SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of March 20,
2000, is made between MangoSoft, Inc., a Nevada Corporation (the "Company"),
and the investor named on the signature page hereto (the "Subscriber").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Subscription. Subject to the terms and conditions of this
Agreement, the Subscriber hereby subscribes to purchase, and the Company agrees
to sell and issue to the Subscriber, such number of shares (the "Shares") of
the Company's common stock, par value $.001 per share (the "Common Stock"), as
is set forth on the signature page hereto.
2. Closing.
(a) Closing Location. The closing of the purchase by the
Subscriber and the sale by the Company of the Shares (the "Closing") held at
the offices of Proskauer Rose, LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ is
being held simultaneously with the execution and delivery of this Agreement.
(b) Deliveries. At the Closing, the Company is delivering to
the Subscriber a certificate or certificates, registered in the name of the
Subscriber (or such other name indicated on the signature page hereto)
representing the Shares against delivery to the Company of the purchase price
therefor by wire transfer of immediately available funds according to the
Company's instructions. The certificates representing the Shares shall bear a
legend restricting transfer under the Securities Act of 1933, as amended (the
"Securities Act"), substantially in the form annexed hereto as Exhibit A, and
(ii) identifying additional restrictions on transfer pursuant to Section 4(j)
hereof.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Subscriber as follows:
(a) Organization and Good Standing. The Company and the
Subsidiaries (as hereinafter defined) are corporations, partnerships or limited
liability companies duly organized, validly existing and in good standing under
the laws of their respective jurisdiction of organization and have all
requisite power and authority to carry on their respective businesses as now
conducted and as proposed to be conducted. The Company and the Subsidiaries are
duly qualified to transact business and are in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the business, properties, operations, prospects or financial
condition of the Company or the Subsidiaries (a "Material Adverse Effect").
(b) Authorization. The Company has all corporate right, power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby, including the
issuance, sale and delivery of the Shares. All corporate action on the part of
the Company necessary for the authorization, execution, delivery and
performance of all of its obligations under this Agreement and for the sale,
issuance and delivery of the Shares has been taken. This Agreement, assuming
due execution and authorization by the Subscriber, constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(c) No Violation. The execution, delivery and performance of
this Agreement and the issuance and sale of the Shares will not violate or
result in a breach of, conflict with (with or without the giving of notice or
the passage of time or both) or entitle any party to terminate or call a
default under any Material Contract (as hereinafter defined) or violate or
result in a breach of any term of the Company's or any Subsidiary's Certificate
of Incorporation or By-laws (as the same may be amended, supplemented or
restated) or conflict with any law, rule, regulation, order, judgment or decree
binding upon the Company or any Subsidiary or to which any of their respective
operations, businesses, properties or assets are subject.
(d) Capitalization.
(i) As of the date hereof, prior to giving
effect to the issuance of the Shares and the shares of Common Stock to be sold
to the Other Subscribers, the authorized capital stock of the Company will
consist of (A) 100,000,000 shares of Common Stock, of which 19,924,127 shares
will be outstanding, and (B) 5,000,000 shares of preferred stock, par value
$.001 per share, of which 2,500,000 shares have been designated as Series A
Preferred Stock (the "Series A Preferred Stock") and will be outstanding.
(ii) All such issued and outstanding shares of
capital stock have been duly authorized and validly issued, are fully paid and
nonassessable, and do not accord the holders thereof preemptive rights to
purchase securities of any class or series issued by the Company.
(iii) Except as set forth on Schedule 3(d) or as
contemplated by this Agreement, there are, and immediately upon the Closing,
there will be, no preemptive or similar rights to purchase or otherwise acquire
shares of the capital stock of the Company pursuant to any provision of law,
the Company's Certificate of Incorporation or By-laws (as the same may be
amended, supplemented or restated) or any agreement to which the Company is a
party. Except as set forth on Schedule 3(d), there is, and immediately upon the
Closing, there will be, no agreement to which the Company is a party, or any
restriction or encumbrance to which the Company is subject (including, but not
limited to, any right of first refusal, right of first offer, proxy, voting
trust or voting agreement) with respect to the sale or voting of any shares of
capital stock of the Company (whether outstanding or issuable upon conversion
or exercise of outstanding securities).
