SUBSCRIPTION AGREEMENT SKINNY NUTRITIONAL CORP. Private Sale of Securities
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_______________________
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____________________
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Name
of Subscriber
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Memorandum
No.
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Private
Sale of Securities
Consisting
of up to 25,000,000 Shares of Common Stock
Aggregate
Offering Amount: $1,500,000
THIS
SUBSCRIPTION AGREEMENT CONTAINS MATERIAL NONPUBLIC INFORMATION CONCERNING SKINNY
NUTRITIONAL CORP. AND IS PREPARED SOLELY FOR THE USE OF THE OFFEREE NAMED
ABOVE. ANY USE OF THIS INFORMATION FOR ANY PURPOSE OTHER THAN IN
CONNECTION WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY MAY SUBJECT THE USER TO CRIMINAL AND CIVIL LIABILITY.
THE SECURITIES OFFERED HEREBY ARE
HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE DILUTION AND
MAY BE PURCHASED ONLY BY PERSONS WHO QUALIFY AS “ACCREDITED INVESTORS” UNDER
RULE 501 (a) OF REGULATION D UNDER THE SECURITIES ACT.
THIS DOCUMENT HAS NOT BEEN FILED WITH
OR REVIEWED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER
COMMISSION OR REGULATORY AUTHORITY, AND HAS NOT BEEN FILED WITH OR REVIEWED BY
THE ATTORNEY GENERAL OF ANY STATES NOR HAS ANY SUCH COMMISSION, AUTHORITY OR
ATTORNEY GENERAL DETERMINED WHETHER IT IS ACCURATE OR COMPLETE OR PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel.
(▇▇▇)
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November
17, 2008
CONFIDENTIAL
SUBSCRIPTION AGREEMENT
INSTRUCTIONS:
Items to
be delivered by all Investors:
a. One
(1) completed and executed Subscription Agreement, including the Investor
Questionnaire.
b.
Payment
in the amount of subscription, by wire transfer of funds or check. All checks
should be made payable to “▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP escrow account for Skinny
Nutritional Corp.” in the total amount of the Securities subscribed
for.
c.
Wired
funds should be directed as follows:
THE SUBSCRIBER IS RESPONSIBLE FOR ALL
WIRE TRANSFER FEES IMPOSED BY THE SUBSCRIBER’S BANK.
ALL
DOCUMENTS SHOULD BE RETURNED TO:
c/▇
▇▇▇▇▇▇ & Poliakoff, LLP
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▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
THE
FOLLOWING EXHIBIT IS ANNEXED TO
AND
FORMS PART OF THIS SUBSCRIPTION AGREEMENT:
EXHIBIT
A: INVESTOR QUESTIONNAIRE
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The
undersigned (the “Subscriber” or the “Purchaser”) hereby subscribes to purchase
from Skinny Nutritional Corp., a Nevada corporation (the “Company”), certain of
the Company’s securities, as described herein, for a total purchase price of
$1,500,000 (the “Purchase Price”). The Company is offering hereby (the
“Offering”) a maximum of 25,000,000 shares of its Common Stock (the “Common
Shares” or “Securities”).
Article
I
SALE OF
SECURITIES
1.1 Sale
of Securities; Offering Period
(a) Subject
to the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to
the Subscriber and the Subscriber agrees to purchase from the Company, upon
Closing, the Securities as described herein for the Purchase Price as set forth
on the signature page of this Subscription Agreement executed by the Subscriber.
The number of Common Shares purchased hereunder by a Subscriber shall be as
specified on the signature page of this Subscription Agreement executed by the
Subscriber. The Company may reject any subscription in whole or in
part. The Securities being offered consist of a total of up to
25,000,000 Common Shares, par value $.001 per share. The Securities are being
offered at a purchase price of $0.06 per share (the “Purchase Price”). This
Offering is only being made to “accredited investors” (as defined in Rule 501
under the Securities Act of 1933, as amended (the “Securities Act”)) in reliance
upon an exemption from registration under Section 4(2) of the Securities Act
and/or Regulation D promulgated thereunder, and on similar exemptions under
applicable state laws. The Securities may be purchased, in part or
their entirety, by officers and directors of the Company.
(b) In
the sole discretion of the Company, the Company may elect to increase the total
number of increase the maximum number of Common Shares being offered from
$1,500,000 of Shares up to a maximum of $1,875,000 of Common Shares. In the
event the Company elects to exercise this oversubscription right, the Company
would issue an additional 6,250,000 Common Shares.
(c) The
Securities are being offering during the offering period commencing on November
17, 2008 and terminating on the earlier of (a) 5:00 p.m. (New York time) on
December 31, 2008, unless extended by an additional 60 days, or (b) the date on
which all Securities authorized for sale have been sold (the “Offering
Period”).
