SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is dated as of June 30, 2012, by and among MIMVI, Inc., a Nevada corporation (the “Company”), and the subscribers identified on the signature page hereto (each a “Subscriber” and collectively, the “Subscribers”).
WHEREAS, the Company and each Subscriber are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation D”) promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”).
WHEREAS, the parties hereto desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Subscribers (the “Offering”), as provided herein, and such Subscribers shall purchase (i) up to an aggregate of $250,000 (the “Principal Amount”) of 10% Senior Secured Convertible Debentures (the “Note” or “Notes”) of the Company, the form of which is annexed hereto as Exhibit A, and (ii) Common Stock Purchase Warrants (the “Warrants”) in the form attached hereto as Exhibit B;
WHEREAS, the Notes shall mature on the date that is one year following the Closing Date (as defined herein) (the “Maturity Date”). Additionally, such Notes shall be convertible into shares (the “Conversion Shares”) of the Company’s common stock, par value $.001 per share (the “Common Stock”), on the terms and conditions set forth therein at an initial price per share equal to $0.25 (the “Conversion Price”). The Warrants shall entitle the Subscribers to purchase that number of shares of the Company’s Common Stock that equal in the aggregate 100% of the number of shares that would be issuable upon full conversion of the such Subscriber’s Notes at the Conversion Price (the “Warrant Shares”). The Notes, Conversion Shares, Warrants and the Warrant Shares are collectively referred to herein as the “Securities”); and
WHEREAS, the aggregate proceeds of the Offering (the “Escrowed Funds”) shall be held in escrow (the “Escrow Account”) pursuant to the terms of a Funds Escrow Agreement to be executed by the parties hereto substantially in the form attached hereto as Exhibit C (the “Escrow Agreement”).
NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and the Subscribers, intending to be legally bound, hereby agree as follows:
1. Closing Date; Conditions to Closing.
(a) The initial closing date (the “First Closing Date”) shall be on or before June 30, 2012. The Offering shall expire on October 10, 2012 (the “Closing Date”), unless extended for an additional thirty (30) days at the option of the Company. The consummation of the transactions contemplated hereby on the First Closing Date (the “First Closing”) and on subsequent closing dates (each, a “Closing”), respectively, shall take place at the offices of Lucosky Xxxxxxxx LLP, 00 Xxxx Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxxxxx, XX, 00000, upon the satisfaction or waiver of all conditions to Closing set forth in this Agreement. Subject to the satisfaction or waiver of the terms and conditions of this Agreement, on the Closing Date, each Subscriber shall purchase, and the Company shall sell to each Subscriber, the Notes in the Principal Amount of up to $250,000, and issue to each Subscriber Warrants as described in Section 2 of this Agreement.
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(i) No order by any Governmental Authority shall be in effect or threatened that enjoins, restrains, conditions or prohibits consummation of the transactions contemplated by this Agreement or the other Transaction Documents; and
(ii) No legal proceedings shall have been instituted or threatened, or claim or demand made against any party hereto seeking to restrain or prohibit, or to obtain substantial damages with respect to, the consummation of the transactions contemplated by this Agreement and the other Transaction Documents.
