courier for receipt by such Subscriber
within three (3) business days after receipt by the Company of the Notice of
Conversion (such third day being the "Delivery Date"). In the event
the Shares are electronically transferable, then delivery of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber. A Note representing the balance of the Note not so converted
will be provided by the Company to such Subscriber if requested by Subscriber,
provided such Subscriber delivers the original Note to the Company.
-10-
(c) The
Company understands that a delay in the delivery of the Shares in the form
required pursuant to Section 7.1 hereof, or the Mandatory Redemption Amount
described in Section 7.2 hereof, respectively later than the Delivery Date or
the Mandatory Redemption Payment Date (as hereinafter defined) could result in
economic loss to the Subscriber. As compensation to a Subscriber for such loss,
the Company agrees to pay (as liquidated damages and not as a penalty) to such
Subscriber for late issuance of Shares in the form required pursuant to Section
7.1 hereof upon Conversion of the Note in the amount of $100 per business day
after the Delivery Date for each $10,000 of Note principal amount (and
proportionately for other amounts) being converted of the corresponding Shares
which are not timely delivered. The Company shall pay any payments incurred
under this Section in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Subscriber, in the
event that the Company fails for any reason to effect delivery of the Shares
within seven (7) business days after the Delivery Date or make payment within
seven (7) business days after the Mandatory Redemption Payment Date (as defined
in Section 7.2 below), such Subscriber will be entitled to revoke all or part of
the relevant Notice of Conversion or rescind all or part of the notice of
Mandatory Redemption by delivery of a notice to such effect to the Company
whereupon the Company and such Subscriber shall each be restored to their
respective positions immediately prior to the delivery of such notice, except
that the liquidated damages described above shall be payable through the date
notice of revocation or rescission is given to the Company.
7.2.
Mandatory
Redemption at Subscriber's Election. In the event (i) the Company is
prohibited from issuing Shares, (ii) upon the occurrence of any other Event of
Default (as defined in the Note or in this Agreement), that continues for more
than twenty (20) business days, (iii) a Change in Control (as defined below), or
(iv) of the liquidation, dissolution or winding up of the Company, then at the
Subscriber's election, the Company must pay to each Subscriber ten (10) business
days after request by each Subscriber ("Calculation Period"), a sum of money
determined by multiplying up to the outstanding principal amount of the Note
designated by each such Subscriber by 120%, plus accrued but unpaid interest
("Mandatory Redemption
Payment"). The
Mandatory Redemption Payment must be received by each Subscriber on the same
date as the Shares otherwise deliverable or within ten (10) business days after
request, whichever is sooner ("Mandatory Redemption Payment
Date"). Upon receipt of the Mandatory Redemption Payment, the
corresponding Note principal and interest will be deemed paid and no longer
outstanding. Liquidated damages calculated pursuant to Section 7.1(c) hereof,
that have been paid or accrued for the ten day period prior to the actual
receipt of the Mandatory Redemption Payment by a Subscriber shall be credited
against the Mandatory Redemption Payment. For purposes of this Section 7.2,
"Change in Control"
shall mean (i) the Company no longer having a class of shares publicly
traded or listed on a Principal Market, (ii) the Company becoming a Subsidiary
of another entity (other than a corporation formed by the Company for purposes
of reincorporation in another U.S. jurisdiction), (iii) a majority of the board
of directors of the Company as of the Closing Date, no longer serving as
directors of the Company, except due to natural causes (which shall include,
termination of such directors by the holders of more than 50% of the equity
outstanding as of the Closing Date), and (iv) the sale, lease or transfer of
substantially all the assets of the Company or its Subsidiaries.