1.2 High Risk Investment. This
investment is speculative and should only be made by investors who can afford
the risk of loss of their entire investment. The proceeds from the sale of the
Securities will be used to fund short term capital needs to enable the Company
to maintain operations until additional funding is received. The Company intends
to sell additional shares of Common Stock after the completion of this
transaction to further fund its operations. Unless the Company is successful in
completing these additional funding transactions, the Company may be forced to
significantly curtail its operations and the Subscribers will lose their entire
investment.
1.3 Selling Agent Compensation.
The Company intends to engage registered broker-dealers to serve as selling
agents (the “Selling Agents”), for the sale of the Units and pay commissions and
other compensation to the Selling Agents who procure purchasers of the Units. We
will pay and issue to each Selling Agent a warrant (the “Agent Warrants”) to
purchase such number of Shares as equals 10% of the total number of Shares
actually sold in the Offering to Subscribers procured by each Selling Agent.
Agent Warrants shall be exercisable at the per share price of $0.07 for a period
of five years from the date of issuance.
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1.4 Escrow; No Minimum Offering
Amount. The Subscriber acknowledges and agrees that all subscription
amounts will be deposited in a non-interest bearing account established on
behalf of the Company, but that there is no minimum Offering amount necessary to
conduct a closing for the funds to be released to the Company. Accordingly,
funds may be released to the Company and closings held, from time to time, as
determined by the Company at any time during the Offering Period. During the
Offering period, subscription funds will be placed into the escrow account and
closings will be held from time to time up to the sale of the maximum amount of
Securities described in this Subscription Agreement or the expiration of the
Offering Period. The final Closing shall be either the date of which this
Offering is fully subscribed or the last date during the Offering Period on
which the Company accepts a subscription, whichever is latest. Each closing of
the transactions contemplated hereunder (the “Closing”) shall be deemed to occur
at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be mutually agreeable
to the parties, at 11:00 a.m., New York Time, on such other date as be mutually
agreeable to the parties.
1.5 Closing Matters. At each
Closing the following actions shall be taken:
(a) each
Subscriber shall deliver its Purchase Price in immediately available United
States funds to the escrow account established for the Offering;
and
(b) the
Company shall deliver certificates representing the Common Shares subscribed for
to each Subscriber; and
(c) each
of the Company and the Subscriber shall deliver to the other signed copies of
this Agreement and the Subscriber shall deliver to the Company a completed and
executed Investor Questionnaire.
1.6 Use of
Proceeds. The Company intends to use the proceeds derived from
this Offering to satisfy its working capital requirements and general corporate
purposes. Management reserves the right to utilize the net proceeds of the
Offering in a manner in the best interests of the Company. The amount of the net
proceeds that will be invested in particular areas of the Company’s business
will depend upon future economic conditions and business opportunities. To the
extent that the Company continues to incur losses from operations, such losses
will be funded from its general funds, including the net proceeds of this
Offering.
1.7 Certain Reports Filed Under the
Securities Exchange Act of 1934. The Company’s (i) Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2007 (the “Annual
Report”); and (ii) Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2008 (the “Quarterly Report”) have been filed by the Company with the
Securities and Exchange Commission through the Commission’s ▇▇▇▇▇ website and
are incorporated into this Subscription Agreement by reference. Such reports
comprise an integral part of this Agreement and each Subscriber is urged to read
each such report in its entirety. Such reports may be collectively referred to
herein as the “SEC Reports”.
1.8 Subscriber
Information
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(a)
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Name(s) of
SUBSCRIBER(s):_____________________
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___________________________________
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___________________________________
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(b)
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Principal
Amount of Securities
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Subscribed
for:
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$__________
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(c)
Accredited Investor Status
The Subscriber acknowledges and agrees
that the offering and sale of the Securities are intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2) thereof and/or
Regulation D promulgated thereunder. In accordance therewith and in
furtherance thereof, the Subscriber represents and warrants to and agrees with
the Company as follows [Please check statements applicable to the
Subscriber]:
The Subscriber is an Accredited
Investor because the Subscriber is (check appropriate item):
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a
bank as defined in Section 3(a)(2) of the
Act;
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a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act;
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a
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934 as amended (the “Exchange
Act”);
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an
insurance company as defined in Section 2(13) of the
Act;
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an
investment company registered under the Investment Company Act of 1940, as
amended or a business development company as defined in Section 2(a)(48)
of such act;
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a
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
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an
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited
investors;
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a
private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940, as
amended;
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an
organization described in Section 501(c)(3) of the Internal Revenue Code,
a corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of
$5,000,000;
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a
natural person whose individual net worth or joint net worth with that
person's spouse, at the time of his purchase exceeds
$l,000,000;
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a
natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current
year;
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a
trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
the Exchange Act; or
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an
entity in which all of the equity owners are accredited
investors. (If this alternative is checked, the Subscriber must
identify each equity owner and provide statements signed by each
demonstrating how each qualifies as an accredited
investor.)
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a
plan established and maintained by a state, its political subdivisions, or
any agency or instrumentality thereof, for the benefit of its employees,
if such plan has total assets in excess of
$5,000,000
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a
director or officer of the
Company.
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(d) Additional
Information.
