Exhibit 10.1
$2,500,000 SUBORDINATED CONVERTIBLE DEBENTURES
SUBSCRIPTION AGREEMENT
OF
ONSTREAM MEDIA CORPORATION
SUBSCRIPTION AGREEMENT made as of this ____ day of ________ 2006 between
Onstream Media Corporation, a corporation organized under the laws of the State
of Florida with offices at 0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000
(the "Company"), and the undersigned (the "Subscriber").
WHEREAS, the Company desires to secure financing by conducting a private
placement (the "Offering") in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Regulation D promulgated thereunder, and intends to issue
on a "best efforts" basis up to $2,500,000 of a its Subordinated Convertible
Debentures ("Debentures") and Warrants ("Warrants") being convertible into
shares of the Company's common stock, par value $.0001 per share (the "Common
Stock") . For each $100,000 principal amount of Debentures, the Company will
issue 35,000 Warrants up to 875,000 in the aggregate with a $1.50 conversion
price. The Company may offer an additional $1,000,000 of Subordinated
Convertible Debentures (the "Additional Debentures") and associated Warrants,
350,000 in the aggregate, upon Shareholder approval for a maximum offering of
$3,500,000;
WHEREAS, approval of the Company's stockholders is required for the
issuance of the Additional Debentures in accordance with the rules of the Nasdaq
Stock Market; and
WHEREAS, the Subscriber desires to purchase the amount of Debentures set
forth on the signature page hereof.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. Subscription for Debentures and Warrants and Representations by and
Covenants of Subscriber
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
amount of Debentures and Warrants as is set forth upon the signature page
hereof, and the Company agrees to sell such Debentures to the Subscriber for
said purchase price subject to the Company's right to sell to the Subscriber
such lesser amount of Debentures as the Company may, in its sole discretion,
deem necessary or desirable. The purchase price is payable by certified or bank
check made payable to Onstream Media Corporation or by wire transfer of
immediately available funds, contemporaneously with the execution and delivery
of this Agreement, as follows:
Wire Transfer Instructions
Onstream Media Corporation
Acct.#:
ABA#:
Sun Trust/South Florida , N.A.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
The Debentures and Warrants will be delivered by the Company within three (3)
business days following the completion of this Offering as set forth in Article
III hereof.
1.2 The Subscriber recognizes that the purchase of the Debentures and
Warrants involves a high degree of risk in that (a) the Company has suffered
recurring losses and negative cash flows from operations; (b) an investment in
the Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Debentures and Warrants; (c) it may not be able to liquidate its investment; (d)
transferability of the Debentures and Warrants is extremely limited; and (e) the
Company will in all likelihood be unable to pay cash dividends on the
Debentures; and (f) the Company is subject to the other risk factors more fully
set forth herein and in the Memorandum. The Subscriber acknowledges that the
Company has and continues to incur substantial costs and expenses in maintaining
its business operations. The Subscriber recognizes that the Company will require
significant additional financing in order to satisfy its longer term cash
requirements. The failure to raise additional funds may prevent the Company from
implementing its business strategy and continuing effectively as a going
concern.
1.3 The Subscriber represents and warrants that it is an "accredited
investor," as such term as defined in Rule 501 of Regulation D promulgated under
the Securities Act, as indicated by its responses to the Investor Questionnaire
attached hereto as Annex A (the "Investor Questionnaire"), and that it is able
to bear the economic risk of an investment in the Debentures and Warrants. The
Subscriber further represents and warrants that the information furnished in the
Investor Questionnaire is accurate and complete in all material respects.
1.4 The Subscriber represents and warrants that the Subscriber did not
learn of the Offering directly or indirectly through any general solicitation or
advertising, including, but not limited to, learning of the Company or the
Offering as a result of viewing any press releases or similar types of publicly
available information which directly or indirectly resulted in the subscriber
subscribing for Debentures and Warrants in the Offering. The Subscriber further
understands that the Company is relying, in part, on this representation to
ensure compliance with the federal securities laws.
1.5 The Subscriber acknowledges that it has significant prior investment
experience, including investment in non-listed and non-registered securities and
that it recognizes the highly speculative nature of this investment.
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1.6 The Subscriber acknowledges receipt and careful review of the Term
Sheet dated __________, 2006, and all attachments, and all other documents
furnished in connection with this transaction (collectively, the "Offering
Documents") and hereby represents that it has been furnished by the Company
during the course of this transaction with all information regarding the Company
which it has requested; that it has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the terms and conditions of the
Offering, and any additional information which it had requested. The Subscriber
represents and warrants that it is relying solely on the information contained
in the Memorandum and the Company's filings made pursuant to the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
information obtained through its own due diligence.
