Exhibit 2
SUBSCRIPTION AGREEMENT
Vitalstate, Inc
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Gentlemen:
1. Pursuant to the terms of the offer (the "Offering") made by
Vitalstate, Inc. (the "Company"), the undersigned hereby tenders this
subscription and applies for the purchase of 4,000,000 units ("Units") of the
Company at a purchase price of US$.50 per Unit, each Unit consisting of (a) one
share ("Shares") of common stock, par value $0.000333 per share (the "Common
Stock"), and (b) one Special Common Stock Purchase Warrant ("Warrants"). Upon
vesting in accordance with the terms thereof, each Warrant requires the holder
to purchase one share of Common Stock ("Warrant Shares") at an exercise price of
US$.50 per Warrant Share. The form of Warrant is annexed hereto as Exhibit A.
The subscriber is sending: (1) an executed copy of this Subscription
Agreement, and (2) EITHER A CHECK IN US FUNDS made out to Vitalstate, Inc. for
the full amount of the purchase price for the Units for which the undersigned is
subscribing to:
Vitalstate, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Attn: Xxxxx Xxxxx
OR
The subscriber may WIRE TRANSFER immediately available U.S. funds for
the full amount of the purchase price of the Units for which the undersigned is
subscribing plus all wire transfer fees to:
Beneficiary: VITALSTATE INC.
Beneficiary Bank: NATIONAL BANK OF CANADA
000 xx xx Xxxxxxxxxxx X. Xxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Account No.: 75-62
Branch No.: 0743-1
Bank Code: 006
2. Representations and Warranties of the Subscriber. In order to induce
the Company to accept this subscription, the undersigned hereby represents and
warrants to, and covenants with, the Company as follows:
(a) The undersigned has received and carefully reviewed such
information and documentation relating to the Company that the undersigned has
requested, and has had full and complete access to all of the Company's filings
with the U.S. Securities and Exchange Commission.
(b) The undersigned has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the Company and the
Offering, and all such questions, if any, have been answered to the full
satisfaction of the undersigned;
(c) The undersigned has such knowledge and expertise in financial
and business matters that the undersigned is capable of evaluating the merits
and risks involved in an investment in the Units;
(d) The undersigned understands that the Company has determined that
the exemption from the registration provisions of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Regulation S promulgated by the U.S.
Securities and Exchange Commission is applicable to the offer and sale of the
Units, based, in part, upon the representations, warranties and agreements made
by the undersigned herein.
(e) Except as set forth herein, no representations or warranties
have been made to the undersigned by the Company or any agent, employee or
affiliate of the Company and in entering into this transaction the undersigned
is not relying upon any information, other than the results of independent
investigation by the undersigned;
(f) The undersigned has full power and authority to execute and
deliver this Subscription Agreement and to perform the obligations of the
undersigned hereunder and this Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms;
(g)
(i) The undersigned understands and acknowledges that (A) the
Units, Shares, Warrants or Warrant Shares (collectively, the "Securities")
acquired pursuant to this Subscription Agreement have not been registered under
the Securities Act and are being sold in reliance upon an exemption from
registration afforded by Regulation S; and that such Securities have not been
registered with any state securities commission or authority; (B) pursuant to
the requirements of Regulation S, the Securities may not be transferred, sold or
otherwise exchanged unless in compliance with the provisions of Regulation S
and/or pursuant to registration under the Securities Act, or pursuant to an
available exemption thereunder; and (C) other than as set forth in this
Subscription Agreement between the Company and the undersigned or the
Registration Rights Agreement referred to herein, the Company is under no
obligation to register the Securities under the Securities Act or any state
securities law, or to take any action to make any exemption from any such
registration provisions available;
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(ii) (A) The undersigned is not a U.S. Person (as defined in
Regulation S) and is not acquiring the Securities for the account of any U.S.
person; (B) if a corporation, it is not organized or incorporated under the laws
of the United States; and (C) if a corporation, no director or executive officer
is a national or citizen of the United States.
(iii) The undersigned was not formed specifically for the
purpose of acquiring the Securities being purchased pursuant to this
Subscription Agreement.
