Exhibit 99.2
SUBSCRIPTION AGREEMENT
Dear Subscriber:
You (the "Subscriber") hereby agree to purchase, and China Peregrine
Food Corporation, a Delaware corporation (the "Company") hereby agrees to
issue and to sell to the Subscriber, the number of shares of Series D 6%
Cumulative Convertible Preferred Stock, $.001 par value (the "Preferred
Stock") convertible in accordance with the terms thereof into shares of the
Company's $.001 par value common stock (the "Company Shares") and Common
Stock Purchase Warrants ("Warrants") as set forth on the signature page
hereof for the aggregate consideration as set forth on the signature page
hereof ("Purchase Price"). The Certificate of Designation of the Rights of
the Preferred Stock is annexed hereto as Exhibit A ("Certificate of
Designation"). (The Company Shares are sometimes referred to herein as the
"Shares" or "Common Stock"). (The Preferred Stock, the Company Shares,
Warrants, Commission Shares and Common Stock Purchase Warrants issuable to
the Placement Agents ("Placement Warrants"), identified on Schedule B
hereto, and the Common Stock issuable upon exercise of the Warrants and
Placement Warrants are collectively referred to herein as, the
"Securities"). Upon acceptance of this Agreement by the Subscriber, the
Company shall issue and deliver to the Subscriber the Preferred Stock and
Warrants against payment, by federal funds (U.S.) wire transfer of the
Purchase Price. This Subscription Agreement and other similar Subscription
Agreements and the subscription agreements relating to Series D Preferred
Stock to be issued in connection with the Puts described in Section 11
hereof relate to the offering of a maximum of 107,000 shares of Preferred
Stock.
The following terms and conditions shall apply to this subscription.
1. Subscriber's Representations and Warranties. The Subscriber
hereby represents and warrants to and agrees with the Company that:
(a) Information on Company. The Subscriber has been
furnished with and has read the Company's Form 10-SB12G filed on
November 6, 1998 with the U.S. Securities and Exchange Commission
(the "Commission") (with exhibits thereto, hereinafter referred to as
the "Reports"). In addition, the Subscriber has received from the
Company such other information concerning its operations, financial
condition and other matters as the Subscriber has requested, and
considered all factors the Subscriber deems material in deciding on
the advisability of investing in the Securities (such information in
writing is collectively, the "Other Written Information").
(b) Information on Subscriber. The Subscriber is an
"accredited investor", as such term is defined in Regulation D
promulgated by the Commission under the Securities Act of 1933, as
amended, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of
United States publicly-owned companies in private placements in the
past and, with its representatives, has such knowledge and experience
in financial, tax and other business matters as to enable the
Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed
investment decision with respect to the proposed purchase, which
represents a speculative investment. The Subscriber has the
authority and is duly and legally qualified to purchase and own the
Securities. The Subscriber is able to bear the risk of such
investment for an indefinite period and to afford a complete loss
thereof.
(c) Purchase of Company Shares. On the Closing Date, the
Subscriber will purchase the Preferred Stock and Warrants for its own
account and not with a view to any distribution thereof.
(d) Compliance with Securities Act. The Subscriber
understands and agrees that the Securities have not been registered
under the Securities Act of 1933, as amended (the "1933 Act") by
reason of their issuance in a transaction that does not require
registration under the 1933 Act, and that such Securities must be
held unless a subsequent disposition is registered under the 1933
Act or is exempt from such registration.
(e) Preferred Stock and Company Shares Legend. The Preferred
Stock, Company Shares, the Commission Shares and the shares of Common
Stock issuable upon the exercise of the Warrants and Placement
Warrants shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
CHINA PEREGRINE FOOD CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
(f) Warrants Legend. The Warrants and Placement Warrants
shall bear the following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CHINA PEREGRINE FOOD CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED."
(g) Communication of Offer. The offer to sell the Securities
was directly communicated to the Subscriber. At no time was the
Subscriber presented with or solicited by any leaflet, newspaper or
magazine article, radio or television advertisement, or any other
form of general advertising or solicited or invited to attend a
promotional meeting otherwise than in connection and concurrently
with such communicated offer.
(h) Correctness of Representations. The Subscriber
represents that the foregoing representations and warranties are true
and correct as of the date hereof and, unless the Subscriber
otherwise notifies the Company prior to the Closing Date (as
hereinafter defined), shall be true and correct as of the Closing
Date. The foregoing representations and warranties shall survive the
Closing Date.
2. Company Representations and Warranties. The Company represents
and warrants to and agrees with the Subscriber that:
(a) Due Incorporation. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the respective jurisdictionss of
their incorporation and have the requisite corporate power to own
their properties and to carry on their business as now being
conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify
would not have a material adverse effect on the business, operations
or prospects or condition (financial or otherwise) of the Company.
(b) Outstanding Stock. All issued and outstanding shares of
capital stock of the Company and each of its subsidiaries has been
duly authorized and validly issued and are fully paid and non-
assessable.
(c) Authority; Enforceability. This Agreement has been duly
authorized, executed and delivered by the Company and is a valid and
binding agreement enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of
equity; and the Company has full corporate power and authority
necessary to enter into this Agreement and to perform its obligations
hereunder and all other agreements entered into by the Company
relating hereto.
(d) Additional Issuances. There are no outstanding
agreements or preemptive or similar rights affecting the Company's
common stock or equity and no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of
any shares of common stock or equity of the Company or other equity
interest in any of the subsidiaries of the Company, except as
described in the Reports or Other Written Information.
(e) Consents. No consent, approval, authorization or order
of any court, governmental agency or body or arbitrator having
jurisdiction over the Company, or any of its affiliates, the NASD,
NASDAQ or the Company's Shareholders is required for execution of
this Agreement, and all other agreements entered into by the Company
relating thereto, including, without limitation issuance and sale of
the Securities, and the performance of the Company's obligations
hereunder.
