Document:

MD - Filed by Filing Services Canada Inc. (403) 717-3898

EXHIBIT C

 

FORM OF WARRANT

 

NEITHER THIS SECURITY NOR ANY SECURITIES WHICH MAY BE ISSUED UPON EXERCISE OF THIS SECURITY HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR OTHER JURISDICTION OR ANY EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND SUCH OTHER LAWS AND REQUIREMENTS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR LISTING OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH REGISTRATION AND/OR LISTING REQUIREMENTS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH WILL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

 

Green PolkaDot Box, Inc.

 

(FORMERLY KNOWN AS VAULT AMERICA, INC.)

 

COMMON STOCK WARRANT

 

No. __________                                                                                                                                                       ______, 2012

 

GREEN POLKADOT BOX, INC. (formerly known as Vault America, Inc.), a Nevada corporation (the “Company”), hereby certifies that _______________________________, its permissible transferees, designees, successors and assigns (collectively, the “Holder”), for value received, is entitled to purchase from the Company at any time commencing on the date hereof (the “Effective Date”) and terminating on the fifth anniversary of the Effective Date up to _____________ shares (each, a “Share” and collectively the “Shares”) of the Company’s common stock, par value $0.001 per Share (the “Common Stock”), at an exercise price per Share equal to $4.50 (the “Exercise Price”).  The number of Shares purchasable hereunder and the Exercise Price are subject to adjustment as provided in Section 4 hereof.

 

1.           Method of Exercise; Payment.

 

(a)           Cash Exercise.  The purchase rights represented by this Warrant may be exercised by the Holder, in whole or in part, at any time, or from time to time, by the surrender of this Warrant (with the notice of exercise form (the "Notice of Exercise") attached hereto as Exhibit A duly executed) at the principal office of the Company, and by payment to the Company of an amount equal to the Exer­cise Price multiplied by the number of the Shares being purchased, which amount may be paid, at the election of the Holder, by wire transfer or certified check payable to the order of the Company. The person or persons in whose name(s) any certificate(s) repre­senting Shares shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the Shares represented thereby (and such Shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised.

 

  

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(b)           Stock Certificates.

(i)           Upon the exercise of this Warrant in compliance with the provisions of Section 1(a), the Company shall promptly issue and cause to be delivered to the Holder a certificate for the Shares purchased by the Holder.  Each exercise of this Warrant shall be effective immediately prior to the close of business on the date (the “Date of Exercise”) that the conditions set forth in Section 1(a) or have been satisfied.  On the first Business Day following the date on which the Company has received each of the Notice of Exercise and the aggregate Exercise Price (the “Exercise Delivery Documents”), the Company shall transmit an acknowledgment of receipt of the Exercise Delivery Documents to the Company’s transfer agent (the “Transfer Agent”). On or before the third Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Notice of Exercise, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Shares.

(ii)           This Warrant shall be exercisable, either in its entirety or, from time to time, for part only of the number of Warrant Shares referenced by this Warrant. If this Warrant is exercised in part, the Company shall issue, at its expense, a new Warrant, in substantially the form of this Warrant, referencing such reduced number of Shares that remain subject to this Warrant.

(c)           Taxes.  The issuance of the Shares upon the exercise of this Warrant, and the delivery of certificates or other instruments representing such Shares, shall be made without charge to the Holder for any tax or other charge in respect of such issuance.

 

  

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2.           Warrant.

 

                               (a)    Exchange, Transfer and Replacement.  At any time prior to the exercise hereof, this Warrant may be exchanged upon presentation and surrender to the Company, alone or with other warrants of like tenor of different denominations registered in the name of the same Holder, for another warrant or warrants of like tenor in the name of such Holder exercisable for the aggregate number of Shares as the Warrant or Warrants surrendered.

 

                               (b)    Replacement of Warrant.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver in lieu thereof, a new Warrant of like tenor.

 

(c)    Cancellation; Payment of Expenses.  Upon the surrender of this Warrant in connection with any transfer, exchange or replacement as provided in this Section 2, this Warrant shall be promptly canceled by the Company.  The Holder shall pay all taxes and all other expenses (including legal expenses, if any, incurred by the Holder or transferees) and charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this Section 2.

 

(d)   Warrant Register.  The Company shall maintain, at its principal executive offices (or at the offices of the transfer agent for the Warrant or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant (the “Warrant Register”), in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.

 

3.             Rights and Obligations of Holders of this Warrant.  The Holder of this Warrant shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, that in the event any certificate representing shares of Common Stock or other securities is issued to the Holder hereof upon exercise of this Warrant, such holder shall, for all purposes, be deemed to have become the holder of record of such Common Stock on the date on which this Warrant, together with a duly executed Election to Purchase, was surrendered and payment of the aggregate Exercise Price was made, irrespective of the date of delivery of such Common Stock certificate.

 

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  4.           Adjustments.

 

(a)           Stock Dividends, Reclassifications, Recapitalizations, Etc.  While this Warrant is outstanding, in the event the Company:  (i) pays a dividend in Common Stock or makes a distribution in Common Stock, (ii) subdivides its outstanding Common Stock into a greater number of shares, (iii) combines its outstanding Common Stock into a smaller number of shares or (iv) increases or decreases the number of shares of Common Stock outstanding by reclassification of its Common Stock (including a recapitalization in connection with a consolidation or merger in which the Company is the continuing corporation), then (1) the Exercise Price on the record date of such division or distribution or the effective date of such action shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately before such event and the denominator of which is the number of shares of Common Stock outstanding immediately after such event, and (2) the number of shares of Common Stock for which this Warrant may be exercised immediately before such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the Exercise Price immediately before such event and the denominator of which is the Exercise Price immediately after such event.

 

 (b)           Combination: Liquidation.  While this Warrant is outstanding, (i) in the event of a Combination (as defined below), each Holder shall have the right to receive upon exercise of the Warrant the kind and amount of shares of capital stock or other securities or property which such Holder would have been entitled to receive upon or as a result of such Combination had such Warrant been exercised immediately prior to such event (subject to further adjustment in accordance with the terms hereof), and (ii) in the event of (x) a Combination where consideration to the holders of Common Stock in exchange for their shares is payable solely in cash or (y) the dissolution, liquidation or winding-up of the Company, the Holders shall be entitled to receive, upon surrender of their Warrant, distributions on an equal basis with the holders of Common Stock or other securities issuable upon exercise of the Warrant, as if the Warrant had been exercised immediately prior to such event, less the Exercise Price. Unless paragraph (ii) is applicable to a Combination, the Company shall provide that the surviving or acquiring Person (the “Successor Company”) in such Combination will assume by written instrument the obligations under this Section 4 and the obligations to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to acquire. “Combination” means an event in which the Company consolidates with, merges with or into, or sells all or substantially all of its assets to another Person, where “Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.  In case of any Combination described in this Section 4, the surviving or acquiring Person and, in the event of any dissolution, liquidation or winding-up of the Company, the Company, shall deposit promptly with an agent or trustee for the benefit of the Holders such funds, if any, necessary to pay to the Holders the amounts to which they are entitled as described above.  After such funds and the surrendered Warrant are received, the Company shall be required to deliver a check in such amount as is appropriate (or, in the case or consideration other than cash, such other consideration as is appropriate) to such Person or Persons as it may be directed in writing by the Holders surrendering such Warrants.