(iv) Except as set forth on Schedule 3(d), there
are no outstanding warrants, options, conversion or exchange privileges, or
other rights or agreements (collectively, "Derivative Securities") to purchase
or otherwise acquire or issue any equity securities of the Company. As of the
date hereof, 4,125,428 shares of Common Stock have been reserved for issuance
upon the conversion, exchange or exercise of Derivative Securities.
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(e) Subsidiaries. Schedule 3(e) sets forth a list of each
other corporation, association or other business entity (each a "Subsidiary"
and collectively, the "Subsidiaries") which the Company presently owns or
controls, directly or indirectly. The Company is not a participant or partner
in any joint venture, partnership or similar arrangement.
(f) Valid Issuance of Common Stock. The Shares, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of preemptive rights and restrictions on
transfer other than those imposed by Federal and state securities laws.
(g) Governmental Consents. Except for the filing of the
Registration Statement (as hereinafter defined) as contemplated by Section 5,
no consent, authorization, approval, order, license, certificate or permit of
or from, or declaration or filing with, any federal, state, local or other
governmental authority, or any court or any other tribunal, is required in
connection with (i) the execution, delivery and performance of this Agreement
by the Company, or (ii) the offer, sale, issuance and delivery of the Shares by
the Company; provided, that, all representations made to the Company by the
Subscriber in this Agreement are assumed for purposes of this representation
and warranty to be accurate and complete.
(h) Contracts and Other Commitments. Each of the Company's or
the Subsidiaries' Material Contracts are in full force and effect and are valid
and binding obligations of the parties thereto enforceable against them in
accordance with their respective terms. For purposes of this Section 3(h), the
term "Material Contract" shall mean each contract, instrument, lease, license,
agreement or other arrangement, whether written or oral, to which the Company
or any Subsidiary is a party which is material to the business, operations or
condition (financial or otherwise), prospects or properties of the Company or
any Subsidiary. No consent or any party to any Material Contract is required
for the execution, delivery of performance of this Agreement or the issuance,
sale and delivery of the Shares.
(i) No Litigation. Except as disclosed in the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
there is no litigation, arbitration, claim, governmental or other proceeding,
or investigation pending or, to the Company's knowledge, threatened (or any
basis therefor) with respect to the Company, any Subsidiary, or any of their
respective operations, business properties or assets except as individually or
in the aggregate do not now have and are not in the future expected to have a
Material Adverse Effect.
(j) Financial Statements. The Company has previously
delivered to the Subscriber true and complete copies of the unaudited balance
sheet of the Company as of December 31, 1999 and consolidated statements of
income, cash flows and changes in stockholders' equity for the fiscal year then
ended (collectively, the "Financial Statements"). The Financial statements are
complete and correct in all material respects, have been prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied and
fairly present the financial condition of the Company and the Subsidiaries at
the date and the results of operations for the periods set forth therein.