(f) No Violation or Conflict. Assuming the representations
and warranties of the Subscriber in Paragraph 1 are true and correct
and the Subscriber complies with its obligations under this
Agreement, neither the issuance and sale of the Securities nor the
performance of its obligations under this Agreement and all other
agreements entered into by the Company relating thereto by the
Company will:
(i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of
notice or the lapse of time or both would be reasonably likely
to constitute a default) under (A) the articles of
incorporation, charter or bylaws of the Company, or any of its
affiliates, (B) to the Company's knowledge, any decree,
judgment, order, law, treaty, rule, regulation or determination
applicable to the Company, or any of its affiliates of any
court, governmental agency or body, or arbitrator having
jurisdiction over the Company, or any of its affiliates or over
the properties or assets of the Company, or any of its
affiliates, (C) the terms of any bond, debenture, note or any
other evidence of indebtedness, or any agreement, stock option
or other similar plan, indenture, lease, mortgage, deed of
trust or other instrument to which the Company, or any of its
affiliates is a party, by which the Company, or any of its
affiliates is bound, or to which any of the properties of the
Company, or any of its affiliates is subject, or (D) the terms
of any "lock-up" or similar provision of any underwriting or
similar agreement to which the Company, or any of its
affiliates is a party; or
(ii) result in the creation or imposition of any lien,
charge or encumbrance upon the Securities or any of the assets
of the Company, or any of its affiliates.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security
interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the 1933 Act and State laws;
(ii) have been, or will be, duly and validly authorized
and on the date of issuance and on the Closing Date, as
hereinafter defined, and the date the Preferred Stock is
converted, the Securities will be duly and validly issued,
fully paid and nonassessable (and if registered pursuant to the
1933 Act, and resold pursuant to an effective registration
statement will be free trading and unrestricted);
(iii) will not have been issued or sold in violation of
any preemptive or other similar rights of the holders of any
securities of the Company;
(iv) will not subject the holders thereof to personal
liability by reason of being such holders; and
(h) Litigation. There is no pending or, to the best
knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its
affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under this Agreement,
and all other agreements entered into by the Company relating hereto.
(i) Reporting Company. The Company is a publicly-held
company whose common stock is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "1934 Act").
The Company's Common Stock is listed for trading on the NASD OTC
Bulletin Board. Pursuant to the provisions of the 1934 Act, the
Company has timely filed all reports and other materials required to
be filed thereunder with the Securities and Exchange Commission
during the preceding twelve months.
(j) No Market Manipulation. The Company has not taken, and
will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the common stock of the
Company to facilitate the sale or resale of the Securities or affect
the price at which the Securities may be issued.
(k) Information Concerning Company. The Reports and Other
Written Information contain all material information relating to the
Company and its operations and financial condition as of their
respective dates which information is required to be disclosed
therein. Since the date of the financial statements included in the
Reports, and except as modified in the Other Written Information,
there has been no material adverse change in the Company's business,
financial condition or affairs not disclosed in the Reports. The
Reports and Other Written Information do not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(l) Dilution. The number of Shares issuable upon conversion
(as hereinafter defined) may increase substantially in certain
circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines
prior to conversion of the Preferred Stock. The Company's executive
officers and directors have studied and fully understand the nature
of the Securities being sold hereby and recognize that they have a
potential dilutive effect. The board of directors of the Company has
concluded, in its good faith business judgment, that such issuance is
in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Shares upon conversion
of the Preferred Stock and exercise of the Warrants and Placement
Warrants is binding upon the Company and enforceable, except as
otherwise described in this Subscription Agreement, regardless of the
dilution such issuance may have on the ownership interests of other
shareholders of the Company.
(m) Stop Transfer. The Securities are restricted securities
as of the date of this Agreement. The Company will not issue any
stop transfer order or other order impeding the sale and delivery of
the Securities at such time as the Securities are registered for
public sale or an exemption from registration is available.
(n) Defaults. Neither the Company nor any of its
subsidiaries is in violation of its Articles of Incorporation or
ByLaws. Neither the Company nor any of its subsidiaries is (i) in
default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would
have a material adverse effect on the Company, (ii) in default with
respect to any order of any court, arbitrator or governmental body or
subject to or party to any order of any court or governmental
authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters, or (iii) to its
knowledge in violation of any statute, rule or regulation of any
governmental authority material to its business.
(o) No Integrated Offering. Neither the Comany, nor any of
its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that
would cause the offering of the Securities pursuant to this Agreement
to be integrated with prior offerings by the Company for purposes of
the 1933 Act or any applicable stockholder approval provisions. Nor
will the Company or any of its affiliates or subsidiaries take any
action or steps that would cause the offering of the Securities to be
integrated with other offerings.
(p) Use of Proceeds. The proceeds of the Subscriber funds to
be released to the Company will be used for working capital and for
expenses of this offering.
(q) No General Solicitation. Neither the Company, nor any of
its affiliates, nor to its knowledge, any person acting on its or
their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
Act) in connection with the offer or sale of the Securities.
(r) Listing. The Company's common stock is listed for
trading on NASD OTC Bulletin Board. The Company has not received any
notice that its common stock will be delisted from the OTC Bulletin
Board or that the common stock does not meet all requirements for the
continuation of such listing.
(s) Correctness of Representations. The Company represents
that the foregoing representations and warranties are true and
correct as of the date hereof in all material respects and, unless
the Company otherwise notifies the Subscriber prior to the Closing
Date, shall be true and correct in all material respects as of the
Closing Date. The foregoing representations and warranties shall
survive the Closing Date.
3. Regulation D Offering. This Offering is being made pursuant to
the exemption from the registration provisions of the Securities Act of
1933, as amended, afforded by Rule 506 of Regulation D promulgated
thereunder. On the Closing Date, the Company will provide an opinion
acceptable to Subscriber from the Company's legal counsel opining on the
availability of the Regulation D exemption as it relates to the offer and
issuance of the Securities. A form of the legal opinion is annexed hereto
as Exhibit C. The Company will provide, at the Company's expense, such
other legal opinions in the future as are reasonably necessary for the
conversion of the Preferred Stock, Commission Shares, Warrants and
Placement Warrants.
