ADDENDUM TO SUBSCRIPTION AGREEMENT
ADDENDUM
TO SUBSCRIPTION
AGREEMENT
THIS
ADDENDUM TO SUBSCRIPTION AGREEMENT
(this
“Addendum”),
is
dated as of April 2, 2008, by and among Purple Beverage Company, Inc., a Nevada
corporation
(the
“Company”),
and
the subscribers identified on the signature page hereto (each, a “March
Subscriber”
and,
collectively, the “March
Subscribers”).
WHEREAS,
the
Company and certain of the March Subscribers, among other investors,
are
parties to a Subscription Agreement, dated as of December 12, 2007 (the
“Original
Subscription Agreement”)
a form
of which was filed by the Company with the United States Securities and Exchange
Commission (the “Commission”)
as
Exhibit 10.7 to its Current Report on Form 8-K/A on December 17,
2007.
WHEREAS,
the
Company and the March Subscribers, among other investors, are parties to an
amendment to the Original Subscription Agreement and the related Common Stock
Purchase Warrants, dated April 2, 2008 (the “Amendment”),
which
provides, in pertinent part, for the waiver by such persons of certain terms
and
conditions in the Original Subscription Agreement.
WHEREAS,
the
Company and the March Subscribers are executing and delivering this Addendum
in
reliance upon
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(i)
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certain
waivers contained in the Amendment;
and
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(ii)
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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 Commission under the Securities Act of 1933,
as
amended (the “1933
Act”).
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WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the March Subscribers, as provided
herein, and the March Subscribers, in the aggregate, shall purchase for
$2,290,101.00 (the “Purchase
Price”)
1,635,786 shares of the Company’s $.001 par value Common Stock (the
“March
Shares”)
at a
per-share purchase price of $1.40.
WHEREAS,
the
aggregate proceeds of the sale of the March Shares 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
A
(the
“Escrow
Agreement”).
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the March Subscribers hereby agree as
follows:
1. Closing
Date.
The
“Closing
Date”
shall
be the date on which the Purchase Price has been transmitted by wire transfer
or
otherwise credited to or for the benefit of the Company. 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 or waiver of all conditions to closing set forth in this
Agreement.
2. Reserved.
3. Reserved.
4. March
Subscriber Representations and Warranties.
Each
March Subscriber hereby represents and warrants to and agrees with the Company,
only as to such March Subscriber, that all of the representations and warranties
provided by the Subscribers in the Original Subscription Agreement are being
made by each such March Subscriber as of the date hereof, all of which
representations and warranties, as set forth in Section 4 of the Original
Subscription Agreement are incorporated herein by reference as though set forth
in full hereat, with the following exceptions:
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(a) Section
4(d) shall also include all Quarterly Reports on Form 10-QSB and all Current
Reports on Form 8-K filed by the Company with the Commission available at the
XXXXX website from and after December 12, 2007.
(b) None
of
the representations and warranties in respect of Warrants or Warrant Shares
made
in Section 4 of the Original subscription Agreement is affirmed
hereby.
(c) Solely
with respect to the March Shares, the representations and warranties contained
in Section 4(o) of the Original Subscription Agreement are specifically not
incorporated herein.
5. Company
Representations and Warranties.
The
Company re-affirms to each March Subscriber that each
of
the representations and warranties provided by the Company to each March
Subscriber in the Original Subscription Agreement was true and correct as of
the
date thereof and that, subsequent to the date of the Original Subscription
Agreement, there has not been a material adverse change to the financial
condition, results of operations, prospects, properties or business of the
Company and its Subsidiaries taken as a whole. Notwithstanding the provisions
of
this Section 5, the Company specifically declines to represent or warrant that
the sale and issuance of the March Shares and the sale and issuance of the
Company’s securities pursuant to the Original Subscription Agreement will not
constitute an integrated offering. However, the Company warrants that such
integration, if any, will not impair the offering exemption relied upon by
the
Company in the transactions contemplated by each of the Original Subscription
Agreement and this Addendum.
6. Regulation
D Offering/Legal Opinion.
The
offer and issuance of the March Shares to the March Subscribers is being made
pursuant to the exemption from the registration provisions of the 1933 Act
afforded by Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of
Regulation D promulgated thereunder. On the Closing Date, the Company will
provide an opinion reasonably acceptable to the March Subscribers from the
Company’s legal counsel opining on the availability of an exemption from
registration under the 1933 Act as it relates to the offer and issuance of
the
March Shares and other matters reasonably requested by the March Subscribers.