Except as set forth in the Financial Statements, neither the Company nor any
Subsidiary has any material liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
December 31, 1999, and (ii) obligations under contracts and
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commitments incurred in the ordinary course of business and not required under
GAAP to be reflected in the Financial Statements. Since December 31, 1999, the
Company and the Subsidiaries have conducted their respective businesses only in
the ordinary course of business consistent with past practice and there has not
been any change or event that, by itself or together with other changes or
events, has had or is likely to have a Material Adverse Effect
(k) Intellectual Property. (i) The Company or a Subsidiary
has sufficient rights in the Intellectual Property (as hereinafter defined)
owned or used by the Company and the Subsidiaries in order to conduct their
respective businesses as currently conducted, and (ii) to the best of the
Company's knowledge, neither the Company nor any Subsidiary is infringing on
the Intellectual Property rights of any third party nor is any third party
infringing on the Intellectual Property rights of the Company or any
Subsidiary. Neither the Company nor any Subsidiary has received any notice or
claim concerning the Company's or any Subsidiary's infringement of the
Intellectual Property rights of any third party. "Intellectual Property" shall
mean (A) trademarks, trade names, service marks, copyrights and applications
therefor, (B) patents, patent applications and other patent rights, (C)
inventions, trade secrets, and other proprietary know-how, processes and
technologies, and (D) computer software, source codes and object codes.
(l) Private Offering. Subject to the truth and accuracy of
the Subscriber's representations set forth in Section 4 of this Agreement, the
offer, sale and issuance of the Shares as contemplated by this Agreement will
be made in reliance on one or more exemptions from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the qualification or registration requirements of applicable state
securities or blue sky laws.
(m) Brokers' Fees and Commissions. Neither the Company nor
any of its officers, directors, employees or agents has employed any investment
banker, broker, or finder in connection with the transactions contemplated by
this Agreement.
4. Representations and Warranties of the Subscriber. The Subscriber
represents and warrants to the Company as follows:
(a) Organization and Good Standing. If the Subscriber is a
corporation, partnership, limited liability company or other entity, it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) Authorization. This Agreement, when executed and
delivered by the Subscriber and, assuming due execution and authorization by
the Company, constitutes a legal, valid and binding obligation of the
Subscriber, enforceable against the Subscriber in accordance with its terms,
subject to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.
(c) Investment. The Subscriber is an accredited investor as
defined in Rule 501 of Regulation D of the Securities Act and will acquire the
Shares for investment for its own account, not as a nominee or agent, and not
with a view to, or for resale in connection with, any distribution thereof.
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(d) Experience. The Subscriber has such knowledge and
experience in finance, securities, investments and other business matters so as
to be able to protect its interest in connection with the transactions
contemplated by this Agreement.
(e) Risk of Loss. The Subscriber understands the various
risks of an investment in the Company as proposed herein and can afford to bear
such risks, including, without limitation, the risks of losing its entire
investment.
(f) Access to Information. The Subscriber has had a
reasonable opportunity to ask questions of and receive answers from a person
acting on behalf of the Company concerning the purchase of the Shares and all
such questions have been answered to the satisfaction of the Subscriber.
(g) Listing of Company's Securities. The Subscriber
understands that the Common Stock is currently traded on the Over-the-Counter
Electronic Bulletin Board ("OTCBB"). The Subscriber further understands that
the OTCBB may take the position that the Company is not obligated to file
reports pursuant to Section 13 or Section 15(d) of the Securities and Exchange
Act of 1934 (the "Exchange Act") and therefore is not eligible to maintain its
trading privileges on the OTCBB until such time as the Company files an
effective Registration Statement under the Securities Act or the Exchange Act
as a result of which the Company is required to file reports under Section 13
or Section 15(d) of the Exchange Act or is otherwise obligated to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.
(h) No General Solicitation. The Subscriber is not purchasing
any of the Shares 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
Subscriber in connection with investments in securities generally.
(i) Brokers' Fees and Commissions. Neither the Subscriber nor
any of its officers, directors, employees or agents has employed any investment
banker, broker, or finder in connection with the transactions contemplated by
this Agreement.