(i) delivery of all executed Transaction Documents (as defined herein);
(ii) delivery of all applicable completed and executed Schedules and Exhibits to this Agreement;
(iii) delivery of a corporate resolution approving the Company’s entry into each of the Transaction Documents and authorizing the Offering and the other actions contemplated by the Transaction Document, including, without limitation, the granting of a security interest in the Collateral;
(iv) delivery of an officer’s certificate signed by an officer of the Company certifying that (A) the representations and warranties made by the Company in this Agreement and the other Transaction Documents are true, complete and accurate in all respects on and as of the First Closing Date, with the same force and effect as though such representations and warranties had been given on and as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier or other date and (B) the Company has performed or complied with, in all respects, all obligations and agreements to be performed or complied with by the Company on or prior to the First Closing Date pursuant to this Agreement and the other Transaction Documents (the “Officer’s Certificate”);
(v) delivery of good standing certificates (collectively, the “Good Standing Certificates”) from the State of the Company’s incorporation and from each State that the Company is or should be qualified to do business, each dated within three (3) business days of the First Closing;
(vi) delivery of all Uniform Commercial Code (“UCC”) financing statements prepared in conformity with the UCC as adopted by the State of New York as are determined by Cape One Financial Master Fund Ltd. (the “Lead Subscriber”), on behalf of itself and the other Subscribers, in its sole and absolute discretion, that are desirable by the Lead Subscriber to secure and perfect the Subscribers’ security interests in the Collateral (as defined in the Security Agreement);
(vii) delivery of the results from Lien (as defined herein), federal and state tax, judgment and pending litigation searches from each state and county in which the Company has or had an address or property that are satisfactory to the Lead Subscriber in its sole and absolute discretion;
(d) Conditions to the Company’s Obligations at each of the First Closing and Subsequent Closings.
(i) with respect to the First Closing only, delivery of all executed Transaction Documents;
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(ii) delivery of all applicable completed and executed Schedules and Exhibits to this Agreement;
(iii) with respect to the First Closing, release from the Escrow Account of the Purchase Price in an aggregate amount of at least $100,000; and
(iv) with respect to Subsequent Closings (as defined herein), release from the Escrow Account of the applicable Purchase Price.
(i) delivery of all applicable completed and executed Schedules and Exhibits to this Agreement; and
(ii) delivery of an Officer’s Certificate as of the date of such Subsequent Closing.
(a) Notes. Subject to the satisfaction or waiver of the terms and conditions of this Agreement and the other Transaction Documents, (i) on the First Closing Date, each Subscriber shall purchase, and the Company shall sell, to each such Subscriber, a Note in the Principal Amount set forth opposite such Subscriber’s name on the signature page hereto and (ii) on any date of a Subsequent Closing (each, a “Subsequent Closing Date”), each Subscriber shall purchase, and the Company shall sell, to each such Subscriber, a Note in the Principal Amount set forth in the addendum to the Subscription Agreement in the form attached hereto as Exhibit D (the “Addendum”).
(c) Allocation of Purchase Price. The Purchase Price shall be allocated among the components of the Securities so that each component of the Securities shall be fully paid and nonassessable.
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(h) Legend. All Securities when issued shall bear the following or similar legend:
“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER AND WHICH SHALL BE REASONABLY ACCEPTABLE TO ISSUER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
(i) Notes and Warrants Legend. Each Note and Warrant shall bear the following legend:
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE OREXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER AND WHICH SHALL BE REASONABLY ACCEPTABLE TO ISSUER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
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(b) Outstanding Stock. All issued and outstanding shares of capital stock and equity interests in the Company have been duly authorized and validly issued and are fully paid and nonassessable, and were not issued in violation of any: (i) preemptive or other rights of any Person to acquire securities of the Company or (ii) applicable federal or state securities laws, and the rules and regulations promulgated thereunder.
(d) Capitalization and Additional Issuances. The authorized and outstanding capital stock of the Company on a fully diluted basis, and all outstanding rights to acquire or receive, directly or indirectly, any equity of the Company, as of the date of this Agreement and the First Closing Date, are set forth on Schedule 5(d) hereof, which such Schedule shall be amended to make the same representation and warranty on each Subsequent Closing Date. Except as set forth on such Schedule 5(d), there are no options, warrants, convertible securities, subscriptions or rights to subscribe to, securities, rights, calls, understandings or obligations, relating to any shares of capital stock or other equity interest of the Company. There are no outstanding agreements or preemptive or similar rights affecting the Company’s Common Stock or other securities, and no shares of Common Stock are held in the Company’s treasury.