 

  

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  (c)           Notice of Adjustment.  Whenever the Exercise Price or the number of shares of Common Stock and other property, if any, issuable upon exercise of the Warrant is adjusted, as herein provided, the Company shall deliver to the holders of the Warrant in accordance with Section 10 a certificate of the Company’s Chief Financial Officer setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated and specifying the Exercise Price and number of shares of Common Stock issuable upon exercise of  Warrant after giving effect to such adjustment.

 

                               (d)           Notice of Certain Transactions.  While this Warrant is outstanding, in the event that the Company shall propose (a) to pay any dividend payable in securities of any class to the holders of its Common Stock or to make any other non-cash dividend or distribution to the holders of its Common Stock, (b) to offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of stock of any class or any other securities, rights or options, (c) to effect any capital reorganization, reclassification, consolidation or merger affecting the class of Common Stock, as a whole, or (d) to effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall, within the time limits specified below, send to each Holder a notice of such proposed action or offer.  Such notice shall be mailed to the Holders at their addresses as they appear in the Warrant Register (as defined in Section 2(d)), which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect of such action on the Common Stock and on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of each Warrant and the Exercise Price after giving effect to any adjustment pursuant to Section 4 which will be required as a result of such action.  Such notice shall be given as promptly as possible and (x) in the case of any action covered by clause (a) or (b) above, at least ten (10) days prior to the record date for determining holders of the Common Stock for purposes of such action or (y) in the case of any other such action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever shall be the earlier.

 

5.           Registration Rights.  The Holder is entitled to the benefit of such registration rights in respect of the Shares as are set forth in the Subscription Agreement between the Company and the Holder.

 

6.           Fractional Shares.  In lieu of issuance of a fractional share upon any exercise hereunder, the Company will issue an additional whole share in lieu of that fractional share, calculated on the basis of the Exercise Price.

 

7.           Legends.  Prior to issuance of the shares of Common Stock underlying this Warrant, all such certificates representing such shares shall bear a restrictive legend to the effect that the Shares represented by such certificate have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), and that the Shares may not be sold or transferred in the absence of such registration or an exemption therefrom, such legend to be substantially in the form of the bold-face language appearing at the top of Page 1 of this Warrant.

 

  

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8.           Disposition of Warrants or Shares.  The Holder of this Warrant, each transferee hereof and any holder and transferee of any Shares, by his or its acceptance thereof, agrees that no public distribution of Warrants or Shares will be made in violation of the provisions of the 1933 Act.  Furthermore, it shall be a condition to the transfer of this Warrant that any transferee thereof deliver to the Company his or its written agreement to accept and be bound by all of the terms and conditions contained in this Warrant.

 

9.           Merger or Consolidation.  The Company will not merge or consolidate with or into any other corporation, or sell or otherwise transfer its property, assets and business substantially as an entirety to another corporation, unless the corporation resulting from such merger or consolidation (if not the Company), or such transferee corporation, as the case may be, shall expressly assume, by supplemental agreement reasonably satisfactory in form and substance to the Holder, the due and punctual performance and observance of each and every covenant and condition of this Warrant to be performed and observed by the Company.

 

10.           Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Subscription Agreement between the Company and the
  Holder.
                 
  11.           Limitation on Exercise. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.99% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph. This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a merger or other business combination or reclassification involving the Company. This restriction may not be waived without the consent of the Holder.

 

  

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12.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York.

 

13.           Successors and Assigns.  This Warrant shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

 

14.           Headings.  The headings of various sections of this Warrant have been inserted for reference only and shall not affect the meaning or construction of any of the provisions hereof.

 

15.           Severability. If any provision of this Warrant is held to be unenforceable under applicable law, such provision shall be excluded from this Warrant, and the balance hereof shall be interpreted as if such provision were so excluded.

 

16.           Modification and Waiver.  This Warrant and any provision hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the Company and the Holder.

 

17.           Specific Enforcement.  The Company and the Holder acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Warrant were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Warrant and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which either of them may be entitled by law or equity.

 

18.           Assignment.  This Warrant may be transferred or assigned, in whole or in part, at any time and from time to time by the then Holder by submitting this Warrant to the Company together with a duly executed Assignment in substantially the form and substance of the Form of Assignment which accompanies this Warrant, as Exhibit B hereto, and, upon the Company’s receipt hereof, and in any event, within five (5) business days thereafter, the Company shall issue a warrant to the Holder to evidence that portion of this Warrant, if any as shall not have been so transferred or assigned.

 

(signature page immediately follows)

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, manually or by facsimile, by one of its officers thereunto duly authorized.

 

	 	GREEN POLKADOT BOX, INC.	 
	 	 	 	 
	

Date: ________, 2012

	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 
   

   

   

   

  

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EXHIBIT A

TO

WARRANT CERTIFICATE

 

ELECTION TO PURCHASE

 

To Be Executed by the Holder

 

in Order to Exercise the Warrant

 

The undersigned Holder hereby elects to purchase _______  Shares pursuant to the attached Warrant, and requests that certificates for securities be issued in the name of:

 

__________________________________________________________

 

(Please type or print name and address)

__________________________________________________________

__________________________________________________________

__________________________________________________________

(Social Security or Tax Identification Number)

 

and delivered

to:____________________________________________________________________________________________________________________________________.

______________________________________________________________________________________________________________________________________

 

(Please type or print name and address if different from above)

 

If such number of Shares being purchased hereby shall not be all the Shares that may be purchased pursuant to the attached Warrant, a new Warrant for the balance of such Shares shall be registered in the name of, and delivered to, the Holder at the address set forth below.

 

In full payment of the purchase price with respect to the Shares purchased and transfer taxes, if any, the undersigned hereby tenders payment of $__________ by check, money order or wire transfer payable in United States currency to the order of [_________]

 

	 	HOLDER:	 
	 	 	 	 
	
Date

	
By: 

	 	 
	 	 	          Name:	 
	 	 	          Title:	 
	 	 	        
  Address:	 
	 	 	 	 
	Dated:_______________________	 	 	 

 

  

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EXHIBIT B

TO

WARRANT

 

FORM OF ASSIGNMENT

(To be signed only on transfer of Warrant)

 

For value received, the undersigned hereby sells, assigns, and transfers unto _____________ the right represented by the within Warrant to purchase ______ shares of Common Stock of Vault America, Inc., a Nevada corporation, to which the within Warrant relates, and appoints ____________________ Attorney to transfer such right on the books of Vault America, Inc., a Nevada corporation, with full power of substitution of premises.

