Attached files
Exhibit
10.1
SUBSCRIPTION
AGREEMENT
SUBSCRIPTION AGREEMENT made as
of this ___ day of ____________, 2009, between Magnolia Solar Corporation, a
Nevada corporation (the “Company”), and the undersigned
(the “Subscriber”).
WHEREAS, pursuant to a
Confidential Private Placement Memorandum dated December 23, 2009 (the “PPM”), the Company is offering
in a private placement (the “Offering”) to accredited
investors a minimum of 15 Units (the “Minimum Offering”) and a
maximum of 60 Units (the “Maximum Offering”) at a
purchase price of $50,000 per Unit, with each Unit (the “Units”) consisting of an
Original Issue Discount Senior Secured Convertible Promissory Note in the
principal amount of $100,000 (the “Note”), and a five-year
detachable warrant (the “Warrant”) to purchase 100,000
shares of Common Stock with an exercise price of $1.65 per share;
and
WHEREAS, the Subscriber
desires to subscribe for the number of Units set forth on the signature page
hereof, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants hereinafter set forth,
the parties hereto do hereby agree as follows:
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I.
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SUBSCRIPTION
FOR AND REPRESENTATIONS AND COVENANTS OF
SUBSCRIBER
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1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase from the Company such number of Units set
forth upon the signature page hereof, at a price equal to $50,000 per Unit, and
the Company agrees to sell such to the Subscriber for said purchase price,
subject to the Company’s right to sell to the Subscriber such lesser number of
(or no) Units as the Company may, in its sole discretion, deem necessary or
desirable. The purchase price is payable by wire transfer of
immediately available funds, pursuant to the wire instructions attached as Exhibit F to the PPM
or by check payable to Sichenzia Ross Friedman Ference LLP as Escrow Agent to
Magnolia Solar Corporation
1.2 The
Subscriber recognizes that the purchase of Units involves a high degree of risk
in that (i) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should consider
investing in the Company and the Units; (ii) the Units are not registered under
the Securities Act of 1933, as amended (the “Act”), or any state securities
law; (iii) there is no trading market for the Units, none is likely ever to
develop, and the Subscriber may not be able to liquidate his, her or its
investment; (iv) transferability of the Units is extremely limited; and (v) an
investor could suffer the loss of his, her or its entire
investment.
1.3 The
Subscriber is an “accredited investor,” as such term in defined in Rule 501 of
Regulation D promulgated under the Act, and the Subscriber is able to bear the
economic risk of an investment in the Units.
1.4 The
Subscriber has prior investment experience (including investment in non-listed
and non-registered securities), and has read and evaluated, or has employed the
services of an investment advisor, attorney or accountant to read and evaluate,
all of the documents furnished or made available by the Company to the
Subscriber and to all other prospective investors in the Units, including the
PPM, as well as the merits and risks of such an investment by the
Subscriber. The Subscriber’s overall commitment to investments which
are not readily marketable is not disproportionate to the Subscriber’s net
worth, and the Subscriber’s investment in the Units will not cause such overall
commitment to become excessive. The Subscriber, if an individual, has
adequate means of providing for his or her current needs and personal and family
contingencies and has no need for liquidity in his or her investment in the
Units. The Subscriber is financially able to bear the economic risk
of this investment, including the ability to afford holding the Units for an
indefinite period or a complete loss of this investment.
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1.5 The
Subscriber acknowledges receipt and careful review of the PPM, all supplements
to the PPM, and all other documents furnished in connection with this
transaction by the Company (collectively, the “Offering Documents”) and has
been furnished by the Company during the course of this transaction with all
information regarding the Company which the Subscriber has requested or desires
to know; and the Subscriber has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers or other representatives of
the Company concerning the terms and conditions of the Offering, and any
additional information which the Subscriber has requested.