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(e) Consents. No consent, approval, authorization or order of any court, governmental authority, agency or body or arbitrator having jurisdiction over the Company or over the properties or assets of the Company or any of its Affiliates (each, a “Governmental Authority”), the Over-the-Counter Bulletin Board (the “Bulletin Board”) or the Company’s shareholders is required for the execution by the Company of the Transaction Documents and the complete compliance and performance by the Company of its respective obligations under the Transaction Documents, including, without limitation, the issuance and sale of the Securities. The Transaction Documents and the Company’s performance of its obligations thereunder have been unanimously approved by the Company’s board of directors. Except for the requirement to file the Transaction Documents with the Commission, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority in the world, including without limitation, the United States, or elsewhere is required by the Company or any of its respective Affiliates in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, or the consummation of any of the other agreements, covenants or commitments of the Company contemplated by the other Transaction Documents. Any such qualifications and filings shall, in the case of qualifications, be effective on each Closing and shall, in the case of filings, be made within the time prescribed by applicable law.
(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 certificate of incorporation or bylaws of the Company, (B) any decree, judgment, order, law, treaty, rule, regulation or determination applicable to the Company of any Governmental Authority, or (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
(ii) result in the creation or imposition of any Lien upon the Securities or any of the assets of the Company or any of its Affiliates; or
(iii) result in the activation of any anti-dilution rights or a reset or repricing of any debt, equity or security instrument of any creditor or equity holder of the Company, or the holder of the right to receive any debt, equity or security instrument of the Company, nor result in the acceleration of the due date of any obligation of the Company; or
(iv) result in the triggering of any demand, piggy-back or other registration rights of any Person (as defined herein) holding securities of the Company or having the right to receive securities of the Company.
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(g) The Securities. Upon issuance, each of the Securities:
(i) are, or shall be, free and clear of any Liens;
(ii) have been, or shall be duly and validly authorized, and on the respective dates of issuance of the Notes and Warrants, the Conversion Shares upon conversion of the Notes, and the Warrant Shares upon exercise of the Warrants, such Notes, Warrants, Conversion Shares and Warrant Shares shall 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 or an exemption from registration, shall be free trading, unrestricted and unlegended, subject only to Rule 144;
(iii) shall not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company or rights to acquire securities of the Company; and
(iv) shall not subject the holders thereof to personal liability by reason of being a holder; and
(v) shall not result in a violation of Section 5 under the 1933 Act.
(j) Information Concerning Company. The Reports and Other Written Information contain all information relating to the Company and its operations, financial condition and business as of their respective dates, which information is required to be disclosed therein. Since June 29, 2012, and except as disclosed or modified in the Reports, Other Written Information or in the Schedules, there has been no Material Adverse Effect relating to the Company’s business, financial condition, business or affairs. The Reports and Other Written Information, including the financial statements included therein, 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, taken as a whole, not misleading in light of the circumstances and when made. For purposes of this Agreement, a “Material Adverse Effect” shall mean (i) a material adverse effect on the financial condition, results of operations, prospects, assets (including, without limitation, the Collateral), business or condition (financial or otherwise) of the Company and its Subsidiaries, either individually or taken as a whole, (ii) a material and adverse effect on the legality, validity or enforceability of any Transaction Document and any other documents executed or delivered with this Agreement or in connection herewith, (iii) an adverse impairment to the Company's ability to perform on a timely basis its obligations under any Transaction Document and (iv) the effect or consequence of any event or circumstance which is or is reasonably likely to be adverse to the ability of the borrower(s) or any person to perform or comply with any of their respective obligations under the terms of any debt in accordance with their respective terms.