(i) Restricted Securities. The Shares may not be resold by
the Subscriber in the absence of registration under the Securities Act or a
valid exemption from registration. In addition, without the prior written
consent of the Company, the Subscriber will not, directly or indirectly offer,
sell, pledge, contract to sell, (including any short sale), grant any option to
purchase or otherwise dispose of any Shares or enter into any Hedging
Transaction (as defined below) relating to the Shares (each of the foregoing
referred to as a "Disposition") for a period of 180 days after the date hereof
(the "Lock-Up Period"). The foregoing restriction is expressly intended to
preclude the Subscriber from engaging in any Hedging Transaction or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition during the Lock-Up Period even if the securities would be
disposed of by someone other than the Subscriber. "Hedging Transaction" means
any short sale (whether or not against the box) or any purchase, sale or grant
of any right (including, without limitation, any put or call option) with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Common Stock.
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5. Registration Rights.
(a) Registration of the Shares. The Company shall prepare and
file with the SEC a registration statement on Form S-3, or if Form S-3 is not
available, then any other appropriate form (the "Registration Statement"),
covering the resale of all of the Registrable Shares (as hereinafter defined)
within 120 days following the date hereof, provided, that if, at any time from
and after the Closing until the end of such 120-day period, the Company files
with the SEC a Registration Statement relating to an offering of any of the
Company's equity securities, for its own account or others, the Company shall
include in such registration statement all of the Registrable Shares; provided,
however, that in connection with a Registration Statement relating to an
offering of the Company's equity securities for its own account, if the
managing underwriter advises the Company that the registration of Registrable
Shares would interfere with the successful marketing (including pricing) of the
shares that the Company proposes to register, the Registrable Shares shall be
covered only to the extent approved by the managing underwriter. In addition,
the Company shall use its reasonable best efforts to (i) cause such
Registration Statement to become effective as soon as practicable thereafter,
and (ii) subject to the provisions of Section 5(o), keep the Registration
Statement continuously effective and available for use at all times until the
date which is the earlier of (x) the date on which all of the Registrable
Shares have been sold pursuant to such Registration Statement, or (y) the date
after which all of the Registrable Shares may be immediately sold to the public
without registration and without restriction as to the number of Registrable
Shares to be sold pursuant to Rule 144(k) under the Securities Act (the
"Registration Period"). For purposes of this Section 5, the term "Registrable
Shares" shall mean (A) the Shares, and (B) any shares of Common Stock or other
securities of the Company issued or issuable in respect of the Shares in
connection with any stock split, stock dividend, recapitalization or similar
event. The Company shall respond to each item of correspondence from the SEC or
the staff of the SEC relating to such Registration Statement as promptly as
reasonably practicable. If to the actual knowledge of a senior officer of the
Company or the Company's outside counsel the SEC and the staff of the SEC have
no comments (or no further comments) concerning such Registration Statement,
the Company shall as soon as practicable, but in any case within three business
days, request from the SEC acceleration of the effectiveness of the
Registration Statement.
(b) Subscriber's Review. Prior to the filing of the
Registration Statement or prospectus or any amendment or supplement thereto,
the Company will furnish to the Subscriber and its counsel copies of all such
documents proposed to be filed, which documents will be subject to the
reasonable review and approval of the Subscriber and its counsel.
(c) Amendments and Supplements. Subject to the provisions of
Section 5(o), the Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective and such
prospectus available for use at all times during the Registration Period
(including, without limitation, amendments and supplements necessary in
connection with a change in the "Plan of Distribution" section in any
Registration Statement or prospectus) and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all the
Registrable Shares. The Company shall cause any such amendment and/or new
Registration Statement to become effective as soon as reasonably practicable
following the filing thereof.
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(d) Information. Upon written request, the Company shall
furnish to the Subscriber and its counsel, promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company, one
copy of the Registration Statement and any amendment thereto, and such number
of copies of each prospectus, including each preliminary prospectus, and all
amendments and supplements thereto, and such other documents as the Subscriber
may reasonably request in order to facilitate the disposition of the
Registrable Shares. The Company shall promptly notify the Subscriber of the
effectiveness of any Registration Statement or post-effective amendments
thereto.
