SUBSCRIPTION AGREEMENT
EXHIBIT
10.1
February
, 2007
Simtrol,
Inc.
Xxxxx
000
0000
Xxxxxxxx Xxxxxxx
Xxxxxxxx,
Xxxxxxx 00000
Ladies
and Gentlemen:
1. Private
Placement
The
undersigned (the “Investor”) is writing to advise you of the following terms and
conditions under which the Investor hereby offers to subscribe (the "Offer")
for
the securities of this private placement (“Offering”) which are offered by
Simtrol, Inc., a Delaware corporation (the "Company”), pursuant to that certain
Information Statement (the “Information Statement”) of the Company dated
February , 2007. The Company is issuing securities consisting of Series B
Convertible Preferred Stock (“Preferred Stock”) with warrants to acquire shares
of Common Stock (“Warrants”) (collectively, the “Securities”) at $37,500 per
Security. Each Security contains 50 shares of Preferred Stock, of which each
share of Preferred Stock is convertible into 2,000 shares of common stock of
the
Company, par value $0.001 per share (the “Common Stock”) and a warrant to
purchase 100,000 shares of Common Stock at $0.375 per share. The undersigned
understands that the Securities are being issued pursuant to the exemption
from
registration requirements of the Securities Act of 1933, as amended (the “Act”),
provided by Section 4(2) of the Act. As such, the Preferred Stock, the Warrants,
and the underlying shares of Common Stock into which the Preferred Stock and
the
Warrants may be converted (the “Underlying Shares”) are "restricted securities".
Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Information Statement.
2. Subscription.
Subject
to the terms and conditions hereinafter set forth in this Subscription
Agreement, the undersigned hereby offers to purchase the Securities as set
forth
in the Investor Signature Page attached hereto.
3. Conditions
to Offer.
The
undersigned acknowledges that the Company may accept or reject the Offer, in
whole or in part, for any reason whatsoever. Acceptance of this Offer shall
be
deemed given by the countersigning of this Subscription Agreement on behalf
of
the Company.
4. Representations
and Warranties of the Investor.
The
undersigned, in order to induce the Company to accept this Offer, hereby
warrants and represents as follows:
(A) The
undersigned has sufficient liquid assets to sustain a loss of the undersigned's
entire investment.
(B) The
Company has not made any other representations or warranties to the Investor
with respect to the Company except as contained herein. The Company has not
rendered any investment advice to the Investor with respect to the
Company.
(C) The
Investor understands that the Securities involve a high degree of risk and
represents that the Investor (i) has adequate means of providing for its current
financial needs and possible contingencies, and has no need for liquidity of
investment in the Securities; (ii) can afford (a) to hold unregistered
securities for an indefinite period of time as required and (b) sustain a
complete loss of the entire amount of the subscription; and (iii) has not made
an overall commitment to investments which are not readily marketable which
is
disproportionate so as to cause such overall commitment to become
excessive.
(D) The
undersigned has carefully reviewed the Information Statement. The undersigned
has also been afforded the opportunity to ask questions of, and receive answers
from, the officers and/or directors of the Company concerning the terms and
conditions of the Offering and to obtain any additional information, to the
extent that the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information furnished; and has availed itself of such opportunity to the extent
the Investor considers appropriate in order to permit it to
evaluate the merits and risks of an investment in the Securities. It is
understood that all documents, records and books pertaining to this investment
have been made available for inspection, and that the books and records of
the
Company will be available upon reasonable notice for inspection by investors
during reasonable business hours at its principal place of
business.
(E) The
undersigned acknowledges that the Securities including Underlying Shares have
not been registered under the Act in reliance on an exemption for transactions
by an issuer not involving a public offering, and further understands that
the
Investor is purchasing the Securities without being furnished any prospectus
setting forth all of the information that would be required to be furnished
under the Act.
(F) The
undersigned further acknowledges that this Offering has not been passed upon
or
the merits thereof endorsed or approved by any state or federal
authorities.