[A
form of the legal opinion is annexed hereto as Exhibit B.] The Company will
provide, at the Company’s expense, such other legal opinions, if any, as are
reasonably necessary in the opinion of each March Subscriber for the issuance
and resale of the March Shares pursuant to an effective registration statement,
Rule 144 under the 1933 Act (“Rule
144”)
or an
exemption from registration.
7. Reserved.
8. March
Subscriber’s
Legal Fees.
The
Company shall pay to Grushko & Xxxxxxx, P.C., a fee of $25,000.00 (the
“March
Subscriber’s Legal Fees”)
as
reimbursement for services rendered to the March Subscribers in connection
with
this Agreement and the purchase and sale of the March Shares (the “Offering”).
The
March Subscriber’s Legal Fees and expenses will be payable out of funds held
pursuant to the Escrow Agreement. Grushko & Xxxxxxx, P.C. will be reimbursed
at Closing for all lien searches, security interest filing fees, and printing
and shipping costs for the closing statements and documents to be delivered
to
the March Subscribers.
9. Covenants
of the Company.
The
Company re-affirms to each March Subscriber each
of
the covenants and agreements with the March Subscribers set forth in Section
9
of the Original Subscription Agreement, with the exceptions of Section 9(e),
the
use of which funds referenced therein the March Subscribers acknowledge shall
be
for the Company’s general operations, and of Section 9(s), which the March
Subscribers acknowledge and agree have previously been
accomplished.
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10. Covenants
of the Company Regarding Indemnification.
(a) The
Company agrees to indemnify, hold harmless, reimburse and defend the March
Subscribers, the March Subscribers’ officers, directors, agents, Affiliates,
members, managers, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the March
Subscribers or any such person which results, arises out of or is based upon
(i)
any material misrepresentation by Company or breach of any representation or
warranty by Company in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance
by
the Company of any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company and the March
Subscribers relating hereto.
(b) Promptly
after receipt by a March Subscriber of notice of the commencement of any action,
such March Subscriber shall, if a claim in respect thereof is to be made against
the Company hereunder, notify the Company in writing thereof, but the omission
so to notify the Company shall not relieve it from any liability which it may
have the Subscriber other than under this Section 10(b) and shall only relieve
it from any liability which it may have to such March Subscriber under this
Section 10(b), except and only if and to the extent the Company is prejudiced
by
such omission. In case any such action shall be brought against a March
Subscriber and it shall notify the Company of the commencement thereof, the
Company 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
March
Subscriber, and, after notice from the Company to such March Subscriber of
its
election so to assume and undertake the defense thereof, the Company shall
not
be liable to such March Subscriber under this Section 10(b) for any legal
expenses subsequently incurred by such March Subscriber 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 such March Subscriber and
the
Company and the Company shall have reasonably concluded that there may be
reasonable defenses available to such March Subscriber which are different
from
or additional to those available to the Company or if the interests of the
March
Subscriber reasonably may be deemed to conflict with the interests of each
other, the March Subscriber and the Company, as a group, shall have the right
to
select one separate counsel, reasonably satisfactory to the March Subscriber
and
Company, 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
Company as incurred.
11.1. Delivery
of Unlegended Shares.
(a) Within
3
business days (such third business day being the “Unlegended
Shares Delivery Date”)
after
the business day on which the Company has received (i) a notice that March
Shares have been sold pursuant to a registration statement, if any, or Rule
144,
(ii) a representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable and if required, have been satisfied,
(iii) the original share certificates representing the shares of Common Stock
that have been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the March Subscriber and/or its broker regarding
compliance with the requirements of Rule 144, the Company at its expense, (y)
shall deliver, and shall cause legal counsel selected by the Company to deliver
to its transfer agent (with copies to the March Subscriber) an appropriate
instruction and opinion of such counsel, directing the delivery of shares of
Common Stock without any legends including the legend set forth in Section
4(i)
above
(the “Unlegended
Shares”);
and
(z) cause the transmission of the certificates representing the Unlegended
Shares together with a legended certificate representing the balance of the
submitted certificate, if any, to the March Subscriber at the address specified
in the notice of sale, via express courier, by electronic transfer or otherwise
on or before the Unlegended Shares Delivery Date. In the event that the Shares
are sold in a manner that complies with an exemption from registration, the
Company will promptly instruct its counsel to issue to the Company’s transfer
agent an opinion permitting removal of the legend (indefinitely, if pursuant
to
Rule 144(b)(1) of the 1933 Act, or for six months if pursuant to the other
provisions of Rule 144).