(iv) The undersigned is purchasing the Securities for its own
account and risk and not for the account or benefit of a U.S. Person as defined
in Regulation S and no other person has any interest in or participation in the
Securities or any right, option, security interest, pledge or other interest in
or to the Securities. The undersigned understands, acknowledges and agrees that
it must bear the economic risk of its investment in the Securities for an
indefinite period of time and that prior to any such offer or sale, the Company
may require, as a condition to effecting a transfer of the Securities, an
opinion of counsel, acceptable to the Company, as to the registration or
exemption therefrom under the Securities Act and any state securities acts, if
applicable.
(v) The undersigned will offer, sell, pledge or otherwise
transfer the Securities only in accordance with Regulation S, an effective
registration statement or pursuant to an available exemption under the
Securities Act and, in any case, in accordance with applicable state securities
laws. The transactions contemplated by this Subscription Agreement have neither
been pre-arranged with a purchaser who is in the United States or who is a U.S.
Person, nor are they part of a plan or scheme to evade the registration
provisions of the United States federal securities laws.
(vi) The offer leading to the sale evidenced hereby was made in
an "offshore transaction." For purposes of Regulation S, the undersigned
understands that an "offshore transaction" as defined under Regulation S is any
offer or sale not made to a person in the United States and either (A) at the
time the buy order is originated, the purchaser is outside the United States, or
the seller or any person acting on his behalf reasonably believes that the
purchaser is outside the United States; or (B) for purposes of (1) Rule 903 of
Regulation S, the transaction is executed in, or on or through a physical
trading floor of an established foreign exchange that is located outside the
United States or (2) Rule 904 of Regulation S, the transaction is executed in,
on or through the facilities of a designated offshore securities market, and
neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States.
(vii) Neither the undersigned nor any affiliate of the
undersigned or any person acting on its behalf, has made or is aware of any
"directed selling efforts" in the United States, which is defined in Regulation
S to be any activity undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States for
any of the Securities being purchased hereby.
(viii) The undersigned understands that the Company is the
seller of the Securities which are the subject of this Subscription Agreement,
and that, for purpose of Regulation S, a "distributor" is any underwriter,
dealer or other person who participates, pursuant to a contractual arrangement,
in the distribution of securities offered or sold in reliance on Regulation S
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and that an "affiliate" is any partner, officer, director or any person directly
or indirectly controlling, controlled by or under common control with any person
in question. The undersigned agrees that it will not, during the Distribution
Compliance Period set forth under Rule 903(b)(iii)(A), act as a distributor of
the securities offered hereby, either directly or though any affiliate, nor
shall it sell, transfer, hypothecate or otherwise convey the Securities other
than to a non-U.S. Person.
(ix) The undersigned acknowledges that the Securities will bear
a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND
SOLD IN AN "OFFSHORE TRANSACTION" IN RELIANCE UPON REGULATION S AS
PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION. ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
TRANSFERRED OTHER THAN IN ACCORDANCE WITH REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF
HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN
COMPLIANCE WITH THE SECURITIES ACT.
(h) The undersigned is acquiring the Securities for its own account
for investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof or interest therein, without
prejudice, however, to the undersigned's right, subject to the provisions of
this Subscription Agreement and the Registration Rights Agreement referred to
herein, at all times to sell or otherwise dispose of all or any part of such
Securities pursuant to an effective registration statement under the Securities
Act and in compliance with applicable federal, foreign and state securities
laws.
3. Representations, Warranties and Agreements of the Company. The
Company hereby represents and warrants to , and covenants, with, the undersigned
as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York and has
full corporate power and authority to own its properties and to conduct
the business in which it is now engaged.
(b) The Company has the full corporate power, authority and legal
right to execute and deliver this Agreement and to perform all of its
obligations and covenants hereunder, and no consent or approval of any
other person or governmental authority is required therefore. The
execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations and covenants hereunder
and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate
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action. This Agreement constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms. As a result of such authorization, the
undersigned will not be subject to Section 912 of the New York Business
Corporation Law.