-11-
7.3. Maximum Conversion.
No Subscriber shall be entitled to convert on a Conversion Date
that
amount of the Note in connection with that number of shares of Common Stock
which would be in excess of the sum
of (i) the number of shares of Common Stock beneficially owned by such
Subscriber and its Affiliates on a Conversion Date, and (ii) the number of
shares of Common Stock issuable upon the conversion of the Note with respect to
which the determination of this provision is being made on a Conversion Date,
which would result in beneficial ownership by such Subscriber and its Affiliates
of more than 9.99% of the outstanding shares of Common Stock of the Company on
such Conversion Date. For the purposes of the provision to 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 Rule 13d-3
thereunder. Subject to the foregoing, the Subscriber shall not be limited to
aggregate conversions of only 9.99% and aggregate conversions by the Subscriber
may exceed 9.99%. The Subscriber may increase the permitted beneficial ownership
amount up to 9.99% upon and effective after 61 days' prior written notice to the
Company. Such Subscriber may allocate which of the equity of the Company deemed
beneficially owned by such Subscriber shall be included in the 9.99% amount
described above and which shall be allocated to the excess above
9.99%.
7.4.
Injunction
Posting of Bond. In the event a Subscriber shall elect to convert a Note
or part thereof, the Company may not refuse conversion or exercise 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, an injunction from a court, on notice, restraining and or enjoining
conversion of all or part of such Note shall have been sought and obtained by
the Company or at the Company's request or with the Company's assistance, and
the Company has posted a surety bond for the benefit of such Subscriber in the
amount of 120% of the outstanding principal and interest of the Note, or
aggregate purchase price of the Shares which are sought to be subject to the
injunction, 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.
7.5.
Buy-In.
In addition to any other rights available to a Subscriber, if the Company
fails to deliver to a Subscriber such shares issuable upon conversion of a Note
by the Delivery Date and if after seven (7) business days after the Delivery
Date such Subscriber or a broker on such Subscriber's behalf purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Subscriber of the Common Stock which such
Subscriber was entitled to receive upon such conversion (a "Buy-In"),
then the Company shall pay in cash to such Subscriber (in addition to any
remedies available to or elected by the Subscriber) the amount by which (A) such
Subscriber's total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (B) the aggregate principal
and/or interest amount of the Note for which such conversion was not timely
honored 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
$11,000 to cover a Buy-In with respect to an attempted conversion of $10,000 of
note principal and/or interest, the Company shall be required to pay such
Subscriber $1,000 plus interest. Such Subscriber shall provide the Company
written notice and evidence indicating the amounts payable to such Subscriber in
respect of the Buy-In.
7.6
Adjustments.
The Conversion Price, Warrant exercise price and amount of Shares
issuable upon conversion of the Notes and exercise of the Warrants shall be
equitably adjusted and as otherwise described in this Agreement, the Notes and
Warrants.
7.7. Redemption. The Notes
shall not be redeemable or callable by the Company except as described
in the Note and Warrants.
-12-
8.
Due Diligence
Fee/Legal Fees.
(a) Due Diligence Fee.
The Company will pay a due diligence fee ("Due Diligence
Fee")
to each investor or its designees (each a "Due Diligence Fee
Recipient") as described on Schedule 8(a).
The aggregate Due Diligence Fee shall be equal to eight percent (8%) of
the Purchase Price. The Due Diligence Fee will be payable in cash.
(b) Subscriber's Legal Fees.
The Company shall pay to Grushko & Xxxxxxx, P.C., a cash fee of
$7,500 ("Cash
Legal Fees") as reimbursement for services rendered to the Subscribers in
connection with this Agreement and the purchase and sale of the Notes (the "Offering").
The Subscribers' Legal Fees and expenses will be payable out of funds
held pursuant to the Escrow Agreement on the Closing Date. Grushko &
Xxxxxxx, P.C. will be reimbursed on the Closing Date for all lien searches,
filing fees, and printing and shipping costs for the closing statements to be
delivered to Subscribers.
9.
Covenants of the
Company. The Company covenants and agrees with the Subscribers as
follows:
(a) Stop Orders. The
Company will advise the Subscribers, within twenty-four hours 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/Quotation.