1.6 The
Subscriber acknowledges that the purchase of the Units may involve tax
consequences to the Subscriber and that the contents of the Offering Documents
do not contain tax advice. The Subscriber acknowledges that the
Subscriber must retain his, her or its own professional advisors to evaluate the
tax and other consequences to the Subscriber of an investment in the Units. The
Subscriber acknowledges that it is the responsibility of the Subscriber to
determine the appropriateness and the merits of a corporate entity to own the
Subscriber’s Units and the corporate structure of such entity.
1.7 The
Subscriber acknowledges that this Offering has not been reviewed by the
Securities and Exchange Commission (the “SEC”) or any state securities
commission, and that no federal or state agency has made any finding or
determination regarding the fairness or merits of the Offering. The
Subscriber represents that the Units are being purchased for his, her or its own
account, for investment only, and not with a view toward distribution or resale
to others. The Subscriber agrees that he, she or it will not sell or
otherwise transfer the Units unless they are registered under the Act or unless
an exemption from such registration is available.
1.8 The
Subscriber understands that the provisions of Rule 144 under the Act are not
available for at least one (1) year to permit resales of the Units or the Common
Stock and Warrants comprising the Units and there can be no assurance that the
conditions necessary to permit such sales under Rule 144 will ever be
satisfied. The Subscriber understands that the Company is under no
obligation to comply with the conditions of Rule 144 or take any other action
necessary in order to make available any exemption from registration for the
sale of the Units or the Common Stock and Warrants comprising the
Units.
1.9 The
Subscriber understands that the Units have not been registered under the Act by
reason of a claimed exemption under the provisions of the Act which depends, in
part, upon his, her or its investment intention. In this connection,
the Subscriber understands that it is the position of the SEC that the statutory
basis for such exemption would not be present if his, her or its representation
merely meant that his, her or its present intention was to hold such securities
for a short period, such as the capital gains period of tax statutes, for a
deferred sale, for a market rise, assuming that a market develops, or for any
other fixed period. The Subscriber realizes that, in the view of the
SEC, a purchase now with an intent to resell would represent a purchase with an
intent inconsistent with his, her or its representation to the Company and the
SEC might regard such a sale or disposition as a deferred sale, for which such
exemption is not available.
1.10 The
Subscriber agrees to indemnify and hold the Company, its directors, officers and
controlling persons and their respective heirs, representatives, successors and
assigns harmless against all liabilities, costs and expenses incurred by them as
a result of any misrepresentation made by the Subscriber contained herein or any
sale or distribution by the Subscriber in violation of the Act (including,
without limitation, the rules promulgated thereunder), any state securities
laws, or the Company’s Certificate of Incorporation or By-laws, as amended from
time to time.
1.11 The
Subscriber consents to the placement of a legend on any certificate or other
document evidencing the Common Stock or the Warrants stating that such
securities have not been registered under the Act and setting forth or referring
to the restrictions on transferability and sale thereof.
1.12 The
Subscriber understands that the Company will review and rely on this
Subscription Agreement without making any independent investigation; and it is
agreed that the Company reserves the unrestricted right to reject or limit any
subscription and to withdraw the Offering at any time.
1.13 The
Subscriber hereby represents that the address of the Subscriber furnished at the
end of this Subscription Agreement is the undersigned’s principal residence, if
the Subscriber is an individual, or its principal business address if it is a
corporation or other entity.
1.14 The
Subscriber acknowledges that if the Subscriber is a Registered Representative of
a Financial Industry Regulatory Authority, Inc. (“FINRA”) member firm, the
Subscriber must give such firm the notice required by the FINRA’s Conduct Rules,
receipt of which must be acknowledged by such firm on the signature page
hereof.
1.15 The
Subscriber hereby acknowledges that neither the Company nor any persons
associated with the Company who may provide assistance or advice in connection
with the Offering (other than the placement agent, if one is engaged by the
Company) are or are expected to be members or associated persons of members of
the FINRA or registered broker-dealers under any federal or state securities
laws.