 

	

Dated:

	
By: 

	 	 
	 	 	              Name:	 
	 	 	              Title:	 
	 	 	

        (signature must conform to name of holder as specified on the fact of the Warrant)

	 
	 	 	 	 
	 	

Address:

	 

 

Signed in the presence of :

 

Dated:

  

-10-MD - Filed by Filing Services Canada Inc. (403) 717-3898

SUBSCRIPTION AGREEMENT

SUBSCRIPTION AGREEMENT (this “Agreement” or “Subscription Agreement”) made as of the last date set forth on the signature page hereof between The Green PolkaDot Box, Inc., a Utah corporation (the “Company”), and the undersigned (the “Subscriber”).

WITNESSETH:

WHEREAS, the Company is conducting a private offering (the “Offering”) consisting of up to $_______________ of Unsecured Convertible Promissory Notes (each a “Note”), a form of which is attached hereto as Exhibit A, pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder; and

WHEREAS, each Subscriber desires to purchase a Note in the principal amount set forth on the signature page hereof on the terms and conditions hereinafter set forth for a purchase price equal to the principal amount thereof (the “Purchase Price”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

I.           SUBSCRIPTION FOR NOTES

1.1           Subject to the terms and conditions hereinafter set forth, the Subscriber hereby irrevocably subscribes for and agrees to purchase from the Company a Note in the principal amount as set forth on the signature page hereof on the terms and conditions hereinafter set forth and in consideration for the Purchase Price, and the Company agrees to sell to the Subscriber such Note.

 

1.2           The purchase price is payable by wire transfer of immediately available funds, pursuant to the wire instructions below or by check payable to Sichenzia Ross Friedman Ference, LLP as Escrow Agent to The Green PolkaDot Box, Inc.

 

1.3           Together with the payment of the purchase price, the Subscriber hereby delivers to the Company the following (i) two executed copies of the Signature Page at the end of this Agreement, (ii) two executed copies of the Escrow Agreement, in the form attached hereto as Exhibit B (the “Escrow Agreement”), and (iii) one executed copy of the Confidential Investor Questionnaire attached hereto as Exhibit C (the “Questionnaire”).

1.4           The Offering will be open until February 28, 2012, unless terminated earlier by the Company; or (ii) the sale of Notes in the aggregate principal of $500,000.

1.5           The closing of the purchase and sale of the Notes hereunder (the “Closing”) shall take place at the offices of Sichenzia Ross Friedman Ference, LLP, 61 Broadway, 32nd Floor, New York, NY 10006 or such other place as determined by the Company and may take place in one of more closings.  Closings shall take place on a Business Day as determined by the Company (the “Closing Date”). “Business Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time) of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed.

 

  

  

  

1.5           Subject to applicable state securities laws, the Subscriber may not revoke any subscription that such Subscriber delivers to the Company. However, the Subscriber understands and agrees that the Company, in its sole discretion, may (i) reject the subscription of any Subscriber, whether or not qualified, in whole or in, part, and (ii) may withdraw the Offering at any time prior to the termination of the Offering.  The Company shall have no obligation to accept subscriptions in the order received. This subscription shall become binding only if accepted by the Company.

1.6           Other than in connection with an Exempt Issuance (as defined below), if at any time following the mandatory exchange of Notes pursuant to Section 4 of the Notes (the “Mandatory Exchange”) and for a period of twelve months thereafter, the Public Company (as defined in the Notes) shall issue any common stock or securities convertible into or exercisable for shares of common stock (or modify any of the foregoing which may be outstanding) to any person or entity at a price per share or conversion or exercise price per share which shall be less than the Exchange Price (as defined in the Notes) (the “Lower Price Issuance”), without the consent of the Subscriber, then the Company shall cause the Public Company to issue, for each such occasion, additional PIPE Securities (as defined in the Notes) to the Subscriber respecting those PIPE Securities that are then still owned by the Subscriber at the time of the Lower Price Issuance so that the average Exchange Price of the PIPE Securities owned by the Subscriber on the date of the Lower Price Issuance plus such additional PIPE Securities issued to Subscriber pursuant to this Section 1.6 is equal to such other Lower Price Issuance. The delivery to Subscriber of the additional PIPE Securities shall be not later than the closing date of the transaction giving rise to the requirement to issue additional PIPE Securities. For the purposes hereof, “Exempt Issuance” means (i) securities of the Public Company issued or issuable in an underwritten public offering or upon the exercise of warrants or rights granted to underwriters in connection with such a public offering, (ii) securities of the Public Company issued, issuable or deemed issued to employees, consultants, officers or directors under equity compensation plan, (iii) securities of the Public Company issued or issuable pursuant to the exercise, conversion or exchange of options, warrants, convertible or exchangeable securities of the Public Company outstanding immediately following the Mandatory Exchange, (iv) securities of the Public Company issued or issuable in connection with bank lines of credit, equipment lease transactions or real estate transactions, (v) securities of the Public Company issued or issuable in connection with any strategic alliance, joint venture or license agreement, and (vi) securities of the Public Company issued or issuable in connection with any acquisition, merger or consolidation (collectively, the foregoing (i) through (vi) are “Exempt Issuances”),

 

II.           REPRESENTATIONS AND WARRANTIES

Subscriber hereby represents, warrants and covenants to, and agrees with, the Company as follows:

 

  

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2.1           The Subscriber recognizes that investment in the Note and the underlying securities (collectively, the “Securities”) involves substantial risks, including loss of the entire amount of such investment.  The Subscriber fully understands the terms of the Offering and acknowledges receipt of and has carefully reviewed this Agreement, the Executive Summary attached as Exhibit D, the “Risk Factors” attached as Exhibit E as well the Note and Escrow Agreement (collectively, the “Disclosure Materials”).  With respect to tax and other economic considerations involved in this investment, the Subscriber is not relying on the Company.  The Subscriber has carefully considered and has, to the extent the Subscriber believes such discussion necessary, discussed with the Subscriber’s professional legal, tax, accounting, and financial advisors the suitability of an investment in the Securities for the Subscriber’s particular tax and financial situation and has determined that the Securities being subscribed for by the Subscriber are a suitable investment for the Subscriber.

2.2           The Subscriber acknowledges that all documents, records, and books pertaining to this investment which the Subscriber has requested have been made available for inspection by the Subscriber, the Subscriber’s attorney, accountant, or adviser(s).

2.3           The Subscriber and/or the Subscriber’s adviser(s) has/have had a reasonable opportunity to ask questions of, and receive answers from, a person or persons acting on behalf of the Company concerning the Offering and all such questions have been answered to the full satisfaction of the Subscriber.

2.4           The Subscriber is not subscribing for 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, internet or radio or presented at any seminar or meeting.