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(a) Upon the conversion of a Note or any part thereof, the Company shall, at its own sole cost and expense, take all action, including obtaining and delivering an opinion of counsel, to assure that the Company's transfer agent shall issue the appropriate stock certificates, in the name of Subscriber (or its permitted assignee) or such other Persons as designated by Subscriber and in such denominations to be specified at the time of conversion, representing the number of shares of Common Stock issuable upon such conversion. The Company represents and warrants that no instructions other than these instructions have been or shall be given to the transfer agent for the Company's Common Stock and that the certificates representing such shares shall contain no legend other than the legend set forth in Section 4(h) hereof. If and when a Subscriber sells the Conversion Shares, assuming (i) a registration statement including such Conversion Shares for registration has been filed with the Commission and is effective, and the prospectus, as supplemented or amended, contained therein is current and (ii) the Company or its agent confirms in writing to the transfer agent that the Company has complied with the prospectus delivery requirements, the Company shall reissue the Conversion Shares without restrictive legend and such Conversion Shares shall be free-trading and freely transferable. In the event that the Conversion Shares are sold in a manner that complies with an exemption from registration, the Company shall promptly instruct its counsel to issue to the transfer agent an opinion permitting removal of the legend, if such sale is eligible and intended to be made in conformity with Rule 144(i)(2) of the 1933 Act, or for 90 days if pursuant to the other provisions of Rule 144 of the 1933 Act, provided that Subscriber delivers all reasonably requested representations in support of such opinion.
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(b) Each Subscriber shall give notice of its decision to exercise its right to convert its Note, interest, or part thereof by faxing or otherwise delivering a completed Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the Company via confirmed facsimile transmission or otherwise pursuant to Section 13(a) of this Agreement. Subscriber shall not be required to surrender the Note until the Note has been fully converted or satisfied. Each date on which a Notice of Conversion is faxed to the Company in accordance with the provisions hereof by 5 PM Eastern Time (“ET”) (or if received by the Company after 5 PM ET, then the next business day) shall be deemed a “Conversion Date.” The Company shall itself or cause the Company’s transfer agent to transmit the Company’s Common Stock certificates representing the Conversion Shares issuable upon conversion of the Note to Subscriber via express courier for receipt by Subscriber within four (4) business days after the Conversion Date (such fourth day being the ”Delivery Date”). In the event the Conversion Shares are electronically transferable, then delivery of the Conversion Shares must be made by electronic transfer, provided request for such electronic transfer has been made by the Subscriber. A Note representing the balance of the Note not so converted shall be provided by the Company to Subscriber if requested by Subscriber, provided Subscriber delivers the original Note to the Company.
(c) The Company understands that a delay in the delivery of the Conversion Shares in the form required pursuant to Section 7.1 hereof could result in economic loss to the Subscriber. As compensation to Subscriber for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to Subscriber for late issuance of Conversion Shares in the form required pursuant to Section 7.1 hereof upon Conversion of the Note, the amount of $25 per business day after the Delivery Date for each $10,000 of Note principal amount and interest (and proportionately for other amounts) being converted of the corresponding Conversion Shares which are not timely delivered provided that the Subscriber has provided all the information reasonably necessary (as reasonably determined by the Company’s transfer agent and the opinion issuing counsel) to receive timely delivery of such Conversion Shares. The Company shall pay any payments incurred under this Section 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 Conversion Shares within seven (7) business days after the Delivery Date, Subscriber shall be entitled to revoke all or part of the relevant Notice of Conversion by delivery of a notice to such effect to the Company whereupon the Company and Subscriber shall each be restored to their respective positions immediately prior to the delivery of such notice, except that the damages payable in connection with the Company’s default shall be payable through the date notice of revocation or rescission is given to the Company.
7.2. Mandatory Redemption at Subscriber’s Election. In the event of a Change in Control (as defined below), then at the Subscriber’s election in its sole and absolute discretion, the Company shall pay to the Subscriber within ten (10) business days after request by Subscriber (“Change in Control Calculation Period”), a sum of money determined by multiplying up to the outstanding principal amount of the Note designated by Subscriber and the accrued but unpaid interest thereon, and any other amounts due under the Transaction Documents, by 125% (the “Change in Control Mandatory Redemption Payment”). The Change in Control Mandatory Redemption Payment must be received by Subscriber not later than ten (10) business days after request (“Change in Control Mandatory Redemption Payment Date”). Upon receipt of the Change in Control Mandatory Redemption Payment, the corresponding Note principal, interest and other amounts shall be deemed paid and no longer outstanding. The Subscriber may rescind the election to receive a Change in Control Mandatory Redemption Payment at any time after the Change in Control Mandatory Redemption Payment Date by written notice to the Company until such payment is actually received. For purposes of this Section 7.2, “Change in Control” shall mean (i) the merger, acquisition, reorganization, restructuring or consolidation with another Person where the Company is not the surviving entity, (ii) the Company becoming a Subsidiary of another Person (other than a corporation formed by the Company for purposes of reincorporation in another U.S. jurisdiction), (iii) the sale, lease or transfer of substantially all of the assets of the Company or its Subsidiaries or (iv) a majority of the members of the Company’s board of directors as of the applicable Closing Date no longer serving as directors of the Company, except as a result of natural causes or as a result of hiring additional outside directors in order to meet appropriate stock exchange requirements, unless prior written consent of the Subscribers had been obtained by the Company. The foregoing notwithstanding, Subscriber may demand and receive from the Company the amount stated above or any other greater amount which Subscriber is entitled to receive or demand pursuant to the Transaction Documents.
