SUBSCRIPTION AGREEMENT
Exhibit
10.1
00000
Xxxxxxx Xxxx. Xxxxx 000
Xxxxxxxx
Xxxxx, XX 00000
Gentlemen:
1. Subscription. On the
terms and subject to the conditions of this Subscription Agreement
(“Subscription Agreement”), ___________ (“Investor”) hereby subscribes for two
hundred fifty thousand (250,000) shares of $.001 par value common stock
(“Shares”) of CrowdGather, Inc., a Nevada corporation (“Company”), at a purchase
price of Three Hundred Thousand Dollars ($300,000), or $1.20 per share (“Per
Share Price”). In connection with the Shares being issued pursuant to the
Subscription Agreement, the Investor shall receive one hundred twenty five
thousand (125,000) warrants which will provide to the Investor the right to
purchase one hundred twenty five thousand (125,000) shares of the Company’s
common stock at a purchase price of $1.68 per share and which warrant shall
expire three years from the date that the Company accepts the subscription
contemplated by the provisions of this Subscription Agreement. The Warrant
Agreement attached hereto as Exhibit A. The Per Price Share is subject to the
anti-dilution provisions of Section 3 of this Subscription
Agreement.
The
Investor shall send: (1) an executed copy of this Subscription
Agreement; and (2) a wire transfer in immediately available U.S. funds for the
full amount of the purchase price of the Shares for which the Investor is
subscribing plus all
wire transfer fees to:
Bank
Name _________________
ABA Routing
No.: _________________
Account
Name: _________________
Account
No.: _________________
Reference: _________________
1
2. Representations and
Warranties. In order to induce the Company to accept this
subscription, the Investor hereby represents and warrants to, and covenants
with, the Company as follows:
(a) The
Investor has received and carefully reviewed such information and documentation
relating to the Company that the Investor has requested, including without
limitation, the Company’s filings with the U.S. Securities and Exchange
Commission;
(b) The
Investor has had a reasonable opportunity to ask questions of and receive
answers from the Company concerning the Company and terms and conditions of his
or her proposed investment in the Company, and all such questions, if any, have
been answered to the full satisfaction of the Investor;
(c) The
Investor has such knowledge and expertise in financial and business matters that
the Investor is capable of evaluating the merits and risks involved in an
investment in the Shares;
(d) The
Investor 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 with respect to non U.S. purchasers
is applicable to the offer and sale of the Shares, based, in part, upon the
representations, warranties and agreements made by the Investor
herein;
(e) Except
as set forth herein, no representations or warranties have been made to the
Investor by the Company or any agent, employee or affiliate of the Company and
in entering into this transaction the Investor is not relying upon any
information, other than the results of independent investigation by the
Investor;
(f) The
Investor acknowledges that it has been called to his or her attention by those
persons with whom the Investor has dealt in connection with his or her proposed
investment in the Company, that the Company has a limited operating history with
limited revenues and the Company may never have any significant revenues or
earnings, and that the Investor’s proposed investment in the Company involves
significant risks which may result in the loss of that investment, or a portion
thereof;
(g) The
Investor has full power and authority to execute and deliver this Subscription
Agreement and to perform the obligations of the Investor hereunder and this
Subscription Agreement is a legally binding obligation of the Investor in
accordance with its terms; and
(h) Regulation
S.
(i) The
Investor understands and acknowledges that (A) the Shares 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 Shares have not been registered with any state
securities commission or authority; (B) pursuant to the requirements
of Regulation S, the Shares 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 Investor, the Company is under no obligation to
register the Shares under the Securities Act or any state securities law, or to
take any action to make any exemption from any such registration provisions
available.
(ii) (A)
The Investor is not a U.S. person and is not acquiring the Shares 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; (C) if a corporation, no
director or executive officer is a national or citizen of the United States; and
(D) it is not otherwise deemed to be a “U.S. Person” within the meaning of
Regulation S.
(iii) The
Investor, if not an individual, was not formed specifically for the purpose of
acquiring the Shares purchased pursuant to this Subscription
Agreement.
(iv) The
Investor is purchasing the Shares 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 Shares or any right, option,
security interest, pledge or other interest in or to the Shares. The Investor
understands, acknowledges and agrees that it must bear the economic risk of its
investment in the Shares 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 Shares, 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
Investor will, after the expiration of the restricted period, as set forth under
Rule 903 of Regulation S, offer, sell, pledge or otherwise transfer the Shares
only in accordance with Regulation S, 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 Investor 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 Investor nor any affiliate of the Investor 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 Shares being
purchased hereby.