4. Reissuance of Securities. The Company agrees to reissue
certificates representing the Securities without the legends set forth in
Sections 1(e) and 1(f) above at such time as (a) the holder thereof is
permitted to dispose of such Securities pursuant to Rule 144(k) under the
Act, or (b) upon resale subject to an effective registration statement
after the Securities are registered under the Act. The Company agrees to
cooperate with the Subscriber in connection with all resales pursuant to
Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow
such resales provided the Company and its counsel receive reasonably
requested certifications from the Subscriber and selling broker, if any.
5. Redemption. The Company may not redeem the Securities without
the consent of the holder of the Securities, except as described in the
Certificate of Designation.
6. Legal Fees/Commissions. The Company shall pay to counsel to
the Subscriber its fee of $15,000 for services rendered to the Subscriber
in reviewing this Agreement and other subscription agreements for the
aggregate subscription amounts of up to $500,000 and acting as escrow
agent. The Company will pay a cash commission of three percent (3%) of the
Purchase Price designated on the signature page hereto to certain Placement
Agents identified on Schedule B hereto. The cash commissions and legal
fees will be payable out of funds held pursuant to a Funds Escrow Agreement
to be entered into by the Company, Subscriber and an Escrow Agent. The
Company will also issue and deliver to the Placement Agents as additional
compensation Preferred Stock of the Company ("Commission Shares") and
Placement Warrants designated on Schedule B hereto. The Commissions will
be issued to the Placement Agents only when, as, and if the corresponding
subscription amount is released from escrow to the Company. All the
representations, covenants, warranties and undertakings, including but not
limited to registration rights made or granted to or for the benefit of the
Subscriber and the terms described in Sections 9.1, 9.2, and 9.3 hereof are
hereby also made and granted to the Placement Agents in respect of the
Commission Shares, Placement Warrants and Company Shares issuable upon
exercise of the Placement Warrants.
7.1. Covenants of the Company. The Company covenants and agrees
with the Subscriber as follows:
(a) The Company will advise the Subscriber, promptly after it
receives notice of issuance by the Securities and Exchange
Commission, any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending
any offering of any securities of the Company, or of the suspension
of the qualification of the common stock of the Company for offering
or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.
(b) The Company shall promptly secure the listing of the
Company Shares, Commission Shares and Common Stock issuable upon the
exercise of the Warrants and Placement Warrants upon each national
securities exchange, or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain such listing so long as any
other shares of Common Stock shall be so listed. The Company will
use its best efforts to maintain the listing and trading of its
Common Stock on the NASD OTC Bulletin Board, and will comply in all
respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities
Dealers ("NASD") and such exchanges, as applicable. The Company will
provide the Subscriber copies of all notices it receives notifying
the Company of the threatened and actual delisting of the Common
Stock on any exchange or quotation system on which the Common Stock
is listed.
(c) The Company shall notify the SEC, NASD and applicable
state authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance
of the Securities to the Subscriber and Placement Agents and promptly
provide copies thereof to Subscriber.
(d) Until at least three (3) years after the effectiveness of
the Registration Statement on Form SB-2 or such other Registration
Statement described in Section 10.1(iv) hereof, the Company will (i)
cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, (ii) comply in all respects with
its reporting and filing obligations under the Exchange Act, and
(iii) comply with all requirements related to any registration
statement filed pursuant to this Agreement. The Company will not
take any action or file any document (whether or not permitted by the
Act or the Exchange Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting
and filing obligations under said Acts until the later of (i) three
(3) years after the effective date of the Registration Statement on
Form SB-2 or such other Registration Statement described in Section
10.1(iv) hereof, or (ii) the sale by the Subscribers and Placement
Agents of all the Company Shares issuable by the Company pursuant to
this Agreement. Until at least two (2) years after the Warrants and
Placement Warrants have been exercised, the Company will use its
commercial best efforts to continue the listing or trading of its
Common Stock on NASD OTC Bulletin Board and will comply in all
respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the NASD and NASDAQ, as appropriate.
(e) The Company undertakes to use the proceeds of the
Subscriber's funds for working capital and expenses of this offering.
8. Covenants of the Company and Subscriber Regarding
Idemnifications.
(a) The Company agrees to indemnify, hold harmless, reimburse
and defend Subscriber against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon Subscriber which results, arises
out of or is based upon (i) any misrepresentation by Company or
breach of any warranty by Company in this Agreement or in any
Exhibits or Schedules attached hereto, or Reports or other Written
Information; or (ii) any breach or default in performance by Company
of any covenant or undertaking to be performed by Company hereunder,
or any other agreement entered into by the Company and Subscribers
relating hereto.
(b) Subscriber agrees to indemnify, hold harmless, reimburse
and defend the Company at all times against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal
fees) of any nature, incurred by or imposed upon the Company which
results, arises out of or is based upon (a) any misrepresentation by
Subscriber in this Agreement or in any Exhibits or Schedules attached
hereto; or (b) any breach or default in performance by Subscriber of
any covenant or undertaking to be performed by Subscriber hereunder,
or any other agreement entered into by the Company and Subscribers
relating hereto.
9.1. Conversion.
(a) The Preferred Stock and accrued dividends will be
convertible according to the procedure set forth in the Certificate
of Designation.