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7.3. Upon the occurrence of an Event of Default (as defined in the Notes), the Conversion Price shall be adjusted to the lower of (i) 50% of the previous thirty (30) day volume weighted average price of the Company’s Common Stock (as determined by Bloomberg L.P.) immediately following the date of the Event of Default and (ii) the then applicable Conversion Price, and the Subscriber will have the right to redeem the entire outstanding principle of the Debentures together with all accrued and unpaid interest.
7.4. Redemption. The Note shall not be redeemable or callable by the Company, except as described in the Note.
9. Covenants of the Company. The Company covenants and agrees with the Subscribers as follows:
(a) Stop Orders. Subject to the prior notice requirement described in Section 9(n) hereof, the Company shall advise the Subscribers, within twenty-four hours after it receives notice of issuance by the Commission, any state securities commission or any Governmental Authority or other regulatory authority, of any stop order or any order preventing or suspending any offering or trading of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for an offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose. Neither the Company nor its Affiliates shall issue any stop transfer order or other order impeding the sale, resale or delivery of any of the Securities, except as may be required by any applicable federal or state securities laws. (b) Listing/Quotation. The Company shall promptly secure the quotation or listing of the Conversion Shares and Warrant Shares upon each national securities exchange, or automated quotation system, upon which the Company’s Common Stock is quoted or listed and upon which such Conversion Shares and Warrant Shares are or become eligible for quotation or listing (subject to official notice of issuance) and shall maintain same so long as any Notes and Warrants are outstanding. The Company shall maintain the quotation or listing of its Common Stock on the NYSE Alternext, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market, Bulletin Board or New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock (the “Principal Market”), and shall comply in all respects with the Company’s reporting, filing and other obligations under the bylaws and rules of the Principal Market, as applicable. Subject to the limitation set forth in Section 9(n) hereof, the Company shall immediately provide Subscribers with copies of all notices it receives notifying the Company of the threatened and actual delisting, or loss of eligibility for quotation\, as applicable, of the Common Stock from any Principal Market. As of the date of this Agreement and the First Closing Date, the Bulletin Board is and shall be the Principal Market.
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(d) Filing Requirements. From the date of this Agreement and until the earliest to occur of (i) two (2) years after the last Subsequent Closing Date, (ii) the date when all of the Conversion Shares and Warrant Shares have been resold or transferred by the Subscribers pursuant to a registration statement or pursuant to Rule 144(b)(1)(i) or (iii) the date when the Notes and Warrants are no longer outstanding (the date of such latest occurrence being the “End Date”), the Company shall (A) cause its Common Stock to continue to be registered under Section 12(b) or 12(g) of the 1934 Act, (B) comply in all respects with its reporting and filing obligations under the 1934 Act, (C) voluntarily comply with all reporting requirements that are applicable to an issuer with a class of shares registered pursuant to Section 12(g) of the 1934 Act if the Company is not subject to such reporting requirements, and (D) comply with all requirements related to any registration statement filed pursuant to this Agreement. The Company shall use its best efforts to not take any direct or indirect action or file any document (whether or not permitted by the 1933 Act or the 1934 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 End Date. Until the End Date, the Company shall continue the listing or quotation of the Common Stock on a Principal Market and shall comply in all respects with the Company’s reporting, filing and other obligations under the bylaws and rules of the Principal Market. The Company agrees to timely file a Form D with respect to the Securities if required under Regulation D and to provide a copy thereof to each Subscriber promptly after such filing if specifically requested by Subscriber.
