AMENDMENT NO. 2 TO SUBSCRIPTION AGREEMENT AND TO COMMON STOCK
EXHIBIT
10.4
AMENDMENT
NO. 2 TO SUBSCRIPTION AGREEMENT AND TO COMMON STOCK
PURCHASE
WARRANT TO PURCHASE SHARES OF COMMON STOCK OF PURPLE BEVERAGE COMPANY,
INC.
This
Amendment to the Subscription Agreement and to Common Stock Purchase Warrant
to
purchase shares of common stock, par value $0.001 per share (the “Common
Stock”)
of
Purple Beverage Company, Inc. (this “Amendment”),
is
effective as of September __, 2008, by Purple Beverage Company, Inc., a Nevada
corporation (the “Company”),
and
the undersigned holder (the “Holder”).
The
Company and Holder are, together, the “Parties.”
RECITALS
WHEREAS,
effective December 12, 2007, the Company and the Holder entered into that
certain Subscription Agreement (the “Subscription
Agreement”),
pursuant to which the Company sold and issued to Holder certain Shares (as
defined therein) and granted to Holder a Common Stock Purchase Warrant to
purchase shares of Common Stock of the Company, which warrant was dated and
issued as of December 12, 2007 (the “2007
Warrant”),
and
entitled Holder, upon exercise thereof in accordance with the terms contained
therein, to purchase up to that number of shares of Common Stock specified
therein (the “2007
Underlying Shares”)
at an
exercise price (the “Purchase Price” as defined in the ▇▇▇▇ ▇▇▇▇▇▇▇) of $2.00
per share;
WHEREAS,
the Company is seeking the consent of Holder and other purchasers who purchased
Shares and 2007 Warrants under the Subscription Agreement which will permit
the
Company to seek to secure certain financing from the exercise of outstanding
2007 Warrants;
WHEREAS,
the parties wish to amend certain terms contained in the Subscription Agreements
and all of the 2007 Warrants, and is offering to reduce to $0.40 per share
the
effective purchase price for Shares purchased under the Subscription Agreements
(and certain other shares purchased from the Company at $1.40 per share and
at
$1.25 per share) by issuance of additional shares of the Company to Holders
at
no cost, upon receipt of the required consents necessary to authorize this
Amendment (the “Excepted
Transaction Shares”);
WHEREAS,
as a further inducement to consent to the requested actions by the Company,
upon
receipt of the required consents necessary to authorize this Amendment, the
Company will: (i) adjust the exercise price of all unexercised 2007 Warrants
to
$0.40 per share; (ii) grant to the Holder of all 2007 Warrants, newly-issued
restricted Common Stock (the “Restricted
Stock”)
in an
amount equal to 15% of the number of 2007 Underlying Shares into which each
unexercised 2007 Warrant is currently exercisable, and each unregistered
▇▇▇▇
▇▇▇▇▇▇▇ shall thereupon be irrevocably forfeited and cancelled; and (iii)
permit
the transfer and assignment of registered 2007 Warrants with a revised exercise
price of $0.40 per share;
NOW,
THEREFORE, in consideration of the premises, the covenants made herein, and
for
such other good and valuable consideration, the receipt and sufficiency of
which
are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE
1
AMENDMENTS
1. Amendments
to the Subscription Agreement.
1.1 Waiver
of Certain Anti-dilution Protections.
Notwithstanding anything to the contrary contained in the Subscription Agreement
or the 2007 Warrants, none of the transactions contemplated by this Amendment,
or the contemporaneous transfer, assignment or exercise of any 2007 Warrants,
including without limitation, issuance of Excepted Transaction Shares,
adjustment of the 2007 Warrant exercise price, forfeiture of 2007 Warrants,
and
issuance of Restricted Stock, shall result in the imposition or effectiveness
of
any anti-dilution protections, price protection, most favored nations
protections or similar clauses, in favor of the Holder contained in the
Subscription Agreement or 2007 Warrants, except as specifically provided
in
Article
II
hereof.
For
the
absence of doubt, the transactions contemplated herein shall constitute an
“Excepted Issuance” as defined in the Subscription Agreement. Notwithstanding
anything herein to the contrary, all anti-dilution protections, price protection
and most favored nations protections or similar clauses shall continue in
full
force and effect following the date hereof and shall apply to any further
issuances or transactions, other than as contemplated by this
Amendment.
