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Exhibit 10.11
FORM OF
SUBSCRIPTION AGREEMENT
Xxxxx 00, 0000
Xxxxxxxxxx Inc.
00000 X.X. 000xx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
Chairman and Chief Executive Officer
Gentlemen:
The undersigned ("Subscriber") hereby tenders this Subscription
Agreement ("Agreement") for the purchase of _________ shares of common stock,
$.01 par value ("Common Stock") of Perfumania, Inc., a Florida corporation
("Perfumania").
1. SUBSCRIPTION. Subscriber hereby irrevocably subscribes for and
agrees to purchase ____________ shares (the "Shares") of Common Stock for a
purchase price of $8.50 per Share, or $____________ in the aggregate.
Subscriber has heretofore made payment of the full amount of the purchase price
of the Shares by wire transfer of funds in accordance with instructions from
Perfumania.
2. OFFERING MATERIAL. Subscriber represents and warrants that it is in
receipt of and that it has carefully read the following items, which items
constitute the only information provided by Perfumania to Subscriber in
connection with Subscriber's investment in the Shares (the "Offering
Materials"): (a) Perfumania's Annual Report on Form 10-K for its fiscal year
ended January 31, 1998 (the "Form 10-K"); (b) Perfumania's Quarterly Reports on
Form 10-Q for the quarters ended May 2, 1998, August 1, 1998 and October 31,
1998; and (c) Perfumania's Proxy Statement for its Annual Meeting of
Shareholders held on December 16, 1998.
3. REPRESENTATIONS AND WARRANTIES OF PERFUMANIA. Perfumania represents
and warrants that: (a) it is a corporation duly organized and validly existing
and in good standing under the laws of the State of Florida, with full power
and authority to carry on its business as currently conducted; (b) it, by
appropriate corporate action, has, or will have prior to the issuance of the
Shares, duly authorized the execution, delivery and performance of this
Agreement and all of the transactions contemplated hereby, including the
issuance and delivery of the Shares and the registration of such shares; (c)
the Shares are not subject to preemptive or other rights of any stockholders
and when issued in accordance with the terms of this Agreement, the Shares will
be validly issued, fully paid and nonassessable; and (d) performance of this
Agreement and compliance with the provisions hereof will not violate any
provision of any applicable law or of its Articles of Incorporation or By-Laws,
and will not conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon, any of its
material properties or assets, pursuant to the terms of any material indenture,
mortgage or other agreement or instrument binding upon it or any of its
subsidiaries, other than such breaches, defaults or liens which would not have
a material adverse effect on Perfumania and its subsidiaries taken as a whole.
Perfumania further represents and warrants that as of the date hereof the
Offering Materials are true and correct, in all material respects, except for
any written communications made by Perfumania to the Subscriber describing any
material change in Perfumania's business or operations.
4. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. Subscriber hereby
represents and warrants that: (a) it has the full legal right and power and all
authority and approval required to execute, deliver and perform its obligations
under this Agreement; (b) it is acquiring the Shares for the purpose of
investment for its own account and not for the account or beneficial interest
of any other person, and not with a view to any distribution or resale thereof
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within the meaning of the Securities Act of 1933, as amended (the "Act"), and
has not offered or sold any portion of the Shares being acquired, nor does it
have any present intention of selling, distributing or otherwise disposing of
the Shares either currently or after the passage of a fixed or determinable
period of time or upon the occurrence or nonoccurrence of any predetermined
event or circumstance in violation of the Act; provided, however, that by
making the representations herein, Subscriber does not agree to hold any of the
Shares for any minimum or other specific term and Subscriber reserves the right
to dispose of the Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Act (c) it is an "accredited
investor," within the meaning of Rule 501(a) of Regulation D under the Act, and
has not been formed for the specific purpose of acquiring the Shares; and (d)
it has such knowledge and experience in business, financial and investment
matters that it is capable of evaluating the merits and risks of an investment
in the Shares, and in acquiring the Shares, it has not acted on the basis of
any representations and warranties concerning Perfumania's business or
financial condition, other than those contained in the Offering Materials, and
has been afforded the opportunity to ask questions of, and receive answers
from, Perfumania and to obtain any additional information necessary to verify
the accuracy of any information provided by Perfumania, and in general had
access to all information it deemed material to an investment decision with
respect to the acquisition of the Shares.
5. RESTRICTIONS ON TRANSFER; REGISTRATION OF SHARES; PAYMENT IN
CERTAIN CIRCUMSTANCES.
5.1. Subscriber acknowledges that (a) the offer and sale of the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws, and may not be sold, transferred,
pledged, or otherwise disposed of unless subsequently so registered or unless
Subscriber delivers to Perfumania an opinion of counsel satisfactory to
Perfumania that such sale, transfer, pledge or disposition is exempt from
registration under the Act; (b) except as provided in this Agreement,
Perfumania is under no obligation to register or facilitate any resale of the
Shares; and (c) any certificate evidencing the Shares will bear a restrictive
legend prohibiting the transfer thereof except in compliance with clause (a) of
this Section 5.1.