(G) The
Securities being subscribed for are being acquired solely for the account of
the
undersigned and not with a view to, or for resale in connection with, any
distribution in any jurisdiction where such sale or distribution would be
precluded. By such representation, the Investor means that no other person
has a
beneficial interest in the Securities (or Underlying Shares) subscribed for
hereunder, and that no other person has furnished or will furnish directly
or
indirectly, any part of or guarantee the payment of any part of the
consideration to be paid to the Company in connection therewith. The undersigned
does not intend to dispose of all or any part of the Securities (or Warrant
or
Common Stock issuable upon any exercise of the Warrant) except in compliance
with the provisions of the Act and applicable state securities laws and
understands that the Securities are being offered pursuant to a specific
exemption under the provisions of the Act, which exemption(s) depends, among
other things, upon compliance with the provisions of the Act.
(H) The
undersigned further represents and agrees that the undersigned will not sell,
transfer, pledge or otherwise dispose of or encumber the Securities (including
the Underlying Shares) prior to registration, or the undersigned will, if
requested, furnish the Company and its transfer agent with an opinion of counsel
satisfactory to the Company in form and substance that registration under the
Act or applicable state securities laws is not required.
(I) The
undersigned hereby agrees that the Company may insert the following or similar
legend on the face of the certificates evidencing the Securities and the
Underlying Shares, if required in compliance with federal and state securities
laws:
"These
securities have not been registered under Act or under the securities laws
of
any state. They may not be sold, offered for sale, pledged or hypothecated
in
the absence of a registration statement in effect with respect to the securities
under such act or an opinion of counsel reasonably satisfactory to the company
that such registration is not required pursuant to a valid exemption under
the
Act.”
(J) Neither
the Company nor any person acting on its behalf has offered or sold the
undersigned the Securities by means of any form of general solicitation or
general advertising and the Securities were not offered or sold to the Investor
by means of publicly disseminated advertisements or sales
literature.
The
undersigned certifies that each of the foregoing representations and warranties
set forth in subsection (A) through (J) inclusive of this Section 4 are true
as
of the date hereof and shall survive such date.
5. Representations
and Warranties of the Company.
The
Company hereby makes the following representations and warranties to the
Investor:
(A) Subsidiaries.
The
Company has no direct or indirect subsidiaries (each a “Subsidiary,” and
collectively, “Subsidiaries”) except as described in SEC Reports and/or the
Information Statement. All the issued and outstanding shares of capital stock
of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights, and the Company owns all of the issued and
outstanding shares of capital stock of each Subsidiary, except as described
in
such the SEC Reports and/or the Information Statement.
(B) Organization
and Qualification.
Each of
the Company and the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and
to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents.
(C) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the Offering. The execution and delivery of this Subscription
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company and no further consent or action is required by the Company,
other than the Required Approvals (as defined below). This Subscription
Agreement, when executed and delivered in accordance with the terms hereof,
will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and general principles of
equity.
(D) No
Conflicts.
The
execution, delivery and performance of this Subscription Agreement by the
Company and the consummation by the Company of the Offering do not and will
not:
(i) conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) subject to obtaining the Required Approvals, conflict
with, or constitute a default (or an event that 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 (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding
to
which the Company or any Subsidiary is a party or by which any property or
asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or
other restriction of any court or governmental authority as currently in effect
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate
(a)
adversely affect the legality, validity or enforceability of the Offering,
(b)
have or result in or be reasonably likely to have or result in a material
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken
as
a whole, or (c) adversely impair the Company's ability to perform fully on
a
timely basis its obligations under this Subscription Agreement (any of (a),
(b)
or (c), a “Material
Adverse Effect”).
(E) Filings,
Consents and Approvals.
Neither
the Company nor any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Subscription Agreement, other
than (i) the filing with the SEC of a Form D pursuant to SEC Regulation D and
(ii) applicable Blue Sky filings (collectively, the “Required
Approvals”).
Such
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or agency or subdivision thereof) or other entity
of
any kind.
(F) Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
this Subscription Agreement, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance
upon conversion of the Preferred Stock and for the issuance of the shares of
Common Stock upon exercise of the Warrants. The Securities conform to the
description contained in the Information Statement. The issuance and sale of
the
Securities hereunder does not contravene the SEC rules and regulations.