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(b) In
lieu
of delivering physical certificates representing the Unlegended Shares, upon
request of a March Subscriber, so long as the certificates therefor do not
bear
a legend and the March Subscriber is not obligated to return such certificate
for the placement of a legend thereon, the Company will cause its transfer
agent
to electronically transmit the Unlegended Shares by crediting the account of
the
March Subscriber’s prime broker with the Depository Trust Company through its
Deposit Withdrawal Agent Commission system, if such transfer agent participates
in such DWAC system. Such delivery must be made on or before the Unlegended
Shares Delivery Date.
(c) The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11 hereof later than the Unlegended Shares Delivery Date
could result in economic loss to a March Subscriber. As compensation to a March
Subscriber for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the March 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 11.1 for an aggregate
of 30 days, then each March Subscriber or assignee holding March Shares subject
to such default may, at its option, require the Company to redeem all or any
portion of the March Shares subject to such default at a price per share equal
to the greater of (i) 120% of the purchase price of such March Shares, or (ii)
a
fraction in which the numerator is the highest closing price of the Common
Stock
during the aforedescribed 30-day period and the denominator of which is the
purchase price of the March Shares, as the case may be, during such 30 day
period, multiplied by the purchase price of the March Shares (“Unlegended
Redemption Amount”).
The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand.
(d) In
addition to any other rights available to a March Subscriber, if the Company
fails to deliver to a March Subscriber Unlegended Shares as required pursuant
to
this Agreement, within 7 business days after the Unlegended Shares Delivery
Date
and the March Subscriber or a broker on the March Subscriber’s behalf, purchases
(in an open market transaction or otherwise) shares of common stock to deliver
in satisfaction of a sale by such March Subscriber of the shares of Common
Stock
which the March Subscriber was entitled to receive from the Company (a
“Buy-In”),
then
the Company shall pay in cash to the March Subscriber (in addition to any
remedies available to or elected by the March Subscriber) the amount by which
(A) the March 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 March 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 March Subscriber
$1,000,
plus interest.
The
March Subscriber shall provide the Company written notice indicating the amounts
payable to the Subscriber in respect of the Buy-In.
(e) In
the
event a March Subscriber shall request delivery of Unlegended Shares as
described in Section 11.1 and the Company is required to deliver such Unlegended
Shares pursuant to Section 11.1, the Company may not refuse to deliver
Unlegended Shares based on any claim that such March Subscriber or any one
associated or affiliated with such March Subscriber has been engaged in any
violation of law, or for any other reason, unless, an injunction or temporary
restraining order from a court, on notice, restraining and or enjoining delivery
of such Unlegended Shares shall have been sought and obtained by the Company
or
at the Company’s request or with the Company’s assistance,
and the
Company has posted a surety bond for the benefit of such March Subscriber in
the
amount of 120% of the amount of the aggregate purchase price of the March Shares
which are subject to the injunction or temporary restraining order, which bond
shall remain in effect until the final unappealable disposition of the
litigation of the dispute and the proceeds of which shall be payable to such
March Subscriber to the extent March Subscriber obtains judgment in such March
Subscriber’s favor.
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11.2. Reserved.
11.3. Subscriber
Questionnaire.
Each
March Subscriber shall answer the questions set forth in Selling Shareholder
Questionnaire (“Subscriber
Questionnaire”)
in the
form attached as Exhibit
C
and
deliver such completed Subscriber Questionnaire to the Company and Broker on
or
prior to the Closing Date. Seller represents that the information provided
by
such Seller shall be true and correct as of the Closing Date and the date such
Subscriber Questionnaire is delivered to the Company and Broker.
12. (a) Favored
Nations Provision.
Other
than in connection with the Excepted Issuances (defined below), with respect
to
the March Shares still owned of record and beneficially by a March Subscriber
until eighteen months after the Closing Date of the transactions contemplated
by
the Original Subscription Agreement, if the Company shall agree to or issue
(the
“Lower
Price Issuance”)
any
Common Stock or securities convertible into or exercisable for shares of Common
Stock (or modify any of the foregoing which may be outstanding) at a price
per
share or conversion or exercise price per share which shall be less than the
purchase price in respect of the March Shares, without the consent of each
March
Subscriber, then the Company shall issue, for each such occasion, additional
shares of Common Stock to each March Subscriber respecting those March Shares
at
the time of the Lower Price Issuance so that the average per share purchase
price of such March Shares is equal to such other lower price per share and
the
Exercise Price shall automatically be reduced to such other lower price. Common
Stock issued or issuable by the Company for no consideration will be deemed
issuable or to have been issued for $0.001 per share of Common Stock. The
delivery to a March 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. For purposes of the
issuance and adjustment described in this paragraph, the issuance of any
security of the Company carrying the right to convert such security into shares
of Common Stock or of any warrant, right or option to purchase Common Stock
shall result in the issuance of the additional shares of Common Stock upon
the
sooner of the agreement to or actual issuance of such convertible security,
warrant, right or option and again at any time upon any subsequent issuances
of
shares of Common Stock upon exercise of such conversion or purchase rights
if
such issuance is at a price lower than the purchase price of the March Shares.