2.5           The Subscriber: (i) has a pre-existing business relationship with the Company, or one of its respective officers, directors, or controlling persons; and (ii) by reason of the Subscriber’s business or financial experience or the business or financial experience of the Subscriber’s professional advisors who are unaffiliated with, and who are not compensated by, the Company or any of its respective affiliates, directly or indirectly, can be reasonably assumed to have the capacity to protect the Subscriber’s interests in connection with the investment in the Securities.

2.6           If the Subscriber is a natural person, the Subscriber has reached the age of majority in the state in which the Subscriber resides, has adequate means of providing for the Subscriber’s current financial needs and contingencies, is able to bear the substantial economic risks of an investment in the Securities for an indefinite period of time, has no need for liquidity in such investment, and, at the present time, could afford a complete loss of such investment.

2.7           The Subscriber or the Subscriber’s purchaser representative, as the case may be, has such knowledge and experience in financial, tax, and business matters so as to enable the Subscriber to utilize the information made available to the Subscriber in connection with the Offering to evaluate the merits and risks of an investment in the Securities and to make an informed investment decision with respect thereto.

 

  

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2.8           The Subscriber will not sell or otherwise transfer the Securities without registration under the Securities Act, or applicable state securities laws or an exemption therefrom.  The Subscriber acknowledges that the Securities have not been registered under the Securities Act or under the securities laws of any states.  The Subscriber is purchasing the Securities for the Subscriber’s own account, for investment, and not with a view to resale or distribution, except in compliance with the Securities Act.  The Subscriber has not offered or sold any portion of the Securities being acquired nor does the Subscriber have any present intention of dividing such Securities with others or of selling, distributing, or otherwise disposing of any portion of such Securities either currently or after the passage of a fixed or determinable period of time or upon the occurrence or non-occurrence of any predetermined event or circumstance in violation of the Securities Act.  The Subscriber acknowledges that the Company has no obligation to register the Securities.

2.9           In making the decision to invest in the Securities the Subscriber has relied solely upon the information provided by the Company in the Disclosure Materials.  To the extent necessary, the Subscriber has retained, at its own risk and expense, and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of the Offering and the purchase of the Securities hereunder.  The Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course of Subscriber’s consideration of an investment in the Securities other than in the Disclosure Materials.  The Subscriber acknowledges and agrees that the Company has prepared the Disclosure Materials and that no other person, has supplied any information for inclusion in the Disclosure Materials.

2.10           If this Subscription Agreement is executed and delivered on behalf of a partnership, corporation, trust, or estate: (i) such partnership, corporation, trust, or estate has the full legal right and power and all authority and approval required (a) to execute and deliver, or authorize the execution and delivery of, this Subscription Agreement, the Escrow Agreement, the Questionnaire and all other instruments executed and delivered by, or on behalf of, such partnership, corporation, trust, or estate in connection with the purchase of its Securities, (b) to delegate authority pursuant to a power of attorney, and (c) to purchase and hold such Securities; (ii) the signature of the party signing on behalf of such partnership, corporation, trust, or estate is binding upon such partnership, corporation, trust, or estate; and (iii) such partnership, corporation, or trust has not been formed for the specific purpose of acquiring such Securities, unless each beneficial owner of such entity is qualified as an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act (“Regulation D”) and has submitted information substantiating such individual qualification.

2.11           The Subscriber is an accredited investor, as defined in Rule 501(a) of Regulation D and under state securities of “blue sky” laws, as indicated in the Questionnaire attached hereto and hereby made a part hereof.

2.12           The Subscriber shall indemnify and hold harmless the Company and is members, officers, managers, employees, agents, representatives or control persons thereof, who is or may be a party to, or is or may be threatened to be made a party to, any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of, or arising from, any actual or alleged misrepresentation or misstatement of facts or omission to represent or state facts made or alleged to have been made by the Subscriber, or omitted or alleged to have been omitted by the Subscriber, concerning the Subscriber or the Subscriber’s authority to invest or financial position in connection with the Offering, including, without limitation, any such misrepresentation, misstatement, or omission contained in the Questionnaire or any other document submitted by the Subscriber, against losses, liabilities, and expenses (including reasonable attorneys’ fees, judgments, fines, and amounts paid in settlement) actually and reasonably incurred by the Company and each respective member, officer, manager, employee, agent, representative or control person thereof, in connection with such action, suit, or proceeding.

 

  

4

  

	
III

	
UNDERSTANDINGS

The Subscriber understands, acknowledges, and agrees with the Company as follows:

3.1           This subscription may be rejected, in whole or in part, by the Company in its sole and absolute discretion, at any time before the relevant Closing, notwithstanding prior receipt by the Subscriber of notice of acceptance of the Subscriber’s subscription.

3.2           Except as set forth in Section 3.1 above, the Subscriber hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Subscriber, that, except as may be provided under applicable laws, the Subscriber is not entitled to cancel, terminate, or revoke this Subscription Agreement or any agreements of the Subscriber hereunder and that this Subscription Agreement and such other agreements shall survive the death or disability of the Subscriber and shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives, and permitted assigns.  If the Subscriber is more than one person, the obligations of the Subscriber 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/her heirs, executors, administrators, successors, legal representatives, and permitted assigns.

3.3           The Offering is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D thereunder, which is in part dependent upon the truth, completeness, and accuracy of the statements made by the Subscriber herein and in the Questionnaire.

3.4           It is understood that in order not to jeopardize the Offering’s exempt status under Section 4(2) of the Securities Act and Regulation D, any transferee will, at a minimum, be required to fulfill the investor suitability requirements thereunder.

3.5           The Subscriber acknowledges that the information disclosed to the Subscriber relating to the Offering is confidential and non-public and agrees that all such information shall be kept in confidence by the Subscriber and neither used by the Subscriber for the Subscriber’s personal benefit (other than in connection with this Subscription) nor disclosed to any third party for any reason; provided, however, that this obligation shall not apply to any such information that (i) is part of the public knowledge or literature and readily accessible at the date hereof, (ii) becomes part of the public knowledge or literature and readily accessible by publication (except as a result of a breach of this provision), or (iii) is received from third parties (except third parties who disclose such information in violation of any confidentiality agreements or obligations, including, without limitation, any Subscription Agreement entered into with the Company).

 

  

5

  

3.6           The Subscriber acknowledges that the Company intends to use the proceeds of the Offering for working capital and general corporate purposes after payment (a) to the Company’s placement agent, Midtown Partners & Co. LLC (the “Placement Agent”) of (i) a cash fee of 10% of the gross proceeds of monies raised in this Offering from investors introduced by the Placement Agent. The Subscriber further acknowledges that the Company will have broad discretion in the use of net proceeds of the Offering.

3.7           The representations, warranties, and agreements of the Subscriber contained herein and in any other writing delivered in connection with the transactions contemplated hereby shall be true and correct in all respects on and as of the date of the Closing as if made on and as of such date and shall survive the execution and delivery of this Agreement and the purchase of the Securities.

