SUBSCRIPTION AGREEMENT
EXHIBIT
10.67
THIS
SUBSCRIPTION AGREEMENT
(this
"Agreement"),
dated
as of March 29, 2005, by and among Kaire Holdings Incorporated, a Delaware
corporation (the "Company"),
and
the subscribers identified on the signature pages hereto (each a “Subscriber”
and
collectively “Subscribers”
if more
than one).
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")
under
the Securities Act of 1933, as amended (the "1933
Act").
WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Subscribers, as provided herein,
and the Subscribers, in the aggregate, shall purchase up to $125,000 (the
"Purchase
Price")
of
principal amount of 8% promissory notes of the Company (“Note”
or
“Notes”)
convertible into shares of the Company's common stock, $.001 par value (the
"Common
Stock")
at a
per share conversion price equal to the lessor of $0.04, or 85% of the average
of the closing bid prices for the fifteen trading days prior to but not
including the Conversion Date (“Conversion
Price”);
and
share purchase warrants (the “Warrants”)
in the
forms attached hereto as Exhibit
A1 and Exhibit A2,
to
purchase shares of Common Stock (the “Warrant
Shares”).
The
Conversion Price is subject to adjustment as described in the Note and this
Agreement. The Notes, shares of Common Stock issuable upon conversion of the
Notes (the “Shares”),
the
Warrants and the Warrant Shares are collectively referred to herein as the
"Securities";
and
WHEREAS,
the
aggregate proceeds of the sale of the Notes and the Warrants 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 attached hereto as Exhibit
B
(the "Escrow
Agreement").
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscribers hereby agree as follows:
1. Conditions
to Closing.
Subject
to the satisfaction or waiver of the terms and conditions of this Agreement,
on
the “Closing
Date”
(as
defined in Section 2 below), each Subscriber shall purchase and the Company
shall sell to each Subscriber a Note in the principal amount designated on
the
signature page hereto and the amount of Warrants determined pursuant to Section
3 below. The aggregate principal amount of the Notes to be purchased by the
Subscribers on the Closing Date shall, in the aggregate, be equal to the
Purchase Price.
2. Closing.
The
consummation of the transactions contemplated herein shall take place at the
offices of Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000, upon the satisfaction of all conditions to Closing set forth
in
this Agreement (“Closing
Date”).
3. Warrants.
(a) Class
A Warrants.
On the
Closing Date, the Company will issue Class A Warrants to the Subscribers. Fifty
(50) Class A Warrants will be issued for each nine dollars ($9.00) of Purchase
Price paid on the Closing Date. The per Warrant Share exercise price to acquire
a Warrant Share upon exercise of a Class A Warrant shall be one hundred and
five
percent (105%) of the closing price of the Common Stock as reported by Bloomberg
L.P. for the OTC Bulletin Board (“Bulletin
Board”)
for
the last trading day immediately preceding the Closing Date. The Class A
Warrants will be exercisable for five (5) years after the Closing
Date.
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(b) Class
B Warrants.
On the
Closing Date, the Company will issue Class B Warrants to the Subscribers.
Twenty-four (24) Class B Warrants will be issued for each one dollar ($1.00)
of
Purchase Price paid on the Closing Date. The per Warrant Share exercise price
to
acquire a Warrant Share upon exercise of a Class B Warrant shall be the closing
bid price of the Common Stock as reported by Bloomberg L.P. for the Bulletin
Board for the trading day preceding the Closing Date. The Class B Warrants
will
be exercisable for five (5) years after the Closing Date.
4. Subscriber's
Representations and Warranties.
Each
Subscriber hereby represents and warrants to and agrees with the Company as
to
such Subscriber that:
(a) Organization
and Standing of the Subscribers.
If the
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.
Each
Subscriber has the requisite power and authority to enter into and perform
this
Agreement and to purchase the Notes and Warrants being sold to it hereunder.
The
execution, delivery and performance of this Agreement 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
has been duly authorized, executed and delivered by such Subscriber and
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Subscriber enforceable against the Subscriber in
accordance with the terms thereof.
(c) No
Conflicts.
The
execution, delivery and performance of this Agreement and the consummation
by
such Subscriber of the transactions contemplated hereby 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 or to purchase
the Notes or acquire the Warrants 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.
(d) Information
on Company.
The
Subscriber has been furnished with or has obtained from the XXXXX Website of
the
Securities and Exchange Commission (the “Commission”)
the
Company's Form 10-KSB for the year ended December 31, 2003 as filed with the
Commission, together with all subsequently filed Forms 10-QSB, 8-K, and filings
made with the Commission available at the XXXXX website (hereinafter referred
to
collectively as the "Reports").
In
addition, the Subscriber has received in writing from the Company such other
information concerning its operations, financial condition and other matters
as
the Subscriber has requested in writing (such other information is collectively,
the "Other
Written Information"),
and
considered all factors the Subscriber deems material in deciding on the
advisability of investing in the Securities.
(e) Information
on Subscriber.
The
Subscriber is, and will be at the time of the conversion of the Notes and
exercise of any of the Warrants, an "accredited
investor",
as
such term is defined in Regulation D promulgated by the Commission under the
Securities Act of 1933, as amended (the “1933
Act”),
is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives,
has
such knowledge and experience in financial, tax and other business matters
as to
enable the Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. The Subscriber has the authority and is duly and legally qualified
to purchase and own the Securities. The Subscriber is able to bear the risk
of
such investment for an indefinite period and to afford a complete loss thereof.
The information set forth on the signature page hereto regarding the Subscriber
is accurate.
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(f) Purchase
of Notes and Warrants.
On
Closing Date, the Subscriber will purchase the Notes and Warrants as principal
for its own account and not with a view to any distribution
thereof.
(g) Compliance
with Securities Act.