The Subscriber has completed the
signature page to this Subscription Agreement and the Questionnaire annexed at
Exhibit A to this
Subscription Agreement.
Article
II
REPRESENTATIONS AND
WARRANTIES OF COMPANY
The Company hereby represents and
warrants to the Purchasers as of the date of this Agreement as
follows:
(A) The
Company is duly organized, validly existing and in good standing under the laws
of its state of incorporation, with all requisite power and authority to own,
lease, license, and use its properties and assets and to carry out the business
in which it is engaged, except where the failure to have or be any of the
foregoing may not be expected to have a material adverse effect on the Company’s
presently conducted businesses. The Company is not in violation of
any of the provisions of its certificate of incorporation, bylaws or other
organizational or charter documents. The Company is duly qualified to transact
the business in which it is engaged and is in good standing as a foreign
corporation in every jurisdiction in which its ownership, leasing, licensing or
use of property or assets or the conduct of its business make such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in (i) a material and adverse effect on the legality,
validity or enforceability of this Agreement, (ii) a material and adverse effect
on the results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company, taken as a whole, or (iii) an adverse
impairment to the Company’s ability to perform on a timely basis its obligations
hereunder (any of (i), (ii) or (iii), a “Material Adverse Effect”).
(B) The
Company is currently authorized to issue 250,000,000 shares of Common Stock,
$.001 par value per share and 1,000,000 shares of Preferred Stock, $0.001 par
value per share. Except as described in this Agreement, no securities
of the Company are entitled to preemptive or similar rights, and no entity or
person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by this
Agreement unless any such rights have been waived. The issue and sale of the
Securities will not (except pursuant to their terms thereunder), immediately or
with the passage of time, obligate the Company to issue shares of Common Stock
or other securities to any entity or person and will not result in a right of
any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such securities.
(C) The
Company has the requisite corporate power and authority to enter into, deliver
and consummate the transactions contemplated by this Agreement, to issue and
sell the Securities and deliver the Shares and Warrants, and otherwise to carry
out its obligations hereunder. The execution and delivery of this
Agreement and the consummation by it of the transactions contemplated thereby
have been duly authorized by the Company and no further action is required by
the Company in connection therewith. When executed and delivered by the Company,
this Agreement will constitute the legal, valid and binding obligation of the
Company, enforceable as to the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance or transfer, moratorium or other laws or
court decisions, now or hereinafter in effect, relating to or affecting the
rights of creditors generally and as may be limited by general principles of
equity and the discretion of the court having jurisdiction in an enforcement
action (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
6
(D) The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other person or
entity in connection with the execution, delivery and performance by the Company
of this Agreement or the issuance, sale or delivery of the Securities other than
(i) any filings required by state securities laws, (ii) the filing of a Notice
of a Sale of Securities on Form D with the Commission under Regulation D of the
Securities Act, (iii) those that have been made or obtained prior to or
contemporaneously with the date of this Agreement and (iv) filings pursuant to
the Securities and Exchange Act of 1934, as amended.
(E) The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby do not and
will not: (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) violate, conflict with, or constitute a
default or breach (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) or other understanding to which the Company is a party or by
which any property or asset of the Company is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
is subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(F) The
Common Shares have been duly authorized and, when issued and paid for in
accordance with this Agreement, will be duly and validly issued, fully paid and
nonassessable, will not be issued in violation of any preemptive or other rights
of stockholders, and will be issued free and clear of all liens and
encumbrances, other than restrictions on transfer under applicable securities
laws.
(G) Except
as disclosed in the SEC Reports, 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. Except as
disclosed in the SEC Reports, 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 which litigation if adversely determined could
have a material adverse effect on the Company.
(H) The
Company has no liabilities or obligations which are material, individually or in
the aggregate, which are not disclosed in the SEC Reports, other than those
incurred in the ordinary course of the Company’s businesses and which,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the Company’s financial condition.
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Article
III
REPRESENTATIONS AND
WARRANTIES OF PURCHASERS
By signing this Agreement, each
undersigned Purchaser hereby represents and warrants to the Company as follows
as an inducement to the Company to accept the subscription of the
Purchaser:
(A) The
Purchaser acknowledges and agrees that (i) the offering and sale of the
Securities are intended to be exempt from registration under the Securities Act
by virtue of Section 4(2) of the Securities Act and/or Regulation D promulgated
thereunder, (ii) the Securities have not been registered under the Securities
Act and (iii) that the Company has represented to the Purchaser (assuming the
veracity of the representations of the Purchaser made herein and in the
Questionnaire annexed hereto at Exhibit A) that the Securities
have been offered and sold by the Company in reliance upon an exemption from
registration provided in Section 4(2) of the Securities Act and Regulation D
thereunder. In accordance therewith and in furtherance thereof, the Purchaser
represents and warrants to and agrees with the Company that it is an accredited
investor (as defined in Rule 501 promulgated under the Securities Act) for the
reason indicated in Article I of this Subscription Agreement.