1.16 The
Subscriber understands that, pursuant to the terms of the Offering as set forth
in the PPM, the Company must receive subscriptions for 15 Units for an aggregate
purchase price of $750,000 in order to close on the sale of any Units and that
persons affiliated with the Company or its consultants, advisors, or placement
agents may subscribe for Common Stock, in which case the Company may accept
subscriptions from such affiliated parties in order to reach the Minimum
Offering; and that, accordingly, no investor should conclude that achieving the
Minimum Offering is the result of any independent assessment of the merits or
advantages of the Offering or the Company made by Subscribers in the Minimum
Offering.
1.17 The
Subscriber hereby represents that, except as expressly set forth in the Offering
Documents, no representations or warranties have been made to the Subscriber by
the Company or any agent, employee or affiliate of the Company and, in entering
into this transaction, the Subscriber is not relying on any information other
than that contained in the Offering Documents and the results of independent
investigation by the Subscriber.
1.18 All
information provided by the Subscriber in the Investor Questionnaire attached as
Exhibit B to
the PPM is true and accurate in all respects, and the Subscriber acknowledges
that the Company will be relying on such information to its possible detriment
in deciding whether the Company can sell these securities to the Subscriber
without giving rise to the loss of the exemption from registration under
applicable securities laws.
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II.
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REPRESENTATIONS
BY THE COMPANY
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(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada and has the corporate power to
conduct the business which it conducts and proposes to conduct.
(b) The
execution, delivery and performance of this Subscription Agreement by the
Company have been duly authorized by the Company and all other corporate action
required to authorize and consummate the offer and sale of the Units has been
duly taken and approved.
(c) The Units
and the underlying Common Stock have been duly and validly authorized and
issued.
(d) The
Company has obtained, or is in the process of obtaining, all licenses, permits
and other governmental authorizations necessary for the conduct of its business,
except where the failure to so obtain such licenses, permits and authorizations
would not have a material adverse effect on the Company. Such licenses, permits
and other governmental authorizations which have been obtained are in full force
and effect, except where the failure to be so would not have a material adverse
effect on the Company, and the Company is in all material respects complying
therewith.
(e) The
Company knows of no pending or threatened legal or governmental proceedings to
which the Company is a party which would materially adversely affect the
business, financial condition or operations of the Company.
(f) The
Company is not in violation of or default under, nor will the execution and
delivery of this Subscription Agreement or the issuance of the Common Stock, or
the consummation of the transactions herein contemplated, result in a violation
of, or constitute a default under, the Company’s Certificate of Incorporation or
By-laws, any material obligations, agreements, covenants or conditions contained
in any bond, debenture, note or other evidence of indebtedness or in any
material contract, indenture, mortgage, loan agreement, lease, joint venture or
other agreement or instrument to which the Company is a party or by which it or
any of its properties may be bound or any material order, rule, regulation,
writ, injunction, or decree of any government, governmental instrumentality or
court, domestic or foreign.
(g) The
Company anticipates using the gross proceeds from the Offering as follows: (i)
approximately $200,000 for offering expenses and (ii) the remainder for
general corporate purposes including growth initiatives and capital
expenditures.
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III.
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TERMS
OF SUBSCRIPTION
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3.1 Subject
to Section 3.2 hereof, the subscription period will begin as of the date of the
PPM and will terminate at 11:59 PM Eastern Time, on the earlier of the date on
which the Maximum Offering is sold or the Offering is terminated by
the Company (the “Termination
Date”). The minimum subscription amount is $50,000, although the Company
may, in its discretion, accept subscriptions for less than $50,000.
3.2 The
Subscriber shall effect a wire transfer in the full amount of the purchase price
for the Units to the Company’s escrow account in accordance with the wire
instructions attached as Exhibit F to the PPM
or shall deliver a check in payment of the purchase price for the
Units.