The
Subscriber understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under the 1933
Act
(based in part on the accuracy of the representations and warranties of
Subscriber contained herein), and that such Securities must be held indefinitely
unless a subsequent disposition is registered under the 1933 Act or any
applicable state securities laws or is exempt from such registration. In any
event, and subject to compliance with applicable securities laws, the Subscriber
may enter into hedging transactions with third parties, which may in turn engage
in short sales of the Securities in the course of hedging the position they
assume and the Subscriber may also enter into short positions or other
derivative transactions relating to the Securities, or interests in the
Securities, and deliver the Securities, or interests in the Securities, to
close
out their short or other positions or otherwise settle short sales or other
transactions, or loan or pledge the Securities, or interests in the Securities,
to third parties that in turn may dispose of these Securities.
(h) Shares
Legend.
The
Shares and the Warrant Shares shall bear the following or similar
legend:
"THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW
OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO KAIRE HOLDINGS INCORPORATED THAT
SUCH REGISTRATION IS NOT REQUIRED."
(i) Warrants
Legend.
The
Warrants shall bear the following or similar legend:
"THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE
STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO KAIRE
HOLDINGS INCORPORATED THAT SUCH REGISTRATION IS NOT REQUIRED."
(j) Note
Legend.
The
Note shall bear the following legend:
"THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED
FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO KAIRE HOLDINGS INCORPORATED THAT SUCH REGISTRATION IS NOT
REQUIRED."
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(k) Communication
of Offer.
The
offer to sell the Securities was directly communicated to the Subscriber by
the
Company. At no time was the Subscriber presented with or solicited by any
leaflet, newspaper or magazine article, radio or television advertisement,
or
any other form of general advertising or solicited or invited to attend a
promotional meeting otherwise than in connection and concurrently with such
communicated offer.
(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 the
Subscriber and are valid and binding agreements enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors' rights generally and to general principles of equity;
and Subscriber has full corporate power and authority necessary to enter into
this Agreement and such other agreements and to perform its obligations
hereunder and under all other agreements entered into by the Subscriber relating
hereto.
(m) Restricted
Securities.
Subscriber understands that the Securities have not been registered under the
1933 Act and such Subscriber will not sell, offer to sell, assign, pledge,
hypothecate or otherwise transfer any of the Securities unless pursuant to
an
effective registration statement under the 1933 Act. 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.
Each
Subscriber understands that no United States federal or state agency or any
other governmental or state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the
offering of the Securities.
(o) No
Market Manipulation.
No
Subscriber has 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.
(p) Correctness
of Representations.
Each
Subscriber represents as to such Subscriber that the foregoing representations
and warranties are true and correct as of the date hereof and will be true
and
correct as of each closing date and unless a Subscriber otherwise notifies
the
Company prior to any closing date, shall be true and correct as of such closing
dates. The foregoing representations and warranties shall survive the Closing
Date for a period of three years.
(q) Survival.
The
foregoing representations and warranties shall survive the Closing Date for
a
period of two years.
5. Company
Representations and Warranties.
The
Company represents and warrants to and agrees with each Subscriber
that:
(a) Due
Incorporation.
The
Company and each of its material subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the respective
jurisdictions of their incorporation and have the requisite corporate power
to
own their properties and to carry on their business as now being conducted
other
than those jurisdictions in which the failure to so qualify would not have
a
material adverse effect. The Company and each of its material subsidiaries
is
duly qualified as a foreign corporation to do business and is in good standing
in each jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those jurisdictions
in which the failure to so qualify would not have a material adverse effect.
(For purposes of this Agreement, a “Material
Adverse Effect”
shall
mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company taken as a
whole.).
(b) Outstanding
Stock.
All
issued and outstanding shares of capital stock of the Company and each of its
subsidiaries has been duly authorized and validly issued and are fully paid
and
non-assessable.
(c) Authority;
Enforceability.
This
Agreement, the Notes, the Warrants, the Escrow Agreement and any other
agreements delivered together with this Agreement or in connection herewith
(collectively “Transaction Documents”) have been duly authorized, executed and
delivered by the Company and are valid and binding agreements enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity. The Company has full corporate power and authority necessary to
enter
into and deliver the Transaction Documents and to perform its obligations
thereunder.
(d) Additional
Issuances.
There
are no outstanding agreements or preemptive or similar rights affecting the
Company's common stock or equity and no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, or agreements
or understandings with respect to the sale or issuance of any shares of common
stock or equity of the Company or other equity interest in any of the
subsidiaries of the Company except as described on Schedule
5(d),
or the
Reports.
(e) Consents.
No
consent, approval, authorization or order of any court, governmental agency
or
body or arbitrator having jurisdiction over the Company, or any of its
affiliates, the American Stock Exchange, the National Association of Securities
Dealers, Inc., Nasdaq SmallCap Market, Bulletin Board nor the Company's
shareholders is required for the execution by the Company of the Transaction
Documents and compliance and performance by the Company of its obligations
under
the Transaction Documents, including, without limitation, the issuance and
sale
of the Securities.
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(f) No
Violation or Conflict.
Assuming the representations and warranties of the Subscribers in Section 4
are
true and correct, except as described on the schedules hereto, 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 any of its subsidiaries
or
over the properties or assets of the Company or any of its affiliates, (C)
the
terms of any bond, debenture, note or any other evidence of indebtedness, or
any
agreement, stock option or other similar plan, indenture, lease, mortgage,
deed
of trust or other instrument to which the Company or any of its affiliates
or
subsidiaries is a party, by which the Company or any of its affiliates or
subsidiaries is bound, or to which any of the properties of the Company or
any
of its affiliates or subsidiaries is subject, or (D) the terms of any "lock-up"
or similar provision of any underwriting or similar agreement to which the
Company, or any of its affiliates or subsidiaries is a party except the
violation, conflict, breach, or default of which would not have a material
adverse effect on the Company; or
(ii) result
in
the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company, its subsidiaries or any of
its
affiliates; or
(iii) 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) result
in
the activation of any piggy-back registration rights of any person or entity
holding securities of the Company or having the right to receive securities
of
the Company.
(g) The
Securities.