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(m) Confidentiality/Public Announcement. From the date of this Agreement and until the End Date, the Company agrees that except in connection with a Form 8-K and any registration statement or statements regarding the Subscriber’s Securities or in correspondence with the Commission regarding same, it shall not disclose publicly or privately the identity of the Subscriber unless expressly agreed to in writing by a Subscriber or only to the extent required by law. In any event and subject to the foregoing, the Company undertakes to file a Form 8-K describing the Offering not later than the fourth (4th) business day after the First Closing Date. Prior to the First Closing Date, such Form 8-K shall be provided to Subscribers for their review and approval. In the Form 8-K, the Company shall specifically disclose the nature of the Offering and amount of Common Stock outstanding immediately after the First Closing and assuming that the full amount of the Offering is sold, not including any Conversions. Upon delivery by the Company to the Subscribers after the First Closing Date and any Subsequent Closing Date of any notice or information, in writing, electronically or otherwise, and while a Note, Conversion Shares, Warrants and Warrant Shares are held by Subscribers, unless the Company legal counsel has determined in writing that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or Subsidiaries, the Company shall within one (1) business day after any such delivery publicly disclose such material, nonpublic information on a Report on Form 8-K. In the event that the Company believes that a notice or communication to Subscribers contains material, nonpublic information relating to the Company or Subsidiaries, the Company shall so indicate to Subscribers prior to delivery of such notice or information. Subscribers shall be granted sufficient time to notify the Company that such Subscriber elects not to receive such information. In the event that Subscriber elects not to receive such information, the Company shall not deliver such information to such Subscriber. In the absence of receipt of any such material, non-public information, such Subscriber shall be allowed to presume that all matters relating to such notice and information do not constitute material, nonpublic information relating to the Company or Subsidiaries.
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(o) Negative Covenants. So long as a Note is outstanding, the Company shall not and shall not permit any of its Subsidiaries, without the consent of the Subscribers, to directly or indirectly:
(i) amend its certificate of incorporation or bylaws so as to adversely affect any rights of the Subscribers;
(ii) repay, repurchase or offer to repay, repurchase or otherwise acquire or make any dividend or distribution in respect of any of its Common Stock or other equity securities other than to the extent permitted or required under the Transaction Documents; or
(iii) engage in any transactions with any officer, director, employee of the Company or any Affiliate or any of such Affiliate’s officers, directors or employees, including by way of any contract, agreement or other arrangement, providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or any entity in which any such officer, director or employee has an interest or is an officer, director, trustee or partner, other than (i) for payment of salary or fees for services rendered pursuant to and on the terms of a (A) written contract in effect at least five (5) days prior to the First Closing Date that is described in the Reports or (B) new employment agreement for which the compensation is less than $100,000 for each year of the term of the employment agreement, (ii) reimbursement for authorized expenses incurred on behalf of the Company, (iii) for other employee benefits, including stock option agreements under any stock option plan of the Company that is disclosed in the Reports or (iv) other transactions disclosed in the Reports.
(p) Offering Restrictions. For so long as the Notes are outstanding, the Company shall not issue nor agree to issue any floating or Variable Priced Equity Linked Instruments nor any equity with price reset rights (collectively, the “Variable Rate Restrictions”) without the prior written consent of a Majority in Interest of the Subscribers. For purposes hereof, “Variable Priced Equity Linked Instruments” shall include: (A) any debt or equity securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock either (1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security, or (2) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity security due to a change in the market price of the Company’s Common Stock since date of initial issuance; and (B) any amortizing convertible security which amortizes prior to its maturity date, where the Company is required or has the option to (or any investor in such transaction has the option to require the Company to) make such amortization payments in shares of Common Stock which are valued at a price that is based upon and/or varies with the trading prices of or quotations for the Company’s Common Stock at any time after the initial issuance of such debt or equity security (whether or not such payments in stock are subject to certain equity conditions).