The rights of each March Subscriber set forth in this Section 12(a) are in
addition to any other rights the March Subscriber has pursuant to any
Transaction Document (as that term is defined in Section 5(c) of the Original
Subscription Agreement), and any other agreement referred to or entered into
in
connection herewith or to which such March Subscriber and Company are parties.
Each March Subscriber is also given the right to elect to substitute any term
or
terms of any other offering in connection with a Lower Price Issuance for any
term or terms of the Offering in connection with March Shares owned by such
March Subscriber as of the date of a Lower Price Issuance.“Excepted
Issuances”
shall
mean (i) full or partial consideration in connection with a strategic merger,
acquisition, consolidation or purchase of substantially all of the securities
or assets of corporation or other entity which holders of such securities or
debt are not at any time granted registration rights, (ii)
the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital and which holders of such securities or debt are
not
at any time granted registration rights, (iii) the Company’s issuance of Common
Stock or the issuances or grants of options to purchase Common Stock to
employees, directors, and consultants, pursuant to plans described on
Schedule
5(d),
(iv) an
underwritten public offering that raises gross proceeds of not less than
$5,000,000 from the sale of Common Stock at not less than $1.00 per share,
preferred stock the initial conversion ratio for which is equivalent to not
less
than $1.00 per share of Common Stock, and in the case of warrants or options
issued in connection therewith at exercise prices of not less than $1.00 per
share (“Underwritten
Offering”),
and
(v) as a result of the exercise of Warrants which are granted or issued pursuant
to the Original Subscription Agreement on the terms described in the Transaction
Documents as of the Closing Date.
(b) Reserved.
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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: Purple Beverage Company,
Inc., 000 X. Xxx Xxxx Xxxx., #000, Xx. Xxxxxxxxxx, XX 00000, Attn: Xxxxxxxx
Xxxxxxxxxx, President, facsimile:
(000)
000-0000, with a copy by facsimile only to: Xxxxx Xxxx LLP, 0000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxx, XX 00000, Attn: Xxxxxxx X. Xxxx, Esq., facsimile: (000)
000-0000, (ii) if to the March Subscriber, to: the one or more addresses and
facsimile numbers indicated on the signature pages hereto, with an additional
copy by facsimile only to: Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, XX 00000, facsimile: (000) 000-0000, and (iii) if to the Broker,
to: Palladium Capital Advisors, LLC, 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx,
XX
00000, Attn: Xxxxxxx Xxxxxxxxx, facsimile: (000) 000-0000.
(b) Entire
Agreement; Assignment.
This
Addendum 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 the Company and the
affected March Subscriber and as described in Section 13(h). Neither the Company
nor the March Subscribers have relied on any representations not contained
or
referred to in this Addendum and the documents delivered herewith. No right
or
obligation of the Company shall be assigned without prior notice to and the
written consent of the March Subscribers.
(c) Counterparts/Execution.
This
Addendum may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Addendum may be executed by facsimile signature
and delivered by facsimile transmission.
(d) Law
Governing this Addendum.
This
Addendum 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 Addendum shall be brought only in the state courts of
New
York or in the federal courts located in the state and county of New York.
The
parties to this Addendum hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum
non conveniens.
The
parties executing this Addendum and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to
the
in personam jurisdiction of such courts and hereby irrevocably waive trial
by
jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Addendum 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.
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(e) Specific
Enforcement, Consent to Jurisdiction.
The
Company and the March Subscriber acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Addendum were not
performed in accordance with their specific terms or were otherwise breached.
It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent or cure breaches of the provisions of this Addendum
and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 13(d) hereof, the Company hereby irrevocably waives,
and agrees not to assert in any such suit, action or proceeding, any claim
that
it is not personally subject to the jurisdiction in New York of such court,
that
the suit, action or proceeding is brought in an inconvenient forum or that
the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
(f) Independent
Nature of March Subscribers.