(c) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates any
provision of the Certificate of Incorporation, as amended, or By-Laws
of the Company or any law, statute, ordinance, regulation, order,
judgment or decree of any court or governmental agency, or conflicts
with or results in any breach of any of the terms of or constitutes a
default under or results in the termination of or the creation of any
lien pursuant to the terms of any contract or agreement to which the
Company is a party or by which the Company or any of its assets is
bound. The sale of the Units is being made in compliance with all
applicable federal, state and foreign securities law.
(d) The Shares being issued hereunder have been duly authorized and,
when issued to the undersigned will be validly issued, fully paid and
non-assessable.
(e) Attached hereto as Schedule 3(e) is a true and complete list of
the holders of any class or series of stock of the company as at the
date hereof, together with their holdings thereof, and a true and
complete list of all persons and entities to whom, as of the date
hereof, options, warrants or other instruments convertible into or
exercisable for any class or series of stock of the Company have been
issued, together with their holdings of such options, warrants or other
instruments.
(f) Except as otherwise provided in Schedule 3(f), there are no
shareholder agreements or other agreements relating to voting, issuance
or registration of shares.
(g) No shares of capital stock of the Company are subject to
pre-emptive or similar rights nor is any holder of the Company's
capital stock entitled to pre-emptive or similar rights arising our of
any agreement or understanding with the Company.
4. Board Representation. For so long as the undersigned (or its
subsidiaries) owns a minimum of 5% of the outstanding Common Stock of the
Company, the undersigned shall have the right (but not the obligation) to
designate to the board of directors of the Company up to that number of
directors, as a percentage of the whole board of the Company, as shall be equal
to the undersigned's percentage ownership of the outstanding shares of Common
Stock. The foregoing calculation shall be made without giving effect to (i) the
conversion or exercise of any options, warrants or other convertible securities
of the Company held by either the undersigned or any other holder of options,
warrants or other convertible securities or (ii) any shares of Common Stock held
in treasury or by any subsidiary of the Company. If the calculation required
above would entitle the undersigned to designate a fraction of a director to the
board of the Company, the number of directors that the undersigned shall be
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entitled to designate shall be rounded up to the next highest whole number.
Notwithstanding the foregoing percentage requirement, the undersigned will be
entitled to appoint at least one director to the board of directors of the
Company for so long as it owns a minimum of 5% of the outstanding Common Stock
of the Company. Such designees shall receive the same compensation as is paid to
other non-officer directors of the Company and shall be entitled to receive
reimbursement for all reasonable costs incurred in attending meetings of the
board of directors. The Company hereby agrees to indemnify and hold such
designees harmless, to the maximum extent permitted by law against any and all
actions, suits, proceedings, inquiries, arbitrations, investigations,
litigation, governmental or other proceedings, domestic or foreign, and awards
and judgments arising out of such designees' service as a director of the
Company. The Company does not presently maintain D&O Insurance for its directors
but hereby covenants that it will obtain such insurance for its directors,
including the designees of the undersigned, as soon as such becomes available to
it on commercially reasonable terms. The Company has further agreed, as a
condition to the sale of the Units, to enter into an Indemnity Agreement, in the
form attached hereto, with each of its directors, including the designees of the
undersigned. As a further condition of the sale of the Units, the Company shall
deliver to the undersigned an agreement, in the form of Exhibit 4 attached
hereto, signed by shareholders of the Company owning at least a majority of the
Company's outstanding voting shares in which each such shareholder agrees to
vote all shares of voting stock of the Company beneficially held by him, her or
it in accordance with the provisions of this Section 4. Immediately prior to the
sale of the Units, the Company shall deliver all executed Exhibit 4 agreements
it shall have then obtained. The Company covenants that it will deliver the
balance of the Exhibit 4 agreements required to be delivered by it, to the
undersigned, as soon as practicable following such sale. The Company will cause
any persons or entities who in the future acquire more than 5% of the
outstanding voting stock of the Company to deliver a letter in the form of
Exhibit 4 to the undersigned; provided, however, that such obligation shall not
apply if all of such shareholder's shares are acquired in transactions to which
the Company is not a party.