(viii) The
Investor understands that the Company is the seller of the Shares 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 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 Investor
agrees that it will not, during the restricted period set forth under Rule 903
of Regulation S, act as a distributor, either directly or though any affiliate,
nor shall it sell, transfer, hypothecate or otherwise convey the Shares other
than to a non-U.S. Person.
(ix) The
Investor acknowledges that the Shares 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.
2
3. Anti-Dilution
Provisions.
(a)
Anti-Dilution Adjustment for Sale of Discounted Common Stock.
(i) Subject to Section 3(a)(iii), if
the Company shall, following the date of this Subscription Agreement, sell
shares of its common stock for a consideration per share less than the Per Share
Price, then the Per Share Price shall be adjusted immediately thereafter so that
it shall equal the price per share of the common stock in such offering.
Whenever any adjustment is made pursuant to this Section 3(a)(i), the number of
shares of common stock issuable pursuant to this Subscription Agreement shall be
adjusted pursuant to Section 3(c) hereof, and such additional shares shall be
delivered to the Investor pursuant to Section 3(e) hereof.
(ii)
Adjustments to the Per Share Price pursuant to this Section 3(a) shall be made
successively whenever an issuance of shares triggering such an adjustment is
made, subject to Section 3(f) hereof.
(iii)
Notwithstanding anything to the contrary in this Section 3(a), no adjustment to
the Per Share Price shall be made pursuant to this Section 3(a) in the case of
shares issued: (i) in connection with any dividend or distribution on, or
subdivision, reclassification or combination of, the outstanding shares of
Common Stock of the Company; (ii) upon the exercise of options granted to the
Company's officers, directors, employees and consultants under a plan or plans
adopted by the Company's Board of Directors and approved by its stockholders, if
such shares would otherwise be included in this Section 3(a); (iii) upon the
exercise of stock options, warrants, convertible securities and convertible
debentures outstanding as of the date hereof; (iv) to shareholders of any
corporation which merges into the Company in proportion to their stock holdings
of such corporation immediately prior to such merger, upon such merger; (v)
pursuant to any other anti-dilution provision affecting the Company securities;
or (vi) in connection with acquisitions.
(b)
Anti-Dilution Adjustment for Sale of Discounted Convertible Stock.
(i)
Subject to Section 3(b)(iii), if the Company shall, following the date of this
Subscription Agreement, issue any equity or debt securities convertible or
exercisable into or exchangeable for its common stock (a “Convertible Stock
Issuance”) for a consideration per share of common stock initially deliverable
upon conversion or exchange of such securities (as determined as provided in
Section 3(d) below, the “Convertible Stock Per Share Price”) less than the Per
Share Price, then the Per Share Price shall be adjusted immediately thereafter
so that it shall equal the Convertible Stock Per Share Price. Whenever any
adjustment is made pursuant to this Section 3(b)(i), the number of shares of
common stock issuable pursuant to this Subscription Agreement shall be adjusted
pursuant to Section 3(c) hereof, and such additional shares shall be delivered
to the Investor pursuant to Section 3(e) hereof.
(ii)
Adjustments to the Per Share Price pursuant to this Section 3(b) shall be made
successively whenever an issuance of shares triggering such an adjustment is
made, subject to Section 3(f) hereof.
(iii)
Notwithstanding anything to the contrary in this Section 3(b), no adjustment to
the Per Share Price shall be made pursuant to this Section 3(b) in the case of
securities issued: (i) in transactions where the Company has fixed a record date
for the issuance of rights or warrants to all holders of its common stock
entitling them to subscribe for or purchase shares of common stock (or
securities convertible into common stock) at a price (or having a conversion
price per share) less than the Per Share Price on such record dates; or (iii)
any of the transactions described in Section 3(a)(iii) hereof (with any
reference in Section 3(a)(iii) to price or quantity of shares issued being
understood, for purposes of this Section 3(b)(iii), to refer to the aggregate
price or quantity, as applicable, of the shares of common stock into which such
securities are convertible or exchangeable).
(c)
Adjustment of Securities. Whenever the Per Share Price is adjusted pursuant to
Sections 6(a) and 6(b) above, the number of shares of common stock issuable
pursuant to this Subscription Agreement shall simultaneously be adjusted by
multiplying the number of shares of common stock issuable hereunder by the Per
Share Price and dividing the product so obtained by the Per Share Price, as
adjusted.