(e) Blue Sky. The Company shall (i) register and qualify the
Registrable Shares covered by any Registration Statement under the securities
laws of such jurisdictions in the United States as the Subscriber reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof and
availability for use during the Registration Period, (iii) take such other
actions as may be reasonably necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Shares for sale in such jurisdictions.
(f) Correction of Statements or Omissions.
(i) The Company shall promptly notify the
Subscriber of the happening of any event as a result of which the Registration
Statement or any prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and use its best efforts as soon as possible to prepare
a supplement or amendment to the Registration Statement (and make all required
filings with the SEC and all applicable state securities or blue sky
commissions) to correct such untrue statement or omission if not otherwise
satisfied through the filing of such supplement or amendment with the SEC or
otherwise pursuant to applicable securities laws and the Company shall
simultaneously (and thereafter as requested) deliver such number of copies of
such supplement or amendment to the Subscriber (or other applicable document)
as the Subscriber may reasonably request.
(ii) The Subscriber agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(f)(i), the Subscriber will forthwith discontinue disposition of
Registrable Shares pursuant to the Registration Statement covering such
securities until the Subscriber's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5(f)(i).
(g) Stop Orders. The Company shall use its best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
the Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable time, and the Company
shall immediately notify the Subscriber of the issuance of such order and the
resolution thereof.
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(h) Subscriber Information. The Company shall hold in
confidence and not make any disclosure of non-public information concerning the
Subscriber provided to the Company by the Subscriber unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
rules, statutes or regulations, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in the Registration
Statement or other public filing by the Company, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or is otherwise required by
applicable law or legal process, (iv) the information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement (to the knowledge of the Company), or (v) the Subscriber
consents to the form and content of any such disclosure. The Company agrees
that it shall, upon learning that disclosure of such information concerning the
Subscriber is sought in or by a court or governmental body of competent
jurisdiction in or through other means, give prompt notice to the Subscriber
prior to making such disclosure, and allow the Subscriber, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.
(i) Listing. The Company shall use its best efforts to cause
the listing and the continuation of listing of all the Registrable Shares
covered by the Registration Statement on each securities exchange or quotation
system upon which any other securities of the Company is then listed or quoted.
(j) Transfer Agent. The Company shall provide a transfer
agent and registrar, which may be a single entity, for the Registrable Shares
not later than the effective date of the Registration Statement.
(k) Delivery of Certificates; Opinions of Counsel. The
Company shall cooperate with the Subscriber to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Registrable Shares to be offered pursuant to the Registration
Statement, such certificates to be in such denominations or amounts, as the
case may be, as the Subscriber may reasonably request and registered in such
names as the Subscriber may request. Upon the written request of the transfer
agent for the Company or the Subscriber within two business days of such
request, the Company shall cause legal counsel selected by the Company to
deliver to the transfer agent and the Subscriber an opinion (a "Transfer
Opinion") of such counsel in a form reasonably acceptable to the transfer agent
and the Subscriber. Such opinion shall include, without limitation, opinions to
the effect that (i) the Registration Statement has become effective under the
Securities Act and no order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of the Registration Statement, any
preliminary prospectus, any final prospectus, or any amendment or supplement
thereto has been issued, nor has the SEC or any securities or blue sky
authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, and (ii) all of the Registrable
Shares covered by such Registration Statement may be sold or otherwise
transferred pursuant to the Plan of Distribution set forth in the prospectus
forming a part of the Registration Statement. Such Transfer Opinion shall also
state the jurisdictions in which the Registrable Securities have been
registered or qualified for sale.
(l) Compliance with Laws. The Company shall comply with all
applicable laws related to a Registration Statement and offering and sale of
securities covered by the Registration
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Statement and all applicable rules and regulations of governmental authorities
in connection therewith (including, without limitation, the Securities Act and
the Exchange Act).