1.2 Waiver
of Certain Offering Restrictions.
Notwithstanding anything to the contrary contained in the Subscription Agreement
or the 2007 Warrants, none of the transactions contemplated by this Amendment,
including, without limitation, issuance
of Excepted Transaction Shares, adjustment of the 2007 Warrant exercise price,
forfeiture of 2007 Warrants, and issuance of Restricted Stock, including
transfers and assignments of the registered 2007 Warrants,
shall be
deemed to be a violation of any of the offering or other restrictions imposed
upon, or granted by, the Company and in favor of the Holder contained in
the
Subscription Agreement, including, without limitation, Section 9(r) of the
Subscription Agreement.
1.3 Consent
and Amendment of Warrant.
The
undersigned Holder (in each of the Holder’s capacity as Subscriber
and as a Holder of 2007 Warrants for the purposes of such consent inasmuch
as the separate consent is required for each of such purposes) hereby consents
to the assignment of 2007 Warrants, the 2007 Underlying Shares of
Common Stock of which have been registered for resale with the Securities
and Exchange Commission, and all other transactions, amendments, modifications
and waivers to the Subscription Agreement and 2007 Warrants as contemplated
herein, and as follows:
(A) The
provisions of Section 4(o) of the Subscription Agreement and any and all
references thereto in the 2007 Warrants, or any other document or
agreement, as amended through the date hereof, are hereby deleted in their
entirety solely with respect to any Restricted Stock, 2007 Warrants, as
well as any similar or equivalent provisions relating to the Restricted
▇▇▇▇▇, ▇▇▇▇ Warrants, and the 2007 Underlying Shares and the provisions of
such
Section 4(o) shall be inapplicable to the Restricted ▇▇▇▇▇, ▇▇▇▇ Warrants
and
the 2007 Underlying Shares, which, unless such securities are registered,
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shall
for
all purposes be subject to the restrictions of Rule 144 under the Securities
Act
of 1933, as amended;
(B) the
Subscription Agreement and each and every lockup agreement is hereby amended
solely to eliminate any and all restrictions on the transfer, sale, assignment,
exercise, or disposition of any 2007 Warrants and/or any 2007
Underlying Shares assigned; and further transfers of such 2007 Warrants or
2007 Underlying Shares, and the undersigned covenants and agrees not
to take any action seeking in any way to restrict assignee of such 2007
Warrants from exercise of the 2007 Warrants or sale of 2007
Underlying Shares or otherwise effectuating the intent and purposes
of any assignment;
(C) upon
approval
of the Board of Directors, the Company may authorize and undertake a reverse
stock split in such ratio, number or amount as the Board of Directors reasonably
determines is necessary or appropriate in connection with satisfying the
original listing standards then in effect for any national securities exchange;
and
(D) Section
12(a)
of the Subscription Agreement (including, without limitation, Section 3.4
of
the ▇▇▇▇ ▇▇▇▇▇▇▇) shall be amended by adding to the definition of “Excepted
Issuance” the following:
“For
the
purposes hereof, an Excepted Issuance shall include: (i) securities issued
(including any warrants or other convertible securities) in connection with
any
registered offering by the Company (including on a best efforts or underwritten
basis); (ii) issuance of any options or shares of Common Stock as commitment
or
consultant fees, additional consideration, interest, exercise fee, commissions,
redemption payment or otherwise in connection with any warrant exercises
or
bridge loans to the Company approved by the Board of Directors, up to a maximum
of 2,500,000 shares; (iii) all 2007 Incentive Plan awards; and (iv) all
issuances of Common Stock authorized by the Company the effect of which shall
result in the effective purchase price per Share of Common Stock to the Company
sold pursuant to each Subscriber as a result thereof equal to $0.40 per share
of
Common Stock acquired prior to the date of this Amendment, the cancellation
and
forfeiture of Warrants and issuance of Common Stock thereupon in an amount
equal
to 15% of the shares of Common Stock underlying such outstanding Warrants
immediately prior to such cancellation and forfeiture and adjustment of the
exercise price of unexercised Warrants not cancelled (i.e., the unexercised
Warrants that have bee registered with the SEC) to $0.40 per
share.”