The Company shall promptly secure the quotation or listing of the Shares
and Warrant Shares upon the Principal Market each national securities exchange,
or automated quotation system upon which they are or become eligible for
quotation or listing (subject to official notice of issuance) and shall maintain
same so long as any Securities are outstanding. The Company will maintain the
quotation or listing of its Common Stock on the American Stock Exchange, Nasdaq
Capital Market, Nasdaq Global Select Market, Nasdaq Global Market, the 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")),
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 the Subscribers.
(d) Filing Requirements.
From the date of this Agreement and until the last to occur of (i) two
(2) years after the Closing Date, (ii) until all the Shares and Warrant Shares
have been resold or transferred by all the Subscribers pursuant to a
registration statement or pursuant to Rule 144(b)(1), or (iii) the Notes are no
longer outstanding (the date of occurrence of the last such event being the
"End Date"),
the Company will (A) cause its Common Stock to be registered under
Section 12(b) or 12(g) of the 1934 Act, (B) comply in all respects
with its reporting and filing obligations under the 1934 Act, and (C)
voluntarily comply with all reporting requirements that are applicable to an
issuer with a class of shares registered pursuant to Section 12(g) of the 1934
Act, if Company is not subject to such reporting requirements. The Company will
not 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 its
reporting and filing obligations under said acts until the End Date. Until the
End Date, the Company will
continue the listing or quotation of the Common Stock on a Principal Market 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.
-13-
(e) Use of Proceeds. The
proceeds of the Offering will be employed by the Company as described on Schedule 9(e). Except as
described on Schedule 9(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 a Closing Date. For so long as any Notes are outstanding, the
Company will not prepay any financing related debt obligations nor redeem any
equity instruments of the Company.
(f) Reservation. On or
before May 30, 2009, and at all times thereafter, the Company shall have
reserved, pro
rata, on behalf of each holder of a Note, Common Stock or Warrant, from
its authorized but unissued Common Stock, a number of common shares equal to
150% of the amount of Common Stock necessary to allow each holder of a Note to
be able to convert all such outstanding Notes, Common Stock and interest and
100% of the Warrant Shares issuable upon exercise of the Warrants.
(g) DTC Program. At all
times that Notes and Warrants are outstanding, the Company will employ as the
transfer agent for the Common Stock a participant in the Depository Trust
Company Automated Securities Transfer Program.
(h) Taxes. From the date
of this Agreement and until the End Date, 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.
(i)
Insurance. From
the date of this Agreement and until the End Date, 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 less reasonable deductible amounts; 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.
(j)
Books and
Records. From the date of this Agreement and until the End
Date, 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.
(k) Governmental Authorities.
From the date of this Agreement and until the End Date, 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.
-14-
(1)
Intellectual
Property. From the date of this Agreement and until the End Date, 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, unless it is sold for value.
(m) Properties. From the
date of this Agreement and until the End Date, 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.
(n)
Confidentiality/Public
Announcement. From the date of this Agreement and until the End Date, the
Company agrees that except in connection with a Form 8-K and the registration
statement or statements regarding the Subscribers' securities or in
correspondence with the SEC regarding same, 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 10-SB, Form 8-K or make a public announcement
describing the Offering not later than the business day after the Closing Date.
Prior to filing or announcement, such Form 10-SB, Form 8-K or public
announcement will be provided to Subscribers for their review and approval. In
the Form 10-SB, Form 8-K or public announcement, the Company will specifically
disclose the amount of Common Stock outstanding immediately after the Closing.
Upon delivery by the Company to the Subscribers after the Closing Date of any
notice or information, in writing, electronically or otherwise, and while a Note
is held by such Subscribers, unless the Company has in good faith determined
that the matters relating to such notice do not constitute material, nonpublic
information relating to the Company or Subsidiaries, the Company shall within
one business day after any such delivery publicly disclose such material,
nonpublic information on a Report on Form 10-SB, Form 8-K or otherwise. In the event that the Company believes that a notice or
communication to a Subscriber contains material, nonpublic information, relating to the Company
or Subsidiaries, the Company shall so indicate to such Subscriber
contemporaneously with delivery of such notice or information. In the absence of
any such indication, such Subscriber shall be allowed to
presume that all matters relating to such notice and information do not
constitute material, nonpublic information relating to the Company or its
Subsidiaries.