The
Securities upon issuance:
(i) are,
or
will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the 1933 Act and
any
applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on the date of conversion
of
the Notes, and upon exercise of the Warrants, the Shares and Warrant Shares,
will be duly and validly issued, fully paid and nonassessable (and if registered
pursuant to the 1933 Act, and if resold pursuant to an effective registration
statement will be free trading and unrestricted, provided that each Subscriber
complies with the prospectus delivery requirements of the 1933
Act);
(iii) will
not
have been issued or sold in violation of any preemptive or other similar rights
of the holders of any securities of the Company except as described on the
Disclosure Schedule;
(iv) will
not
subject the holders thereof to personal liability by reason of being such
holders; and
(v) result
in
a violation of Section 5 under the 1933 Act.
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(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 this Agreement, and all other agreements entered into
by
the Company relating hereto. Except as disclosed in the Reports, 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 which
litigation if adversely determined could have a material adverse effect on
the
Company.
(i) Reporting
Company.
The
Company is a publicly-held company subject to reporting obligations pursuant
to
Sections 15(d) and 13 of the Securities Exchange Act of 1934, as amended (the
"1934
Act")
and
has a class of common shares registered pursuant to Section 12(g) of the 1934
Act. Pursuant to the provisions of the 1934 Act, the Company has timely filed
all reports and other materials required to be filed thereunder with the
Commission during the preceding twelve months.
(j) No
Market Manipulation.
The
Company has not taken, and will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the common stock of the Company
to
facilitate the sale or resale of the Securities or affect the price at which
the
Securities may be issued or resold.
(k) Information
Concerning Company.
The
Reports contain all material information relating to the Company and its
operations and financial condition as of their respective dates which
information is required to be disclosed therein. Since the date of the financial
statements included in the Reports, and except as modified in the Other Written
Information or in the Schedules hereto, there has been no material adverse
change in the Company's business, financial condition or affairs not disclosed
in the Reports. The Reports do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
when
made.
(l) Stop
Transfer.
The
Securities, when issued, will be restricted securities. 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 unless contemporaneous notice of such
instruction is given to the Subscriber.
(m) Defaults.
The
Company is not in violation of its Articles of Incorporation or ByLaws. The
Company is (i) not in default under or in violation of any other material
agreement or instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would have a
material adverse effect on the Company, (ii) not in default with respect to
any
order of any court, arbitrator or governmental body or subject to or party
to
any order of any court or governmental authority arising out of any action,
suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) to its
knowledge in violation of any statute, rule or regulation of any governmental
authority which violation would have a material adverse effect on the
Company.
(n) No
Integrated Offering.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances that would cause
the offer of the Securities pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the Bulletin Board. Nor will the Company or any of its
affiliates or subsidiaries take any action or steps that would cause the offer
of the Securities to be integrated with other offerings. 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.
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(o) 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.
(p) Listing.
The
Company's common stock is quoted on the Bulletin Board. The Company has not
received any oral or written notice that its common stock is not eligible nor
will become ineligible for quotation on the Bulletin Board nor that its common
stock does not meet all requirements for the continuation of such quotation
and
the Company satisfies and as of the Closing Date, the Company will satisfy
all
the requirements for the continued quotation of its common stock on the Bulletin
Board.
(q) No
Undisclosed Liabilities.
The
Company has no liabilities or obligations which are material, individually
or in
the aggregate, which are not disclosed in the Reports and Other Written
Information, other than those incurred in the ordinary course of the Company’s
businesses since December 31, 2003 and which, individually or in the aggregate,
would reasonably be expected to have a material adverse effect on the Company’s
financial condition, other than as set forth in Schedule
5(q).
(r) No
Undisclosed Events or Circumstances.
Since
December 31, 2003, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, operations or financial condition,
that, under applicable law, rule or regulation, requires public disclosure
or
announcement prior to the date hereof by the Company but which has not been
so
publicly announced or disclosed in the Reports.
(s) Capitalization.
The
authorized and outstanding capital stock of the Company as of the date of this
Agreement and the Closing Date are set forth on Schedule
5(s).
Except
as set forth in the Reports and Other Written Information and 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. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized
and
issued and are fully paid and nonassessable.
(t) Dilution.
The
Company's executive officers and directors have studied and fully understand
the
nature of the Securities being sold hereby and recognize that they 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 such issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Shares upon
conversion of the Note and exercise of the Warrants is binding upon the Company
and enforceable, except as otherwise described in this Subscription Agreement
or
the Note, regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company or parties entitled to receive
equity of the Company.
(u) No
Disagreements with Accountants and Lawyers.
There
are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the accountants and lawyers
formerly or presently employed by the Company, including but not limited to
disputes or conflicts over payment owed to such accountants and
lawyers.
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(v) Investment
Company.
The
Company is not, and is not an Affiliate (as defined in Rule 405 under the 0000
Xxx) of, an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.
(w) Correctness
of Representations.
The
Company represents that the foregoing representations and warranties are true
and correct as of the date hereof and will be true and correct as of each
closing date, and unless the Company otherwise notifies the Subscribers prior
to
any closing date, shall be true and correct as of such closing dates. The
foregoing representations and warranties shall survive the Closing Date for
a
period of three years.
(x) 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.
(y) Registration
Statement.
As of
the date of this Agreement, and as of the Closing Date, the Company will not
have any registration statement pending before the Commission.
(z) Survival.
The
foregoing representations and warranties shall survive the Closing Date for
a
period of two years.
6. Regulation
D Offering.
The
offer and issuance of the Securities to the Subscribers is being made pursuant
to the exemption from the registration provisions of the 1933 Act afforded
by
Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation
D
promulgated thereunder. On the Closing Date, the Company will provide an opinion
reasonably acceptable to Subscriber from the Company's legal counsel opining
on
the availability of an exemption from registration under the 1933 Act as it
relates to the offer and issuance of the Securities and other matters reasonably
requested by Subscribers. A form of the legal opinion is annexed hereto as
Exhibit
C.
The
Company will provide, at the Company's expense, such other legal opinions in
the
future as are reasonably necessary for the resale of the Common Stock and
exercise of the Warrants and resale of the Warrant Shares.
7.1. Conversion
of Note.
(a) Upon
the
conversion of the 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 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, unless waived by the Subscriber, the Shares will be free-trading, and
freely transferable, and will not contain a legend restricting the resale or
transferability of the Shares provided the Shares are being sold pursuant to
an
effective registration statement covering the Shares or are otherwise exempt
from registration.