5. Right of First Refusal.
(a) In the event that, at any time while the undersigned owns any
shares of Common Stock of the Company, the Company shall receive a bona
fide written offer or enter into a bona fide written agreement (the
"Offer") for the purchase of any of its shares of stock, or for the
purchase of any debt instruments to be issued by it, from any party
(the "Offerer"), then the Company shall give to the undersigned notice
of the Offer (the "Notice") of the Offer, which Notice shall contain a
detailed description of the Offer. The Notice shall also contain the
name and address of the Offerer and shall be accompanied by (i) a copy
of the Offer and (ii) a statement in writing from the person or entity
that has made the Offer that he, she or it recognizes that the Company
is subject to the provisions of this Section 5. The shares of stock
subject to such Offer are referred to herein as the "Offered Shares"
and the debt instruments subject to such Offer are referred to herein
as the "Offered Debt."
(b) Upon the giving by the Company of a Notice, the undersigned
shall have the right, but not the obligation (the "First Refusal
Right"), to purchase, at the price, on the terms and subject to the
conditions specified in the Offer, up to that portion of the Offered
Shares and/or that portion of the Offered Debt covered by the Notice as
is equal to the undersigned's Specified Portion (as defined below).
Within fifteen (15) days after receipt of the Notice, the undersigned
shall notify the Company (the "First Refusal Notice") whether it
intends to exercise the First Refusal Right. Failure to give the First
Refusal Notice within such period shall constitute a waiver of the
First Refusal Right with respect to such Offer.
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(c) As used herein, "Specified Portion" shall mean the quotient
obtained by dividing (I) the number of shares of Common Stock then held
by the undersigned by (II) the total number of shares of Common Stock
then outstanding. The foregoing calculation shall be made without
giving effect to (i) the conversion or exercise of any options,
warrants or other convertible securities of the Company held by either
the undersigned or any other holder of options, warrants or other
convertible securities or (ii) any shares of Common Stock held in
treasury or by any subsidiary of the Company.
(d) The Company shall have the obligation to sell to the undersigned
such Offered Shares and/or Offered Debt as are covered by the First
Refusal Notice. In the event that the undersigned determines not to
purchase any of the Offered Shares and/or any of the Offered Debt or
fails to timely deliver a First Refusal Notice, the Company may sell
the Offered Shares and/or the Offered Debt to the Offerer on terms no
different from those specified in the Offer. In the event that such
terms are different from those specified in the Offer or if the sale to
the Offerer of the Offered Shares and/or the Offered Debt which were
the subject of the Offer is not completed within the ninety (90) day
time period referred to in Section 5(e) below, the Offered Shares and
the Offered Debt shall again be subject to the restrictions contained
in this Section 5.
(e) The closing for any purchase of the Offered Shares and/or the
Offered Debt by the undersigned and/or the Offerer, as applicable,
shall be held at the offices of the Company within ninety (90) days of
the giving of the Notice, at such time and place as the parties to the
purchase transaction shall agree. At the closing, the undersigned or
the Offerer, as the case may be, shall pay for the Offered Shares
and/or the Offered Debt in accordance with the terms of the Offer.
(f) It shall be a condition precedent to the sale of the Offered
Shares or the Offered Debt to any Offerer that, at least ten (10) days
prior to such sale, the Company shall deliver drafts of the closing
documents to the undersigned (and give at least one (1) business days'
notice of any material changes in such documents that are made after
such delivery and prior to the closing).
(g) The rights and obligations of the undersigned under this Section
5 may be assigned by it to any of its affiliates (as such term is
defined in Rule 405 under the Securities Act of 1933, as amended).
(h) The Company acknowledges that the undersigned will be
irreparably damaged in the event of a breach or threatened breach of
the terms, covenants and/or conditions of this Section 5, which damages
will not be measurable or compensable in money damages unless this
Section 5 shall be specifically enforced. Therefore, in addition to any
other remedy to which the undersigned may be entitled, the undersigned
shall be entitled to a preliminary and permanent injunction against the
Company, without showing any actual damage or threat of irreparable
injury, and/or a decree for specific performance by the Company,
without any bond or other security being required in connection
therewith, in accordance with the provisions hereof.