(G) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company is as set forth in the SEC Reports or Memorandum of the
Company.
(H) SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Act and
the
Securities Exchange Act of 1934 (the “Exchange Act”), including pursuant to
Section 13(a) of 15(d) thereof, for the two years preceding the date hereof
(or
such shorter period as the Company was required by law to file such material)
(the foregoing materials being collectively referred to herein as the “SEC
Reports”). The SEC Reports, when filed, complied in all material respects with
the requirements of the Act and the Exchange Act and the rules and regulations
of the Commission promulgated thereunder, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state
a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company that have been included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto
as in
effect at the time of filing. Such financial statements have been prepared
in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position
of
the Company and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
(I) Material
Changes.
Since
the date of the latest financial statements included within the SEC Reports,
except as specifically disclosed in the Information Statement: (i) there has
been no event, occurrence or development that has had a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or required to be disclosed in filings made with the SEC, (iii) the Company
has
not altered its method of accounting or the identity of its auditors, (iv)
the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders except in the ordinary course of business
consistent with prior practice, or purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock except consistent with prior
practice or pursuant to existing Company stock option or similar plans, and
(v)
the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option or similar plans.
Such “Affiliate” means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under
the
Act. With respect to any Investor, any investment fund or managed account that
is managed on a discretionary basis by the same investment manager as such
Investor will be deemed to be an Affiliate of such Investor.
(J) Litigation.
Except
as set forth in the SEC Reports and the Information Statement, there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by
any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which:
(i) adversely affects or challenges the legality, validity or enforceability
of
this Subscription Agreement or the Securities or (ii) would, if there were
an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws. The Company
does not have pending before the SEC any request for confidential treatment
of
information. There has not been, and to the knowledge of the Company, there
is
not pending or contemplated, any investigation by the SEC involving the Company.
The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(K) Compliance.
Neither
the Company nor any Subsidiary: (i) is in default under or in violation of
(and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any material indenture, loan or
credit agreement or any other material agreement or instrument to which it
is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), which default or violation would have
or
result in a Material Adverse Effect, (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, except in each case as would
not, individually or in the aggregate, have or result in a Material Adverse
Effect.
(L) Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits would not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect (“Material
Permits”),
and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(M) Listing
and Maintenance Requirements.
The
Company is currently quoted on the OTC Bulletin Board under the symbol “SMRL”.
The Company is, and has no reason to believe that it will not in the foreseeable
future to be, in compliance with all requirements to be quoted on the OTC
Bulletin Board.
(N) Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosures controls and procedures to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the
certifying officers by others within those entities. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures as of the date immediately prior to the filing of the Company’s
most recent periodic report under the Exchange Act (such date, the "Evaluation
Date").
The
Company presented in such report the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on
their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal controls (as such term
is
defined in Item 307(b) of Regulation S-K under the Exchange Act).
(O) Disclosure.
The
disclosure provided to the Investor regarding the Company, its business and
the
transactions contemplated hereby, furnished by or on behalf of the Company,
including all of the SEC Reports, does not contain any untrue statement of
a
material fact or omit to state any material fact necessary in order to make
the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that the Investor
makes or has made no representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
this
Subscription Agreement.
6. Covenants
of the Company.
(A)
Registration
Rights. The
Company grants to the Investor registration rights relating to the Common Stock
and the Underlying Shares under the following terms and conditions:
(1)
The
Company will prepare and file, at its own expense, a registration statement
under the Act (the “Registration Statement”) with the SEC sufficient to permit
the non-underwritten public offering and resale of the Underlying Shares (the
“Registrable Securities”) through the facilities of all appropriate securities
exchanges, if any, on which the Common Stock is being sold or on the
over-the-counter market if the Common Stock is traded thereon.
(2)
The
Company will use its reasonable best efforts to cause such Registration
Statement to become effective within one hundred and twenty (120) days of the
date of the sale of the Securities to Investor or, if earlier, within five
(5)
business days of Commission clearance to request acceleration of effectiveness.