(b) The Company understands that a delay in the delivery of
the Company Shares after Conversion, and delivery of Preferred Stock
certificates representing the unconverted balance of a Preferred
Stock certificate tendered for conversion, beyond the date described
for such delivery set forth in the Certificate of Designation or
Mandatory Conversion Date (as that term is employed in the
Certificate of Designation), or late delivery of a Mandatory
Redemption Payment (as defined herein), as the case may be, (each of
the foregoing a "Delivery Date") could result in economic loss to the
Subscriber. As compensation to the Subscriber for such loss, the
Company agrees to pay late payments to the Subscriber for late
delivery of Shares upon Conversion and late delivery of a Preferred
Stock certificates for the unconverted portion of a Preferred Stock
or late delivery of a Mandatory Redemption Payment in the amount of
$100 per business day after the Delivery Date for each $10,000 of
Stated Value of Preferred Stock being converted and Preferred Stock
certificate remaining undelivered or Mandatory Redemption Payment not
paid. The Company shall pay any payments incurred under this Section
in immediately available funds upon demand. Furthermore, in addition
to any other remedies which may be available to the Subscriber, in
the event that the Company fails for any reason to effect delivery of
the Shares within three business days after the Delivery Date, the
Subscriber will be entitled to revoke the relevant Notice of
Conversion by delivery of a notice of revocation to the Company
whereupon the Company and the Subscriber shall each be restored to
their respective positions immediately prior to the delivery of such
notice of revocation, except that late payment charges described
above shall be payable through the date notice of revocation is given
to the Company.
(c) Nothing contained herein or in any document referred to
herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other
charges in excess of the maximum permitted by applicable law. In the
event that the rate of interest or dividends required to be paid or
other charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum shall be credited against amounts
owed by the Company to the Subscriber and thus refunded to the
Company.
9.2. Mandatory Redemption. In the event the Company may not issue
Shares on a Delivery Date, then at the Subscriber's election, the Company
must pay to the Subscriber on the Delivery Date a sum of money determined
by multiplying the Stated Value of Preferred Stock not convertible by 120%,
together with accrued but unpaid dividend thereon ("Mandatory Redemption
Payment"). The Mandatory Redemption Payment must be received by the
Subscriber on the same date as the Company Shares otherwise deliverable.
Upon receipt of the Mandatory Redemption Payment, the corresponding
Preferred Stock will be cancelled and no longer outstanding, and if the
Holder is in possession of the corresponding Preferred Stock, same will be
returned to the Company.
9.3. Maximum Conversion. The Company and Subscriber shall not be
entitled to convert on a Conversion Date or effect a Mandatory Conversion
of that amount of the Preferred Stock in connection with that number of
shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Subscriber and
its affiliates on a Conversion Date, and (ii) the number of shares of
Common Stock issuable upon the conversion of the Preferred Stock with
respect to which the determination of this proviso is being made on a
Conversion Date, which would result in beneficial ownership by the
Subscriber and its affiliates of more than 9.99% of the outstanding shares
of Common Stock of the Company on such Conversion Date. For the purposes
of the proviso to the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
10.1. Registration Rights. The Company hereby grants the following
registration rights to holders of the Securities.
(i) On one occasion, for a period commencing 31 days after
the Closing Date, but not later than three years after the Closing
Date, the Company, upon a written request therefor from any record
holder or holders of more than 50% of the aggregate of the Company's
Shares issued and issuable upon Conversion of the Preferred Stock
(the Securities and securities issued or issuable by virtue of
ownership of the Securities, and the Put Securities defined in
Section 11.1(b)(i) hereof if actually issued, being, the "Registrable
Securities"), shall prepare and file with the SEC a registration
statement under the Act covering the Registrable Securities which are
the subject of such request, unless such Registrable Securities are
the subject of an effective registration statement. In addition,
upon the receipt of such request, the Company shall promptly give
written notice to all other record holders of the Registrable
Securities that such registration statement is to be filed and shall
include in such registration statement Registrable Securities for
which it has received written requests within 10 days after the
Company gives such written notice. Such other requesting record
holders shall be deemed to have exercised their demand registration
right under this Section 10.1(i). As a condition precedent to the
inclusion of Registrable Securities, the holder thereof shall provide
the Company with such information as the Company reasonably requests.
The obligation of the Company under this Section 10.1(i) shall be
limited to one registration statement.
(ii) If the Company at any time proposes to register any of
its securities under the Act for sale to the public, whether for its
own account or for the account of other security holders or both,
except with respect to registration statements on Forms X-0, X-0 or
another form not available for registering the Registrable Securities
for sale to the public, provided the Registrable Securities are not
otherwise registered for resale by the Subscriber or Holder pursuant
to an effective registration statement, each such time it will give
at least 30 days' prior written notice to the record holder of the
Registrable Securities of its intention so to do. Upon the written
request of the holder, received by the Company within 30 days after
the giving of any such notice by the Company, to register any of the
Registrable Securities, the Company will cause such Registrable
Securities as to which registration shall have been so requested to
be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition of the Registrable
Securities so registered by the holder of such Registrable Securities
(the "Seller"). In the event that any registration pursuant to this
Section 10.1(ii) shall be, in whole or in part, an underwritten
public offering of common stock of the Company, the number of shares
of Registrable Securities to be included in such an underwriting may
be reduced by the managing underwriter if and to the extent that the
Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities
to be sold by the Company therein; provided, however, that the
Company shall notify the Seller in writing of any such reduction.
Notwithstanding the forgoing provisions, the Company may withdraw any
registration statement referred to in this Section 10.1(ii) without
thereby incurring any liability to the Seller.
(iii) If, at the time any written request for registration is
received by the Company pursuant to Section 10.1(i), the Company has
determined to proceed with the actual preparation and filing of a
registration statement under the 1933 Act in connection with the
proposed offer and sale for cash of any of its securities for the
Company's own account, such written request shall be deemed to have
been given pursuant to Section 10.1(ii) rather than Section 10.1(i),
and the rights of the holders of Registrable Securities covered by
such written request shall be governed by Section 10.1(ii) except
that the Company or underwriter, if any, may not withdraw such
registration or limit the amount of Registrable Securities included
in such registration.
(iv) The Company shall file with the Commission within 40 days
of the Closing Date (the "Filing Date"), and use its reasonable
commercial efforts to cause to be declared effective a Form SB-2
registration statement (or such other form that it is eligible to
use) within ninety (90) days of the Closing Date in order to register
the Registrable Securities for resale and distribution under the Act.