The
Company acknowledges that the obligations of each March Subscriber under the
Transaction Documents are several and not joint with the obligations of any
other March Subscriber, and no March Subscriber shall be responsible in any
way
for the performance of the obligations of any other March Subscriber under
the
Transaction Documents. The
Company acknowledges that each March Subscriber has represented that the
decision of each March Subscriber to purchase March Shares has been made by
such
March Subscriber independently of any other March 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 March Subscriber or by any agent or employee
of
any other March Subscriber, and no March Subscriber or any of its agents or
employees shall have any liability to any March 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 March Subscriber pursuant hereto or thereto shall be deemed
to constitute the March Subscribers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the March
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 March 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 March Subscriber to be joined as an additional party
in
any proceeding for such purpose. The Company acknowledges that it has
elected to provide all March 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 March Subscribers. The Company
acknowledges that such procedure with respect to the Transaction Documents
in no
way creates a presumption that the March Subscribers are in any way acting
in
concert or as a group with respect to the Transaction Documents or the
transactions contemplated thereby.
(g) Damages.
In the
event the March Subscriber is entitled to receive any liquidated damages
pursuant to the Transaction Documents, the March Subscriber may elect to receive
the greater of actual damages or such liquidated damages.
(h)
Consent.
As used
in the Original Subscription Agreement as modified by this Addendum, “consent of
the Subscribers” or similar language means the consent of holders (the
“Required
Holders”)
of not
less than 70% of the total of the Shares, the Warrant Shares, and the March
Shares held by all of the subscribing parties to the Original Subscription
Agreement and the March Subscribers on the date consent is
requested.
(i) Equal
Treatment.
No
consideration shall be offered or paid to any person to amend or consent to
a
waiver or modification of any provision of the Transaction Documents unless
the
same consideration is also offered and paid to all the March Subscribers and
their permitted successors and assigns.
(j) Maximum
Payments.
Nothing
contained herein or in any document referred to herein or delivered in
connection herewith shall be deemed to establish or require the payment of
a
rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest or dividends required
to
be paid or other charges hereunder exceed the maximum permitted by such law,
any
payments in excess of such maximum shall be credited against amounts owed by
the
Company to the March Subscriber and thus refunded to the
Company.
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(k) Calendar
Days.
All
references to “days” in the Transaction Documents shall mean calendar days
unless otherwise stated. The terms “business days” and “trading days” shall mean
days that the New York Stock Exchange is open for trading for three or more
hours. Time periods shall be determined as if the relevant action, calculation
or time period were occurring in New York City. Any deadline that falls on
a
non-business day in any of the Transaction Documents shall be automatically
extended to the next business day and interest, if any, shall be calculated
and
payable through such extended period.
(l) Captions:
Certain Definitions.
The
captions of the various sections and paragraphs of this Addendum have been
inserted only for the purposes of convenience; such captions are not a part
of
this Addendum and shall not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Addendum. As used in this Addendum
the
term “person”
shall
mean and include an individual, a partnership, a joint venture, a corporation,
a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
(m) Severability.
In the
event that any term or provision of this Addendum shall be finally determined
to
be superseded, invalid, illegal or otherwise unenforceable pursuant to
applicable law by an authority having jurisdiction and venue, that determination
shall not impair or otherwise affect the validity, legality or enforceability:
(i) by or before that authority of the remaining terms and provisions of this
Addendum, which shall be enforced as if the unenforceable term or provision
were
deleted, or (ii) by or before any other authority of any of the terms and
provisions of this Addendum.
(n) Successor
Laws.
References in the Transaction Documents to laws, rules, regulations and forms
shall also include successors to and functionally equivalent replacements of
such laws, rules, regulations and forms. A successor rule to 144(k) shall
include any rule that would be available to a non-Affiliate of the Company
for
the sale of Common Stock not subject to volume restrictions.
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8
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SIGNATURE
PAGE TO ADDENDUM TO SUBSCRIPTION AGREEMENT
Please
acknowledge your acceptance of the foregoing Addendum to Subscription Agreement
by signing and returning a copy to the undersigned whereupon it shall become
a
binding agreement between us.