3.3 Pending
the sale of the Units, all funds paid hereunder shall be deposited by the
Company in escrow with the Company’s escrow agent. If the Company
shall not have obtained subscriptions (including this subscription) for the
Minimum Offering on or before the Termination Date (as such date may be extended
by the Company), then this subscription shall be void and all funds paid
hereunder by the Subscriber shall be promptly returned without interest to the
Subscriber, to the same account from which the funds were drawn. If
subscriptions are received and accepted and payment tendered for the Minimum
Offering on or prior to the Termination Date, then all subscription proceeds
(less fees and expenses) shall be paid over to the Company within ten (10) days
thereafter or such earlier date that is one business day after the amount of
good funds in escrow equals or exceeds $3,000,000. In such event,
sales of the Units may continue thereafter until the earlier of the date on
which the Maximum Offering is sold and the Termination Date, with subsequent
releases of funds from time to time at the discretion of the
Company.
3.4 The
Subscriber hereby authorizes and directs the Company and its escrow agent to
deliver any certificates or other written instruments representing the Units to
be issued to such Subscriber pursuant to this Subscription Agreement to the
address indicated on the signature page hereof.
3.5 The
Subscriber hereby authorizes and directs the Company and its escrow agent to
return any funds, without interest, for unaccepted subscriptions to the same
account from which the funds were drawn.
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3.6 If the
Subscriber is not a United States person, such Subscriber shall immediately
notify the Company and the Subscriber hereby represents that the Subscriber is
satisfied as to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Units or any use of this
Subscription Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Units, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Units. Such Subscriber’s subscription and
payment for, and continued beneficial ownership of, the Units will not violate
any applicable securities or other laws of the Subscriber’s
jurisdiction.
3.7 The
Company’s right to accept the subscription of the Subscriber is conditioned upon
the satisfaction of the following conditions precedent on or before the date the
Company accepts such subscription:
(a) As of the
Closing, no legal action, suit or proceeding shall be pending that seeks to
restrain or prohibit the transactions contemplated by this
Agreement.
(b) The
representations and warranties of the Company contained in this Agreement shall
have been true and correct in all material respects on the date of this
Agreement and shall be true and correct as of the Closing as if made on the
Closing Date.
(c) The
Company shall have provided the Subscriber with a substantially completed draft
of a Current Report on Form 8-K containing such information about
Pubco as would be required to be disclosed in a Registration
Statement on Form 10 (the “Jumbo 8-K”), and
following receipt of such Jumbo 8-K, the Subscriber shall have reconfirmed, in
writing, its subscription hereunder.
(d) The
Company shall have consummated its acquisition of Pubco’s issued and outstanding
capital stock.
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IV.
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MISCELLANEOUS
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4.1 Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by reputable overnight courier, facsimile (with receipt of
confirmation) or registered or certified mail, return receipt requested,
addressed to the Company, at the address set forth in the first paragraph
hereof, Attention: Chief Executive Officer, and to the Subscriber at the address
or facsimile number indicated on the signature page hereof. Notices
shall be deemed to have been given on the date when mailed or sent by facsimile
transmission or overnight courier, except notices of change of address, which
shall be deemed to have been given when received.
4.2 This
Subscription Agreement shall not be changed, modified or amended except by a
writing signed by both (a) the Company and (b) subscribers in the Offering
holding a majority of the Units issued in the Offering.