2. Conditions
Precedent.
As a
condition precedent to the effectiveness of the Amendment and the transactions
contemplated herein, the effectiveness of this Amendment and the transactions
contemplated hereby shall require the Holders holding not less than 70% of
the
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Shares
and 2007 Underlying Shares shall have signed this amendment to their respective
Subscription Agreement and 2007 Warrant (the “Effective
Date”).
3. Market
Standoff.
In
connection with this Amendment, each Holder agrees that in the event the
Company sells securities pursuant to an underwritten registered offering,
including on a best efforts basis by a placement agent, the Holder shall
not
effect any public sale of securities of the Company during a customary period
of
time requested by the managing underwriter of such offering.
ARTICLE
2
ANTI-DILUTION
ADJUSTMENT
1. 2007
Warrants; Restricted Stock Issuance.
On the
Effective Date, the Company shall issue to all Holders of 2007 Warrants
(registered and unregistered), newly-issued shares of restricted Common Stock
in
an amount equal to 15% of the number of 2007 Underlying Shares into which
each
unexercised 2007 Warrant forfeited shall be exercisable, and each 2007 Warrant
(other than 2007 Warrants exercised or exercisable for registered 2007
Underlying Shares) shall be forfeited and cancelled and of no further force
or
effect.
2. 2007
Warrants; Registered Shares.
On the
Effective Date, the exercise price of all 2007 Warrants, the 2007 Underlying
Shares of which have been registered with the SEC, shall be $0.40 per share
and
such 2007 Warrants shall be the only 2007 Warrants that shall remain
outstanding.
3. Anti-Dilution
Shares.
On the
Effective Date, the Company shall issue to all Subscribers, all Holders who
previously exercised 2007 Warrants, and all purchasers of shares of Common
Stock
at $1.40 per share prior to the date hereof, such number of additional shares
of
Common Stock as shall result in the effective purchase price per share of
Common
Stock to the Company equal $0.40 per share of Common Stock.
ARTICLE
3
MISCELLANEOUS
PROVISIONS
1. Re-affirmation
of Representations and Warranties.
If the
Holder consents to this Amendment, then the Holder hereby currently re-affirms
herein all of the representations and warranties made by the Holder in favor
of
the Company in the Subscription Agreement as if made as of the date of this
Amendment and the Company hereby re-affirms herein all of the representations
and warranties initially made by the Company in favor of the Holder in the
Subscription Agreement as of the date of the Subscription
Agreement.
2. Miscellaneous
Provisions.
2.1 No
Further Amendments.
Except
as amended by this Amendment, the Subscription Agreement and the 2007 Warrant
remain unmodified and in full force and effect. In the event of any
inconsistency between the provisions of either the Subscription Agreement
or the
▇▇▇▇ ▇▇▇▇▇▇▇ and the provisions of this Amendment, the provisions of this
Amendment shall
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prevail.
This Amendment may only be modified or amended by a written agreement executed
by the Company, and consented to by Holder, with the same formalities and
in the
same manner as this Amendment.
2.2 Counterparts.
This
Amendment may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which when taken together shall constitute
one and
the same instrument. Facsimiles or portable document files transmitted by
e-mail
containing original signatures shall be deemed for all purposes to be originally
signed copies of the documents which are the subject of such facsimiles or
files.
2.3 Binding
on Successors.
This
Amendment shall be binding upon and shall inure to the benefit of the successors
and permitted assigns of the Parties.
2.4 Entire
Agreement.
Each of
the Subscription Agreement and the 2007 Warrant, as amended by this Amendment,
contains the entire understanding between the Parties and supersedes any
prior
written or oral agreements between them respecting the subject matter contained
herein. There are no representations, agreements, arrangements or
understandings, oral or written, between the Parties relating to the subject
matter hereof that are not fully expressed herein.
IN
WITNESS WHEREOF, the Parties hereto have executed or have caused a duly
authorized officer to execute this Amendment all effective as of the day
and
year first above written.
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By:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer
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HOLDER:
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I
hereby consent to the amendments set forth herein:
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September
__, 2008
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Name:
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Title:
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