|
a
Nevada corporation
|
|
|
By:
|
|
|
Name:
Xxxxxxxx Xxxxxxxxxx
|
|
|
Title:
President
|
|
| Dated: April 2, 2008 | |
|
MARCH
SUBSCRIBER
|
AGGREGATE
PURCHASE
PRICE
(CASH)
|
SHARES
|
||
|
Name
of March Subscriber:
__________________________________________
Address:
__________________________________________
__________________________________________
Fax
No.: ____________________________________
Email
address (not for notice purposes):
___________________________________________
Social
Security Number or Taxpayer ID# (if
applicable):
__________________________________
Jurisdiction
of organization (for entities):
___________________________________________
___________________________________________
(Signature)
By:
________________________________________
Name:
______________________________________
Title:
_______________________________________
|
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9
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LIST
OF EXHIBITS AND SCHEDULES
|
Exhibit
A
|
Escrow
Agreement
|
|
Exhibit
B
|
Form
of Legal Opinion
|
|
Exhibit
C
|
March
Subscriber Questionnaire
|
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10
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EXHIBIT
C
SUBSCRIBER
QUESTIONNAIRE
I. The
March
Subscriber represents and warrants that he or it comes within one category
marked
below,
and
that for any category marked, he or it has truthfully set forth, where
applicable, the factual basis or reason the Subscriber comes within that
category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY
CONFIDENTIAL. The undersigned shall furnish any additional information which
Purple Beverage Company, Inc. (the “Company”) deems necessary in order to verify
the answers set forth below.
|
Category
A __
|
The
undersigned is an individual (not a partnership, corporation, etc.)
whose
individual net worth, or joint net worth with his or her spouse,
presently
exceeds $1,000,000.
|
|
Explanation.
In calculating net worth you may include equity in personal property
and
real estate, including your principal residence, cash, short-term
investments, stock and securities. Equity in personal property and
real
estate should be based on the fair market value of such property
less debt
secured by such property.
|
|
|
Category
B __
|
The
undersigned is an individual (not a partnership, corporation, etc.)
who
had an individual income in excess of $200,000 in each of the two
most
recent years, or joint income with his or her spouse in excess of
$300,000
in each of those years (in each case including foreign income, tax
exempt
income and full amount of capital gains and losses but excluding
any
income of other family members and any unrealized capital appreciation)
and has a reasonable expectation of reaching the same income level
in the
current year.
|
|
Category
C __
|
The
undersigned is a director or executive officer of the Company which
is
issuing and selling the Company’s $.001 par value Common Stock (the
“Shares”).
|
|
Category
D __
|
The
undersigned is a bank; savings and loan association; registered
broker-dealer; insurance company; registered investment company;
registered business development company; licensed small business
investment company (“SBIC”); any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality
of a
state or its political subdivisions, for the benefit of its employees,
if
such plan has total assets in excess of $5,000,000; or employee benefit
plan within the meaning of Title 1 of ERISA and (a) the investment
decision is made by a plan fiduciary which is either a bank, savings
and
loan association, insurance company or registered investment advisor,
or
(b) the plan has total assets in excess of $5,000,000 or is a self
directed plan with investment decisions made solely by persons that
are
accredited investors.
|
|
(describe
entity)
|
|
Category
E __
|
The
undersigned is a private business development company as defined
in
section 202(a)(22) of the Investment Advisors Act of
1940.
|
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11
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|
(describe
entity)
|
|
Category
F __
|
The
undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3)
of the Internal Revenue Code, in each case not formed for the specific
purpose of acquiring the March Shares and with total assets in excess
of
$5,000,000.
|
|
(describe
entity)
|
|
Category
G __
|
The
undersigned is a trust with total assets in excess of $5,000,000,
not
formed for the specific purpose of acquiring the March Shares, where
the
purchase is directed by a “sophisticated person” as defined in Regulation
506(b)(2)(ii) under the Securities Act.
|
|
Category
H __
|
The
undersigned is an entity (other than a trust) all the equity owners
of
which are “accredited investors” within one or more of the above
categories. If relying upon this Category alone, each equity owner
must
complete a separate copy of this
Agreement.
|
|
(describe
entity)
|
|
Category
I __
|
The
undersigned is not within any of the categories above and is therefore
not
an accredited investor.
|
(a)
As
used herein, the term “net worth” means the excess of total assets at fair
market value (including home and personal property) over total liabilities
(including mortgage). For purposes hereof, “individual income” means adjusted
gross income less any income attributable to a spouse or to property owned
by a
spouse, increased by the following amounts (but not including any amounts
attributable to a spouse or to property owned by a spouse): (i) the amount
of
any interest income received which is tax-exempt under Section 103 of the
Internal Revenue Code of 1986, as amended (the “Code”),
(ii)
the amount of losses claimed as a limited partner in a limited partnership
(as
reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion
under Section 611 et seq. of the Code, and (iv) any amount by which income
from
long-term capital gains has been reduced in arriving at adjusted gross income
pursuant to the provisions of Section 12.02 of the Code.