The registration statement described in this paragraph must be
declared effective by the Commission within 120 days of the Closing
Date (as defined herein) ("Effective Date"). The Company will
register not less than ________ shares of Common Stock in the
aforedescribed registration statement for each $25,000 of Stated
Value of Preferred Stock subscribed for and one share of Common Stock
for each Commission Share and common share issuable upon exercise of
the Warrants and Placement Warrants. The Registrable Securities
shall be reserved and set aside exclusively for the benefit of the
Subscriber and Placement Agents, as the case may be, and not issued,
employed or reserved for anyone other than the Subscriber and
Placement Agents, as the case may be. Such registration statement
will be promptly amended or additional registration statements will
be promptly filed by the Company as necessary to register additional
Company Shares to allow the public resale of all Common Stock
included in and issuable by virtue of the Registrable Securities.
10.2. Registration Procedures. If and whenever the Company is
required by the provisions hereof to effect the registration of any shares
of Registrable Securities under the Act, the Company will, as expeditiously
as possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for
the period of the distribution contemplated thereby (determined as
herein provided), and promptly provide to the holders of Registrable
Securities copies of all filings;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above
and comply with the provisions of the Act with respect to the
disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Seller's intended
method of disposition set forth in such registration statement for
such period;
(c) furnish to the Seller, and to each underwriter if any,
such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus)
as such persons reasonably may request in order to facilitate the
public sale or their disposition of the securities covered by such
registration statement;
(d) use its best efforts to register or qualify the Seller's
Registrable Securities covered by such registration statement under
the securities or "blue sky" laws of such jurisdictions as the Seller
and in the case of an underwritten public offering, the managing
underwriter shall reasonably request, provided, however, that the
Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;
(e) list the Registrable Securities covered by such
registration statement with any securities exchange on which the
Common Stock of the Company is then listed;
(f) immediately notify the Seller and each underwriter under
such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act, of the happening
of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing;
(g) make available for inspection by the Seller, any
underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by the Seller or underwriter, all publicly available, non-
confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the seller,
underwriter, attorney, accountant or agent in connection with such
registration statement.
10.3. Provision of Documents.
(a) At the request of the Seller, provided a demand for
registration has been made pursuant to Section 10.1(i) or a request
for registration has been made pursuant to Section 10.1(ii), the
Registrable Securities will be included in a registration statement
filed pursuant to this Section 10. In the event of a firm commitment
underwritten public offering in which the Registrable Securities are
so included, the lockup, if any, requested by the managing
underwriter may not exceed ninety (90) days after the effective date
thereof.
(b) In connection with each registration hereunder, the
Seller will furnish to the Company in writing such information with
respect to itself and the proposed distribution by it as reasonably
shall be necessary in order to assure compliance with federal and
applicable state securities laws. In connection with each
registration pursuant to Section 10.1(i) or 10.1(ii) covering an
underwritten public offering, the Company and the Seller agree to
enter into a written agreement with the managing underwriter in such
form and containing such provisions as are customary in the
securities business for such an arrangement between such underwriter
and companies of the Company's size and investment stature.
10.4. Non-Registration Events. The Company and the Subscriber agree
that the Seller will suffer damages if any registration statement required
under Section 10.1(i) or 10.1(ii) above is not filed within 60 days after
request by the Holder and not declared effective by the Commission within
120 days after such request [or the Filing Date and Effective Date,
respectively, in reference to the Registration Statement on Form SB-2 or
such other form described in Section 10.1(iv)], and maintained in the
manner and within the time periods contemplated by Section 10 hereof, and
it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (i) the Registration Statement described in
Sections 10.1(i) or 10.1(ii) is not filed within 60 days of such request,
or is not declared effective by the Commission on or prior to the date that
is 120 days after such request, or (ii) the registration statement on Form
SB-2 or such other form described in Section 10.1(iv) is not filed on or
before the Filing Date or not declared effective on or before the sooner of
the Effective Date, or within five days of receipt by the Company of a
communication from the Commission that the registration statement described
in Section 10.1(iv) will not be reviewed, or (iii) any registration
statement described in Sections 10.1(i), 10.1(ii) or 10.1(iv) is filed and
declared effective but shall thereafter cease to be effective (without
being succeeded immediately by an additional registration statement filed
and declared effective) for a period of time which shall exceed 30 days in
the aggregate per year but not more than 20 consecutive calendar days
(defined as a period of 365 days commencing on the date the Registration
Statement is declared effective) (each such event referred to in clauses
(i), (ii) and (iii) of this Section 10.4 is referred to herein as a "Non-
Registration Event"), then, for so long as such Non-Registration Event
shall continue, the Company shall pay in cash as Liquidated Damages to each
holder of any Registrable Securities an amount equal to two (2%) percent
for each thirty (30) days or part thereof, of the Purchase Price of the
Preferred Stock and Company Shares, the Stated Value of the Commission
Shares or Company Shares issued upon the conversion thereof, and the
aggregate amount of the exercise prices of the Warrants and Placement
Warrants, whether or not exercised, then owned of record by such holder as
of the occurrence of such Non-Registration Event. Payments to be made
pursuant to this Section 10.4 shall be due and payable immediately upon
demand in immediately available funds. Demand for payment of Liquidated
Damages must be made by a holder within 90 days after the final accrual of
such Liquidated Damages. In the event a mandatory payment for Preferred
Stock is demanded from the Company by the Holder of Preferred Stock,
pursuant to Section 8 of the Certificate of Designation, then the
Liquidated Damages described in this Section 10.4 shall no longer accrue
from and after the date the Holder receives the payment described in
Section 8 of the Certificate of Designation.
10.5. Expenses. All expenses incurred by the Company in complying
with Section 10, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel
fees) incurred in connection with complying with state securities or "blue
sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, fee of one counsel,
if any, to represent all the Sellers, and costs of insurance are called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Registrable Securities, including any fees and
disbursements of any special counsel to the Seller, are called "Selling
Expenses". The Seller shall pay the fees of its own additional counsel, if
any.