4.3 This
Subscription Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Subscription Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
4.4 Notwithstanding
the place where this Subscription Agreement may be executed by any of the
parties hereto, the parties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and governed by the laws of the
State of New York. The parties hereby agree that any dispute which
may arise between them arising out of or in connection with this Subscription
Agreement shall be adjudicated only before a Federal court located in New York,
New York and they hereby submit to the exclusive jurisdiction of the federal
courts located in New York, New York with respect to any action or legal
proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Subscription Agreement or
any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of the
address set forth below or such other address as the undersigned shall furnish
in writing to the other. The parties further agree that in the event
of any dispute, action, suit or other proceeding arising out of or in connection
with this Subscription Agreement, the PPM or other matters related to this
subscription brought by a Subscriber (or transferee), the Company (and each
other defendant) shall recover all of such party’s attorneys’ fees and costs
incurred in each and every action, suit or other proceeding, including any and
all appeals or petitions therefrom. As used herein, attorney’s fees shall be
deemed to mean the full and actual costs of any investigation and of legal
services actually performed in connection with the matters involved, calculated
on the basis of the usual fee charged by the attorneys performing such
services.
4.5 This
Subscription Agreement may be executed in counterparts. Upon the
execution and delivery of this Subscription Agreement by the Subscriber, this
Subscription Agreement shall become a binding obligation of the Subscriber with
respect to the purchase of Units as herein provided; subject, however, to the
right hereby reserved by the Company to (i) enter into the same agreements with
other subscribers, (ii) add and/or delete other persons as subscribers and (iii)
reduce the amount of or reject any subscription.
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4.6 The
holding of any provision of this Subscription Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Subscription Agreement, which shall remain in full force and
effect.
4.7 It is
agreed that a waiver by either party of a breach of any provision of this
Subscription Agreement shall not operate or be construed as a waiver of any
subsequent breach by that same party.
4.8 The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further actions as may be necessary or
appropriate to carry out the purposes and intent of this Subscription
Agreement.
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V.
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REGISTRATION
RIGHTS
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5.1 Definitions. As
used in this Agreement, the following terms shall have the following
meanings.
(a) The term
“Holder” shall mean any person owning or having the right to acquire Registrable
Securities or any permitted transferee of a Holder.
(b) The terms
“register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or order of effectiveness of such
registration statement or document.
(c) The term
“Registrable Securities” shall mean the shares underlying the Notes and
Warrants, provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC;
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale; (C) are held by a Holder or a permitted transferee of
a Holder pursuant to Section 5.8; and (D) may not be disposed of under Rule 144
under the Securities Act without restriction.
(d) The
term “SEC Guidance” means (i) any publicly-available written or oral guidance,
requirements or notice of the staff of the SEC, and (ii) the Securities
Act.
(e) The
term “Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the SEC having substantially the
same purpose and effect as such Rule.
5.2 Piggyback
Registration. At any time after the date hereof, if the
Company shall determine to register for its account or for the account of others
any of its equity securities, the Company shall include in such registration
statement the Registrable Securities, as permitted by SEC Guidance, including,
without limitation, Rule 415, provided, however, that the Company may reduce the
number of Registrable Securities registered pro rata in view of market
conditions.
5.3 Registration
Procedures. Whenever required under this Article V to include
Registrable Securities in a Company registration statement, the Company shall,
as expeditiously as reasonably possible:
(a) Use its
best reasonable efforts to (i) cause such registration statement to become
effective, and (ii) cause such registration statement to remain effective until
the earliest to occur of (A) such date as the sellers of Registrable Securities
(the “Selling Holders”) have completed the distribution described in the
registration statement and (B) such time that all of such Registrable Securities
are no longer, by reason of Rule 144 under the Securities Act, required to be
registered for the sale thereof by such Holders. The Company will
also use its best reasonable efforts to, during the period that such
registration statement is required to be maintained hereunder, file such
post-effective amendments and supplements thereto as may be required by the
Securities Act and the rules and regulations thereunder or otherwise to ensure
that the registration statement does not contain any untrue statement of
material fact or omit to state a fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they are made, not misleading; provided, however, that if applicable rules
under the Securities Act governing the obligation to file a post-effective
amendment permits, in lieu of filing a post-effective amendment that (i)
includes any prospectus required by Section 10(a)(3) of the Securities Act or
(ii) reflects facts or events representing a material or fundamental change in
the information set forth in the registration statement, the Company may
incorporate by reference information required to be included in (i) and (ii)
above to the extent such information is contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement.