5.2. Perfumania shall prepare and file with the Securities and
Exchange Commission (the "SEC"), and shall use its best efforts to cause to
become effective within six (6) months after the date hereof (the "Registration
Deadline Date"), a registration statement (the "Shelf Registration Statement")
and such other documents as may be necessary in the opinion of counsel for
Perfumania, in order to comply with the provisions of the Act so as to permit
the registered resale of the Shares by Subscriber in open market transactions.
Perfumania shall give Subscriber notice, at its address set forth on the
signature page hereof, of the filing and effectiveness of the Shelf
Registration Statement. The registration rights provided under this Section 5.2
are not assignable by Subscriber.
5.3. In connection with the registration of the Shares, Perfumania
will: (a) prepare and file with the SEC a registration statement with respect
to the Shares and use its best efforts to cause such registration statement to
become effective by the Registration Deadline Date; (b) prepare and file with
the SEC 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 for the period (the "Effective Period")
commencing on the effective date of such registration statement (the "Effective
Date") and ending on the later of (i) six months after the Effective Date, or
(ii) one year after the date hereof, and to comply with the requirements of the
Act and the rules and regulations promulgated by the SEC thereunder relating to
the sale or other disposition of the securities covered by such registration
statement; (c) furnish to Subscriber such numbers of copies of a prospectus,
including a preliminary prospectus, complying with the requirements of the Act,
as Subscriber may reasonably request in order to facilitate the public sale or
other disposition of the Shares owned by Subscriber; and (d) use its best
efforts to register or qualify the securities covered by such registration
statement under the securities laws of any state within the United States as
Subscriber shall reasonably request, and do any and all such other acts and
things as may be necessary or advisable to enable Subscriber to consummate the
public sale or other disposition of the Shares owned by Subscriber in such
states; PROVIDED, that Perfumania shall not be obligated to register or qualify
such securities in any jurisdiction in which such registration or qualification
would require Perfumania to qualify as a foreign corporation or file any
general consent to service of process where it is not then so qualified or has
not theretofore so consented.
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5.4. The expenses incurred by Perfumania in connection with action
taken by it to comply with Sections 5.2 and 5.3, including all registration and
filing fees, printing and delivery expenses, fees and disbursements of its
counsel and accountants, shall be paid by Perfumania. All fees and
disbursements of any counsel, experts or consultants employed by Subscriber
shall be borne by Subscriber. Perfumania shall not be obligated in connection
with any registration pursuant to this Agreement for any selling commissions or
discounts payable by Subscriber to any underwriter or broker of securities to
be sold by Subscriber.
5.5. It shall be a condition precedent to the obligation of Perfumania
to register the Shares under the Act pursuant to this Agreement that Perfumania
shall have received from Subscriber for use in the preparation of the
registration statement and prospectus such written information concerning the
Common Stock beneficially owned by Subscriber, Subscriber's intended method of
disposition of the Shares, information concerning any underwriter of such
Shares and any additional information as Perfumania shall reasonably request or
as may be required in connection with the action to be taken by Perfumania
hereunder.
5.6. In the event of any registration of the Shares under the Act
pursuant to this Agreement, Perfumania will indemnify and hold harmless
Subscriber, its officers, directors and each underwriter of such securities,
and any person who controls Subscriber or underwriter within the meaning of
Section 15 of the Act, against all claims, actions, losses, damages,
liabilities and expenses, joint or several, to which any of such persons may
become subject under the Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions 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 securities were registered under the
Act, 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 Subscriber, its officers, directors and each underwriter of such
securities, and each such controlling person or entity for any legal and any
other expenses reasonably incurred by Subscriber, such underwriter, or such
controlling person or entity in connection with investigating or defending any
such loss, action, claim, damage, liability, or action; PROVIDED, that
Perfumania will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in said registration statement, said preliminary prospectus or said
prospectus, or said amendment of supplement in reliance upon and in conformity
with written information furnished to Perfumania by Subscriber or such
underwriter specifically for use in the preparation thereof, and PROVIDED
FURTHER, that Perfumania will not be liable in any such case to the extent that
any such loss, claim, damage or liability or action arises out of or is based
upon an untrue or alleged untrue statement or omission or an alleged omission
made in any preliminary prospectus or final prospectus if (i) Subscriber failed
to send or deliver a copy of the final prospectus or prospectus supplement with
or prior to the delivery of written confirmation of the sale of the Conversion
Shares, and (ii) the final prospectus or prospectus supplement would have
corrected such untrue statement or omission.