(o) Non-Public Information.
The Company covenants and agrees that except for the Reports, Other
Written Information and schedules and exhibits to this Agreement, neither it nor
any other person acting on its behalf will at any time 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 keep such information in confidence. The Company
understands and confirms that each Subscriber shall be relying on the foregoing
representations in effecting transactions in securities of the
Company.
(p) Negative Covenants.
So long as a Note is outstanding, without the consent of the Subscribers,
the Company will not and will not permit any of its Subsidiaries to directly or
indirectly:
-15-
(i)
create, incur, assume or suffer to exist any pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, security title,
mortgage, security deed or
deed of trust, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Uniform Commercial Code or comparable law of any jurisdiction) (each,
a "Lien") upon any of
its property, whether now owned or hereafter acquired except for: (A) the
Excepted Issuances (as defined in Section 12 hereof), and (B) (a) Liens imposed by law
for taxes that are not yet due or are being contested in good
faith and for which adequate reserves have been established in accordance
with generally accepted
accounting principles; (b) carriers', warehousemen's, mechanics', material
men's, repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges
and deposits made in the ordinary course of business in compliance with workers'
compensation, unemployment insurance and other social security laws or
regulations; (d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business; (e) Liens created with respect to the financing of the purchase of new
property in the ordinary course of the Company's business up to the amount of
the purchase price of such
property; and (f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property (each of (a) through (f), a
"Permitted
Lien");
(ii) amend its
certificate of incorporation, bylaws or its charter documents so
as to
materially and adversely affect any rights of the Subscriber;
(iii) repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents.
(iv) engage in
any transactions with any officer, director, employee or any Affiliate of the
Company, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company, and (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company; or
(v) prepay or
redeem any financing related debt or past due obligations
outstanding
as of the Closing Date.
(q) Seniority. Except for
Permitted Liens and as otherwise provided for herein, until the Notes are fully
satisfied or converted, the Company shall not grant nor allow any security
interest to be taken in the assets of the Company or any Subsidiary; nor issue
any debt, equity or other instrument which would give the holder thereof
directly or indirectly, a right in any assets of the Company or any Subsidiary,
superior to any right of the holder of a Note in or to such assets.
(r) Notices. For so long
as the Subscribers hold any Securities, the Company will maintain as United
States address and United States fax number for notices purposes under the
Transaction Documents.
10.
Covenants of the
Company Regarding Indemnification. The Company agrees to indemnify, hold
harmless, reimburse and defend the Subscribers, the Subscribers' officers,
directors, agents, Affiliates, members, managers, 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
representation or warranty by Company 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 the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscriber relating hereto.
-16-
11.1.
Delivery of Unlegended
Shares.
(a) Within
seven business days (such seventh business day being the "Unlegended Shares Delivery Date") after
the business day on which the Company has received (i) a notice that Shares or
Warrant Shares, or any other Common Stock held by a Subscriber have been sold
pursuant to a registration statement, if any, or Rule 144, (ii) a representation
that the prospectus delivery requirements, or the requirements of Rule 144, as
applicable and if required, have been satisfied, (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 a 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(i) above (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 submitted
certificate, 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. In the event that the Shares are sold in a
manner that complies with an exemption from registration, the Company will
promptly instruct its counsel to issue to the Company's transfer agent an
opinion permitting removal of the legend indefinitely if pursuant to Rule
144(b)(1).