3.8           Insofar as indemnification for liabilities under the Securities Act may be permitted to managers, officers, or controlling persons of the Company, the Company has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable to such extent.

3.9           IN MAKING AN INVESTMENT DECISION, SUBSCRIBERS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.  THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.  FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE DISCLOSURE MATERIALS OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

3.10           THE SECURITIES MAY NOT BE TRANSFERRED, RESOLD, OR OTHERWISE DISPOSED OF, EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  SUBSCRIBERS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

IV.            MISCELLANEOUS

4.1           Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:

if to the Company, to it at:

629 E. Quality Dr., Suite 103

American Fork, UT 84003

 

  

6

  

 

Attn: Rob Smith

with a copy to:

Sichenzia Ross Friedman & Ference LLP

61 Broadway, 32nd Floor

New York, NY 10022

Attn: Andrea Cataneo, Esq.

if to the Subscriber, to the Subscriber’s address indicated on the signature page of this Agreement.

Notices shall be deemed to have been given or delivered on the date of mailing, except notices of change of address, which shall be deemed to have been given or delivered when received.

4.2           Except as otherwise provided herein, this Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein.  No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

4.3           This 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 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           Upon the execution and delivery of this Agreement by the Subscriber, this Agreement shall become a binding obligation of the Subscriber with respect to the purchase of the Note as herein provided, subject to acceptance by the Company.

4.5           NOTWITHSTANDING THE PLACE WHERE THIS 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 SUBSTANTIVE AND PROCEDURAL LAWS OF THE STATE OF NEW YORK WITH­OUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW.  IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK AND THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

 

  

7

  

4.6           The holding of any provision of this Agreement to be invalid or unenforce­able by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.  If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

4.7           It is agreed that a waiver by either party of a breach of any provision of this 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 action as may be neces­sary or appropriate to carry out the purposes and intent of this Agreement.

4.9           This Agreement may be executed in one or more counterparts each of which shall be deemed an origi­nal, but all of which shall together constitute one and the same instrument.  This Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

4.10           The headings of this Agreement are for convenience of reference only, are not part of this Agreement and do not affect its interpretation.

4.11           The Subscriber acknowledges that it is not relying on any other subscriber in making its investment or decision to invest in the Company.  The Subscriber agrees that no other subscriber nor the respective controlling person, officers, directors, partners, agents or employees of any subscriber shall be liable to any other subscriber for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Note or the execution of or performance under this Agreement.

 

***********

  

8

  

In Witness Whereof, the parties hereto have executed, or caused their duly authorized representatives to execute, this Subscription Agreement as of the day first above written.

 

	 	 	Company:	 
	 	 	 	 
	 	 	The Green Polkadot Box, Inc.	 
	 	 	 	 	 
	
 

	 	
By: 

	/s/ 	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 	 	 	 	 
	 	 	Subscriber:	 
	Principal Amount of Note Subscribed For	 	 	 	 
	 	 	

Individual:

	 
	 	 	 	 	 
	 	 	 	 
	 	 	Name:	 
	 	 	 	 	 
	 	 	Non-Individual:	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	

Name of Entity:

	 
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 	 	 	 	 
	 	 	Address(*):	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

	 	 	Attention:	 	 
	 	 	Facsimile:	 	 
	 	 	E-mail:	 	 

 

	 	 

(*)  Individuals should list their primary residence; Companies and other non-natural entities should list their principal place of business.

  

9

  

Exhibit A

FORM OF CONVERTIBLE PROMISSORY NOTE

 
 

 

 

  

10

  

Exhibit B

FORM OF ESCROW AGREEMENT

 
 

 

 

 

  

11

  

Exhibit C

 

CONFIDENTIAL INVESTOR QUESTIONNAIRE

A.           The Subscriber represents and warrants that he, she or it comes within one category marked below, and that for any category marked, he, she or it has truthfully set forth, where applicable, the factual basis or reason the Subscriber comes within that category.  ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL.  The undersigned agrees to furnish any additional information which the Company deems necessary in order to verify the answers set forth below.

	
Category A  

	
The Subscriber is (a) an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000, or (b) a self-directed retirement account (“Retirement Account”) whose participant’s net worth (or joint net worth with his or her spouse) presently exceeds $1,000,000.

	
  

	
In calculating net worth, (a)  the Subscriber’s or his or her spouse’s primary residence shall not be included as an asset, (b) indebtedness that is secured by such person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the Units, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of the Notes and Warrants exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability), and (c) indebtedness that is secured by such person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of the Units shall be included as a liability.

	
Category B  

	
The Subscriber is (a) an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year or (b) a Retirement Account and the Retirement Account participant meets the tests in clause (a).

	
Category C  

	
The Subscriber is a director or executive officer of the Company which is issuing and selling the Shares.

	
Category D  

	
The Subscriber is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self directed plan with investment decisions made solely by persons that are accredited investors. (describe entity)

	
 

	
 

	
 

	
 

 

  

12

  

 

	
Category E  

	
The Subscriber is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940. (describe entity)

	
 

	
 

	
 

	
 

 

	
Category F  

	
The Subscriber is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Shares and with total assets in excess of $5,000,000. (describe entity)

	
 

	
 

	
 

	
 

 

	
Category G  

	
The Subscriber is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, where the purchase is directed by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the Act.

 

	
Category H  

	
The Subscriber is a revocable trust and the grantor is an accredited investor pursuant to the following category: _____________________

 

	
Category I  

	
The Subscriber is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories.  If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement.  (describe entity)

	
 

	
 

	
 

	
 

 

	
Category J  

	
The Subscriber is not within any of the categories above and is therefore not an accredited investor.

 

The Subscriber agrees that the undersigned will notify the Company at any time on or prior to the closing in the event that the representations and warranties in this Agreement shall cease to be true, accurate and complete.

 

SUITABILITY (please answer each question)

 

  

13

  

(a)           For an individual Subscriber, please describe your current employment, including the company by which you are employed and its principal business:

	 	 
	 	 
	 	 

 

(b)           For an individual Subscriber, please describe any college or graduate degrees held by you:

	 	 
	 	 
	 	 

(c)           For all Subscribers, please list types of prior investments:

	 	 
	 	 
	 	 
	 	 

(d)           For all Subscribers, please state whether you have participated in other private placements before:

 

YES_______                                           NO_______

 

(e)           If your answer to question (d) above was “YES”, please indicate frequency of such prior participation in private placements of:

 

	  	
 

Public

Companies

	 	
 

Private

Companies

	 	
Public or Private Companies

with no, or insignificant,

assets and operations

	
Frequently

	  	 	  	 	  
	
Occasionally

	  	 	  	 	  
	
Never

	  	 	  	 	  

(f)           For individual Subscribers, do you expect your current level of income to significantly decrease in the foreseeable future:

 

YES_______                                           NO_______

 

(g)           For trust, corporate, partnership and other institutional Subscribers, do you expect your total assets to significantly decrease in the foreseeable future:

 

YES_______                                           NO_______

 

  

14

  

 

(h)           For all Subscribers, do you have any other investments or contingent liabilities which you reasonably anticipate could cause you to need sudden cash requirements in excess of cash readily available to you:

 

YES_______                                           NO_______

 

(i)           For all Subscribers, are you familiar with the risk aspects and the non-liquidity of investments such as the securities for which you seek to subscribe?