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(q) Seniority. Except for Permitted Liens, until the Notes are fully satisfied or converted, the Company shall not grant nor allow any security interest to be taken in any assets of the Company or any Subsidiary, nor issue or amend any debt, equity or other instrument which would give the holder thereto, directly or indirectly, a right in any equity or assets of the Company or any Subsidiary or any right to payment equal to or superior to any right of the Subscribers as holders of the Notes in or to such equity, assets or payment, nor issue or incur any debt not in the ordinary course of business.
10. Delivery of Unlegended Shares.
(a) Within seven (7) business days (such seventh business day being the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Conversion Shares, Warrant Shares or any other Common Stock held by Subscriber has been sold pursuant to a registration statement or Rule 144 under the 1933 Act, (ii) a representation that the prospectus delivery requirements, or the requirements of Rule 144, as applicable and if required, have been satisfied, (iii) the original share certificates representing the shares of Common Stock that have been sold and (iv) in the case of sales under Rule 144, customary representation letters of the Subscriber and, if required, Subscriber’s broker regarding compliance with the requirements of Rule 144, the Company, at its expense, (x) shall deliver, and shall cause legal counsel selected by the Company to deliver to its transfer agent (with copies to Subscriber) an appropriate instruction and opinion of such counsel, directing the delivery of shares of Common Stock without any legends including the legend set forth in Section 4(h) above (the “Unlegended Shares”) and (y) cause the transmission of the certificates representing the Unlegended Share, together with a legended certificate representing the balance of the submitted Common Stock certificate, if any, to the Subscriber at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date as instructed by Subscriber.
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11. Covenants of the Company Regarding Indemnification.
(a) The Company agrees to indemnify, hold harmless and defend each Subscriber and such Subscriber’s officers, directors, agents, Affiliates, members, managers, control persons and principal shareholders (collectively, the “Representatives”) against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature (or actions in respect thereof), joint or several, incurred by or imposed upon such Subscriber or any Representative which results, arises out of or is based upon (i) any material breach of any representation or warranty or misrepresentation by Company or by Company in this Agreement or in any Exhibits or Schedules attached hereto or in any Transaction Document, or other agreement delivered pursuant hereto or in connection herewith, now or after the date hereof or (ii) after any applicable notice and/or cure periods, if any, any material breach or default in performance by the Company of any covenant or undertaking to be performed by the Company hereunder, or any other agreement entered into by the Company and Subscribers relating hereto, and reimburse such Subscriber or Representative for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. However, if any such liability is a result of Subscriber or its Representatives fraud, gross negligence or willful misconduct, the Company shall have no liability hereunder.
(b) 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, except and only 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 at its sole expense to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party. 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 indemnified party 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, as a group, 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.
(c) In order to provide for just and equitable contribution in the event of joint liability under the 1933 Act, in any case in which either (i) a Subscriber or Representative makes a claim for indemnification pursuant to this Section 12 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 12 provides for indemnification in such case or (ii) contribution under the 1933 Act may be required on the part of the Subscriber or in circumstances for which indemnification is not provided under this Section 12; then, and in each such case, the Company and the Subscriber shall 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 Subscriber is responsible only for the portion for which Subscriber is irrefutably and completely at fault.
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(d) Subscriber agrees to indemnify and hold harmless the Company and its officers, directors, agents and counsel (“Indemnitees”), from and against any and all damage, loss, liability, cost and expense (including reasonable attorneys’ fees) (“Loss”) which any of them may incur by reason of any material breach of the representations and warranties made by Subscriber herein. Subscribers shall severally, and not jointly, indemnify the Company.
If to the Company, to:
Attn: Xxxxxxx Xxxxxx, Chief Executive Officer
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Holder:
To the address and facsimile number listed on the first paragraph of this Note.