5.7. In the event of any registration of the Shares under the Act
pursuant to this Agreement, Subscriber will indemnify and hold harmless
Perfumania, its officers, directors and any person who controls Perfumania
within the meaning of Section 15 of the Act, against any losses, claims,
damages, liabilities, or actions, joint or several, to which Perfumania, its
officers, directors, or such controlling person or entity may become subject
under the Act or otherwise, insofar as such losses, claims, damages,
liabilities, or actions (i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any statement
made by Subscriber to Perfumania pursuant to Section 5.5 of this Agreement and
such untrue statement of any material fact is contained in any registration
statement under which the Shares are registered under the Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or (ii) arise out of or are based upon the omission or
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alleged omission to state in a statement made by Subscriber to Perfumania
pursuant to Section 5.5 of this Agreement a material fact required to be stated
therein or necessary to make such statements not misleading, in each case to
the extent and only to the extent that any such loss, claim, damage, liability,
or action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said the statement required
to be made by Subscriber pursuant to Section 5.5 and the registration
statement, said preliminary prospectus or said prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished to Perfumania by Subscriber or any underwriter of Subscriber's
securities specifically for use in the preparation thereof.
5.8. Provided that Subscriber holds and has not sold any of the Shares
prior to the effective date of the registration statement referred to in
Section 5.2 hereof (the "Effective Date"), if on the Effective Date the Market
Price (as hereinafter defined) is less than $8.50, Perfumania will pay to
Subscriber, within ten (10) business days following the Effective Date, an
amount equal to the lesser of (a) the product of (i) the difference between
$8.50 minus the Market Price on the Effective Date, times (ii) the number of
Shares set forth in Section 1 above, or (b) the product of (x) $2.00, times (y)
the number of Shares set forth in Section 1 above. For purposes of this
Agreement, the term "Market Price" means the closing bid price per share of the
Common Stock on the Nasdaq National Market, as reported by Nasdaq. The
provisions of this Section 5.8 shall terminate and be of no further force and
effect if at any time prior to the Effective Date the Market Price equals or
exceeds $20.00.
5.9. If Perfumania fails to fully satisfy its obligations under
Sections 5.2 and 5.3 of this Agreement (a "Registration Default"), then
Perfumania shall be obligated to pay liquidated damages ("Liquidated Damages")
to Subscriber following the occurrence of such Registration Default in an
amount determined by multiplying (i) $.17 per Share not covered by an effective
registration statement by (ii) the percentage derived by dividing (A) the
actual number of days elapsed from the last day of the date of the Registration
Default or the prior 30-day period, as applicable, to the day such Registration
Default has been completely cured by (B) 30, in cash. The Liquidated Damages
payable pursuant hereto shall be payable within five (5) business days from the
end of the calendar month commencing on the first calendar month in which the
Registration Default occurs.
5.10. Perfumania covenants that it shall use its best efforts to cause
its transfer agent to comply with the terms and provisions of this Section 5.
6. MISCELLANEOUS.
6.1. Any notice or demand to be given or served in connection herewith
shall be deemed to be sufficiently given or served for all purposes by being
sent as registered or certified mail, return receipt requested, postage prepaid
or overnight courier or facsimile, in the case of Perfumania, addressed to it
at Perfumania Inc., 00000 X.X. 000xx Xxxx, Xxxxx, Xxxxxxx 00000, Attention:
President, Facsimile: (000) 000-0000, Telephone: (000) 000-0000; and in the
case of Subscriber to the address for correspondence set forth on the signature
page hereof.
6.2. Subscriber hereby acknowledges and agrees that the subscription
hereunder is irrevocable and that, except as required by law, the undersigned
is not entitled to cancel, terminate or revoke this Agreement or any agreements
of the undersigned hereunder.
6.3. This Agreement shall be governed and construed in all respects in
accordance with the laws of the State of Florida, as such laws are applied by
Florida courts to agreements entered into and to be performed in Florida by and
between residents of Florida.
6.4. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. If any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
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extent that it may conflict therewith and shall be deemed to be modified to
conform with such statute or rule of law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
6.5. In any action, proceeding or counterclaim brought to enforce any
of the provisions of this Agreement or to recover damages, costs and expenses
in connection with any breach of the Agreement, the prevailing party shall be
entitled to be reimbursed by the opposing party for all of the prevailing
party's attorneys' fees, costs and other out-of-pocket expenses incurred in
connection with such action, proceeding or counterclaim.
6.6. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes any
prior oral or written communications between the parties regarding the subject
matter hereof and may be amended only by a writing executed by both parties
hereto.
IN WITNESS WHEREOF, Subscriber has executed this Subscription
Agreement as of the date first set forth above.
SUBSCRIBER:
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Name of Subscriber [Please Print]
By:
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Authorized Signatory
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Name and Title of Authorized Signatory
[Please Print]
Address; phone and fax:
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Tax Identification Number:
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Perfumania hereby acknowledges, agrees to and accepts the terms of the
foregoing Subscription Agreement as of the date first set forth above:
PERFUMANIA, INC.
By:
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Title:
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