(B) The
Purchaser hereby represents and warrants that the Purchaser is acquiring the
Securities hereunder for its own account for investment and not with a view to
distribution, and with no present intention of distributing the Securities or
selling the Securities for distribution. The Purchaser understands
that the Securities are being sold to the Purchaser in a transaction which is
exempt from the registration requirements of the Securities
Act. Accordingly, the Purchaser acknowledges that it has been advised
that the Securities have not been registered under the Securities Act and are
being sold by the Company in reliance upon the veracity of the Purchaser’s
representations contained herein and upon the exemption from the registration
requirements provided by the Securities Act and the securities laws of all
applicable states. The Purchaser's acquisition of the Securities
shall constitute a confirmation of the foregoing representation and warranty and
understanding thereof.
(C) The
Purchaser (or its “Purchaser Representative” if any) has such knowledge and
experience in financial and business matters as is required for evaluating the
merits and risks of making this investment, and the Purchaser or its Purchaser
Representative(s) has received such information requested by the Purchaser
concerning the business, management and financial affairs of the Company in
order to evaluate the merits and risks of making this
investment. Further, the Purchaser acknowledges that the Purchaser
has had the opportunity to ask questions of, and receive answers from, the
officers of the Company concerning the terms and conditions of this investment
and to obtain information relating to the organization, operation and business
of the Company and of the Company's contracts, agreements and obligations or
needed to verify the accuracy of any information contained herein or any other
information about the Company. Except as set forth in this Agreement,
no representation or warranty is made by the Company to induce the Purchaser to
make this investment, and any representation or warranty not made herein or
therein is specifically disclaimed and no information furnished to the Purchaser
or the Purchaser's advisor(s) in connection with the sale were in any way
inconsistent with the information stated herein. The Purchaser further
understands and acknowledges that no person has been authorized by the Company
to make any representations or warranties concerning the Company, including as
to the accuracy or completeness of the information contained in this
Agreement.
(D) The
Purchaser is making the foregoing representations and warranties with the intent
that they may be relied upon by the Company in determining the suitability of
the sale of the Securities to the Purchaser for purposes of federal and state
securities laws. Accordingly, each Purchaser represents and warrants that the
information stated herein is true, accurate and complete, and agrees to notify
and supply corrective information promptly to the Company as provided above if
any of such information becomes inaccurate or incomplete. The
Purchaser has completed this Agreement and Questionnaire, has delivered it
herewith and represents and warrants that it is accurate and true in all
respects and that it accurately and completely sets forth the financial
condition of the Purchaser on the date hereof. The Purchaser has no
reason to expect there will be any material adverse change in its financial
condition and will advise the Company of any such changes occurring prior to the
closing or termination of the Offering.
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(E) The
Purchaser is not subscribing for any of the Securities as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the Purchaser in connection
with investments in Securities generally.
(F) The
Purchaser has received or obtained access to certain information regarding the
Company, including this Agreement, the SEC Reports and other accompanying
documents of the Company receipt of which is hereby acknowledged. The Purchaser
has carefully reviewed all information provided to it and has carefully
evaluated and understands the risks described therein related to the Company and
an investment in the Company, and understands and has relied only on the
information provided to it in writing by the Company relating to this
investment. No agent prepared any of the information to be delivered to
prospective investors in connection with this transaction. Prospective investors
are advised to conduct their own review of the business, properties and affairs
of the Company before subscribing to purchase the Securities.
(G) The
Purchaser also understands and agrees that, although the Company will use its
best efforts to keep the information provided in this Agreement strictly
confidential, the Company or its counsel may present this Agreement and the
information provided in answer to it to such parties as they may deem advisable
if called upon to establish the availability under any federal or state
securities laws of an exemption from registration of the private placement or if
the contents thereof are relevant to any issue in any action, suit or proceeding
to which the Company or its affiliates is a party, or by which they are or may
be bound or as otherwise required by law or regulatory authority.
(H) The
individual signing below on behalf of any entity hereby warrants and represents
that he/she is authorized to execute this Agreement on behalf of such
entity. If an individual, the Purchaser has reached the age of
majority in the state in which the Purchaser resides. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite action, if any,
in respect thereof on the part of Purchasers and no other proceedings on the
part of Purchasers are necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by Purchasers and constitutes a valid and binding obligation of
Purchasers, enforceable against Purchasers in accordance with its terms (subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’
rights generally and subject, as to enforceability, to general principles of
equity (whether applied in a proceeding in equity or at
law)).
(I) The
Purchaser is aware that the offering of the Securities involves securities for
which only a limited trading market exists, thereby requiring any investment to
be maintained for an indefinite period of time. The purchase of the
Securities involves risks which the Purchaser has evaluated, and the Purchaser
is able to bear the economic risk of the purchase of such Securities and the
loss of its entire investment. The undersigned is able to bear the substantial
economic risk of the investment for an indefinite period of time, has no need
for liquidity in such investment and can afford a complete loss of such
investment. The Purchaser's overall commitment to investments that
are not readily marketable is not, and his acquisition of the Securities will
not cause such overall commitment to become, disproportionate to his net worth
and the Purchaser has adequate means of providing for its current needs and
contingencies.