The Company will pay all Registration Expenses in connection with the
registration statement under Section 10. All Selling Expenses in
connection with each registration statement under Section 10 shall be borne
by the Seller and may be apportioned among the Sellers in proportion to the
number of shares sold by the Seller relative to the number of shares sold
under such registration statement or as all Sellers thereunder may agree.
10.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable
Securities under the Act pursuant to Section 10, the Company will
indemnify and hold harmless the Seller, each officer of the Seller,
each director of the Seller, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls
such Seller or underwriter within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several,
to which the Seller, or such underwriter or controlling person may
become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement under which such Registrable Securities was registered
under the Act pursuant to Section 10, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by any such Seller, the underwriter or any such controlling
person in writing specifically for use in such registration statement
or prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the Act pursuant to Section 10, the Seller will
indemnify and hold harmless the Company, and each person, if any, who
controls the Company within the meaning of the Act, each officer of
the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any
underwriter within the meaning of the Act, against all losses,
claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person
may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement under which such Registrable Securities were
registered under the Act pursuant to Section 10, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer,
director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action,
provided, however, that the Seller will be liable hereunder in any
such case if and only to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such
Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus,
and provided, further, however, that the liability of the Seller
hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that
the public offering price of the Registrable Securities sold by the
Seller under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any
event to exceed the gross proceeds received by the Seller from the
sale of Registrable Securities covered by such registration
statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to such
indemnified party other than under this Section 10.6(c) and shall
only relieve it from any liability which it may have to such
indemnified party under this Section 10.6(c) if and to the extent the
indemnifying party is prejudiced by such omission. In case any such
action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under this Section 10.6(c) for any legal expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison
with counsel so selected, provided, however, that, if the defendants
in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which
are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified parties shall have the right to
select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In order to provide for just and equitable contribution
in the event of joint liability under the Act in any case in which
either (i) the Seller, or any controlling person of the Seller, makes
a claim for indemnification pursuant to this Section 10.6 but it is
judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the
fact that this Section 10.6 provides for indemnification in such
case, or (ii) contribution under the Act may be required on the part
of the Seller or controlling person of the Seller in circumstances
for which indemnification is provided under this Section 10.6; then,
and in each such case, the Company and the Seller will contribute to
the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so
that the Seller is responsible only for the portion represented by
the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering
price of all securities offered by such registration statement,
provided, however, that, in any such case, (A) the Seller will not be
required to contribute any amount in excess of the public offering
price of all such securities offered by it pursuant to such
registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of
the Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.
11.1. Obligation To Purchase.
(a) The Subscriber agrees to purchase from the Company up to
the additional shares of Preferred Stock ("First Put Stock" and
"Second Put Stock", collectively "Put Stock") and up to the Warrants
("First Put Warrants" and "Second Put Warrants", collectively "Put
Warrants") described on the signature page hereof for up to the
aggregate consideration designated on the signature page hereof (the
"First Put" and the "Second Put"). Collectively the Put Stock, Put
Warrants and Put Commissions (as hereinafter defined) are referred to
as the "Put Securities".)
(b) The agreement to purchase the Put Stock is contingent on
the following:
(i) The timely filing of the registration statement
described in Section 10.1(iv) hereof relating to all the
Registrable Securities.
(ii) As of the Put Date, First Put Closing Date and
Second Put Closing Date (all as hereinafter defined), the
Company will be a full reporting company with the class of
Shares registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934.
(iii) The Closing Bid Price (as defined in the
Certificate of Designation) for the five trading days prior to
a Put Date will not be less than $1.25, nor will the aggregate
trading activity in the Company's Common Stock be less than
$20,000 per day for each of the five trading days prior to a
Put Date (unless otherwise agreed to by Subscriber). In the
event the foregoing trading price and trading activity are not
attained and the Subscriber does not waive the requirement in
this Section 11.1(b), then the offering restriction in Section
12(b) shall not thereafter apply.
(iv) No material adverse change in the Company's
business or business prospects shall have occurred after the
date of the most recent financial statements included in the
Reports. Material adverse change is defined as any effect on
the business, operations, properties, prospects, or financial
condition of the Company that is material and adverse to the
Company and its subsidiaries and affiliates, taken as a whole,
and/or any condition, circumstance, or situation that would
prohibit or otherwise interfere with the ability of the Company
to enter into and perform any of its obligations under this
Agreement, or any other agreement entered into or to be entered
into in connection herewith, in any material respect.
(v) The non-occurrence (whether or not continuing) of
an Event of Default as described in Section 8 of the
Certificate of Designation.
(vi) The execution and delivery to the Subscriber of a
certificate signed by its chief executive officer representing
the truth and accuracy of all the Company's representations and
warranties contained in this Subscription Agreement as of the
Put Date, and the First Put Closing Date and Second Put Closing
Date and confirming the undertakings contained herein, and
representing the satisfaction of all contingencies and
conditions required for the exercise of the Put.
(vii) The Company's compliance with the listing
requirements of the NASD OTC Bulletin Board, and the Company's
not having received notice from the NASD OTC Bulletin Board
(and any principal market on which the Company's Common Stock
is listed for trading) that the Company is not in compliance
with the requirements for continued listing.
(viii) The execution by the Company and delivery to the
Subscriber of all documents reasonably necessary to memorialize
the rights and obligations of each of the parties in relation
to the Put.
(c) The exercise of the Second Put is further contingent on
the declaration of effectiveness by the Securities and Exchange
Commission and the continued effectiveness of the Registration
Statement on Form SB-2 or such other form as described in Section
10.1(iv) hereof relating to the Registrable Securities and the
Company's ability to issue Common Stock upon conversion and/or
exercise of the Put Securities, pursuant to an effective registration
statement, with such Common Stock, upon resale, being unlegended
freely transferable Common Stock.