The number of shares designated in the Registration Statement to be registered
shall include all of the Registrable Securities and shall include appropriate
language regarding reliance upon Rule 416 to the extent permitted by the SEC.
The Company will notify the Investor of the effectiveness of the Registration
Statement within five (5) business days of such event.
(3) Except
as
otherwise provided in Section 6(C) below, the Company will use its reasonable
best efforts to maintain effectiveness under the Act of the Registration
Statement or any post-effective amendment thereto filed under the terms of
this
Agreement until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to such Registration Statement, (ii) the
date
all Registrable Securities have been otherwise transferred to persons who may
trade such shares without restriction under the Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend, or (iii) the date all Securities may be sold
at any time, without volume or manner of sale limitations pursuant to Rule
144(k) (Rule 144 means Rule 144 promulgated by the SEC pursuant to the Act,
herein referred to as “Rule 144”) or any similar provision then in effect under
the Securities Act (the “Effectiveness Period”).
(4) If,
at
any time during which the Registration Statement required by Section 6(A)(1)
and
6(A)(2) above is not effective, the Company shall determine to proceed with
the
preparation and filing of a separate registration statement pursuant to the
Act
in connection with the proposed offer and sale of any securities by it or any
of
its securities holders (other than a registration statement on Form X-0, X-0,
or
other limited purpose Form), the Company will give written notice of its
determination to do so to the Investor. Upon receipt of a written request from
Investor, within twenty (20) days after receipt of any such notice from the
Company, the Company will cause all such Registrable Securities requested by
the
Investor to be included in such registration statement, all to the extent
required to permit the sale or other disposition by the Investor of such shares.
The obligation of the Company under this Section 6(A)(4) shall be unlimited
as
to the number of registration statements to which it applies, unless the
Effectiveness Period has ended. Notwithstanding the foregoing, the Company
shall
have the right to postpone or withdraw any registration effect pursuant to
this
Section 6(A)(4) without obligation to the Investor. In addition, if any
registration effected pursuant to this Section 6(A)(4) is a registered public
offering involving an underwriting, the Company shall so advise the Investor
as
a part of the written notice given pursuant to this Section 6(A)(4). In such
event, the right of the Investor to include Registrable Securities in such
registration pursuant to this Section 6(A)(4) shall be conditioned upon
Investor’s execution of an underwriting agreement upon customary terms with the
underwriter or underwriters selected for the underwriting by the Company. If
the
managing underwriter advises the Company in writing that marketing factors
require a limitation in the number of shares held by selling stockholders to
be
underwritten, the number of Registrable Securities that may be included in
such
Registration Statement and underwriting shall be allocated among all investors,
including the Investor, requesting registration in proportion, as nearly as
practicable, to the respective number of shares of Registrable Securities held
by them on the date the Company gives the notice specified in this Section
6(A)(4).
(5) All
fees,
disbursements and out-of-pocket expenses and costs incurred by the Company
in
connection with the preparation and filing of the Registration Statement and
in
complying with applicable federal securities and Blue Sky laws (including,
without limitation, all attorneys' fees of the Company) shall be borne by the
Company. The Investor shall bear the cost of underwriting and/or brokerage
discounts, fees and commissions, if any, applicable to the Registrable
Securities being registered and the fees and expenses of its counsel. The
Company shall use its reasonable best efforts to qualify any of the Securities
for sale in such states as any Investor reasonably designates. However, the
Company shall not be required to qualify in any state which will require an
escrow or other restriction relating to the Company and/or the sellers, or
which
will require the Company to qualify to do business in such state or require
the
Company to file therein any general consent to service of process. If NASDR
Rule
2710 requires any broker-dealer to make a filing prior to executing a sale
by a
Purchaser of the Securities, make an issuer filing with the NASDR, Inc.
Corporate Financing Department pursuant to NASDR Rule 2710(b)(10)(A)(i) and
respond within five (5) Trading Days to any comments received from NASDR in
connection therewith, and pay the filing fee required in connection therewith.