(J) The
Purchaser acknowledges and agrees that there is no “minimum” offering amount for
the Securities and that there is no escrow of the funds deposited by the
Purchaser for the purchase of the Units. The Purchaser acknowledges
and agrees that funds may be immediately released to the Company.
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(K) In
entering into this Agreement and in purchasing the Securities, the Purchaser
further acknowledges that:
(i) The Company has informed
the Purchaser that the Securities have not been offered for sale by means of
general advertising or solicitation and the Purchaser acknowledges that it has
either a pre-existing personal or business relationship with either the Company
or any of its officers, directors or controlling person, of a nature
and duration such as would enable a reasonable prudent investor to be aware of
the character, business acumen, and general business and financial circumstances
of the Company and an investment in the Securities.
(ii) Neither the Securities
nor any interest therein may be resold by the Purchaser in the absence of a
registration under the Securities Act or an exemption from
registration. In particular, the Purchaser is aware that all of the
foregoing described Securities will be “restricted securities”, as such term is
defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they
may not be sold pursuant to Rule 144, unless the conditions thereof are met.
Other than set forth in this Agreement, the Company has no obligation to
register any securities purchased or issuable hereunder.
(iii) The following legends
(or similar language) shall be placed on the certificate(s) or other instruments
evidencing the Shares, Warrants and Warrant Shares:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER
SUCH NOTES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH NOTES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH NOTES
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
(iv) The Company may at any
time place a stop transfer order on its transfer books against the Securities.
Such stop order will be removed, and further transfer of the Securities will be
permitted, upon an effective registration of the respective Securities, or the
receipt by the Company of an opinion of counsel satisfactory to the Company that
such further transfer may be effected pursuant to an applicable exemption from
registration.
(L) The
Company has employed its own legal counsel in connection with the Offering. The
Purchasers have not been represented by independent counsel in connection with
the preparation of this Agreement or the terms of this Offering and no
investigation of the merits or fairness of the Offering has been conducted on
behalf of the Purchasers. Prospective Purchasers should consult with
their own legal, tax and financial advisors with respect to the Offering made
pursuant to this Agreement.
(M) (insert name
of Purchaser Representative: if none leave
blank) has acted
as the Purchaser’s Purchaser Representative for purposes of the private
placement exemption under the Act. If the Purchaser has appointed a
Purchaser Representative (which term is used herein with the same meaning as
given in Rule 501(h) of Regulation D), the Purchaser has been advised by his
Purchaser Representative as to the merits and risks of an investment in the
Company in general and the suitability of an investment in the Securities for
the Purchaser in particular.
(N) The
undersigned hereby acknowledges that officers, affiliates, employees and
directors of the Company and/or the Selling Agents may purchase Securities in
the Offering.
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(O) It
never has been represented, guaranteed or warranted by any Selling Agent, the
Company, any of the officers, directors, stockholders, partners, employees or
agents of the Company, or any other persons, whether expressly or by
implication, that: (i) the Company or the Purchasers will realize any given
percentage of profits and/or amount or type of consideration, profit or loss as
a result of the Company’s activities or the Purchaser’s investment in the
Company; or (ii) the past performance or experience of the management of the
Company, or of any other person, will in any way indicate the predictable
results of the ownership of the Securities or of the Company's
activities.
(P) The
Purchaser acknowledges that any delivery to it of this Agreement relating to the
Securities prior to the determination by the Company of its suitability as a
Purchaser shall not constitute an offer of the Securities until such
determination of suitability shall be made, and the Purchaser hereby agrees that
it shall promptly return this Agreement and the other Offering documents to the
Company upon request. The Purchaser understands that the Company shall have the
right to accept or reject this subscription in whole or in
part. Unless this subscription is accepted in whole or in part by the
Company, this subscription shall be deemed rejected in whole.
Article
IV
INDEMNIFICATION
4.1 Indemnification by the
Company. The Company agrees to defend, indemnify and hold
harmless the Purchasers and shall reimburse Purchasers for, from and against
each claim, loss, liability, cost and expense (including without limitation,
interest, penalties, costs of preparation and investigation, and the reasonable
fees, disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, “Losses”) directly or indirectly relating
to, resulting from or arising out of any untrue representation,
misrepresentation, breach of warranty or non-fulfillment of any covenant,
agreement or other obligation by or of the Company contained herein or in any
certificate, document, or instrument delivered to Purchasers pursuant
hereto.
4.2
Indemnification by
Purchasers. Purchasers agrees to defend, indemnify and hold
harmless the Company and shall reimburse The Company for, from and against all
Losses directly or indirectly relating to, resulting from or arising out of any
untrue representation, misrepresentation, breach of warranty or non-fulfillment
of any covenant, agreement or other obligation of the Purchasers contained
herein or in any certificate, document or instrument delivered to the Company
pursuant hereto.