(b) Subscriber
will give notice of its decision to exercise its right to convert the Note
or
part thereof by telecopying an executed and completed Notice of Conversion
(a
form of which is annexed to Exhibit
A
to the
Note) to the Company via confirmed telecopier transmission or otherwise pursuant
to Section 13(a) of this Agreement. The 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 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 the Subscriber via express courier for receipt by such Subscriber within
three (3) business days after receipt by the Company of the Notice of Conversion
(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 the Subscriber if requested by
Subscriber, provided the Subscriber delivers an original Note to the Company.
To
the extent that a Subscriber elects not to surrender a Note for reissuance
upon
partial payment or conversion, the Subscriber hereby indemnifies the Company
against any and all loss or damage attributable to a third-party claim in an
amount in excess of the actual amount then due under the Note.
8
(c) The
Company understands that a delay in the delivery of the Shares in the form
required pursuant to Section 7 hereof, or the Mandatory Redemption Amount
described in Section 7.2 hereof, beyond the Delivery Date or Mandatory
Redemption Payment Date (as hereinafter defined) could result in economic loss
to the Subscriber. As compensation to the Subscriber for such loss, the Company
agrees to pay to the Subscriber for late issuance of Shares in the form required
pursuant to Section 7 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 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 by the Delivery Date
or
make payment by the Mandatory Redemption Payment Date, the 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 the Subscriber shall each
be restored to their respective positions immediately prior to the delivery
of
such notice, except that late payment charges described above shall be payable
through the date notice of revocation or rescission is given to the
Company.
(d) 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.
7.2. Mandatory
Redemption at Subscriber’s Election.
In the
event the Company is prohibited from issuing Shares, or fails to timely deliver
Shares on a Delivery Date, or upon the occurrence of any other Event of Default
(as defined in the Note or in this Agreement) or for any reason other than
pursuant to the limitations set forth in Section 7.3 hereof, then at the
Subscriber's election, the Company must pay to the Subscriber ten (10) business
days after request by the Subscriber or on the Delivery Date (if requested
by
the Subscriber) at the Subscriber’s election, a sum of money determined by (i)
multiplying up to the outstanding principal amount of the Note designated by
the
Subscriber by 130%, or (ii) multiplying the number of Shares otherwise
deliverable upon conversion of an amount of Note principal and/or interest
designated by the Subscriber (with the date of giving of such designation being
a Deemed Conversion Date) at the then Conversion Price that would be in effect
on the Deemed Conversion Date by the highest closing price of the Common Stock
on the principal market for the period commencing on the Deemed Conversion
Date
until the day prior to the receipt of the Mandatory Redemption Payment,
whichever is greater, together with accrued but unpaid interest thereon
("Mandatory
Redemption Payment").
The
Mandatory Redemption Payment must be received by the Subscriber on the same
date
as the Company 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.
7.3. Maximum
Conversion.
The
Subscriber shall not 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 the 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 the 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 Regulation 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
void the conversion limitation described in this Section 7.3 upon and effective
after 61 days prior written notice to the Company. The Subscriber may allocate
which of the equity of the Company deemed beneficially owned by the Subscriber
shall be included in the 9.99% amount described above and which shall be
allocated to the excess above 9.99%.
9
7.4. Injunction
- Posting of Bond.
In the
event a Subscriber shall elect to convert a Note or part thereof or exercise
the
Warrant in whole or in part, 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 said Note or exercise of all or part
of
said Warrant shall have been sought and obtained and the Company has posted
a
surety bond for the benefit of such Subscriber in the amount of 130% of the
amount of the Note, or aggregate purchase price of the Warrant Shares which
are
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.
7.5. Buy-In.
In
addition to any other rights available to the Subscriber, if the Company fails
to deliver to the Subscriber such shares issuable upon conversion of a Note
by
the Delivery Date and if ten (10) days after the Delivery Date the Subscriber
purchases (in an open market transaction or otherwise) shares of Common Stock
to
deliver in satisfaction of a sale by such Subscriber of the Common Stock which
the Subscriber anticipated receiving upon such conversion (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 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
the
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 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. The delivery date by which Common Stock must be delivered pursuant
to this Section 7.5 shall be tolled for the amount of days that the Subscriber
does not deliver information reasonably requested by the Company’s transfer
agent.
7.6 Adjustments.
The
Conversion Price and amount of Shares issuable upon conversion of the Notes
and
exercise of the Warrants shall be adjusted to offset the effect of stock splits,
stock dividends, pro rata distributions of property or equity interests to
the
Company’s shareholders.
7.7. Redemption.
The
Company may not redeem or call the Note without the consent of the holder of
the
Note.
8. Legal
Fee.
The
Company shall pay to Grushko & Xxxxxxx, P.C., a fee of $2,500 (“Legal
Fees”)
as
reimbursement for services rendered in connection with this Agreement and the
purchase and sale of the Notes and the Warrants (the “Offering”)
and
acting as Escrow Agent for the Offering. The Legal Fees will be payable out
of
funds held pursuant to the Escrow Agreement.
10
9. Covenants
of the Company.
The
Company covenants and agrees with the Subscribers as follows:
(a) Stop
Orders.
The
Company will advise the Subscribers, promptly after it receives notice of
issuance by the Commission, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending
any offering of any securities of the Company, or of the suspension of the
qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such
purpose.
(b) Listing.
The
Company shall promptly secure the listing of the shares of Common Stock and
the
Warrant Shares upon each national securities exchange, or automated quotation
system upon which they are or become eligible for listing (subject to official
notice of issuance) and shall maintain such listing so long as any Warrants
are
outstanding. The Company will maintain the listing of its Common Stock on the
American Stock Exchange, Nasdaq SmallCap Market, Nasdaq National Market System,
Bulletin Board, or New York Stock Exchange (whichever of the foregoing is at
the
time the principal trading exchange or market for the Common Stock (the
“Principal
Market”)),
and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide the Subscribers copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common
Stock
from any Principal Market. As of the date of this Agreement and the Closing
Date, the Bulletin Board is and will be the Principal Market.