(m) Registration Expenses. The Company will pay all expenses,
other than Selling Expenses (as hereinafter defined) necessary to comply with
this Section 5, including, without limitation, all registration, qualification
and filing fees, exchange listing fees, printing expenses, escrow fees, fees
and disbursements of counsel for the Company, blue sky fees and expenses, and
the expense of any special audits incident to or required by any such
registration. For purposes of this Section 5(m), the term "Selling Expenses"
shall mean all underwriting discounts, selling commissions and stock transfer
taxes applicable to the sale of the Registrable Shares.
(n) "Market Stand-Off" Agreement. Subscriber agrees that, if
the managing underwriter of an underwritten public offering of the Company's
securities involving gross proceeds to the Company of at least $25,000,000 (a
"Qualified Offering") so requests, the Subscriber shall not, to the extent
requested by such managing underwriter, directly or indirectly sell, offer to
sell, contract to sell, grant any options to purchase or otherwise transfer or
dispose of (other than to transferees who agree to be similarly bound) any
securities of the Company held by the Subscriber (except for Registrable Shares
included in such Registration Statement, if any) during such period of time
(not to begin prior to the effective date of the registration statement
relating to such Qualified Offering and not to exceed 180 days in the
aggregate) as may be requested by such managing underwriter without such
managing underwriter's consent; provided, however, that the Subscriber's
agreement pursuant to this Section 5(n):
(i) shall expire on the second anniversary of
the date hereof; and
(ii) shall be conditioned upon all officers and
directors of the Company, all five-percent security-holders, all other persons
with registration rights, and all other persons who, directly or indirectly,
own the same or greater percentage of equity securities of the Company as does
the Subscriber agreeing to be subject to the same restrictions.
In addition to the foregoing conditions, if the managing underwriter
of a Qualified Offering relieves any person enumerated in clause (ii) above
from any of its restrictions corresponding to any of the restrictions contained
in this Section 5(n), then the Subscriber shall automatically and without any
further action by the managing underwriter, the Company or the Subscriber, be
relieved of the restrictions set forth above to the same extent as such other
person is relived of such corresponding restrictions.
(o) Suspension of Registration Statement. Notwithstanding
anything to the contrary contained herein, if at any time after the filing of a
Registration Statement or after it is declared effective by the SEC, the
Company determines, in its reasonable business judgment, that such registration
and offering could adversely affect any financing, acquisition, corporate
reorganization, or other material transaction or development involving the
Company then the Company may require the suspension for a period not to exceed
45 days by the Subscriber of the distribution of any of the Registrable Shares
by giving notice to the Subscriber. Any such notice need not specify the
reasons for such suspension if the Company determines, in its reasonable
business judgment, that doing so would adversely affect such transaction or
development or would
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result in the disclosure of material non-public information. The Company may
not require more than one suspension pursuant to this Section 5(o) in any
12-month period.
6. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless
the Subscriber, its affiliates and their respective officers, directors,
partners, members, shareholders, employees and agents (collectively, the
"Subscriber's Indemnities"), from and against any and all losses, claims,
damages, judgments, penalties, liabilities and deficiencies (collectively,
"Indemnitee Losses"), and agrees to reimburse the Subscriber's Indemnitees for
all out-of-pocket expenses (including, without limitation, the fees and
expenses of legal counsel), in each case promptly as incurred by the
Subscriber's Indemnities, to the extent arising out of or in connection with:
(i) any misrepresentation or breach of any
of the Company's representations or warranties contained in this Agreement or
the annexes, schedules or exhibits hereto;
(ii) any failure by the Company to perform any
of its covenants, agreements, undertakings or obligations set forth in this
agreement or the annexes, schedules or exhibits hereto;
(iii) any untrue or alleged untrue statement of
material fact contained in the Registration Statement, any prospectus or
preliminary prospectus used in connection therewith or any amendment thereof or
supplement thereto;
(iv) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; or
(v) any violations by the Company of any
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with
any such registration, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by the Subscriber expressly
for use in the Registration Statement or any prospectus or by the Subscriber's
failure to deliver a copy of the Registration Statement or any prospectus or
any amendments or supplements thereto after the Company has furnished the
Subscriber with a sufficient number of copies of the same.