With a copy to (which copy shall not constitute notice):
Lucosky Xxxxxxxx LLP
Attn: Xxxxxx X. Xxxxxxx, Esq.
00 Xxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
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(d) 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 any party hereto against the other concerning the transactions contemplated by this Agreement, the other Transaction Transactions and the other documents delivered in connection herewith, shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement, the other Transaction Transactions, and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
(e) Specific Enforcement, Consent to Jurisdiction. The Company and Subscribers 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 hereto shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.
(h) Calendar Days. All references to “days” in the Transaction Documents shall mean calendar days unless otherwise stated. The terms “business days” and “Trading Days” shall mean days that the New York Stock Exchange is open for trading for three or more hours. Time periods shall be determined as if the relevant action, calculation or time period were occurring in New York City. Any deadline that falls on a non-business day in any of the Transaction Documents shall be automatically extended to the next business day and interest, if any, shall be calculated and payable through such extended period.
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(i) Captions; Certain Definitions. The captions of the various sections and paragraphs of this Agreement have been inserted only for the purposes of convenience, and such captions are not a part of this Agreement and shall not be deemed in any manner to interpret modify, explain, enlarge or restrict any of the provisions of this Agreement.
(j) Severability. In the event that any provision of this Agreement, the other Transaction Transactions or any other documents delivered in connection herewith is determined to be invalid, superseded, illegal or unenforceable under any applicable statute or rule of law by an authority having jurisdiction and venue, 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.
(l) Consent. As used in this Agreement and the Transaction Documents and any other agreement delivered in connection herewith, “Consent of the Subscribers” or similar language means the consent of holders of not less than a majority of the outstanding Principal Amount of Notes on the date consent is requested (such Subscribers being a “Majority in Interest”), unless a provision hereof or thereof expressly states that the Lead Subscriber’s consent or approval is required. A Majority in Interest may consent to take or forebear from any action permitted under or in connection with the Transaction Documents, modify any Transaction Documents or waive any default or requirement applicable to the Company, Subsidiaries or Subscribers under the Transaction Documents provided the effect of such action does not waive any accrued interest or damages and further provided that the relative rights of the Subscribers to each other remains unchanged.
(n) Independent Nature of Subscribers. The Company acknowledges that the obligations of each Subscriber under the Transaction Documents are several and not joint with the obligations of any other Subscriber, and no Subscriber shall be responsible in any way for the performance of the obligations of any other Subscriber under the Transaction Documents. The Company acknowledges that each Subscriber has represented that the decision of each Subscriber to purchase Securities has been made by such Subscriber independently of any other Subscriber and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company which may have been made or given by any other Subscriber or by any agent or employee of any other Subscriber, and no Subscriber or any of its agents or employees shall have any liability to any other Subscriber (or any other Person) relating to or arising from any such information, materials, statements or opinions. The Company acknowledges that nothing contained in any Transaction Document, and no action taken by any Subscriber pursuant hereto or thereto shall be deemed to constitute the Subscribers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Subscribers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges that it has elected to provide all Subscribers with the same terms and Transaction Documents for the convenience of the Company and not because Company was required or requested to do so by the Subscribers.
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[Remainder of Page Intentionally Left Blank]
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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.
MIMVI, INC. | ||
a Nevada corporation | ||
By: | /s/ Xxxxxxx Xxxxxx | |
Name: Xxxxxxx Xxxxxx | ||
Title: Chief Executive Officer | ||
SUBSCRIBER | PURCHASE PRICE | NOTE PRINCIPAL | WARRANTS |
Cape One Financial Master Fund Ltd.
/s/ Xxxx Xxxxxxxx By: Xxxx Xxxxxxxx Managing Member Cape One Financial Advisors on behalf of Cape One Master Fund Ltd
|
$100,000 | $100,000 | 400,000 |
[Signature Page to Subscription Agreement]
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A | Form of Note | |
Exhibit B | Form of Warrant | |
Exhibit C | Escrow Agreement | |
Exhibit D | Addendum |
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