1.7 The Subscriber acknowledges that this Offering may involve adverse tax
consequences (including, but not limited to, the possible need to recognize
dividend income relating to the Debentures) and that neither the Company nor the
Placement Agent (as defined below) has provided it with tax advice or
information. The Subscriber acknowledges that it must retain its own
professional advisors to evaluate the tax and other consequences of an
investment in the Debentures and Warrants.
1.8 The Subscriber acknowledges that this Offering has not been reviewed
by the U.S. Securities and Exchange Commission ("SEC") nor has the SEC or any
state Securities Commission passed upon the accuracy or adequacy of the
Memorandum. The Subscriber represents that the Securities subscribed for
hereunder, including the shares of Common Stock into which the Debentures are
convertible and the Warrants are exercisable, are being purchased for its own
account, for investment and not for distribution or resale to others. The
Subscriber agrees that it will not sell or otherwise transfer the Securities
unless they are registered under the Securities Act or unless an exemption from
such registration is available.
1.9 The Subscriber understands Rule 144 (the "Rule") promulgated under the
Securities Act requires, among other conditions, a one-year holding period prior
to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the
Securities Act. The Subscriber understands that the Company makes no
representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Exchange Act, or its dissemination to the
public of any current financial or other information concerning the Company, as
is required by the Rule as one of the conditions of its availability. The
Subscriber understands and hereby acknowledges that the Company is under no
obligation to register the Securities under the Securities Act, with the
exception of certain registration rights relating to the shares of Common Stock
issuable upon the conversion of the Debentures and exercise of the Warrants
(together, the "Conversion Shares") set forth in Article IV herein. The
Subscriber consents that the Company may, if it desires, permit the transfer of
the Debentures, the Warrants or the Conversion Shares out of its name only when
its request for transfer is accompanied by an opinion of counsel reasonably
satisfactory to the Company that neither the sale nor the proposed transfer
results in a violation of the Act or any applicable state "blue sky" laws
(collectively, "Securities Laws"). The Subscriber agrees to hold the Company and
its directors, officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses (including reasonable legal fees and costs
of investigation) incurred by them as a result of any misrepresentation made by
such Subscriber contained herein or in the Investor Questionnaire or any sale or
distribution by the undersigned Subscriber in violation of any Securities Laws.
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1.10 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities or the Conversion Shares
stating that they have not been registered under the Securities Act and setting
forth or referring to the restrictions on transferability and sale thereof.
1.11 The Subscriber acknowledges that if such Subscriber is a Registered
Representative of an NASD member firm, such Subscriber must give such firm the
notice required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm on the signature page hereof.
1.12 If the undersigned Subscriber is a partnership, corporation, trust or
other entity, such partnership, corporation, trust or other entity further
represents and warrants that: (a) it was not formed for the purpose of investing
in the Company; (b) it is authorized and otherwise duly qualified to purchase
and hold the Securities and the Conversion Shares; and (c) that this
Subscription Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal, binding and enforceable obligation of the
undersigned.
1.13 The Subscriber hereby represents that the address of Subscriber
furnished by such Subscriber at the end of this Subscription Agreement is the
undersigned's principal residence if such Subscriber is an individual or its
principal executive office if it is a corporation or other business entity.
1.14 The Subscriber hereby represents that, except as set forth in the
Offering Documents, no representations or warranties have been made to the
Subscriber by the Placement Agent, Company or any agent, employee or affiliate
of the Company and in entering into this transaction, the Subscriber is not
relying on any information, other than that contained in the Offering Documents
and the results of independent investigation by the Subscriber.
1.15 The Subscriber acknowledges that at such time as the Conversion
Shares are registered, sales of such securities will be subject to state
securities laws, including those of states which may require any securities sold
therein to be sold through a registered broker-dealer or in reliance upon an
exemption from registration.
II. Representations by the Company
2.1 The Company represents and warrants to the Subscriber that prior to
the consummation of this Offering and at each closing date:
(a) The Company is a corporation duly organized, existing and
in good standing under the laws of the State of Florida and has the corporate
power to conduct the business which it conducts and proposes to conduct.