The Company, at its expense, will supply the Investor with copies of the
applicable Registration Statement and any prospectus included therein and other
related documents in such quantities as may be reasonably requested by the
Investor.
(6) In
the
event that (i) the Registration Statement to be filed by the Company pursuant
to
Section 6(A)(2) is not declared effective by the SEC within the earlier of
one
hundred and twenty (120) days from the date of the sale of the Securities or
five (5) days of clearance by the SEC to request effectiveness, (ii) such
Registration Statement is not maintained as effective by the Company for the
period set forth in Section 6(A)(2) above (each a “Registration Default”) then
the Company will pay Investor (pro rated on a daily basis), as partial
compensation for such failure and not as a penalty, one and one-half percent
(1.5%) of the purchase price of the Registrable Securities purchased from the
Company and held by the Investor for each month (or portion thereof) until
such
Registration Statement has been filed or declared effective or lapsed
effectiveness (in the case of clause (ii) above), one and one-half percent
(1.5%) of the purchase price of the Registrable Securities purchased from the
Company and held by the Investor each month (or portion thereof) (regardless
of
whether one or more such Registration Defaults are then in existence, but
without duplication of such partial compensatory payments) until such
Registration Statement has been declared effective. Such compensatory payments
shall be made to the Investor in cash, within five (5) calendar days of demand,
provided, however, that the payment of such amounts shall not relieve the
Company from its obligations to register the Securities pursuant to this
Section.
If
the
Company does not remit the payment to the Investor as set forth above, the
Company will pay the Investor reasonable costs of collection, including
attorneys’ fees, in addition to the liquidated damages. The registration of the
Securities pursuant to this provision or payment of such compensatory amounts
shall not affect or limit the Investor’s other rights or remedies as set forth
in this Agreement or at law.
(B) The
Company shall be entitled to suspend the availability of any Registration
Statement, by providing notice thereof to the Investors, without incurring
or
accruing any obligation to pay liquidated damages pursuant to Section 6(A)(4),
no more than one (1) time in any three month period or three (3) times in any
twelve month period, and any such period during which the availability of the
Registration Statement is suspended (the “Deferral Period”) shall, without
incurring any obligation to pay liquidated damages pursuant to Section 6(A)(4),
not exceed 30 days; provided
that the
aggregate duration of any Deferral Periods shall not exceed 15 days in any
three
month period or 40 days in any twelve (12) month period; provided
that in
the case of a Material Event relating to an acquisition or a probable
acquisition or financing, recapitalization, business combination or other
similar transaction, the Company may, without incurring any obligation to pay
liquidated damages pursuant to Section 6(A)(4), deliver to the Holders a second
notice to the effect set forth above, which shall have the effect of extending
the Deferral Period by up to an additional 30 days, or such shorter period
of
time as is specified in such second notice. As used herein, “Material Event”
shall mean the occurrence of any event or the existence of any fact as a result
of which any Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(C) In
the
case of each registration effected by the Company pursuant to any section
herein, the Company will keep each shareholder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will:
(1) Keep
such
registration effective at least until such time as the Underlying Shares are
eligible to have the restrictive legend removed pursuant to SEC Rule
144(k);
(2) Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to a disposition of all securities covered by such registration
statement;
(3) Notify
the shareholders at any time when a prospectus relating thereto is required
to
be delivered under the Act, of the happening of any event as a result of which
the prospectus included 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 or incomplete in light of the circumstances then existing, and
at
the request of the shareholders, prepare and furnish to them a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the shareholders, such prospectus
shall not include an 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 or incomplete in light of the circumstances then
existing;
(4) Use
its
commercially reasonable best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of a registration statement, and, if such
an order is issued, to obtain the withdrawal of such order at the earliest
possible moment and to notify Investor (and, in the event of an underwritten
offering, the managing underwriter) of the issuance of such order and the
resolution thereof;
(5) Cause
all
shares which are registered in accordance with the provisions herein, to be
listed or included for quotation on each exchange on which the shares of Common
Stock are then listed or included for quotation;
(6) Provide
a
transfer agent and registrar for all such shares and CUSIP number for all such
shares of Common Stock in each case not later than the effective date of such
registration statement; and
(7) Otherwise
use its commercially reasonable best efforts to comply with all applicable
rules
and regulations of the SEC.