(c) Market
Regulations.
The
Company shall notify the Commission, the Principal Market and applicable state
authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the
Subscribers and promptly provide copies thereof to Subscriber.
(d) Reporting
Requirements.
From
the date of this Agreement and until the sooner of (i) two (2) years after
the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitation, the Company will
(v)
cause its Common Stock to continue to be registered under Section 12(b) or
12(g)
of the 1934 Act, (x) comply in all respects with its reporting and filing
obligations under the 1934 Act, (y) comply with all reporting requirements
that
are applicable to an issuer with a class of shares registered pursuant to
Section 12(b) or 12(g) of the 1934 Act, as applicable, and (z) comply with
all
requirements related to any registration statement filed pursuant to this
Agreement. The Company will use its best efforts not to take any action or
file
any document (whether or not permitted by the 1933 Act or the 1934 Act or the
rules thereunder) to terminate or suspend such registration or to terminate
or
suspend its reporting and filing obligations under said acts until two (2)
years
after the Closing Date. Until the earlier of the resale of the Common Stock
and
the Warrant Shares by each Subscriber or at least two (2) years after the
Warrants have been exercised, the Company will use its best efforts to continue
the listing or quotation of the Common Stock on the Principal Market or other
market with the reasonable consent of Subscribers holding a majority of the
Shares and Warrant Shares, and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Principal Market. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to
each
Subscriber promptly after such filing.
11
(e) Use
of
Proceeds.
The
Company undertakes to use the proceeds of the Subscribers’ funds for working
capital. 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 redeemable notes or equity instruments of the Company nor non-trade
obligations outstanding on the Initial Closing Date.
(f) Reservation.
The
Company undertakes to reserve, pro rata on behalf of each holder of a Note
or
Warrant, from its authorized but unissued common stock, at all times that Notes
or Warrants remain outstanding, a number of common shares equal to not less
than
150% of the amount of common shares necessary to allow each such holder at
all
times to be able to convert all such outstanding Notes, and one common share
for
each Warrant Share. Failure to have sufficient shares reserved pursuant to
this
Section 9(f) for three consecutive business days or ten days in the aggregate
shall be an Event of Default under the Note.
(g) Taxes.
From
the date of this Agreement and until the sooner of (i) two (2) years after
the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitations, the Company will
promptly pay and discharge, or cause to be paid and discharged, when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company; provided,
however, that any such tax, assessment, charge or levy need not be paid if
the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the Company will
pay
all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security
therefore.
(h) Insurance.
From
the date of this Agreement and until the sooner of (i) two (2) years after
the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitations, the Company will
keep its assets which are of an insurable character insured by financially
sound
and reputable insurers against loss or damage by fire, explosion and other
risks
customarily insured against by companies in the Company’s line of business, in
amounts sufficient to prevent the Company from becoming a co-insurer and not
in
any event less than one hundred percent (100%) of the insurable value of the
property insured; and the Company will maintain, with financially sound and
reputable insurers, insurance against other hazards and risks and liability
to
persons and property to the extent and in the manner customary for companies
in
similar businesses similarly situated and to the extent available on
commercially reasonable terms.
(i) Books
and Records.
From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitations, the Company will
keep true records and books of account in which full, true and correct entries
will be made of all dealings or transactions in relation to its business and
affairs in accordance with generally accepted accounting principles applied
on a
consistent basis.
12
(j) Governmental
Authorities.
From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitations, the Company shall
duly observe and conform in all material respects to all valid requirements
of
governmental authorities relating to the conduct of its business or to its
properties or assets.
(k) Intellectual
Property.
From
the date of this Agreement and until the sooner of (i) two (2) years after
the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitations, the Company shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights to use intellectual property owned or
possessed by it and reasonably deemed to be necessary to the conduct of its
business.
(l) Properties.
From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitation, the Company will
keep
its properties in good repair, working order and condition, reasonable wear
and
tear excepted, and from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto; and the Company
will
at all times comply with each provision of all leases to which it is a party
or
under which it occupies property if the breach of such provision could
reasonably be expected to have a material adverse effect.
(m) Confidentiality/Public
Announcement.
From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement
or
pursuant to Rule 144, without regard to volume limitations, except as may be
required in connection with a registration statement filed on behalf of the
Subscribers pursuant to Section 11 of this Agreement or on Form 8-K, the Company
agrees that 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 ten days prior notice to Subscriber.
In any event and subject to the foregoing, the Company undertakes to file a
form
8-K or make a public announcement describing the Offering not later than the
Closing Date. In the form 8-K or public announcement, the Company will
specifically disclose the amount of common stock outstanding immediately after
the Closing.
(n) Blackout.
The
Company undertakes and covenants that until the first to occur of (i) until
one
hundred and eighty (180) days after the Actual Effective Date during which
such
Registration Statement shall be current and available for use in connection
with
the unrestricted public resale of the Shares and Warrant Shares (“Exclusion
Period”),
or
(ii) until all the Shares and Warrant Shares have been resold pursuant to such
registration statement, the Company will not enter into any acquisition, merger,
exchange or sale or other transaction that could have the effect of delaying
the
effectiveness of any pending registration statement or causing an already
effective registration statement to no longer be effective or
current.
13
(o) S-8.
The
Company will not file a Form S-8 with the Commission during the Exclusion Period
(as defined in Section 9(a) of the Agreement) without the consent of the
Subscriber except in respect of employee benefit plans and past services
rendered.
10. Covenants
of the Company and Subscriber Regarding Indemnification.
(a) The
Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers' officers, directors, agents, affiliates, control
persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of
any
nature, incurred by or imposed upon the Subscriber or any such person which
results, arises out of or is based upon (i) any material misrepresentation
by
Company or breach of any warranty by Company in 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.
(b) Each
Subscriber agrees to indemnify, hold harmless, reimburse and defend the Company
and each of the Company’s officers, directors, agents, affiliates, control
persons against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon
the
Company or any such person which results, arises out of or is based upon (i)
any
material misrepresentation by such Subscriber in this Agreement or in any
Exhibits or Schedules attached hereto, or other agreement delivered pursuant
hereto; or (ii) after any applicable notice and/or cure periods, any breach
or
default in performance by such Subscriber of any covenant or undertaking to
be
performed by such Subscriber hereunder, or any other agreement entered into
by
the Company and Subscribes relating hereto.