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(b) The execution, delivery and performance of this
Subscription Agreement by the Company will have been duly approved by the Board
of Directors of the Company and all other actions required to authorize and
effect the offer and sale of the Securities contained therein will have been
duly taken and approved including the approval of the Company's stockholders
which will be required to comply with Nasdaq listing standards, and will be a
condition to a release of the Additional Securities from escrow.
(c) The Debentures have been duly and validly authorized and
when issued and paid for in accordance with the terms hereof, will be duly and
validly issued and fully paid and non-assessable.
(d) The Warrants have been duly and validly authorized and,
when duly exercised and the exercise price is paid in connection therewith, the
Common Stock underlying such Warrants will be duly and validly issued and fully
paid and non-assessable.
(e) The Company will at all times have authorized and reserved
a sufficient number of Reserved Shares to provide for the conversion of the
Debentures and exercise of the Warrants.
(f) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations necessary
to the conduct of its business; such licenses, permits and other governmental
authorizations obtained are in full force and effect; and the Company is in all
material respects complying therewith.
(g) Except as described in the Offering Documents, the Company
knows of no pending or threatened legal or governmental proceedings to which the
Company is a party which could materially adversely affect the business,
property, financial condition or operations of the Company.
(h) Except as described in the Memorandum, the Company is not
in violation of or default under, nor will the execution and delivery of this
Subscription Agreement, the issuance of the Debentures and Warrants, and the
incurrence of the obligations herein and therein set forth and the consummation
of the transactions herein or therein contemplated, result in a violation of, or
constitute a default under, the Company's certificate of incorporation or
by-laws, any material obligations, agreement, covenant or condition contained in
any bond, debenture, note or other evidence of indebtedness or in any material
contract, indenture, mortgage, loan agreement, lease, joint venture or other
agreement or instrument to which the Company is a party or by which it or any of
its properties may be bound or any material order, rule, regulation, writ,
injunction, or decree of any government, governmental instrumentality or court,
domestic or foreign, except where such violation or default would not have a
material adverse effect on the Company's business or financial condition.
(i) The financial information contained in the Offering
Documents presents fairly the financial condition of the Company as of the dates
and for the periods indicated.
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III. Terms of Subscription
The subscription period will begin as of March 1, 2006 and will terminate
at 11:59 p.m. Eastern time on ____________, unless extended by the Company for a
period or periods of up to 60 days (the "Termination Date"). Such extension may
be effected without notice to the Subscribers. The Company will issue on a "best
efforts" basis up to $2,500,000 of a its Subordinated Convertible Debentures
("Debentures") and Warrants ("Warrants") being convertible into shares of the
Company's common stock, par value $.0001 per share (the "Common Stock") . For
each $100,000 principal amount of Debentures, the Company will issue 35,000
Warrants. The Company may offer an additional $1,000,000 of Subordinated
Convertible Debentures ("the Additional Debentures") and associated detachable
Warrants upon Shareholder approval for a maximum offering of $3,500,000;
3.1 Placement of the Securities will be made by NASD broker dealers (and
finders as permitted by law), as placement agent (the "Placement Agent"), which
will receive (a) a cash commission equal to 7% of the gross proceeds received by
the Company from the Debentures sold in the Offering; and (b) four-year warrants
to purchase 10% of the number of shares of Common Stock issuable upon the
conversion of the Debentures and exercise of the Warrants, on the same terms as
agreed to under the Warrants (the "Agent's Warrants"), at an exercise price
equal to $1.50 per share (as such term is defined in the Certificate of
Designation). The Company shall also pay all expenses in connection with the
qualification of the Securities under the Securities Laws of the states which
the Placement Agent shall designate, including legal fees and filing fees.
3.2 All funds paid for the Debentures hereunder shall be deposited
directly into the Bank account of the Company. At the Companies discretion, not
later than (i) when the total amount of Debentures are sold or (2) May 1, 2006
(or in the event the company extends the offering for up to 60 days, July 1,
2006), the Company will effect an initial closing of the offering. All Placement
Agent fees and expenses if not already deducted shall be paid.
3.3 Upon the sale of all or part of the Additional Debentures and
Warrants, which shall be subject to the approval of the Company's stockholders
in accordance with the rules of the Nasdaq Stock Market, all Additional
Debentures and Warrants subscription proceeds, less the Placement Agent fees and
expenses, shall be promptly paid to the Company by the subscribers within 5 days
of notice that the Additional Debentures and Warrants were approved by the
Company's shareholders.