4.3 Procedure. The indemnified
party shall promptly notify the indemnifying party of any claim, demand, action
or proceeding for which indemnification will be sought under Sections 4.1 or 4.2
of this Agreement, and, if such claim, demand, action or proceeding is a third
party claim, demand, action or proceeding, the indemnifying party will have the
right at its expense to assume the defense thereof using counsel reasonably
acceptable to the indemnified party. The indemnified party shall have
the right to participate, at its own expense, with respect to any such third
party claim, demand, action or proceeding. In connection with any
such third party claim, demand, action or proceeding, Purchasers and the Company
shall cooperate with each other and provide each other with access to relevant
books and records in their possession. No such third party claim,
demand, action or proceeding shall be settled without the prior written consent
of the indemnified party, which shall not be unreasonably
withheld. If a firm written offer is made to settle any such third
party claim, demand, action or proceeding and the indemnifying party proposes to
accept such settlement and the indemnified party refuses to consent to such
settlement, then: (i) the indemnifying party shall be excused from, and the
indemnified party shall be solely responsible for, all further defense of such
third party claim, demand, action or proceeding; and (ii) the maximum liability
of the indemnifying party relating to such third party claim, demand, action or
proceeding shall be the amount of the proposed settlement if the amount
thereafter recovered from the indemnified party on such third party claim,
demand, action or proceeding is greater than the amount of the proposed
settlement.
11
ARTICLE
V
ADDITIONAL AGREEMENTS BY THE
PARTIES
Section
5.1 Registration Rights
The
Subscriber and the Company agree that the Subscriber shall be entitled to the
registration rights with respect to the Securities as set forth in this Section
5.1
(a) Definition of Registrable
Securities. As used in this Section 5.1, the term “Registrable
Security” means (i) each share of Common Stock issued in accordance with this
Subscription Agreement; and (ii) any securities issued upon any stock split or
stock dividend in respect thereof; provided, however, that with respect to any
particular Registrable Security, such security shall cease to be a Registrable
Security when, as of the date of determination; (A) it has been effectively
registered under the Securities Act and disposed of pursuant thereto; (B)
registration under the Securities Act is no longer required for subsequent
public distribution of such security; or (C) it has ceased to be
outstanding. The term “Registrable Securities” means any and/or all
of the securities falling within the foregoing definition of a “Registrable
Security.” In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in the definition of “Registrable Security”
as is appropriate in order to prevent any dilution or increase of the rights
granted pursuant to this Clause (a) as determined in good faith by the Board of
Directors.
(b) Registration by the
Company. Commencing on the Closing Date and for a period of
five years thereafter, in the event that the Company intends to file a
registration statement with the Securities and Exchange Commission under the
Securities Act of l933 (the “Act”), other than registration statement on Form
S-4 or S-8, or successor forms thereto, and registration statements filed but
not effective prior to the termination of this Offering, to register for sale
any of its shares of Common Stock, the Company will include for resale under the
Securities Act in the registration statement the Registrable Securities of the
Holder in accordance with this Section 5.1. The Company shall advise the Holder
of the Registrable Securities (such persons being collectively referred to
herein as “Holders”) by written notice at least 20 days prior to the filing by
the Company with the Securities and Exchange Commission of any other
registration statement under the Act covering shares of Common Stock of the
Company, except on Forms S-4 or S-8 (or similar successor form) or registration
statements filed but not effective prior to the termination of this Offering,
and upon the request of any such Holder within ten days after the date of such
notice, include in any such registration statement such information as may be
required to permit a public offering of the Holder’s Registrable
Securities. Such Holders shall furnish information and
indemnification as set forth in elsewhere in this Section 5.1. For
the purpose of the foregoing, inclusion of the Registrable Shares by the Holder
in a Registration Statement pursuant to this Section 5.1 under a condition that
the offer and/or sale of such Registrable Shares not commence until a date not
to exceed 90 days from the effective date of such registration statement shall
be deemed to be in compliance with this Section 5.1. Further, the
Company shall not be required to register for resale any Registrable Securities
if at the time of such proposed registration, the Registrable Securities may be
sold without any limitation under Rule 144. The Company may withdraw the
registration at any time. Notwithstanding the foregoing, if the registration
statement filed by the Company is pursuant to an underwritten
offering:
(A) if
the underwriter determines in good faith that marketing factors require the
exclusion of some or all of the Registrable Securities, then the Holders may
include in the registration statement no more than the maximum amount, if any,
of such Registrable Securities that the underwriter believes will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the Holders according to the total amount of
securities requested to be included therein owned by the Holders or in such
other proportions as shall mutually be agreed upon by such
parties). The Holders’ right to have Registrable Securities included
in the first registration statement filed by the Company shall be deferred to
the second registration statement filed by the Company, which deferral may be
continued to the third or subsequent registration statement so long as the
registration statements are pursuant to underwritten offerings and the
underwriter determines in good faith that marketing factors require exclusion of
some or all of the Registrable Securities held by the Holders; and
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(B) each
Holder of Registrable Securities shall enter into an underwriting agreement in
customary form with the underwriter and provide such information regarding
Holder that the underwriter shall reasonably request in connection with the
preparation of the prospectus describing such offering, including completion of
NASD Questionnaires.