(c) In
no
event shall the liability of any Subscriber or permitted successor hereunder
or
under any other agreement delivered in connection herewith be greater in amount
than the dollar amount of the net proceeds received by such Subscriber upon
the
sale of Registrable Securities (as defined herein) giving rise to such
indemnification obligation.
(d) The
procedures set forth in Section 11.6 shall apply to the indemnifications set
forth in Sections 10(a) and 10(b) above.
11.1. Registration
Rights.
If the
Company at any time proposes to register any of its securities under the 1933
Act for sale to the public, whether for its own account or for the account
of
other security holders or both, except with respect to registration statements
on Forms X-0, X-0 or another form not available for registering the Registrable
Securities for sale to the public, provided the Registrable Securities are
not
otherwise registered for resale by the Subscribers or Holder pursuant to an
effective registration statement, each such time it will give at least 15 days'
prior written notice to the record holder of the Registrable Securities of
its
intention so to do. Upon the written request of the holder, received by the
Company within 10 days after the giving of any such notice by the Company,
to
register any of the Registrable Securities not previously registered, the
Company will cause such Registrable Securities as to which registration shall
have been so requested to be included with the securities to be covered by
the
registration statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition of the Registrable Securities
so registered by the holder of such Registrable Securities (the "Seller").
In
the event that any registration pursuant to this Section 11.1 shall be, in
whole
or in part, an underwritten public offering of common stock of the Company,
the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be
sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 11.1 without
thereby incurring any liability to the Seller.
14
11.2. Registration
Procedures.
If and
whenever the Company is required by the provisions of Section 11.1(i), 11.1(ii),
or (iv) to effect the registration of any shares of Registrable Securities
under
the 1933 Act, the Company will, as expeditiously as possible:
(a) subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 11, with respect to
such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), and promptly provide to the holders
of
Registrable Securities copies of all filings and Commission letters of comment
including a notification by confirmed telecopier and overnight express delivery
of the declaration of effectiveness of any Registration Statement within
twenty-four (24) hours of such effectiveness;
(b) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of two (2) years, and comply with
the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance
with
the Seller's intended method of disposition set forth in such registration
statement for such period;
(c) furnish
to the Seller, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement;
(d) use
its
best efforts to register or qualify the Seller's Registrable Securities covered
by such registration statement under the securities or "blue sky" laws of such
jurisdictions as the Seller, provided, however, that the Company shall not
for
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(e) if
applicable, list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;
(f) immediately
notify the Seller when a prospectus relating thereto is required to be delivered
under the 1933 Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact
or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing; and
(g) provided
same would not be in violation of the provision of Regulation FD under the
1934
Act, make available for inspection by the Seller, and any attorney, accountant
or other agent retained by the Seller or underwriter, all publicly available,
non-confidential financial and other records, pertinent corporate documents
and
properties of the Company, and cause the Company's officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the seller, attorney, accountant or agent in connection
with such registration statement.
15
11.3. Provision
of Documents.
In
connection with each registration described in this Section 11, the Seller
will
furnish to the Company in writing such information and representation letters
with respect to itself and the proposed distribution by it as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws.
11.4. Non-Registration
Events.
The
Company and the Subscribers agree that the Sellers will suffer damages if any
registration statement required under Section 11.1 is not filed within 60 days
after written request and declared effective by the Commission within 120 days
after such request, and maintained in the manner and within the time periods
contemplated by Section 11 hereof, and it would not be feasible to ascertain
the
extent of such damages with precision. Accordingly, if the registration
statement described in Section 11.1 is not filed within 60 days after such
written request (“Filing
Date”),
or is
not declared effective within 120 days after such written request (“Effective
Date”),
or
any registration statement described in Section 11.1 is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
within fifteen (15) business days by an effective replacement or amended
registration statement) for a period of time which shall exceed 30 days in
the
aggregate per year (defined as a period of 365 days commencing on the date
the
Registration Statement is declared effective) or more than 20 consecutive days
(each such event referred to in this Section 11.4 is referred to herein as
a
"Non-Registration
Event"),
then
the Company shall deliver to the holder of Registrable Securities, as Liquidated
Damages, an amount equal to two percent (2%) for each thirty (30) days or part
thereof of the Purchase Price of the Notes remaining unconverted and purchase
price of Shares issued upon conversion of the Notes owned of record by such
holder which are subject to such Non-Registration Event. The Company must pay
the Liquidated Damages in cash or an amount equal to two hundred percent of
such
cash Liquidated Damages if paid in additional shares of registered unlegended
free-trading shares of Common Stock. Such Common Stock shall be valued at the
Conversion Price in effect on each thirty (30) day or shorter period for which
Liquidated Damages are payable. The Liquidated Damages must be paid within
ten
(10) days after the end of each thirty (30) day period or shorter part thereof
for which Liquidated Damages are payable. In the event a Registration Statement
is filed by the Filing Date but is withdrawn prior to being declared effective
by the Commission, then such Registration Statement will be deemed to have
not
been filed. All
oral
or written and accounting comments received from the Commission relating to
the
Registration Statement must be responded to within
thirty (30) days. Notwithstanding the foregoing, the Company shall not be liable
to the Subscriber under this Section 11.4 for any events or delays occurring
as
a consequence of the acts or omissions of the Subscribers contrary to the
obligations undertaken by Subscribers in this Agreement. Liquidated Damages
will
not accrue nor be payable pursuant to this Section 11.4 nor will a
Non-Registration Event be deemed to have occurred for times during which
Registrable Securities are transferable by the holder of Registrable Securities
pursuant to Rule 144(k) under the 1933 Act.
11.5. Expenses.
All
expenses incurred by the Company in complying with Section 11, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for the Company,
fees and expenses (including reasonable counsel fees) incurred in connection
with complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, costs of insurance and fee of one counsel for all Sellers are
called "Registration
Expenses".