The
undersigned agrees that the undersigned will notify the Company at any time
on
or prior to the execution of this Agreement in the event that the
representations and warranties in this Agreement shall cease to be true,
accurate and complete.
II. SUITABILITY
(please
answer each question)
(a) For
an
individual March Subscriber, please describe your current employment, including
the company by which you are employed and its principal
business:
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12
-
(b) For
an
individual March Subscriber, please describe any college or graduate degrees
held by you:
(c) For
all
March Subscribers, please list types of prior investments:
(d) For
all
March Subscribers, please state whether you have you participated in other
private
placements
before:
YES_______ NO_______
(e) If
your
answer to question (d) above was “YES”, please indicate frequency of such prior
participation in private
placements
of:
|
Public
|
Private
|
||
|
Companies
|
Companies
|
||
|
Frequently
|
|||
|
Occasionally
|
|||
|
Never
|
(f) For
individual March Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:
YES_______ NO_______
(g) For
trust, corporate, partnership and other institutional March Subscribers, do
you
expect your total assets to significantly decrease in the foreseeable future:
YES_______ NO_______
(h) For
all
March Subscribers, do you have any other investments or contingent liabilities
which you reasonably anticipate could cause you to need sudden cash requirements
in excess of cash readily available to you:
YES_______ NO_______
(i) For
all
March Subscribers, are you familiar with the risk aspects and the non-liquidity
of investments such as the March Shares for which you seek to
subscribe?
YES_______ NO_______
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13
-
(j) For
all
March Subscribers, do you understand that there is no guarantee of financial
return on this investment and that you run the risk of losing your entire
investment?
YES_______ NO_______
III. MANNER
IN WHICH TITLE IS TO BE HELD.
(circle one)
(a) Individual
Ownership
(b) Community
Property
(c) Joint
Tenant with Right of Survivorship
(both parties must
sign)
(d) Partnership*
(e) Tenants
in Common
(f) Corporation*
(g) Trust*
(h) Limited
Liability Company*
(i) Other
*If
March
Shares are being subscribed for by an entity, the attached Certificate of
Signatory must also be completed.
IV. NASD
AFFILIATION.
Are
you
affiliated or associated with an NASD member firm (please
check one):
Yes
_________ No
__________
If
Yes,
please describe:
*If
March
Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The
undersigned NASD member firm acknowledges receipt of the notice required by
Rule
3050 of the NASD Conduct Rules.
|
Name
of NASD Member Firm
|
|
|
By:
|
|
|
Authorized
Officer
|
|
|
Date:
|
|
V. The
undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
contained herein and such answers have been provided under the assumption that
the Company will rely on them.
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14
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VI. In
furnishing the above information, the undersigned acknowledges that the Company
will be relying thereon in determining, among other things, whether there are
reasonable grounds to believe that the undersigned qualifies as a Purchaser
under Section 4(2) and/or Regulation D of the Securities Act of 1933 and
applicable state securities laws for the purposes of the proposed
investment.
VII. The
undersigned understands and agrees that the Company may request further
information of the undersigned in verification or amplification of the
undersigned’s knowledge of business affairs, the undersigned’s assets and the
undersigned’s ability to bear the economic risk involved in an investment in the
securities of the Company.
VIII. The
undersigned represents to you that (a) the information contained herein is
complete and accurate on the date hereof and may be relied upon by you and
(b)
the undersigned will notify you immediately of any change in any such
information occurring prior to the acceptance of the subscription and will
promptly send you written confirmation of such change. The undersigned hereby
certifies that he, she or it has read and understands the Subscription Agreement
related hereto.
IX. In
order
for the Company to comply with applicable anti-money laundering/U.S. Treasury
Department Office of Foreign Assets Control (“OFAC”)
rules
and regulations, the March Subscriber is required to provide the following
information:
1. Payment
Information
|
(a)
|
Name
and address (including country) of the bank from which March Subscriber’s
payment to the Company is being wired (the “Wiring
Bank”):
|
|
|
| (b) |
March
Subscriber’s wiring instructions at the Wiring
Bank:
|
|
|
|
(c)
|
Is
the Wiring Bank located in the U.S. or another “FATF
Country”* ?
|
_____
Yes ______
No
|
(d)
|
Is
March Subscriber a customer of the Wiring Bank?
|
_____
Yes ______
No
* As
of the
date hereof, countries that are members of the Financial Action Task Force
on
Money Laundering (“FATF
Country”)
are:
Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland,
France, Germany, Greece, Hong Kong, Iceland, Ireland, Italy, Japan, Luxembourg,
Mexico, Kingdom of the Netherlands, New Zealand, Norway, Portugal, Russian
Federation, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United
Kingdom and the United States of America.