 

YES_______                                           NO_______

 

(j)            For all Subscribers, do you understand that there is no guarantee of financial return on this investment and that you run the risk of losing your entire investment?

 

YES_______                                           NO_______
   

   

   

  

15

  

FINRA AFFILIATION.

Are you affiliated or associated with an FINRA member firm (please check one):

 

Yes _________                                           No __________

 

If Yes, please describe:

____________________________________________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________________________________________

*If Subscriber is a Registered Representative with an FINRA member firm, have the following acknowledgment signed by the appropriate party:

 

The undersigned FINRA member firm acknowledges receipt of the notice required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

 

	Name of FINRA Member Firm	 
	 	 	 
	By:	 	 
	 	Authorized Officer	 
	 	 	 
	Date:	 	 

 

C.           The undersigned is informed of the signifi­cance to the Company of the forego­ing representa­tions and answers contained in this Confidential Investor Questionnaire and such answers have been provided under the assumption that the Company will rely on them.

	 	 	 
	Signature:	 	 
	 	 	 
	 	 	 
	 	(If purchased jointly)	 
	 	 	 
	Print Name:	 	 
	 	 	 
	 	 	 
	 	(If purchased jointly)	 
	 	 	 
	Date: 	 	 
	 	 	 

                      

  
   

   

16

  

 

CERTIFICATE OF SIGNATORY

(To be completed if Units are

being subscribed for by an entity)

I,____________________________, am the____________________________ of __________________________________________ (the “Entity”).

I certify that I am empowered and duly autho­rized by the Entity to execute and carry out the terms of the Subscription Agreement and to purchase and hold the Units, and certify further that the Subscription Agree­ment has been duly and validly executed on behalf of the Entity and consti­tutes a legal and binding obligation of the Entity.

IN WITNESS WHEREOF, I have set my hand this ________ day of _________________,______

	 	                              (Signature)	 

   

   

  

17

  

 

 Exhibit D

 

Executive Summary

When considering the following facts:

 

	
·  

	
56 million U.S. consumers’ demand for healthy and organic foods is projected to grow 18% annually from $150 billion to one-half trillion dollars, by the end of this decade.

	
·  

	
Online shopping is forecast to exceed over $300 billion annually by 2020.

	
·  

	
Membership Clubs like COSTCO, Wal-Mart and BJ’s have attracted over 100 million adult members

You have to wonder...

Wouldn’t an online membership club for healthy foods be a billion dollar business?

That’s exactly what entrepreneur Rod Smith wondered...until he stopped wondering and built America’s first online membership club for natural and organic foods:

 

The Green PolkaDot Box (“GPDB”) is positioning itself to become the Internet marketplace leader in organic and natural foods. GPDB aims to garner a billion dollars or more in annual sales by capturing the purchasing loyalty of hundreds of thousands, if not millions, of health-minded consumers—living in every zip code of the United States—who demand “clean” foods at affordable prices.

Early Results

After approximately four months of pre-opening membership drive, and recently commencing operations on December 19th, 2011, The Green PolkaDot Box (“GPDB”) has generated about 12,400 memberships, along with revenue from early membership and product sales exceeding $1,852,393.

 

  

18

  

GPDB’s new marketing and delivery system is innovative and unique. We believe there is nothing like it in the current organic and healthy food marketplace. It capitalizes on efficiencies of the Internet and a state- of-the-art online ordering system. It takes top brand name packaged products and organic produce directly from manufacturers and growers, consolidates them into central distribution centers, then packs and ships (free delivery) directly to its members by FED EX. This efficient business model produces a net result of extraordinary convenience and savings for health-minded consumers. The savings can be as much as 60% off conventional retail pricing or thousands of dollars per year for the typical organic and healthy food consumer.

Positioned to capitalize on Consumer Trends

The Green PolkaDot Box (“GPDB”) concept is driven by three “mega” trends that are capturing hundreds of billions of dollars in annual consumer spending: 

 

Potential Growth

Foreshadowing bigger things to come is the Company’s attraction of strong marketing partners—membership associations, private enterprises such as health clubs, magazine and newspaper subscribers, affiliate business customer groups, university alumni organizations and many social media organizations representing millions of consumers whom may be attracted to GPDB’s mission of promoting “clean” foods and saving money. 

Certain of the statements set forth in this Executive Summary and any annexes and/or exhibits attached hereto constitute “Forward Looking Statements”. Forward Looking Statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words “estimate,” “project,” “intend,” “forecast,” “anticipate,” “plan,” “planning,” “expect,” “believe,” “will,” “will likely,” “should,” “could,” “would,” “may” or words or expressions of similar meaning. All such forward looking statements involve risks and uncertainties, including, but not limited to: statements regarding our sales programs; proposed marketing and sales; regulatory approvals; the effect of competition and proprietary rights of third parties; the need for and availability of additional financing and our access to capital; the seeking of joint development, licensing or distribution and collaboration and marketing arrangements with other companies. Many important factors affect our ability to achieve our stated objectives including, among other things, our ability to obtain substantial additional funds, to compete successfully against other products and to market products in a profitable manner. Therefore, prospective investors are cautioned that the forward-looking statements included in this Executive Summary may prove to be inaccurate. In light of the significant uncertainties inherent to the forward looking statements included herein, the inclusion of such information should not be regarded as a representation or warranty by us or any other person that our objectives and plans will be achieved in any specified time frame, if at all. Except to the extent required by applicable laws or rules, we do not undertake any obligation to update any forward-looking statements or to announce revisions to any of the forward-looking statements.

  

19

  

Exhibit E

 

RISK FACTORS

An investment in the Units offered hereby is speculative in nature, involves a high degree of risk and should not be made by an investor who cannot bear the economic risk of its investment for an indefinite period of time and who cannot afford the loss of its entire investment.  Each prospective investor should carefully consider the following risk factors associated with the Offering before making an investment.

Any undefined terms used herein shall bear the same meaning as ascribed to them in the Subscription Agreement (including its exhibits) to which this Exhibit E is a part. Unless the context otherwise requires, as used herein, “our”, “us” “we” and the “Company” refer to The Green Polkadot Box, Inc.

Risks Related to Our Business

We have a limited operating history and are subject to the risks encountered by early-stage companies.