(b) The Subscriber agrees to indemnify and hold harmless the
Company, its affiliates and their respective officers, directors, shareholders,
employees and agents (collectively, the "Company's Indemnities"), from and
against any and all Indemnitee Losses, and agrees to reimburse the Company's
Indemnitees for all out-of-pocket expenses (including, without limitation, the
fees and expenses of legal counsel), in each case promptly as incurred by the
Company's Indemnities, to the extent arising out of or in connection with
information provided in writing by the Subscriber expressly for inclusion in
the Registration Statement or in any prospectus relating to the sale of the
Registrable Shares.
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(c) Notification of Claims. A party seeking indemnification
under this Section 6 (an "Indemnified Party") shall, in a timely manner,
provide the party against whom indemnification pursuant to this Section 6 is
being sought (the "Indemnifying Party"), with prompt notice of (i) all third
party actions, suits, proceedings, claims, demands or assessments subject to
the indemnification provisions of this Section 6 (each, a "Third Party Claim"),
and (ii) all other claims or demands for indemnification pursuant to this
Section 6; provided, however, that the failure to provide timely notice shall
not relieve the Indemnifying Party from any liability that it otherwise may
have to the Indemnified Party, except to the extent that the Indemnifying Party
is materially prejudiced by reason of such failure. In connection with any
Third Party Claim as to which both the Indemnifying Party and the Indemnified
Party are parties, the Indemnifying Party shall be entitled to assume the
defense thereof. Notwithstanding the assumption of the defense of any Third
Party Claim by the Indemnifying Party, the Indemnified Party shall have the
right to employ separate legal counsel and to participate in the defense of
such Third Party Claim and, in such case, the Indemnified Party shall bear the
reasonable fees, out-of-pocket costs and expenses of such separate legal
counsel unless: (i) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (ii) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (iii) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If
the Indemnified Party employs separate legal counsel in circumstances other
than as described in clauses (i), (ii) or (iii) above, the fees, costs and
expenses of such legal counsel shall be borne exclusively by the Indemnified
Party. Except as provided above, the Indemnifying Party shall not, in
connection with any Claim in the same jurisdiction, be liable for the fees and
expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
7. Miscellaneous.
(a) Amendment. This agreement may be amended only by a
writing signed by each party hereto.
(b) Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, this Agreement may not be transferred or assigned by either party by
operation of law or otherwise without the prior written consent of the other
party.
(c) Governing Law. This Agreement is deemed to have been
entered into in the State of New York, and its interpretation, construction,
and the remedies for its enforcement or breach are to be applied pursuant to
and in accordance with the laws of the State of New York (without regard to the
conflict of laws principles thereof).
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(d) Validity of Agreement. If any provision of this Agreement
is, becomes, or is deemed invalid or unenforceable in any jurisdiction, such
provision shall be deemed amended to conform to applicable law so as to be
valid, legal and enforceable in such jurisdiction so deeming. The validity,
legality and enforceability of such provision shall not in any way be affected
or impaired thereby in any other jurisdiction. If such provision cannot be so
amended without materially altering the intention of the parties, it shall be
stricken in the jurisdiction so deeming, and the remainder of this Agreement
shall remain in full force and effect.
(e) Waiver. No waiver of any right under this Agreement shall
be deemed effective unless contained in a writing signed by the party charged
with such waiver, and no waiver of any right arising from any breach or failure
to perform shall be deemed to be a waiver of any future such right or of any
other right arising under this Agreement.
(f) Headings. The headings contained in this Agreement are
inserted for convenience of reference only and shall not be a part, control or
affect the meaning hereof. All references herein to Sections are to the
Sections of this Agreement.