(D)
To
the
extent Investor includes any Common Stock in a Registration Statement pursuant
to the terms hereof, the Company will indemnify and hold harmless Investor,
its
directors and officers, and each person, if any, who controls Investor within
the meaning of the Act, from and against, and will reimburse Investor, its
directors and officers and each controlling person with respect to, any and
all
loss, damage, liability, cost and expense to which Investor or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement
or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, 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, in light of the circumstances in which they were made,
not misleading; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, damage, liability, cost or expense
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 Investor or any such controlling person in writing specifically for use
in
the preparation thereof.
(E)
To
the
extent Investor includes any Underlying Shares in a Registration Statement
pursuant to the terms hereof, Investor will indemnify and hold harmless the
Company, its directors and officers and any controlling person from and against,
and will reimburse the Company, its directors and officers and any controlling
person with respect to, any and all loss, damage, liability, cost or expense
to
which the Company, its directors and officers or such controlling person may
become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, 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, in light of the circumstances in which they were made,
not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made in reliance upon and in conformity with written information furnished
by or
on behalf of the Investor specifically for use in the preparation thereof and
provided further, that the maximum amount that may be recovered from Investor
shall be limited to the amount of proceeds received by Investor from the sale
of
such shares of Common Stock.
(F)
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable hereunder to the extent
permitted by law, provided that (i) no contribution shall be made under
circumstances where the indemnifying party would not have been liable for
indemnification pursuant to the provisions hereof, (ii) no seller of securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Act) shall be entitled to contribution from any seller of securities who
was
not guilty of such fraudulent misrepresentation, and (iii) the amount of the
contribution together with any other payments made in respect of such loss,
damage, liability or expense, by any seller of securities shall be limited
to
the net amount of proceeds received by such seller from the sale of such
securities.
(G)
The
Investor will cooperate with the Company in connection with this Subscription
Agreement, including timely supplying all information reasonably requested
by
the Company (which shall include all information regarding the Investor and
proposed manner of sale of securities required to be disclosed in any
registration statement filed in accordance with this Section 6) and executing
and returning all documents reasonably requested in connection with the
registration and sale of any securities being registered hereunder and entering
into and performing their obligations under any underwriting agreement, if
the
offering is an underwritten offering, in usual and customary form, with the
managing underwriter or underwriters of such underwritten offering.
(H) Transfer
Restrictions.
(1) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company
or
to an affiliate of an Investor or in connection with a pledge as contemplated
in
Section 6(H)(2), the Company may require the transferor thereof to provide
to
the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Act. As a
condition of transfer, any such transferee shall agree in writing to be bound
by
the terms of this Subscription Agreement and shall have the rights of an
Investor under this Subscription Agreement.
(2) The
Investor agrees to the imprinting, so long as is required by this Section
6(H)(2) of a legend on any of the Securities in the following form:
THIS
PREFERRED STOCK AND WARRANT AND THE SHARES ISSUABLE UPON CONVERSION OR EXERCISE
OF THIS PREFERRED STOCK OR WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY
NOT BE SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND
ANY
APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH NOTE MAY BE SOLD,
ASSIGNED, HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
(3) Certificates
evidencing the Underlying Shares shall not contain any legend (including the
legend set forth in Section 6(H)(2) hereof): (i) while a registration statement
(including the Registration Statement) covering the resale of such security
is
effective under the Act, or (ii) following any sale of such Underlying Shares
pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for sale
under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Act (including judicial interpretations and pronouncements
issued by the staff of the SEC); provided,
however,
in
connection with the issuance of the Underlying Shares, each Investor, severally
and not jointly with the other Investors, hereby agrees to adhere to and abide
by all prospectus delivery requirements under the Act and rules and regulations
of the SEC. The Company shall cause its counsel to issue a legal opinion to
the
Company’s transfer agent promptly after the Effective Date if required by the
Company’s transfer agent to effect the removal of the legend hereunder. If all
or any portion of Preferred Stock or Warrant is converted or exercised (as
applicable) at a time when there is an effective registration statement to
cover
the resale of the Underlying Shares, or if such Underlying Shares may be sold
under Rule 144(k) or if such legend is not otherwise required under applicable
requirements of the Act (including judicial interpretations thereof) then such
Underlying Shares shall be issued free of all legends. The Company agrees that
following the Effective Date or at such time as such legend is no longer
required under this Section 6(H)(3), it will, no later than three (3) days
following the delivery by an Investor to the Company or the Company's transfer
agent of a certificate representing Underlying Shares, as applicable, issued
with a restrictive legend (such third (3rd)
day,
the “Legend
Removal Date”),
deliver or cause to be delivered to such Investor a certificate representing
such shares that is free from all restrictive and other legends. The Company
may
not make any notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth in this
Section.