We were formed as a Utah limited liability company on January 18, 2008 and effective December 31, 2011, we converted into a Utah corporation.  Because we have a limited operating history, you should consider and evaluate our operating prospects in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets. For us, these risks include:

	
·  

	
risks that we may not have sufficient capital to achieve our growth strategy;

	
·  

	
risks that we may not develop our product and service offerings in a manner that enables us to be profitable and meet our customers’ requirements;

	
·  

	
risks that our growth strategy may not be successful; and

	
·  

	
risks that fluctuations in our operating results will be significant relative to our revenues.

These risks are described in more detail below. Our future growth will depend substantially on our ability to address these and the other risks described in this section. If we do not successfully address these risks, our business would be significantly harmed.

We cannot predict our future capital needs and we may not be able to secure additional financing.

 

  

20

  

We will need to raise significant additional funds sooner in order to support our growth, develop new or enhanced services and products, respond to competitive pressures, acquire or invest in complementary or competitive businesses or technologies, or take advantage of unanticipated opportunities. If our financial resources are insufficient, we will require additional financing in order to meet our plans for expansion.  We cannot be sure that this additional financing, if needed, will be available on acceptable terms or at all. Furthermore, any debt financing, if available, may involve restrictive covenants, which may limit our operating flexibility with respect to business matters.  If additional funds are raised through the issuance of equity securities, the percentage ownership of our existing members will be reduced, our shareholders may experience additional dilution in net book value, and such equity securities may have rights, preferences, or privileges senior to those of our existing shareholders. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.

We have a history of losses and no assurance of their future operating results can be given.

 

We have experienced net losses and negative cash flows from operating activities since inception and expect such losses and negative cash flows to continue in the foreseeable future. As of December 31, 2010 and 2011, we had working capital of $________ and $_________, respectively, and stockholders’ equity of $________ and $__________, respectively. For the years ended December 31, 2010 and 2011, we incurred net losses of $ (__________) and $(__________) . As of December 30, 2011, we had an aggregate accumulated deficit of $___________. We may never achieve profitability.

Our operations are sensitive to economic downturns.

The organic and natural products market is sensitive to national and regional economic conditions and the demand for the products that we distribute may be adversely affected from time to time by economic downturns that impact consumer spending, including discretionary spending. Future economic conditions such as employment levels, business conditions, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits.

 Our business is a low margin business and our profit margins may decrease due to consolidation in the grocery industry.

 

  

21

  

The organic and natural foods products generally is characterized by relatively high volume of sales with relatively low profit margins. The continuing consolidation of retailers in the natural products industry and the growth of supernatural chains may reduce potential profit margins in the future as more customers qualify for greater volume discounts, and we experience pricing pressures from suppliers and retailers. To compensate for these lower gross margins, we must reduce the expenses we incur to service our customers. If we are unable to reduce our expenses our business, prospects, financial condition or results of operations could be adversely impacted.

 

Our business may be sensitive to inflationary and deflationary pressures.

Many of our sales are at prices that are based on our product cost plus a percentage markup. As a result, volatile food costs have a direct impact upon our profitability. Prolonged periods of product cost inflation may have a negative impact on our profit margins and results of operations to the extent that we are unable to pass on all or a portion of such product cost increases to our customers. In addition, product cost inflation may negatively impact the consumer discretionary spending trends of our customers' customers, which could adversely affect our sales. Conversely, because many of our sales are at prices that are based upon product cost plus a percentage markup, our profit levels may be negatively impacted during periods of product cost deflation even though our gross profit as a percentage of net sales may remain relatively constant. To compensate for lower gross margins, we, in turn, must reduce expenses that we incur to service our customers.

We have significant competition from a variety of sources.

We operate in competitive markets and our future success will be largely dependent on our ability to provide quality products and services at competitive prices. Our competition comes from a variety of sources, including other distributors of organic and natural products as well as specialty grocery and mass market grocery distributors and retailers. These competitors may have been in business longer than we have, may have substantially greater financial and other resources than we have and may be better established in their markets. We cannot assure you that our current or potential competitors will not provide products or services comparable or superior to those provided by us or adapt more quickly than we do to evolving industry trends or changing market requirements. It is also possible that alliances among competitors may develop and rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which could materially adversely affect our business, prospects, financial condition or results of operations. We cannot assure you that we will be able to compete effectively against current and future competitors.

We rely on third-party carriers as part of our inventory fulfillment and order delivery processing, and these third parties may fail to meet shipping schedules or requirements which could limit our ability to distribute our products, which could reduce our sales and our margins.

We cannot control all of the factors that might affect our timely and cost-effective procurement of products from our suppliers and delivery of our products to our customers. We rely on third-party carriers both for the delivery of inventory and for the shipment of our products to our customers. Consequently, we are subject to risks of these carriers, including increased fuel costs, security concerns, labor disputes, union organizing activity and inclement weather. Any disruption in the ability of these carriers to timely deliver inventory to us and products to our customers could damage our reputation and brand and result in customer dissatisfaction. This could, in turn, materially and adversely affect our business, prospects, financial condition and results of operations.

Disruption of our distribution network could adversely affect our business.

Damage or disruption to our distribution capabilities due to weather, natural disaster, fire, terrorism, pandemic, strikes, the financial and/or operational instability of key suppliers, or other reasons could impair our ability to distribute our products. To the extent that we are unable, or it is not financially feasible, to mitigate the likelihood or potential impact of such events, or to manage effectively such events if they occur, there could be an adverse effect on our business, prospects financial condition or results of operations.

 

  

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Actual or perceived food safety concerns may adversely affect our sales.

 

There is increasing governmental scrutiny of and public awareness regarding food safety. We believe that many customers choose to purchase from us because of their interest in health, nutrition and food safety. We believe that our customers hold us to a higher food safety standard than retailers. The real or perceived sale of contaminated food products by us could result in government enforcement action, private litigation, product recalls and other liabilities, the settlement or outcome of which might have a material adverse effect on our operating results.

Unfavorable changes in governmental regulation could harm our business.

 

We are subject to various federal, state and local laws, regulations and administrative practices affecting our business, and we must comply with provisions regulating health and sanitation standards, food labeling, equal employment, minimum wages, and licensing for the sale of organic food and other organic products. Changes in existing laws or implementation of new laws, regulations and practices could have a significant impact on our business.

 

The USDA’s Organic Rule facilitates interstate commerce and the marketing of organically produced food, and provides assurance to our customers that such products meet consistent, uniform standards. Compliance with this rule could pose a significant burden on some of our suppliers, which may cause a disruption in some of our product offerings.

As the role and importance of online commerce has grown in the U.S., there have been continuing efforts to increase the legal and regulatory obligations and restrictions on companies conducting commerce through the Internet, primarily in the areas of taxation, consumer privacy, restrictions on imports and exports, customs, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of products and services, which could increase the cost of conducting business over the Internet. In addition, consumer unwillingness or inability to use the Internet to conduct business, due to adverse regulation, security concerns, service interruptions or otherwise, could materially reduce our growth. Governmental laws and regulations, service interruptions or adverse attitudes about online commerce could increase the costs and liabilities associated with our online commerce activities, increase the price of our product to consumers, or reduce traffic to our website. Unfavorable resolution of these issues could have a material adverse effect on our business, prospects, financial condition or results of operations.