(g) No Third Party Rights. Nothing in this Agreement shall
create or be deemed to create any rights in any person or entity not a party to
this Agreement other than the Indemnified Parties.
(h) Entire Agreement. This Agreement and the annexes,
schedules and exhibits hereto, sets forth and constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes any and all prior agreements, understandings, promises and
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto.
(i) Other Business Interests. The Subscriber and any
affiliate thereof shall be entitled to hold interests in any other business,
investment or undertaking without regard to this Agreement, and the Subscriber
and its affiliates shall have no obligation to offer any business opportunity
of any nature to the Company, and the Company shall have no right to
participate in, or have any claim with respect to or right to block for any
reason, any other business, investment or undertaking of any nature in which
the Subscriber and/or its affiliates now participates or may in the future
participate in any way. The provisions of this Section 7(i) are absolute and
are intended to by agreement eliminate any right or claim of the Company under
any "business opportunity" or related doctrine. The Subscriber and its
affiliates are to be completely and absolutely free to pursue business and
investment interests of all manners and kinds without the Company having any
right to participate in any way in any such businesses or investments.
(j) Jurisdiction. All suits, actions or proceedings arising
out of, or in connection with, this Agreement or the transactions contemplated
by this Agreement shall be brought in any federal or state court of competent
subject matter jurisdiction sitting in New York County, New York. Each of the
parties hereto, by execution and delivery of this Agreement, expressly and
irrevocably (i) consents and submits to the personal jurisdiction of any such
courts in any such action or proceeding; (ii) consents to the service of any
complaint, summons, notice or other process relating to any such action or
proceeding by delivery thereof to such party as set forth in Section 7(l)
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hereof; and (iii) waives any claim or defense in any such action or proceeding
based on any alleged lack of personal jurisdiction, improper venue, forum non
conveniens or any similar basis.
(k) Publicity. The Company and the Subscriber shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby, and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed.
(l) Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by certified, registered or express mail (including any private carrier
guaranteeing overnight delivery), postage prepaid. Any such notice shall be
deemed given (i) when so delivered personally, (ii) on the date of delivery if
sent by express or such private carrier guaranteeing overnight delivery, or
(iii) if mailed, three (3) business days after the date of deposit in the
United States mail, when sent as follows (or to such other address as any party
shall provide to the other parties hereto in accordance with this Section
7(l)): (A) if to the Subscriber, at the Subscriber's address set forth on the
signature page hereof, or at such other address as the Subscriber shall have
furnished to the Company in writing, and (B) if to the Company, at ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; Attention: President, or at such
other address as the Company shall have furnished to the Subscriber in writing.
(m) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be enforceable against the parties
actually executing such counterpart, and all of which together shall constitute
one instrument. This Agreement may be delivered by facsimile, and facsimile
signatures shall be treated as original signatures for all applicable purposes.
[SIGNATURE PAGE TO FOLLOW.]
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IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement to be effective as of the date first written above.
PURCHASERS: Number of Shares of Common Stock subscribed for:_________ shares
Aggregate Subscription Price ($5.00 per share): $_____________
Entity: Individual
By:
------------------------------- --------------------------------
Print Name:
------------------------
By:
----------------------------------
Name:
Title:
Address for notice: Address for notice:
------------------------------- ---------------------
------------------------------- ---------------------
------------------------------- ---------------------
------------------------------- ---------------------
Fax no.: Fax no.:
----------------------- -----------------
ACCEPTED AND AGREED TO:
MANGOSOFT, INC.
By:
-----------------------------------
Print Name:
Title:
14
Schedule 3(d)
The Company has granted options to purchase an aggregate of 4,125,428 shares of
Common Stock.
The outstanding Series A Preferred Stock is convertible into Common Stock at
$4.00 per share.
15
Schedule 3(e)
MangoSoft Corp., a Delaware corporation, is a wholly-owned subsidiary of the
Company.
16
Exhibit A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT AND SUCH LAWS.
17