(b) In lieu
of delivering physical certificates representing the Unlegended Shares, 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 will cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber's prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC 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 11 hereof later than 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. In the event damages are payable pursuant to the foregoing sentence,
then the Subscriber may elect to receive liquidated damages under this Section
11.1(c) or Section 12(g) below. If during any 360 day period, the Company fails
to deliver Unlegended Shares as required by this Section 11.1 for an aggregate
of 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 the greater of (i) 120%, or (ii) a fraction in which the numerator is the
highest closing price of the Common Stock during the aforedescribed 30 day
period and the denominator of which is the purchase price of the Shares or
exercise price of such Warrant Shares during such 30 day period, multiplied by
the purchase price of the Shares or exercise price of such Warrant Shares ("Unlegended Redemption Amount").
The Company shall pay any payments incurred under this Section in
immediately available funds upon demand.
-17-
(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 three business days after the
Unlegended Shares Delivery Date and the Subscriber or a broker on the
Subscriber's behalf, 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 $11,000 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 delivery of Unlegended Shares as described
in Section 11.1 or Warrant Shares upon exercise of Warrants and the Company is
required to deliver such Unlegended Shares pursuant to Section 11.1 or the
Warrant Shares pursuant to the Warrant, the Company may not refuse to deliver
Unlegended Shares or Warrant 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, 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 by the Company or at the Company's request or with the
Company's assistance, and the Company has posted a surety bond for the benefit
of such Subscriber in the amount of 120% of the amount of the aggregate purchase
price of the Shares and Warrant Shares which are subject to the injunction or
temporary restraining order, which bond shall remain in effect until the final
unappealable disposition of the 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.
11.2.
In the event commencing one hundred and eighty-one (181) days after the Closing
Date and ending five years thereafter, the Subscriber is not permitted to resell
any of the Shares or Warrant Shares without any restrictive legend or if such
sales are permitted but subject to volume limitations or further restrictions on
resale as a result of the unavailability to Subscriber of Rule 144(b)(1) under
the 1933 Act or any successor rule (a "144 Default"), for any reason except for
Subscriber's status as an Affiliate or "control person" of the Company, then the
Company shall pay such Subscriber as liquidated damages ("Liquidated Damages")
and not as a penalty an amount equal to one percent (1%) for the first day of
such occurrence and one percent (1%) for each thirty (30) days (or such lesser
pro-rata amount for any period less than thirty (30) days) thereafter of the
purchase price of the Shares or Warrant Shares owned by the Subscriber during
the pendency of the 144 Default.
12.
(a) Right of First Refusal.
Until one year after the Closing Date, the Subscribers shall be given not
less than ten business days prior written notice of any proposed sale by the
Company of its common stock or other securities or equity linked debt
obligations, except in connection with (i) full or partial consideration in
connection with a strategic merger, acquisition, consolidation or purchase of
substantially all of the securities or assets of corporation or other entity
which holders of such securities or debt are not at any time granted
registration rights, (ii) the Company's issuance of securities in connection
with strategic license agreements and other partnering arrangements so long as
such issuances are not for the purpose of raising capital and which holders of
such securities or debt are not at any time granted registration rights, (iii)
the Company's issuance of Common Stock or the issuances or grants of options to
purchase Common Stock pursuant to stock option plans and employee stock purchase
plans described on Schedule 5(d) hereto at prices equal to or higher than the
closing price of the Common Stock on the issue date of any of the foregoing,
(iv) as a result of the exercise of Warrants or conversion of Notes which are
granted or issued pursuant to this Agreement, or that have been issued prior to
the Closing Date, the issuance of which has been disclosed in a registration
statement filed not less than five days prior to the Closing Date, (v)
securities issued in payment of outstanding indebtednesses (for non-financing
purposes) or to a vendor for professional
services, and (vi) the payment of any interest on the Notes and Liquidated
Damages pursuant to the Transaction Documents (collectively the foregoing are
"Excepted Issuances").
The Subscribers who exercise their rights pursuant to this Section 12(a)
shall have the right during the ten business days following receipt of the
notice to purchase in the aggregate up to one-half such offered common stock,
debt or other securities in accordance with the terms and conditions set forth
in the notice of sale in the same proportion to each other as their purchase of
Notes in the Offering. In the event such terms and conditions are modified
during the notice period, the Subscribers shall be given prompt notice of such
modification and shall have the right during the ten business days following the
notice of modification to exercise such right.