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15
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2. Additional
Information (N.B.: this Section applies only to prospective
investors who responded “no” to either of Question I(c) or I(d)
above.)
The
following materials must be provided to the Company (forms will be provided
by
the Company upon request):
For
Individual Investors:
____
A
government issued form of picture identification (e.g.,
passport or drivers license).
____
Proof of the individual’s current address (e.g.,
current
utility xxxx), if not included in the form of picture
identification.
For
Funds of Funds or Entities that Invest on Behalf of Third Parties Not Located
in
the U.S. or Other FATP Countries:
|
_____
|
A
certificate of due formation and organization and continued authorization
to conduct business in the jurisdiction of its organization (e.g.,
certificate of good standing).
|
|
_____
|
An
“incumbency certificate” attesting to the title of the individual
executing these subscription materials on behalf of the prospective
investor.
|
|
_____
|
A
completed copy of a certification that the entity has adequate anti-money
laundering policies and procedures (“AML Policies and Procedures”) in
place that are consistent with the USA PATRIOT Act, OFAC and other
relevant federal, state or non-U.S. anti-money laundering laws and
regulations (with a copy of the entity’s current AML Policies and
Procedures to which such certification relates).
|
|
_____
|
A
letter of reference from the entity’s local office of a reputable bank or
brokerage firm that is incorporated, or has its principal place of
business located, in the U.S. or other FATF Country certifying that
the
prospective investor maintains an account at such bank/brokerage
firm for
a length of time and containing a statement affirming the prospective
investor’s integrity.
|
For
all other Entity Investors:
|
_____
|
A
certificate of due formation and organization and continued authorization
to conduct business in the jurisdiction of its organization (e.g.,
certificate of good standing).
|
|
_____
|
An
“incumbency certificate” attesting to the title of the individual
executing these subscription materials on behalf of the prospective
investor.
|
|
_____
|
A
letter of reference from the entity’s local office of a reputable bank or
brokerage firm that is incorporated, or has its principal place of
business located, in the U.S. or other FATF Country certifying that
the
prospective investor maintains an account at such bank/brokerage
firm for
a length of time and containing a statement affirming the prospective
investor’s integrity.
|
-
16
-
|
_____
|
If
the prospective investor is a privately-held entity, a certified
list of
the names of every person or entity who is directly or indirectly
the
beneficial owner of 25% or more of any voting or non-voting class
of
equity interests of the March Subscriber, including (i) country of
citizenship (for individuals) or principal place of business (for
entities) and, (ii) for individuals, such individual’s principal employer
and position.
|
|
_____
|
If
the prospective investor is a trust, a certified list of (i) the
names of
the current beneficiaries of the trust that have, directly or indirectly,
25% or more of any interest in the trust, (ii) the name of the settler
of
the trust, (iii) the name(s) of the trustee(s) of the trust, and
(iv) the
country of citizenship (for individuals) or principal place of business
(for entities).
|
ARTICLE
X. ADDITIONAL
INFORMATION
A
TRUST
MUST ATTACH A COPY OF ITS DECLARATION OF TRUST OR OTHER GOVERNING INSTRUMENT,
AS
AMENDED, AS WELL AS ALL OTHER DOCUMENTS THAT AUTHORIZE THE TRUST TO INVEST
IN
THE MARCH SHARES. ALL RESOLUTIONS AND DOCUMENTATION MUST BE COMPLETE AND CORRECT
AS OF THE DATE HEREOF.
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17
-
EXECUTION
PAGE
PURCHASE
PRICE = $_____________ (US Dollars)
NUMBER
OF SHARES OF COMMON STOCK = _______________
|
Signature
|
Signature
(if purchasing jointly)
|
||
|
Name
Typed or Printed
|
Name
Typed or Printed
|
||
|
Entity
Name
|
Entity
Name
|
||
|
Address
|
Address
|
||
|
City,
State and Zip Code
|
City,
State and Zip Code
|
||
|
Telephone-Business
|
Telephone-Business
|
||
|
Telephone-Residence
|
Telephone-Residence
|
||
|
Facsimile-Business
|
Facsimile-Business
|
||
|
Facsimile-Residence
|
Facsimile-Residence
|
||
|
Tax
ID # or Social Security #
|
Tax
ID # or Social Security #
|
||
|
Email
Address
|
Name
in which the March Shares should be issued: _________________________
Dated:
________________, 2008
This
Confidential March Subscriber Questionnaire is executed as of
__________________, 2008.
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18
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