(c) Covenants with Respect to
Registration. In connection with the registration in which the
Registrable Securities are included, the Company covenants and agrees as
follows:
(A) The
Company shall use its best efforts to have the registration statement declared
effective as soon as possible after filing, and shall furnish each Holder of
Registrable Securities such number of prospectuses as shall reasonably be
requested. In addition, the Company shall file such amendments as may
be required from time to time, in order to keep any registration statement filed
under this section effective as provided herein. The registration
statement filed by the Company hereunder shall remain effective for the earlier
of (i) 9 months or (ii) the date that the Registrable Securities may be sold
without volume limitation under SEC Rule 144(k).
(B) The
Company shall pay all costs (excluding fees and expenses of Holder(s) counsel
and any underwriting or selling commissions), fees and expenses in connection
with the registration statement filed pursuant hereto including, without
limitation, the Company's legal and accounting fees, printing expenses, blue sky
fees and expenses.
(C) The
Company will take all necessary action which may be required in qualifying or
registering the Registrable Securities included in the registration statement,
for offering and sale under the securities or blue sky laws of such states as
reasonably are requested by the Holder(s), provided that the Company shall not
be obligated to execute or file any general consent to service of process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
(D) The
Company shall indemnify each Holder of Registrable Securities to be sold
pursuant to the registration statement and each person, if any, who controls
such Holder within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss,
claim, damage, expense or liability (including all reasonable expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement, except to the extent
arising under paragraph (E) below.
(E) Each
Holder of Registrable Securities to be sold pursuant to a registration
statement, and their successors and assigns, shall severally, and not jointly,
indemnify the Company, its officers and directors and any underwriter, and each
person, if any, who controls the Company or such underwriter within the meaning
of Section 15
of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or reasonable expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising (I) from information furnished
by or on behalf of such Holder, or their successors or assigns, for specific
inclusion in such registration statement or (II) as a result of use by the
Holder of a registration statement that the Holder was advised to discontinue;
provided, however, that in no event shall any indemnity hereunder exceed the net
proceeds from the offering received by such Holder.
(F) The
foregoing registration rights shall be contingent on the Holders furnishing the
Company with such appropriate information (relating to the intentions of such
Holders) as the Company shall reasonably request in writing.
13
ARTICLE
VI
MISCELLANEOUS
6.1 Survival. The
representations and warranties set forth in Articles II and III hereof shall
survive the Closing. No investigation made by or on behalf of either
party shall affect the representations and warranties made pursuant to this
Agreement. No party makes any additional or implied representations other than
those set forth herein.
6.2 Expenses. Each
party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated hereby, including fees and
expenses of its own brokers, finders, financial consultants, accountants and
counsel.
6.3
Entire
Agreement. This Agreement, including the Exhibits, contains
the entire agreement and understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior arrangements and
understandings between the parties, either written or oral, with respect to its
subject matter.
6.4 Binding Effect of
Subscription. The Purchaser hereby acknowledges and agrees,
subject to any applicable state securities laws that the subscription and
application hereunder are irrevocable, that the Purchaser is not entitled to
cancel, terminate or revoke this Agreement and that this Agreement shall survive
the death or disability of the Purchaser and shall be binding upon and inure to
the benefit of the Purchaser and his heirs, executors, administrators,
successors, legal representatives, and assigns. If the Purchaser is
more than one person, the obligations of the Purchaser hereunder shall be joint
and several, and the agreements, representations, warranties, and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators, successors,
legal representatives, and assigns.
6.5 Captions. The table
of contents and captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
6.6 Amendments; Waivers. No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers holding a majority of the Securities subscribed for in the Offering
or, in the case of a waiver, by the party against whom enforcement of any such
waiver is sought (in the case of
the Purchasers, such waiver shall be in writing and approved by a majority of
the Purchasers). No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.
6.7 Notices. Any
notice, demand or other communication which any party hereto may be required, or
may elect, to give to anyone interested hereunder shall be sufficiently given if
(a) deposited, postage prepaid, in a United States mail box, stamped, registered
or certified mail, return receipt requested, addressed to such address as may be
listed on the books of the Company, or, if to the Company, the Company’s
executive office, or (b) delivered personally at such
address.
6.8 Execution. This
Agreement may be executed through the use of separate signature pages or in any
number of counterparts, and each of such counterparts shall, or all purposes,
constitute one agreement binding on all parties, notwithstanding that all
parties are not signatories to the same counterpart.
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6.9 Severability. Each
provision of this Agreement is intended to be severable from every other
provisions, and the invalidity or illegality of any portion hereof, shall not
affect the validity or legality of the remainder hereof.
6.10 Non-Assignment. This
Agreement is not transferable or assignable by the Purchaser except as may be
provided herein.