-18-
(b) Favored Nations Provision.
Other than in connection with the Excepted Issuances, if at any time the
Notes or Warrants are outstanding, the Company shall agree to or issue (the
"Lower
Price
Issuance") any Common Stock or securities convertible into or exercisable
for shares of Common Stock (or modify any of the foregoing which may be
outstanding) to any person or entity at a price per share or conversion or
exercise price per share which shall be less than the price in respect of the
Conversion Price in respect of the Shares, or if less than the Warrant exercise
price in respect of the Warrant Shares, without the consent of each Subscriber,
then the Company shall issue, for each such occasion, additional shares of
Common Stock to each Subscriber respecting those Notes, Warrants, and Shares
that remain outstanding at the time of the Lower Price Issuance so that the
average per share purchase price of the shares of Common Stock issued to each
Subscriber (of only the Common Stock or Warrant Shares still owned by a
Subscriber) is equal to such other lower price per share and the Conversion
Price and Warrant exercise price shall automatically be reduced to such other
lower price. The average Purchase Price of the Shares and average exercise price
in relation to the Warrant Shares shall be calculated separately for the Shares
and Warrant Shares. The foregoing calculation and issuance shall be made
separately for Shares received upon conversion of the Notes and separately for
Warrant Shares. The delivery to a 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 additional shares of Common Stock. Each Subscriber is
granted the registration rights described in Section 11 hereof in relation to
such 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 sooner of the
agreement to or actual issuance of such convertible security, warrant, right or
option and again at any time 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 Conversion Price or Warrant exercise price in effect upon
such issuance. The rights of each Subscriber set forth in this Section 12 are in
addition to any other rights the Subscriber has pursuant to this Agreement, the
Note, any Transaction Document, and any other agreement referred to or entered
into in connection herewith or to which such Subscriber and Company are parties.
Each Subscriber is also given the right to elect to substitute any term or terms
of any other offering in connection with which such Subscriber has rights as
described in Section 12(a), or any outstanding price protection, anti-dilution
or reset rights granted to any holder of any of the Company's equity or right to
receive such equity, or any such rights which are granted after the Initial
Closing Date for any term or terms of the Offering in connection with Securities
owned by such Subscriber as of the date the notice described in Section 12(a) is
required to be given to such Subscriber.
(c) Maximum Exercise of Rights.
In the event the exercise of the rights described in Sections 12(a) and
12(b) would or could 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 7.3 of this Agreement, 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
applicable maximum amount set forth calculated in the manner described in
Section 7.3 of this Agreement. The determination of when such Common Stock may
be issued shall be made by each Subscriber as
to only such Subscriber.
-19-
13. 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: Attitude Drinks Inc., 00000 Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxx Xxxxx Xxxxxxx, XX 00000, Attn: Xxx Xxxxxx, CEO and President, telecopier:
(000) 000-0000, with a copy by telecopier only to: Weed & Co., LLP, 0000
XxxXxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, XX 00000, Attn: Xxxx Xxxx, Esq., telecopier number: (000)
000-0000, and (ii) if to the Subscriber, 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: (000) 000-0000.
(b) 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. No right or obligation of the Company shall be assigned
without prior notice to and the written consent of the Subscribers.
(c) 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.
(d) 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
and county of New York. The parties to this Agreement hereby irrevocably waive
any objection to jurisdiction and venue of any action instituted hereunder and
shall not assert any defense based on lack of jurisdiction or venue or based
upon forum non
conveniens. The parties
executing this Agreement and other agreements referred to herein or delivered
in connection herewith
on behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby
irrevocably 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. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.
-20-
(e) 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 seek 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 13(d) hereof, the
Company hereby irrevocably 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.
(f) 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 each Subscriber has
represented 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 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 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.