All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any additional
counsel to the Seller, are called "Selling
Expenses".
The
Company will pay all Registration Expenses in connection with the registration
statement under Section 11. Selling Expenses in connection with each
registration statement under Section 11 shall be borne by the Seller and may
be
apportioned among the Sellers in proportion to the number of shares sold by
the
Seller relative to the number of shares sold under such registration statement
or as all Sellers thereunder may agree.
16
11.6. Indemnification
and Contribution.
(a) In
the
event of a registration of any Registrable Securities under the 1933 Act
pursuant to Section 11, the Company will, to the extent permitted by law,
indemnify and hold harmless the Seller, each officer of the Seller, each
director of the Seller, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions
of
Section 11.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable
to
the Seller to the extent that any such damages arise out of or are based upon
an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by
the
Company to the Seller with or prior to the delivery of written confirmation
of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement
or
alleged untrue statement or such omission or alleged omission, or (iii) to
the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller,
or
any such controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In
the
event of a registration of any of the Registrable Securities under the 1933
Act
pursuant to Section 11, each Seller severally but not jointly will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter
and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage
or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability
of
the Seller hereunder shall be limited to the gross proceeds received by the
Seller from the sale of Registrable Securities covered by such registration
statement.
(c) Promptly
after receipt by an indemnified party hereunder of notice of the commencement
of
any action, such indemnified party shall, if a claim in respect thereof is
to be
made against the indemnifying party hereunder, notify the indemnifying party
in
writing thereof, but the omission so to notify the indemnifying party shall
not
relieve it from any liability which it may have to such indemnified party other
than under this Section 11.6(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 11.6(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified
party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake
the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 11.6(c) for any legal expenses subsequently incurred
by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both
the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to
it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed
to
conflict with the interests of the indemnifying party, the indemnified parties,
as a group, shall have the right to select one separate counsel and to assume
such legal defenses and otherwise to participate in the defense of such action,
with the reasonable expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
17
(d) In
order
to provide for just and equitable contribution in the event of joint liability
under the 1933 Act in any case in which either (i) a Seller, or any controlling
person of a Seller, makes a claim for indemnification pursuant to this Section
11.6 but it is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to appeal or
the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 11.6 provides
for indemnification in such case, or (ii) contribution under the 1933 Act may
be
required on the part of the Seller or controlling person of the Seller in
circumstances for which indemnification is not provided under this Section
11.6;
then, and in each such case, the Company and the Seller will contribute to
the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Seller is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the registration statement bears
to
the public offering price of all securities offered by such registration
statement, provided, however, that, in any such case, (y) the Seller will not
be
required to contribute any amount in excess of the public offering price of
all
such securities offered by it pursuant to such registration statement; and
(z)
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 10(f) of the 0000 Xxx) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
11.7. Delivery
of Unlegended Shares.
(a) Within
three (3) business days (such third business day, the “Unlegended
Shares Delivery Date”)
after
the business day on which the Company has received (i) a notice that Registrable
Securities have been sold either pursuant to the Registration Statement or
Rule
144 under the 1933 Act, (ii) a representation that the prospectus delivery
requirements, or the requirements of Rule 144, as applicable, have been
satisfied, and (iii) the original share certificates representing the shares
of
Common Stock that have been sold, 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, for the delivery of shares of Common Stock without
any
legends including the legends set forth in Sections 4(e) and 4(g) above,
issuable pursuant to any effective and current registration statement described
in Section 11 of this Agreement or pursuant to Rule 144 under the 1933 Act
(the
“Unlegended
Shares”);
and
(z) cause the transmission of the certificates representing the Unlegended
Shares together with a legended certificate representing the balance of the
unsold shares of Common Stock, if any, to the Subscriber at the address
specified in the notice of sale, via express courier, by electronic transfer
or
otherwise on or before the Unlegended Shares Delivery Date.
(b) In
lieu
of delivering physical certificates representing the Unlegended Shares, if
the
Company’s transfer agent is participating in the Depository Trust Company
(“DTC”)
Fast
Automated Securities Transfer program, upon request of a Subscriber, so long
as
the certificates therefore do not bear a legend and the Subscriber is not
obligated to return such certificate for the placement of a legend thereon,
the
Company shall cause its transfer agent to electronically transmit the Unlegended
Shares by crediting the account of Subscriber’s prime Broker with DTC through
its Deposit Withdrawal Agent Commission system. Such delivery must be made
on or
before the Unlegended Shares Delivery Date.
(c) The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11 hereof beyond the Unlegended Shares Delivery Date could
result in economic loss to a Subscriber. As compensation to a Subscriber for
such loss, the Company agrees to pay late payment fees (as liquidated damages
and not as a penalty) to the Subscriber for late delivery of Unlegended Shares
in the amount of $100 per business day after the Delivery Date for each $10,000
of purchase price of the Unlegended Shares subject to the delivery default.
If
during any 360 day period, the Company fails to deliver Unlegended Shares as
required by this Section 11.7 for an aggregate of thirty (30) days, then each
Subscriber or assignee holding Securities subject to such default may, at its
option, require the Company to purchase all or any portion of the Shares and
Warrant Shares subject to such default at a price per share equal to 130% of
the
Purchase Price of such Shares and Warrant Shares. The Company shall pay any
payments incurred under this Section in immediately available funds upon demand.
18
(d) In
addition to any other rights available to a Subscriber, if the Company fails
to
deliver to a Subscriber Unlegended Shares within ten (10) calendar days after
the Unlegended Shares Delivery Date and the Subscriber purchases (in an open
market transaction or otherwise) shares of common stock to deliver in
satisfaction of a sale by such Subscriber of the shares of Common Stock which
the Subscriber anticipated receiving 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.
12. (a) Favored
Nations Provision.