6.11 Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Pennsylvania, without regard to the
principles of conflicts of law thereof. Each party agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective Affiliates, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the State of Pennsylvania
(the “Pennsylvania
Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Pennsylvania Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any proceeding, any claim that it is not personally subject to the jurisdiction
of any Pennsylvania Court, or that such proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in any
such proceeding 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 manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a proceeding to enforce any
provisions of this Agreement, then the prevailing party in such proceeding shall
be reimbursed by the other party for its reasonable attorney’s fees and other
reasonable costs and expenses incurred with the investigation, preparation and
prosecution of such Proceeding.
6.12 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the Company, the Purchasers and their respective successors and
permitted assigns.
Signature
pages to Securities Purchase Agreement Follows
15
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT
IN WITNESS WHEREOF, the parties hereto
have executed or caused this Agreement to be executed by their signature as
natural persons or by individuals by their duly authorized officers as of the __
day of ____________, 2008.
THE
COMPANY:
_______________________
Chief
Executive Officer
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EXECUTION
BY AN INDIVIDUAL
(Not
applicable to entities)
IF YOU
ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST BOTH SIGN THIS SIGNATURE
PAGE.
PLEASE
INDICATE DESIRED TYPE OF OWNERSHIP OF SECURITIES:
o Individual
o Joint
Tenants (rights of survivorship)
o Tenants
in Common (no rights of survivorship)
I
represent that the foregoing information is true and correct.
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement
and agrees to the terms hereof.
Dated:
__________________ _____200_
Subscription
Amount: $_____________
Number of
Shares of Common Stock to be purchased: _______________
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__________________________________________
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(Name
of Investor - Please Print)
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_____________________________________________
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(Signature)
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_____________________________________________
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(Name
of co-Investor - Please Print)
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_____________________________________________
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(Signature
of Co-Investor)
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PARTNERSHIP
SIGNATURE PAGE
The
undersigned PARTNERSHIP hereby represents and warrants that the person signing
this Subscription Agreement on behalf of the PARTNERSHIP is a general partner of
the PARTNERSHIP, has been duly authorized by the PARTNERSHIP to acquire the
Securities and sign this Subscription Agreement on behalf of the PARTNERSHIP
and, further, that the undersigned PARTNERSHIP has all requisite authority to
purchase such Securities and enter into the Subscription Agreement.
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement
and agrees to the terms hereof.
Dated:
__________________ _____200_
Subscription
Amount: $_____________
Number of
Shares of Common Stock to be purchased: _______________
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__________________________________________
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Name
of Partnership
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(Please
Type or Print)
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By: __________________________________________
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(Signature)
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Name: ________________________________________
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(Please
Type or Print)
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Title: _________________________________________
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(Please
Type or Print)
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CORPORATION/LIMITED
LIABILITY COMPANY SIGNATURE PAGE
The
undersigned CORPORATION or LIMITED LIABILITY COMPANY hereby represents and
warrants that the person signing this Subscription Agreement on behalf of the
CORPORATION or LIMITED LIABILITY COMPANY has been duly authorized by all
requisite action on the part of the CORPORATION or LIMITED LIABILITY COMPANY to
acquire the Securities and sign this Subscription Agreement on behalf of the
CORPORATION or LIMITED LIABILITY COMPANY and, further, that the undersigned
CORPORATION or LIMITED LIABILITY COMPANY has all requisite authority to purchase
the Securities and enter into this Subscription Agreement.
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription
Agreement and agrees to the terms hereof.
Dated:
__________________ _____200_
Subscription
Amount: $_____________
Number of
Shares of Common Stock to be purchased: _______________
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__________________________________________
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Name
of Corporation
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Or
Limited Liability Company
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(Please
Type or Print)
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By:
__________________________________________
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Signature
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Name: ________________________________________
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(Please
Type or Print)
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Title: _________________________________________
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(Please
Type or Print)
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TRUST/RETIREMENT
PLAN SIGNATURE PAGE
The
undersigned TRUST or RETIREMENT PLAN hereby represents and warrants that the
persons signing this Subscription Agreement on behalf of the TRUST or RETIREMENT
PLAN are duly authorized to acquire the Securities and sign this Subscription
Agreement on behalf of the TRUST or RETIREMENT PLAN and, further, that the
undersigned TRUST or RETIREMENT PLAN has all requisite authority to purchase
such Securities and enter into the Subscription Agreement.
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription
Agreement and agrees to the terms hereof.
Dated:
__________________ _____200_
Subscription
Amount: $_____________
Number of
Shares of Common Stock to be purchased: _______________
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Title
of Trust or Retirement Plan
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(Please
Type or Print)
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By:
__________________________________________
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Signature
of Trustee or
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Authorized
Signatory
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Name
of Trustee: ________________________________
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(Please
Type or Print)
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By:
__________________________________________
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Signature
of Co-Trustee if applicable
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Name
of Co-Trustee: _____________________________
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(Please
Type or Print)
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