(d)
Computation of Certain Consideration. For purposes of any computation with
respect to the consideration received pursuant to Sections 6(a) and 6(b) above,
the following shall apply:
(i) in
the case of the issuance of shares of common stock for cash, the consideration
shall be the amount of such cash, provided that in no case shall any deduction
be made for any commissions,
discounts
or other expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in
the case of the issuance of shares of Common Stock for a consideration in whole
or in part other than cash, the consideration other than cash shall be deemed to
be the fair market value thereof as determined in good faith by the Board of
Directors of the Company (irrespective of the accounting treatment thereof),
whose determination shall be conclusive; and
(iii) in
the case of a Convertible Stock Issuance, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as provided in
clauses (i) and (ii) of this Section 3(d)).
(e)
Notice of Adjustment. Whenever the Per Share Price is adjusted as herein
provided, the Company shall promptly, but no later than 10 days after any
request for such an adjustment by the Investor, cause a notice setting forth the
adjusted Per Share Price and adjusted number of shares of common stock issuable
hereunder, and, if requested, information describing the transactions giving
rise to such adjustments, to be mailed to the Investor at its address set forth
below, and shall cause a certified copy thereof to be mailed to its transfer
agent, if any. The Company may retain a firm of independent certified public
accountants selected by its Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required by this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of such adjustment. The Company shall, within fifteen (15) days
of any anti-dilution adjustment pursuant to this Section 3, issue and deliver to
the Investor a certificate evidencing the shares of common stock to be issued
pursuant to this Section 3.
(f)
Termination of Anti-Dilution Provisions. The provisions of Sections 6(a) through
6(e) shall terminate and be of no further force or effect on February 3,
2011.
3
4. The
Investor 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. The Investor
further understands that all the offering proceeds will be placed directly in
the Company’s bank account. In the event the Company does not accept
the offering proceeds, the offering will not be completed and all offering
proceeds will thereafter be promptly returned to investors without interest or
deduction.
5. The
Investor has no right to require that the Shares be registered pursuant to the
provisions of the Securities Act, or otherwise. The Investor further
acknowledges and agrees that the Company has no obligation to assist the
Investor in obtaining any exemption from any registration requirements imposed
by applicable law. The Investor also acknowledges and agrees that he or she
shall be responsible for compliance with all conditions on transfer imposed by a
securities administrator or similar person of any state, province or
territory.
6. The
Investor 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.
7. The
Investor agrees to indemnify the Company and hold it harmless from and against
any and all losses, damages, liabilities, costs and expenses which it may
sustain or incur in connection with the breach by the Investor of any
representation, warranty or covenant made by the Investor.
8. Neither
this Subscription Agreement nor any of the rights of the Investor hereunder may
be transferred or assigned by the Investor.
9. Except as
otherwise provided herein, this Subscription Agreement (i) may only be modified
by a written instrument executed by the Investor and the Company; (ii) sets
forth the entire agreement of the Investor and the Company with respect to the
subject matter hereof; (iii) shall be governed by the laws of the State of
Nevada 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 Investor
and their respective heirs, legal representatives, successors and permitted
assigns.
10. 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.
11. 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 Investor, to the address set forth on the
signature page hereto; and if to the Company, to 00000 Xxxxxxx Xxxx. Xxxxx 000,
Xxxxxxxx Xxxxx, XX 00000, Attention: President or to such other address as the
Company or the Investor shall have designated to the other by like
notice.
4
SIGNATURE
PAGE
IN
WITNESS WHEREOF, the Investor has executed this Subscription Agreement this 3rd
day of February 2010.
Number of
Shares Subscribed for 250,000
Subscription
Amount:
$300,000
Organization
Signature: Individual
Signature:
_________________ ____________________________________
|
By:
____________________________
Name:
Title:
|
Signature
______________________________________
Print Name
|
|
|
______________________________________
Additional
Signature of Joint Owner
______________________________________
Print Name
|
(All
Subscribers should please print information below exactly
as
you wish it to appear in the records of the Company)
___________________________________ ___________________________________
|
Name
|
Social
Security Number of Individual
or other Taxpayer I.D.
Number
|
Address: Address for notices
if different:
___________________________________ _____________________________________
Number
and
Street Number and
Street
___________________________________ _____________________________________
City Country Postal
Code
City Country Postal
Code
Please
check the box to indicate form of ownership (if applicable):
|
tenants-in-common
ÿ
(Both
Parties must sign above)
|
joint
tenants with right of survivorship ÿ
(Both
Parties must sign above)
|
community
property ÿ
(Both
Parties must sign above)
|
5
ACCEPTANCE
OF SUBSCRIPTION
The
foregoing subscription is hereby accepted by CrowdGather, Inc. this _________
day of February 2010.
By:
_____________________________
Name: Xxxxxx Xxxxxxx
Title:
President
6