3.4 The Subscriber hereby authorizes and directs the Company to deliver
Notes and Warrants representing the Securities to be issued to such Subscriber
pursuant to this Subscription Agreement either (a) to the residential or
business address indicated in the Investor Questionnaire or (b) directly to the
Subscriber's account maintained with the Placement Agent, if any. (If the
Subscriber does not desire the Securities to be delivered to such account, the
Subscriber should so indicate on the signature page).
3.5 The Subscriber hereby authorizes and directs the Company to return any
funds for unaccepted subscriptions to the same account from which the funds were
drawn, including any customer account maintained with the Placement Agent.
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3.6 If the Subscriber is not a United States person, such Subscriber
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (a) the legal requirements
within its jurisdiction for the purchase of the Securities, (b) any foreign
exchange restrictions applicable to such purchase, (c) any governmental or other
consents that may need to be obtained, and (d) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Securities. Such Subscriber's subscription and payment
for, and such Subscriber's continued beneficial ownership of the Securities,
will not violate any applicable securities or other laws of the Subscriber's
jurisdiction.
IV. Registration Rights
4.1 Required Registration Under the Securities Act.
(a) The Company shall, for the benefit of the holders of
Registrable Securities (as defined below), at the Company's cost, file with the
SEC on or prior to thirty (30) days after the final closing of the Offering in
which the Securities are sold in accordance with the Memorandum (the "Closing"),
a Registration Statement (the "Registration Statement") providing for the resale
by the holders of all the Registrable Securities, and shall use commercially
reasonable efforts to have such Registration Statement declared effective by the
SEC as soon as practicable. If the Registration Statement is not filed as set
forth above or declared effective within ninety (90) days following the Closing
(or 150 days in the event of a review of the Registration Statement by the
Securities and Exchange Commission), the Company shall be obligated to pay the
holders of the Registrable Securities an amount equal to one percent (1%) of the
aggregate purchase price paid by the holder of the Registrable Securities
(pursuant to the Subscription Agreement) on such date and one and one-half
percent (1.5%) on the monthly anniversary of each such date thereafter (if the
Registration Statement shall not have been declared effective by such date)
until the Registration Statement is declared effective up to a maximum of
fifteen percent (15%). The Company agrees to use commercially reasonable efforts
to keep the Registration Statement continuously effective until the earlier to
occur of (i) the expiration of the time period referred to in Rule 144(k) under
the Securities Act with respect to all beneficial holders of the underlying
shares of Common Stock (other than affiliates of the Company), and (ii) such
time as all the restricted underlying shares of Common Stock covered by the
Registration Statement have been sold or are otherwise freely tradable without
registration under the Securities Act (the "Effectiveness Period"); provided
that, if at any time or from time to time after the date of effectiveness of the
Registration Statement, the Company notifies the undersigned in writing of the
existence of a Potential Material Event (as defined below), the undersigned
shall not offer or sell any shares of Common Stock, or engage in any other
transaction involving or relating to such shares, from the time of the giving of
notice with respect to a Potential Material Event until the Company notifies the
undersigned that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event. "Potential Material
Event" means the possession by the Company of material information regarding a
potential transaction beneficial to the Company or its stockholders not ripe for
disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company. The Company further
agrees, if necessary or appropriate, to supplement or amend the Registration
Statement, if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Registration Statement or by
the Securities Act or by any other rules and regulations thereunder for such
registrations, and the Company agrees to furnish to the holders of Registrable
Securities copies of any such supplement or amendment promptly after its being
used or filed with the Commission. As used in this Agreement, (ii) "Registrable
Securities" shall mean (A) the shares of Common Stock issuable upon the
conversion of the Debentures and exercise of the Warrants, (B) any securities
issued in exchange for or substitution of any thereof or as a result of a stock
split or combination or as a dividend or other distribution in respect thereof,
and (ii) as used in this Agreement, and (C) any shares to be paid in lieu of
interest.
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(b) Effective Registration Statement. A Registration Statement
pursuant to Section 4.1(a) above will not be deemed to have become effective
unless it has been declared effective by the SEC; provided that if, after it has
been declared effective, the offering of Registrable Securities pursuant to a
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume provided that for
purposes of this Agreement the Registration Statement will still be deemed
effective. If the Registration Statement is not effective for more for more than
60 calendar days (which need not be consecutive days) during any 12 month
period.
The obligation of the Company under this Section 4.1
shall not apply to Registrable Securities that at such time are eligible for
immediate resale pursuant to Rule 144(k) under the Act.