Except
in connection with (i) employee stock options or compensation plans, (ii) as
full or partial consideration in connection with any merger, consolidation
or
purchase of substantially all of the securities or assets of any corporation
or
other entity, or (iii) as has been described in the Reports or Other Written
Information filed or delivered to the Subscribers prior to the Closing Date
(collectively “Excepted
Issuances”),
if at
any time the Note is outstanding the Company shall offer, issue or agree to
issue any common stock or securities convertible into or exercisable for shares
of common stock (or modify any of the foregoing which may be outstanding at
any
time prior to the Closing Date) to any person or entity at a price per share
or
conversion or exercise price per share which shall be less than the Conversion
Price of the Notes, without the consent of each Subscriber holding Notes or
Shares, then the Company shall issue, for each such occasion, additional shares
of Common Stock to each Subscriber and Finder so that the average per share
purchase price of the shares of Common Stock issued to the Subscriber (of only
the Common Stock or Warrant Shares still owned by the Subscriber) is equal
to
such other lower price per share and the Conversion Price and Warrant exercise
price shall be reduced to such other lower amount. The delivery to the
Subscriber of the additional shares of Common Stock shall be not later than
the
closing date of the transaction giving rise to the requirement to issue
additional shares of Common Stock. The Subscriber is granted the registration
rights described in Section 11 hereof in relation to such additional shares
of
Common Stock except that the Filing Date and Effective Date vis-à-vis such
additional common shares shall be, respectively, the sixtieth (60th)
and one
hundred and twentieth (120th)
date
after the closing date giving rise to the requirement to issue the additional
shares of Common Stock. For purposes of the issuance and adjustment described
in
this paragraph, the issuance of any security of the Company carrying the right
to convert such security into shares of Common Stock or of any warrant, right
or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the issuance of such convertible security, warrant,
right or option and again upon any subsequent issuances of shares of Common
Stock upon exercise of such conversion or purchase rights if such issuance
is at
a price lower than the then Conversion Price. The rights of the Subscriber
set
forth in this Section 12 are in addition to any other rights the Subscriber
has
pursuant to this Agreement and any other agreement referred to or entered into
in connection herewith.
(b) Right
of First Refusal.
During
the Exclusion Period, the Subscribers shall be given not less than five (5)
business days prior written notice of any proposed sale by the Company of its
common stock or other securities or debt obligations, except in connection
with
the Excepted Issuances. The Subscribers shall have the right during the five
(5)
business days following the notice to purchase 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 original notice period or for a period
of
five (5) business days following the notice of modification, whichever is
longer, to exercise such right.
(c) Maximum
Exercise of Rights.
In the
event the exercise of the rights described in Sections 12(a) or 12(b) would
result in the issuance of an amount of common stock of the Company that would
exceed the maximum amount that may be issued to a Subscriber as described in
Section 7.3 of this Agreement, then the purchase and/or issuance of such other
Common Stock or Common Stock equivalents 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 or Common Stock equivalents without exceeding
the maximum amount set forth in Section 7.3. The determination of when such
Common Stock or Common Stock equivalents 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: Kaire
Holdings Incorporated, 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxxx, XX 00000, telecopier:
(000) 000-0000, with a copy by telecopier only to: Xxxx X. Xxxxxxxxx, Esq.,
Xxxxxxxxx & Associates, 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX
00000, telecopier: (000) 000-0000, and (ii) if to the Subscriber, to: the
address and telecopier number indicated on the signature page hereto, with
a
copy by telecopier only to: Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (000) 000-0000.
(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 either party shall be assigned by that party without prior
notice to and the written consent of the other party.
(c) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(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 of New York. The
parties and the individuals executing this Agreement and other agreements
referred to herein or delivered in connection herewith on behalf of the Company
agree to submit to the jurisdiction of such courts and waive trial by
jury.
The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid
or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.
(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 an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law
or
equity. Subject to Section 13(d) hereof, each of the Company and Subscriber
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or
that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
20
(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 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 (including, but not limited to, the (i)
inclusion of a Subscriber in the SB-2 Registration Statement and (ii) review
by,
and consent to, such Registration Statement by a Subscriber) shall be deemed
to
constitute the Subscribers as a partnership, an association, a joint venture
or
any other kind of entity, or create a presumption that the Subscribers are
in
any way acting in concert or as a group with respect to such obligations or
the
transactions contemplated by the Transaction Documents. The Company
acknowledges that each Subscriber shall be entitled to independently protect
and
enforce its rights, including without limitation, the rights arising out
of the Transaction Documents, and it shall not be necessary for
any
other Subscriber to be joined as an additional party in any proceeding for
such
purpose. The Company acknowledges that it has elected to provide all
Subscribers with the same terms and Transaction Documents for the convenience
of
the Company and not because Company was required or requested to do so by the
Subscribers. The Company acknowledges that such procedure with respect
to
the Transaction Documents in no way creates a presumption that the Subscribers
are in any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated thereby.
(g) Equitable
Adjustment.
The
Securities and the purchase prices of Securities shall be equitably adjusted
to
offset the effect of stock splits, stock dividends, and distributions of
property or equity interests of the Company to its shareholders.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
21
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT
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.
KAIRE
HOLDINGS INCORPORATED
A
Delaware Corporation
/S/
Xxxxx
Xxxxxxxx
By:_________________________________
Name:
Xxxxx Xxxxxxxx
Title:
CEO, Director
Dated:
March 29, 2005
22
|
SUBSCRIBER
|
PURCHASE
PRICE
|
CLASS
A WARRANTS ISSUABLE ON CLOSING DATE
|
CLASS
B WARRANTS ISSUABLE ON CLOSING DATE
|
|
/s/
Xxxxx Benz
_________________________________________
(Signature)
LONGVIEW
FUND LP
000
Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Attn:
S. Xxxxxxx Xxxxxxx
Fax:
(000) 000-0000
|
$125,000.00
|
694,444
|
3,000,000
|
23
LIST
OF EXHIBITS AND SCHEDULES
Exhibit
A1 Form
of
Class A Warrant
Exhibit
A2 Form
of
Class B Warrant
Exhibit
B Form
of
Escrow Agreement
Exhibit
C Form
of
Legal Opinion
Schedule
5(d) Additional
Issuances
Schedule
5(q) Undisclosed
Liabilities
Schedule
5(s) Capitalization
Schedule
11.1 Other
Securities to be Registered
24