11.2. Exercise of Put.
(a) The Company's right to exercise the First Put expires one
week after the filing of the registration statement described in
Section 10.1(iv) of this Subscription Agreement relating to all the
Registrable Securities. The Company's right to exercise the Second
Put expires seven (7) days after the effective date of the
registration statement relating to the Registrable Securities
described in Section 10.1(iv) above.
(b) The First Put and Second Put may be exercised by the
Company by the giving to the Subscriber of a written notice of
exercise ("Put Notice") during the respective exercise periods of the
First Put and Second Put in relation to all the subject Put
Securities. The date a Put Notice is given is a Put Date. The First
Put Notice must be accompanied by the (i) officer's certificate
described in Section 11.1(b)(vi) above; (ii) a copy of the filed
registration statement; and (iii) a legal opinion relating to the Put
Securities substantially similar to the legal opinion attached hereto
as Exhibit C. The Second Put Notice must be accompanied by the (i)
officer's certificate described in Section 11.1(b)(vi) above; (ii) a
copy of the filed registration statement; (iii) notice of declaration
of effectiveness; (iv) five copies of the final prospectus; and (v) a
legal opinion relating to the Put Securities substantially similar to
the legal opinion attached hereto as Exhibit C.
(c) Unless otherwise agreed to by the Subscribers, Put
Notices must be given to all Subscribers in proportion to the amounts
agreed to be purchased by all Subscribers undertaking to purchase Put
Shares in the $500,000 offering to which this Subscription Agreement
relates. The aggregate amount of all such Put Notices may not exceed
$500,000.
(d) Payment by the Subscriber in relation to a Put Notice
relating to the First Put must be made within seven (7) days of
receipt of a Put Notice relating to the First Put and within 45 days
after receipt by the Subscriber of a Put Notice relating to the
Second Put. Payment will be made against delivery to the Subscriber
or an escrow agent to be agreed upon by the Company and Subscriber,
of the Put Securities and items set forth in Section 11.2(b) above,
and delivery to the Placement Agents of the Put Commissions relating
to the Put being exercised, and delivery to the Placement Agents of
the Put Commissions relating to the First Put.
11.3. Put Warrants.
(a) The First Put Warrants and Put Commission Warrants (as
defined herein) payable in connection therewith will be identical to
the Warrants except that such First Put Warrants will be exercisable
commencing on the First Put Closing Date and for three years
thereafter.
(b) The Second Put Warrants and Put Commission Warrants (as
defined herein) payable in connection therewith will be identical to
the Warrants except that such Second Put Warrants will be exercisable
commencing on the Second Put Closing Date and for three years
thereafter.
11.4. Put Commissions. The Placement Agents identified on Schedule B
hereto shall receive commissions in connection with the exercise of the
First Put and Second Put as follows: (i) cash equal to three (3%) percent
of the purchase price of the Put Stock, as set forth on the signature page
hereto; (ii) Preferred Stock having a Stated Value equal to seven (7%)
percent of the purchase price of the Put Stock as set forth on the
signature page hereto; and (iii) one First Put Warrant or one Second Put
Warrant for each $10 of First Put purchase price or Second Put purchase
price paid by a Subscriber in connection with the First Put or Second Put.
Collectively, the foregoing are referred to as Put Commissions. Put
Commissions shall be payable only in connection with the First Put Purchase
Price and Second Put Purchase Price actually paid by a Subscriber. Put
Commissions shall be paid and the attorney for the Subscriber shall receive
a payment at the Closing of each Put equal to one (1%) percent of the Put
purchase price for each Put.
12. (a) Right of First Refusal. Until 120 days after the
effective date of the Registration Statement described in Section 10.1(iv)
hereof, the Subscriber shall be given not less than ten (10) business days
prior written notice of any proposed sale by the Company of its common
stock or other securities or debt obligations except as disclosed in the
Reports or Other Written Information. The Subscriber shall have the right
during the ten (10) business days following the notice to agree to purchase
an amount of Company Shares in the same proportion as being purchased in
the aggregate offering to which this Subscription Agreement relates (i.e.
$500,000 in the aggregate), of those securities proposed to be issued and
sold, in accordance with the terms and conditions set forth in the notice
of sale. In the event such terms and conditions are modified during the
notice period, the Subscriber shall be given prompt notice of such
modification and shall have the right during the original notice period or
for a period of ten (10) business days following the notice of
modification, whichever is longer, to exercise such right. In the event
the right of first refusal described in this Section is exercised by the
Subscriber and the Company thereby receives net proceeds from such
exercise, then commissions and fees will be paid by the Company to the
Placement Agents in the same amounts as specified in the notice of sale.
(b) Offering Restrictions. Except with respect to securities
otherwise disclosed in the Reports or Other Written Information, the
Company will not issue any equity, convertible debt or other securities
which are or could be (by conversion or registration) free-trading
securities prior to the expiration of 120 days from the Effective Date (the
Exclusion Period). This restriction shall not prohibit the Company from
issuing any equity, convertible debt or other securities prior to the
expiration of the Exclusion Period, provided that such equity, convertible
debt or other securities are restricted securities when issued and remain
restricted until the expiration of such 120 day Exclusion Period.