4.2 Expenses. --------
(a) With respect to the registration required pursuant to
Section 4.1 hereof, all fees, costs and expenses of and incidental to such
registration, inclusion and public offering (as specified in paragraph (b)
below) in connection therewith shall be borne by the Company, including the cost
of one counsel to the holders of the Registrable Securities who shall be chosen
by the Placement Agent; provided, however, that the holders of Registrable
Securities (the "Holders") shall bear their pro rata share of the underwriting
discount and commissions and transfer taxes and the cost of their own counsel.
(b) The fees, costs and expenses of registration to be borne
by the Company as provided in paragraph (a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided in 4.2(a) above). Fees and
disbursements of counsel and accountants for the Holders and any other expenses
incurred by the Holders not expressly included above shall be borne by the
Holders.
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4.3 Indemnification.
(a) The Company will indemnify and hold harmless each Holder
of Registrable Securities which are included in a registration statement
pursuant to the provisions of Section 4.1 hereof, its directors and officers,
and any underwriter (as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or such underwriter within the meaning
of the Securities Act, from and against, and will reimburse such Holder and each
such underwriter and controlling person with respect to, any and all loss,
damage, liability, cost and expense to which such Holder or any such underwriter
or controlling person may become subject under the Securities 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 or on behalf of such Holder,
such underwriter or such controlling person in writing specifically for use in
the preparation thereof.
(b) Each Holder of Registrable Securities included in a
registration pursuant to the provisions of Section 4.1 hereof will indemnify and
hold harmless the Company, its directors and officers, any controlling person
and any underwriter from and against, and will reimburse the Company, its
directors and officers, any controlling person and any underwriter with respect
to, any and all loss, damage, liability, cost or expense to which the Company or
any controlling person and/or any underwriter may become subject under the
Securities 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 strict conformity with written information furnished by or on behalf of
such Holder specifically for use in the preparation thereof, or if the Holder
sells after receiving a notice as contemplated by Section 4.2(h) or (i) hereof.
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(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 4.2 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, if counsel for the indemnifying party concludes that a single
counsel cannot under applicable legal and ethical considerations, represent both
the indemnifying party and the indemnified party, the indemnified party or
parties have the right to select separate counsel to participate in the defense
of such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said paragraph (a) or (b) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after the
notice of the commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party.
V. Miscellaneous
5.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at its registered office, 0000 X.X.
00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx 00000, Attention: Xx. Xxxxx X. Xxxxxx, Chief
Executive Officer, and to the Subscriber at its address indicated on the last
page of this Agreement. Notices shall be deemed to have been given on the date
of mailing, except notices of change of address and notices sent from outside
the continental United States, which shall be deemed to have been given when
received.
5.2 This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
5.3 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
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5.4 Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed in accordance with and governed by the laws
of the State of Florida without regard to such states laws regarding conflicts
of laws. The parties hereby agree that any dispute which may arise between them
arising out of or in connection with this Agreement shall be adjudicated before
a court located in Fort Lauderdale, Florida and they hereby submit to the
exclusive jurisdiction of the courts of the State of Florida located in Fort
Lauderdale, Florida and of the federal courts in the Southern District of
Florida with respect to any action or legal proceeding commenced by any party,
and irrevocably waive any objection they now or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or respecting
the fact that such court is an inconvenient forum, relating to or arising out of
this Agreement or any acts or omissions relating to the sale of the securities
hereunder, and consent to the service of process in any such action or legal
proceeding by means of registered or certified mail, return receipt requested,
in care of the address set forth below or such other address as the undersigned
shall furnish in writing to the other.
5.5 This Agreement may be executed in counterparts. Upon the execution and
delivery of this Agreement by the Subscriber, this Agreement shall become a
binding obligation of the Subscriber with respect to the purchase of the
Securities as herein provided; subject, however, to the right hereby reserved to
the Company to enter into the same agreements with other subscribers and to add
and/or to delete other persons as subscribers.
5.6 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
5.9 The Company agrees not to disclose the names, addresses or any other
information about the Subscribers, except as required by law, provided, that the
Company may use information relating to the Subscriber in any registration
statement under the Securities Act with respect to the Debentures.
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VI. Blue Sky Legends
FOR RESIDENTS OF ALL STATES: THE UNITS OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE INTERESTS ARE
SUBJECT IN VARIOUS STATES 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. THE UNITS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY AND ADEQUACY OF THE CONFIDENTIAL PRIVATE OFFERING MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
12
IN WITNESS WHEREOF, the parties have executed this Subscription Agreement
as of the day and year first written above.