(4) Each
Investor, severally and not jointly with the other Investors, agrees that the
removal of the restrictive legend from certificates representing Securities
as
set forth in this Section 6(H) is predicated upon the Company’s reliance that
the Investor will sell any Securities pursuant to either the registration
requirements of the Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.
(I) Material
Non-Public Information.
The
Company covenants and agrees that neither it nor any other person or entity
acting on its behalf will provide the Investor or its agents or counsel with
any
information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written
agreement regarding confidentiality and use of such information. The Company
understands and confirms that the investor shall be relying on the foregoing
representations in effecting transactions in securities of the
Company.
7. No
Waiver.
Notwithstanding
any of the representations, warranties, acknowledgments or agreements made
herein by the Investor, the Investor does not thereby or in any manner waive
any
rights granted to the Investor under federal or state securities
laws.
8. Revocation.
The
Investor agrees that he shall not cancel, terminate or revoke this Subscription
Agreement or any agreement of the Investor made hereunder other than as set
forth herein, and that this Subscription Agreement shall survive the death
or
disability of the Investor.
9. Termination
of Subscription Agreement.
If
the
Company elects to cancel this Subscription Agreement, provided that it returns
to the Investor, without interest and without deduction, all sums paid by the
Investor, this Offer shall be null and void and of no further force and effect,
and no party shall have any rights against any other party
hereunder.
10. Miscellaneous.
(A) All
notices or other communications given or made hereunder shall be in writing
and
shall be mailed by registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier service to the Investor at his address
set forth below, to the Company and the Placement Agent at the addresses set
forth herein.
(B) This
Subscription Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by all parties.
(C)
The
provisions of this Subscription Agreement shall survive the execution thereof.
11. Certification.
The
Investor certifies that he has read this entire Subscription Agreement and
that
every statement on the part of the Investor made and set forth herein is true
and complete.
12. Investor
Suitability Qualification.
(A) The
Investor has initialed each of the following statements that correctly describes
the Investor:
______
An
organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
______
A
natural person whose individual net worth, or joint net worth with such person’s
spouse, exceeds $1,000,000;
______
A
natural person who had an individual income in excess of $200,000 in each of
the
two most recent years or joint income with such individual’s spouse in excess of
$300,000 in each of those years and who has a reasonable expectation of reaching
the same income level in the current year;
______
A
trust with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Membership Interest, whose purchase is directed by
a
person who has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and the risks of an investment
in
the Membership Interest; or
______
An
entity in which all of the equity owners are accredited investors.
Note:
If
the Investor is an entity, questions (B) and (C) must be completed by the
individual
making
the investment decision on
behalf of
the
Investor.
(B)
Name
of
Individual making investment decision:
_______________________________
(C) Please
provide the following information:
|
(1) Occupation
|
____________________________ | |
| (2) Please describe your education background, including dates of attendance and degrees earned. | ||
|
|
||
| (3) Please describe briefly principal positions held and any other business involvement (e.g., service on boards of directors) during the last five years. Specific employers need not be identified. What is sought is a sufficient description to enable the Company to determine the extent of vocationally related experience in financial and business matters. | ||
|
|
||
| (4) Please describe the number, amount and type of investments you have made in the past in private placements of any type of securities: | ||
|
|
||
|
(5) Please
indicate in the space provided below any additional information which
you
think may be helpful in enabling the Company to determine that your
knowledge and experience in financial and business matters is sufficient
to enable you to evaluate the merits and risks of investing in the
Securities.
|
||
|
|
||
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH
LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND
SUCH
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR
AN
INDEFINITE PERIOD OF TIME.
THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE SECURITIES COMMISSION, OR ANY OTHER REGULATORY AUTHORITY,
NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS
OF
THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
INVESTOR
SIGNATURE PAGE FOR SIMTROL, INC. SUBSCRIPTION AGREEMENT
Please
print or type, Use ink only. (All Parties Must Sign)
The
undersigned investor hereby certifies that he (i) has received and relied solely
upon the Confidential Private Placement Memorandum, this Subscription Agreement
and their respective exhibits and schedules, (ii) agrees
to
all the terms and conditions of this Subscription Agreement, (iii) meets the
suitability standards set forth herein and (iv) is a resident of the state
or
foreign jurisdiction indicated below.
Dollar
Amount of Securities Subscribed for: $_________________________
| ______________________________________________ |
If
other than individual check one and indicate
|
|
|
Name
of Investor (Print)
|
capacity
of signatory under the signature:
|
|
|
Trust
|
||
| ______________________________________________ |
Estate
|
|
|
Name
of Joint Investor (if any) (Print)
|
Uniform
Gifts to Minors Act, State of
|
|
|
Attorney-in-fact
|
||
|
Corporation
|
||
| ______________________________________________ |
Other
|
|
|
Signature
of Investor
|
||
|
If
Joint Ownership, Check one:
|
||
|
|
Joint
Tenants with Right of Survivorship
|
|
| ______________________________________________ |
Tenants
in Common
|
|
|
Signature
of Joint Investor (if any)
|
Tenants
by the Entirety
|
|
|
Community
by Property
|
||
| ______________________________________________ | ||
|
Capacity
of Signatory (if applicable)
|
Backup
Withholding Statement:
|
|
|
Please
check this box only if the investor is subject to
|
||
| ______________________________________________ |
backup
withholding
|
|
|
Social
Security or Taxpayer Identification Number
|
||
|
Foreign
Person:
|
||
|
Investor
Mail Address:
|
Please
check this box only if the investor is a
|
|
|
nonresident
alien, foreign corporation, foreign
|
||
|
____________________________________________________
|
partnership,
foreign trust or foreign estate
|
|
|
Street
Address
|
||
|
____________________________________________________
|
||
|
City State Zip
Code
|
Share
and Warrant Registration Name(s) and Amounts:
|
|
|
Telephone:
( ) Fax:
( )
|
Name
Amount
|
|
|
|
1.____________________________________
|
|
|
Email:_______________________________________________
|
2.____________________________________
|
|
| Address for Delivery of Shares (if different from above): |
3.____________________________________
|
|
|
____________________________________________________
|
4.____________________________________
|
|
|
____________________________________________________
|
||
|
City State Zip
Code
|
The
investor agrees to the terms of this Agreement and, as required by the
Regulations pursuant to the Internal Revenue Code, certifies under penalty
of
perjury that (1) the Social Security Number or Taxpayer Identification Number
and address provided above is correct, (2) the investor is not subject to backup
withholding (unless the Backup Withholding Statement box is checked) either
because he has not been notified that he is subject to backup withholding as
a
result of a failure to report all interest or dividends or because the Internal
Revenue Service has notified him that he is no longer subject to backup
withholding and (3) the investor (unless, the Foreign Person box above is
checked) is not a nonresident alien, foreign partnership, foreign trust or
foreign estate.
THE
SUBSCRIPTION FOR SECURITIES OF SIMTROL, INC. BY THE ABOVE NAMED INVESTOR(S)
IS
ACCEPTED THIS ________ DAY OF ______________________, 2007.
SIMTROL,
INC.
By:_____________________________________
Name:
Xxxxxxx Xxxx
Title:
President and CEO