(g) Damages. In the event
the Subscriber is entitled to receive any liquidated damages pursuant to the
Transactions, the Subscriber may elect to receive the greater of actual damages
or such liquidated damages.
(h) Consent. As used in
the Agreement, "consent of the Subscribers" or similar language means the
consent of holders of not less than 75% of the total of the Shares issued and
issuable upon conversion of outstanding Notes owned by Subscribers on the date
consent is requested.
(i)
Limit on
Liability. In no event shall the liability of any Subscriber or permitted
successor hereunder or under any Transaction Document or 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
Shares.
-21-
(j) Equal Treatment. No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of the Transaction Documents unless the
same consideration is also offered and paid to all the Subscribers and their
permitted successors and assigns.
(k) Maximum Payments.
Nothing contained herein or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest or dividends
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Subscriber and thus refunded to the
Company.
(i) Calendar Days. All
references to "days" in the Transaction Documents shall mean calendar days
unless otherwise stated. The terms "business days" and "trading days" shall mean
days that the New York Stock Exchange is open for trading for three or more
hours. Time periods shall be determined as if the relevant action, calculation
or time period were occurring in New York City. Any deadline that falls on a
non-business day in any of the Transaction Documents shall be automatically
extended to the next business day and interest, if any, shall be calculated and
payable through such extended period.
(m)
Successor Laws.
References in the Transaction Documents to laws, rules, regulations and
forms shall also include successors to and functionally equivalent replacements
of such laws, rules, regulations and forms. A successor rule to 144(b)(l)(i)
shall include any rule that would be available to a non-Affiliate of the Company
for the sale of Common Stock not subject to volume restrictions and after a six
month holding period.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
-22-
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.
|
a
Delaware corporation
By: /s/
Xxx X.
Xxxxxx
Name:
Xxx X. Xxxxxx
Title:
President, CEO
Date:
March 30,
2009
|
|
SUBSCRIBER
|
NOTE
PRINCIPAL AMOUNT
|
PURCHASE
PRICE
|
|
ALPHA
CAPITAL ANSTALT
Pradafant
7
9490
Furstentums
Vaduz,
Lichtenstein
Fax:
000-00-00000000
|
$100,000.00
|
$90,000.00
|
|
(Signature)
By:
|
-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.
|
a
Delaware corporation
By: /s/ Xxxxxx
Xxxxxxxx
Name:
Xxxxxxx Xxxxxxxx
Title:
Director
Date:
March 30,
2009
|
|
SUBSCRIBER
|
NOTE
PRINCIPAL AMOUNT
|
PURCHASE
PRICE
|
|
ALPHA
CAPITAL ANSTALT
Pradafant
7
9490
Furstentums
Vaduz,
Lichtenstein
Fax:
000-00-00000000
/s/ Xxxxxx
Xxxxxxxx
|
$100,000.00
|
$90,000.00
|
|
(Signature)
Xxxxxx Xxxxxxxx
By:
Director
|
-24-
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.
|
a
Delaware corporation
By: /s/
Xxx X.
Xxxxxx
Name:
Xxx X. Xxxxxx
Title:
President, CEO
Date:
March 30,
2009
|
|
SUBSCRIBER
|
NOTE
PRINCIPAL AMOUNT
|
PURCHASE
PRICE
|
|
WHALEHAVEN
CAPITAL FUND LIMITED
000
Xxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxx, X.X. 00000
Fax:
(000) 000-0000
|
$100,000.00
|
$90,000.00
|
|
(Signature)
By:
|
-25-
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.
|
SUBSCRIBER
|
NOTE
PRINCIPAL AMOUNT
|
PURCHASE
PRICE
|
|
WHALEHAVEN
CAPITAL FUND LIMITED
000
Xxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxx, X.X. 00000
Fax:
(000) 000-0000
/s/
Xxxxx
Xxxxxxxx
|
$100,000.00
|
$90,000.00
|
|
(Signature)
Xxxxx Xxxxxxx
By:
CFO
|
-26-