-------------------------------- ------------------------------------
Signature of Subscriber Signature of Co-Subscriber
-------------------------------- ------------------------------------
Name of Subscriber Name of Co-Subscriber
[please print] [please print]
-------------------------------- ------------------------------------
Address of Subscriber Address of Co-Subscriber
-------------------------------- ------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Subscriber Identification
------------------------------ Number of Co-Subscriber
-------------------------------- ------------------------------------
Telephone Number of Subscriber Telephone Number of Co-Subscriber
-------------------------------- = $--------------------
Amount of Subordinated Convertible Aggregate Purchase Price
Debentures Subscribed for
Check here to delete Subsection (b) of Section 3.4. |_|
*IF 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 Subscription Accepted:
Conduct Rules.
ONSTREAM MEDIA CORPORATION
--------------------------------
Name of NASD Member Firm
By:
---------------------------------
Xxxxx X. Xxxxxx,
Chief Executive Officer
By:
-----------------------------
Authorized Officer
13
INVESTOR QUESTIONNAIRE
Instructions: Check all boxes below which correctly describe you.
|_| You are (i) a bank, as defined in Section 3(a)(2) of the Securities
Act of 1933, as amended - (the "Securities Act"), (ii) a savings and
loan association or other institution, as defined in --------------
-- Section 3(a)(5)(A) of the Securities Act, whether acting in an
individual or fiduciary capacity, (iii) a broker or dealer
registered pursuant to Section 15 of the Securities Exchange --- Act
of 1934, as amended (the "Exchange Act"), (iv) an insurance company
as defined in Section ------------- -- 2(13) of the Securities Act,
(v) an investment company registered under the Investment Company -
Act of 1940, as amended (the "Investment Company Act"), (vi) a
business development company as ----------------------- -- defined
in Section 2(a)(48) of the Investment Company Act, (vii) a Small
Business Investment --- Company licensed by the U.S. Small Business
Administration under Section 301 (c) or (d) of the Small Business
Investment Act of 1958, as amended, (viii) a plan established and
maintained by ---- a state, its political subdivisions, or an agency
or instrumentality of a state or its political subdivisions, for the
benefit of its employees and you have total assets in excess of
$5,000,000, or (ix) an employee benefit plan within the meaning of
the Employee Retirement -- Income Security Act of 1974, as amended
("ERISA") and (1) the decision that you shall subscribe ----- - for
and purchase Subordinated Convertible Debentures (the "Debentures")
is made by a plan ---------- fiduciary, as defined in Section 3(21)
of ERISA, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, (2) you have
total assets in excess of $5,000,000 and the decision that you shall
subscribe for and purchase Debentures is made solely by persons or
entities that are accredited investors, as defined in Rule 501 of
Regulation D promulgated under the Securities Act ("Regulation D")
or (3) you are a ------------- - self-directed plan and the decision
that you shall subscribe for and purchase Debentures is made solely
by persons or entities that are accredited investors.
|_| You are a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as amended.
|_| Internal Revenue Code of 1986, as amended (the "Code"), a
corporation, Massachusetts or similar business trust or a
partnership, in each case not formed for the specific purpose of
making an investment in Debentures and with total assets in excess
of $5,000,000.
|_| You are a director or executive officer of Onstream Media
Corporation
|_| You are a natural person whose individual net worth, or joint net
worth with your spouse, exceeds $1,000,000 at the time of your
subscription for and purchase of Debentures.
|_| You are 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
your spouse in excess of $300,000 in each of the two most recent
years, and who has a reasonable expectation of reaching the same
income level in the current year.
Q-1
|_| You are a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring Debentures, whose
subscribe for and purchase of Debentures is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D.
|_| You are an entity in which all of the equity owners are persons or
entities described in one of the preceding paragraphs.
The undersigned hereby represents and warrants that all of its answers to
this Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased Subordinated Convertible
Debentures and Warrants of Onstream Media Corporation
-------------------------------- ------------------------------------
Name of Purchaser [please print] Name of Co-Purchaser [please print]
-------------------------------- ------------------------------------
Signature of Purchaser (Entities Signature of Co-Purchaser
please provide signature of
Purchaser's duly authorized
signatory.)
--------------------------------
Name of Signatory (Entities only)
--------------------------------
Title of Signatory (Entities only)
Q-2