13. Miscellaneous.
(a) Notices. All notices or other communications given or
made hereunder shall be in writing and shall be personally delivered
or deemed delivered the first business day after being telecopied
(provided that a copy is delivered by first class mail) to the party
to receive the same at its address set forth below or to such other
address as either party shall hereafter give to the other by notice
duly made under this Section: (i) if to the Company, to China
Peregrine Food Corporation, 00000 X.X. Xxxxxxx 0, Xxxxx 000, Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000, telecopier number: (000) 000-0000, with a
copy by telecopier only to Xxx X. Xxxxxx, Xx., Esq., telecopier
number: (000) 000-0000, and (ii) if to the Subscriber, to the name,
address and telecopy number set forth on the signature page hereto,
with a copy by telecopier only to Grushko & Xxxxxxx, 000 Xxxxxxxx,
Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (212) 227-
5865. Any notice that may be given pursuant to this Agreement, or
any document delivered in connection with the foregoing may be given
by the Subscriber on the first business day after the observance
dates in the United States of America by Orthodox Jewry of Rosh
Hashanah, Yom Kippur, the first two days of the Feast of Tabernacles,
Shemini Atzeret Simchat Torah, the first two and final two days of
Passover and Pentecost, with such notice to be deemed given and
effective, at the election of the Subscriber on a holiday date that
precedes such notice. Any notice received by the Subscriber on any
of the aforedescribed holidays may be deemed by the Subscriber to be
received and effective as if such notice had been received on the
first business day after the holiday.
(b) Closing. The consummation of the transactions
contemplated herein shall take place at the offices of Grushko &
Xxxxxxx, 000 Xxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, upon the
satisfaction of all conditions to Closing set forth in this
Agreement. The closing date shall be the date that subscriber funds
representing the net amount due the Company from the Purchase Price
are transmitted by wire transfer to the Company (the "Closing Date").
The closing date for the First Put and Second Put shall be the
respective dates on which Subscriber funds representing the net
amount due the Company from the First Put Purchase Price and Second
Put Purchase Price, respectively due, transmitted to or on behalf of
the Company ("First Put Closing Date", "Second Put Closing Date").
(c) Entire Agreement; Assignment. This Agreement represents
the entire agreement between the parties hereto with respect to the
subject matter hereof and may be amended only by a writing executed
by both parties. No right or obligation of either party shall be
assigned by that party without prior notice to and the written
consent of the other party.
(d) Execution. This Agreement may be executed by facsimile
transmission, and in counterparts, each of which will be deemed an
original.
(e) Law Governing this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in
the state courts of New York or in the federal courts located in the
state of New York. Both parties and the individuals executing this
Agreement and other agreements on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury.
The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs. In the event that
any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of law. Any
such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other
provision of any agreement.
(f) Specific Enforcement, Consent to Jurisdiction. The
Company and Subscriber acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled
by law or equity. Subject to Section 13(e) hereof, each of the
Company and Subscriber hereby waives, and agrees not to assert in any
such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner
permitted by law.
(g) Automatic Termination. This Agreement shall
automatically terminate without any further action of either party
hereto if the Closing shall not have occurred by the tenth (10th)
business day following the date this Agreement is accepted by the
Subscriber.
[THIS SPACE INTENTIONALLY LEFT BLANK]
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it
shall become a binding agreement between us.
CHINA PEREGRINE FOOD CORPORATION
By:_______________________________
Dated: Xxxxx 0, 0000
Xxxxxxxx Price: $162,500.00
Preferred Shares Purchased: 16,250 (at $10 per share)
Common Stock Purchase Warrants: 16,250
ACCEPTED: Dated as of March ____, 1999
FIRST PUT
First Put Stock: 8,125 Preferred Shares
First Put Warrants: 8,125
First Put Purchase Price: $81,250.00
SECOND PUT
Second Put Stock: 8,125 Preferred Shares
Second Put Warrants: 8,125
Second Put Purchase Price: $81,250.00
AUSTINVEST ANSTALT BALZERS - Subscriber
(A Lichenstein corporation)
Xxxxxxxxxxx 000
0000 Xxxxxxxxxxx
Balzers, Liechtenstein
Fax: 000-000-000000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it
shall become a binding agreement between us.
CHINA PEREGRINE FOOD CORPORATION
By:_______________________________
Dated: Xxxxx 0, 0000
Xxxxxxxx Price: $162,500.00
Preferred Shares Purchased: 16,250 (at $10 per share)
Common Stock Purchase Warrants: 16,250
ACCEPTED: Dated as of March ____, 1999
FIRST PUT
First Put Stock: 8,125 Preferred Shares
First Put Warrants: 8,125
First Put Purchase Price: $81,250.00
SECOND PUT
Second Put Stock: 8,125 Preferred Shares
Second Put Warrants: 8,125
Second Put Purchase Price: $81,250.00
ESQUIRE TRADE & FINANCE INC. - Subscriber
(A B.V.I. corporation)
Trident Xxxxxxxx
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx, B.V.I.
Fax: 000-00-00-000-0000
By:____________________________
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it
shall become a binding agreement between us.
CHINA PEREGRINE FOOD CORPORATION
By:_______________________________
Dated: Xxxxx 0, 0000
Xxxxxxxx Price: $175,000.00
Preferred Shares Purchased: 17,500 (at $10 per share)
Common Stock Purchase Warrants: 17,500
ACCEPTED: Dated as of March ____, 1999
FIRST PUT
First Put Stock: 8,750 Preferred Shares
First Put Warrants: 8,750
First Put Purchase Price: $87,500.00
SECOND PUT
Second Put Stock: 8,750 Preferred Shares
Second Put Warrants: 8,750
Second Put Purchase Price: $87,500.00
AMRO INTERNATIONAL, S.A. - Subscriber
(A Panama corporation)
c/o Ultra Finanz
Grossmuenster Xxxxx 00
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx CH 8022
Fax: 000-000-000-0000
By:____________________________
SCHEDULE B TO SUBSCRIPTION AGREEMENT
PLACEMENT AGENT CASH COMMISSION PLACEMENT WARRANTS COMMISSION SHARES
--------------- --------------- ------------------ -----------------
LIBRA FINANCE S.A. $12,375.00 -0- -0-
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
SETTONDOWN CAPITAL INTERNATIONAL, LTD. $ -0- 50,000 3,500
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxx, XX 00000
Fax: 000-000-0000
AMRO INTERNATIONAL, SA $ 2,625.00 -0- -0-
c/o Ultra Finanz
Grossmuenster Xxxxx 00
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx CH 8022
Fax: 000-000-000-0000
TOTALS $15,000.00 50,000 3,500