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(b) Prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish
to the Selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus as amended or supplemented from time to time, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(d) Use best
reasonable efforts to register and qualify the securities covered by such
registration statement under such other federal or state securities laws of such
jurisdictions as shall be reasonably requested by the Selling Holders; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
(e) In the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each Selling Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify
each Holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, (i) when the registration statement or any post-effective
amendment and supplement thereto has become effective; (ii) of the issuance by
the SEC of any stop order or the initiation of proceedings for that purpose (in
which event the Company shall make every effort to obtain the withdrawal of any
order suspending effectiveness of the registration statement at the earliest
possible time or prevent the entry thereof); (iii) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iv) of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.
(g) Cause all
such Registrable Securities registered hereunder to be listed on each securities
exchange or quotation service on which similar securities issued by the Company
are then listed or quoted.
(h) Provide a
transfer agent for all Registrable Securities registered pursuant hereunder and
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration.
(i) Cooperate
with the Selling Holders and the managing underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing the Registrable
Securities to be sold, which certificates will not bear any restrictive legends;
and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, shall request at
least two business days prior to any sale of the Registrable Securities to the
underwriters.
(j) Comply
with all applicable rules and regulations of the SEC.
(k) If the
offering is underwritten and at the request of any Selling Holder, use its best
reasonable efforts to furnish on the date that Registrable Securities are
delivered to the underwriters for sale pursuant to such registration: (i)
opinions dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters and the transfer agent for the
Registrable Securities so delivered, respectively, to the effect that such
registration statement has become effective under the Securities Act and such
Registrable Securities are freely tradable, and covering such other matters as
are customarily covered in opinions of issuer’s counsel delivered to
underwriters and transfer agents in underwritten public offerings and (ii) a
letter dated such date from the independent public accountants who have
certified the financial statements of the Company included in the registration
statement or the prospectus, covering such matters as are customarily covered in
accountants’ letters delivered to underwriters in underwritten public
offerings.
5.4 Furnish
Information. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any Selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be reasonably required by the Company to
effect the registration of such Holder’s Registrable Securities.
5.5 Registration
Expenses. The Company shall bear and pay all registration
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registration pursuant to Section 5.2
for each Holder, but excluding (i) legal expenses of the Holders and (ii)
underwriting discounts and commissions relating to Registrable
Securities.
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5.6 Delay of
Registration. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Article.
5.7 Indemnification. In
the event that any Registrable Securities are included in a registration
statement under this Article V:
(a) To the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 5.7(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the
extent permitted by law, each Selling Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, or the Exchange
Act, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the
indemnity agreement contained in this Section 5.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that, in no
event shall any indemnity under this Section 5.7(b) exceed the greater of the
cash value of the (i) gross proceeds from the Offering received by such Holder
or (ii) such Holder’s investment pursuant to this Agreement as set forth on the
signature page attached hereto.
(c) Promptly
after receipt by an indemnified party under this Section 5.7 of notice of the
commencement of any action (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.7, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel selected by the indemnifying party and approved
by the indemnified party (whose approval shall not be unreasonably withheld);
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.7.
(d) If the
indemnification provided for in this Section 5.7 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
7
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall
control.
(f) The
obligations of the Company and Holders under this Section 5.7 shall survive the
completion of the Offering.
5.8 Permitted
Transferees. The rights to cause the Company to register
Registrable Securities granted to the Holders by the Company under this Article
V may be assigned in full by a Holder in connection with a transfer by such
Holder of its Registrable Securities, to (a) any partner or retired partner of a
Holder that is a partnership or member or Manager of a limited Liability Company
of a Holder that is an LLC, or (b) any family member or trust for the benefit of
any individual Holder, provided that (i) such Holder gives prior written notice
to the Company; (ii) such transferee agrees to comply with the terms and
provisions of this Agreement; (iii) such transfer is otherwise
in compliance with this Agreement; and (iv) such transfer is otherwise
effected in accordance with applicable securities laws. Except as
specifically permitted by this Section 5.8, the rights of a Holder with respect
to Registrable Securities as set out herein shall not be transferable to any
other person, and any attempted transfer shall cause all rights of such Holder
therein to be forfeited.