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6. The Company has agreed to register the Shares and Warrant Shares in
accordance with the attached Registration Rights Agreement.
7. The undersigned understands that this subscription is not binding
upon the Company until the Company accepts it, which acceptance is at the sole
discretion of the Company and is to be evidenced by the Company=s execution of
this Subscription Agreement where indicated. This Subscription Agreement shall
be null and void if the Company does not accept it as aforesaid.
8. The undersigned understands that the Company may, in its sole
discretion, reject this subscription, in whole or in part, and/or reduce this
subscription in any amount and to any extent, whether or not pro rata reductions
are made of any other investor's subscription.
9. The Company and the undersigned each agree to indemnify the other
party and hold it harmless from and against any and all losses, damages,
liabilities, costs and expenses which the other party may sustain or incur in
connection with the breach by the Company or the undersigned, as the case may
be, of any representation, warranty or covenant made by it herein.
10. Neither this Subscription Agreement nor any of the rights of the
undersigned hereunder may be transferred or assigned by the undersigned (except
that the undersigned can assign any of its rights hereunder to any of its
affiliates (as such term is defined in Rule 405 under the Securities Act)).
11. This Subscription Agreement (i) may only be modified by a written
instrument executed by the undersigned and the Company; (ii) sets forth the
entire agreement of the undersigned and the Company with respect to the subject
matter hereof; (iii) shall be governed by the laws of the State of New York
applicable to contracts made and to be wholly performed therein; and (iv) shall
inure to the benefit of, and be binding upon the Company and the undersigned and
their respective heirs, legal representatives, successors and permitted assigns.
12. Unless the context otherwise requires, all personal pronouns used
in this Subscription Agreement, whether in the masculine, feminine or neuter
gender, shall include all other genders.
13. All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or mailed by
certified or registered mail, return receipt requested, postage prepaid, as
follows: if to the undersigned, to the address set forth on the signature page
hereto; and if to the Company, to VitalState, Inc., 0000 Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0, Attention: President or to such other address
as the Company or the undersigned shall have designated to the other by like
notice.
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SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 27th day of February, 2003.
Number of Units Subscribed for 4,000,000
-------------------------------------------------
Organization Signature: Individual Signature:
Scepter Holdings, Inc.
------------------------------------- -----------------------------------------
Print name of Organization Signature
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- -----------------------------------------
Name: Xxxxxx X. Xxxxxxxx Print Name
Title:
-----------------------------------------
[ ] "U.S. Person" [x] "Non-U.S. Additional Signature of Joint Owner
Person"
(Check box that applies)
-----------------------------------------
Print Name
[ ] "U.S. Person" [ ] "Non-U.S. Person"
(Check box that applies)
(All Subscribers should please print information below exactly
as you wish it to appear in the records of the Company)
Scepter Holdings, Inc.
------------------------------------- -----------------------------------------
Name Social Security Number of Individual
or other Taxpayer I.D. Number
Address: Address for notices if different:
000 Xxxxxxx Xxxx
------------------------------------- -----------------------------------------
Number and Street Number and Street
Toronto, Ontario M1P 3A9
------------------------------------- -----------------------------------------
City State Zip Code City State Zip Code
Please check the box to indicate form of ownership (if applicable):
--------------------------------------------------------------------------------
TENANTS-IN-COMMON [ ]
(Both Parties must sign above)
JOINT TENANTS WITH RIGHT OF SURVIVORSHIP [ ]
(Both Parties must sign above)
COMMUNITY PROPERTY [ ]
(Both Parties must sign above)
--------------------------------------------------------------------------------
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ACCEPTANCE OF SUBSCRIPTION
The foregoing subscription is hereby accepted by Vitalstate, Inc. this
27th day of February, 2003, for 4,000,000 Units.
VITALSTATE, INC.
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Secretary and Treasurer
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