 

We cannot predict the nature of future laws, regulations, interpretations or applications, or determine what effect either additional government regulations or administrative orders, when and if promulgated, or disparate federal, state and local regulatory schemes would have on our business in the future. They could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional recordkeeping, expanded documentation of the properties of certain products, expanded or different labeling and/or scientific substantiation. Any or all of such requirements could have an adverse effect on our operating results.

 

  

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We depend primarily upon search engines and other online sources to increase traffic to our website, and need to convert this traffic into customers in a cost-effective manner; our failure to do so could reduce our sales.

Our success depends on our ability to attract visitors to our website and convert them into customers in a cost-effective manner. We utilize search engines and other online sources as a means to direct traffic to our website. Our website is included in search results as a result of both paid search listings, where we purchase specific search terms that result in the inclusion of our website in the search result, and algorithmic searches that depend upon the searchable content in our website. Search engines and other online sources revise their algorithms from time to time in an attempt to optimize their search results.

If one or more of the search engines or other online sources which we use to direct traffic to our website were to modify its general methodology for how it displays our website, fewer visitors may visit our website, which could have a material adverse effect on our business and results of operations. Further, if any free search engine which we use to direct traffic to our website begins charging fees for listing or placement, or if one or more of the search engines or other online sources on which we rely for purchased listings, modifies or terminates its relationship with us, the traffic to our website could decrease and our expenses could increase which could have a material adverse effect on our business, prospects, financial condition or results of operations.

We may not be able to maintain our domain name, which may result in confusion to existing and new customers and lost sales and, therefore, could have a material adverse effect on our business, prospects, financial condition or results of operations.

Maintaining our Internet domain name is critical to our success. Under current domain name registration practices, no other entity may obtain an identical domain name but can obtain a similar or identical name with a different suffix, such as “.net” or “.org,” or with a different country designation.

We have not registered our domain name with each of the suffixes or jurisdictions available. As a result, third parties may use domain names that are similar to our domain name, which may result in confusion to existing and new customers and lost sales. Failure to maintain our domain name’s uniqueness could have a material adverse effect on our business, prospects, financial condition or results of operations.

 Taxation risks could subject us to liability for past sales, increase our costs and cause our future sales to decrease.

We do not collect sales or other taxes on shipments of most of our products into most states in the U.S. Currently, U.S. Supreme Court decisions restrict the imposition of obligations to collect state and local sales and use taxes with respect to sales made over the Internet. However, a number of states, as well as the U.S. Congress, have been considering initiatives that could limit or supersede the Supreme Court’s position regarding sales and use taxes on Internet sales. If any of these initiatives were successful, we could be required to collect sales and use taxes in additional states. The imposition by state and local governments of various taxes upon Internet commerce could create administrative burdens for us, reduce our competitive advantage over traditional retailers and decrease our future sales. One or more states may seek to impose sales or other tax collection obligations on out-of-jurisdiction eCommerce companies. Effective June 2008, New York imposed such a sales tax obligation requirement on online retailers that use New York residents to directly or indirectly refer potential customers, via a link on an Internet website or otherwise, to the online retailer. A successful assertion by one or more states or foreign countries that we should collect sales or other taxes on the sale of products or services could result in substantial tax liabilities for past sales, decrease our ability to compete with traditional retailers and otherwise harm our business, prospects, financial condition or results of operations.

  

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Product liability claims could have an adverse effect on our business.

We face an inherent risk of exposure to product liability claims if the products we sell cause injury or illness. We may be subject to liability, which could be substantial, because of actual or alleged contamination in products sold by us, including products sold by companies before we acquired them. We have, and the companies we have acquired have had, liability insurance with respect to product liability claims. This insurance may not continue to be available at a reasonable cost or at all, and may not be adequate to cover product liability claims against us or against companies we have acquired. We generally seek contractual indemnification from suppliers, but any such indemnification is limited, as a practical matter, to the creditworthiness of the indemnifying party. If we or any of our suppliers do not have adequate insurance or contractual indemnification available, product liability claims and costs associated with product recalls, including a loss of business, could have a material adverse effect on our business, prospects, financial condition or results of operations.

If we lose or are unable to obtain key personnel, our business, financial condition or results of operations could be materially adversely affected.

Our success depends to a significant degree upon the continued contributions of our executive officers and other key personnel. If any of our key personnel were to cease their affiliation with us, our operating results could suffer. Further, we do not maintain key person life insurance on any of our executive officers. If we lose or are unable to obtain the services of key personnel, our business, prospects, financial condition or results of operations could be materially and adversely affected.

If we are unable to effectively manage our growth plan, we could be unable to implement our business strategy.

Our growth plan requires significant management time and operational and financial resources. There is no assurance that we have the operational and financial resources to manage our growth. In addition, rapid growth in our headcount and operations may place a significant strain on our management and our administrative, operational and financial infrastructure. Failure to adequately manage our growth could have a material adverse effect on our business, prospects, financial condition or results of operations.

  

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Risks Related to the Offering

This Offering is a best efforts offering by us and there are no firm commitments or minimum amount that needs to be raised before Closing.

This Offering is made on a best efforts basis by us. No commitment exists by anyone to purchase all or any part of the Notes being offered and there is no minimum amount that we must raise before Closing.

The Notes purchased in this Offering are subject to restrictions which severely limit your ability to transfer such securities and liquidate your investment.

In connection with your purchase of Notes in this Offering, you will be receiving restricted securities. The Notes and the underlying securities (the “Securities”) have not been registered pursuant to the Securities Act, or pursuant to any other applicable federal or state laws and you must be able to bear the economic risk of your investment for an indefinite period of time. You will not be able to sell or transfer the Securities unless the Units are registered under the Securities Act or an exemption from such registration is available and such sale or transfer is otherwise in compliance with the Securities Act and any other applicable federal or state securities laws, rules or regulations. We have no intention or obligation to register the Securities.

 

There is not now, and there may not ever be a market for the Securities.

There is no active market for the Securities and no market is expected to develop in the foreseeable future for any of such securities.  Accordingly, investors must bear the economic risk of an investment in the Securities for an indefinite period of time and the Company must bear the economic risk of an investment in the Securities for an indefinite period of time. The Securities have not been, nor will they be, registered pursuant to the Securities Act.

The Purchase Price of the Securities is arbitrarily determined.

The Purchase Price was arbitrarily determined by us based upon such factors as the proceeds to be raised by this Offering, the lack of a public market for our interests and our capital requirements. There is no relationship whatsoever between such the Purchase Price and our assets or book value, or any other recognized criteria of value. If a market were to develop for the Securities in the future, there can be no assurance that the market price will equal or exceed the offering price herein.

  
   

   

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