[Signature
Pages Follow]
8
IN WITNESS WHEREOF, the
parties have executed this Subscription Agreement as of the day and year first
written above.
|
__________________________
|
X
$50,000 for each Unit
|
=
$_____________________.
|
|
Number
of Units subscribed for
|
Aggregate
Purchase Price
|
Manner
in which Title is to be held (Please Check One):
|
1.
|
___
|
Individual
|
7.
|
___
|
Trust/Estate/Pension
or Profit Sharing Plan
Date
Opened:______________
|
|
2.
|
___
|
Joint
Tenants with Right of Survivorship
|
8.
|
___
|
As
a Custodian for
________________________________
Under
the Uniform Gift to Minors Act of the State of
________________________________
|
|
3.
|
___
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Community
Property
|
9.
|
___
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Married
with Separate Property
|
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4.
|
___
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Tenants
in Common
|
10.
|
___
|
Keogh
|
|
5.
|
___
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Corporation/Partnership/
Limited Liability Company
|
11.
|
___
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Tenants
by the Entirety
|
|
6.
|
___
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IRA
|
12.
|
___
|
Foundation
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
|
IF
MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN:
· INDIVIDUAL
SUBSCRIBERS MUST COMPLETE PAGE A-10
· SUBSCRIBERS
WHICH ARE ENTITIES MUST COMPLETE PAGE A-11
9
EXECUTION BY NATURAL
PERSONS
|
_____________________________________________________________________________
Exact
Name in Which Title is to be Held
|
||
|
Name
(Please Print)
|
Name
of Additional Subscriber
|
|
|
Residence:
Number and Street
|
Address
of Additional Subscriber
|
|
|
City,
State and Zip Code
|
City,
State and Zip Code
|
|
|
Social
Security Number
|
Social
Security Number
|
|
|
Telephone
Number
|
Telephone
Number
|
|
|
Fax
Number (if available)
|
Fax
Number (if available)
|
|
|
E-Mail
(if available)
|
E-Mail
(if available)
|
|
|
(Signature)
|
(Signature
of Additional Subscriber)
|
|
|
ACCEPTED
this ___ day of _________ 2009, on behalf of Magnolia Solar
Corporation
|
||
|
By:_____________________________
Name:
Title:
|
||
10
EXECUTION BY SUBSCRIBER
WHICH IS AN ENTITY
(Corporation,
Partnership, Trust, Etc.)
|
____________________________________________________________________________
Name
of Entity (Please Print)
|
|
|
Date
of Incorporation or Organization:
|
|
|
State
of Principal Office:
|
|
|
Federal
Taxpayer Identification Number:
____________________________________________
Office
Address
____________________________________________
City,
State and Zip Code
____________________________________________
Telephone
Number
____________________________________________
Fax
Number (if available)
____________________________________________
E-Mail
(if available)
|
|
|
[seal]
Attest:
(If
Entity is a Corporation)
|
By: ___________________
Name:__________________
Title:
|
|
*If
Subscriber is a Registered Representative with a FINRA member firm, have
the following acknowledgement signed by the appropriate
party:
|
|
|
The
undersigned FINRA member firm acknowledges receipt of the
notice
required
by Rule 3050 of the FINRA
Conduct
Rules
|
|
|
Name
of FINRA Firm
|
ACCEPTED
this ____ day of __________ 2009, on behalf of Magnolia Solar
Corporation.
|
|
By: _______________________
Name:
Title:
|
By: ____________________
Name:____________________
Title:
|
11