Document:

ifon-ex41_6.htm

Exhibit 4.1

 

INFOSONICS CORPORATION

(A Maryland Corporation)

 

 

WARRANT TO PURCHASE

SHARES OF COMMON STOCK

 

 

 

Effective: ________

 

 

THE OFFER AND SALE OF THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE OFFER AND SALE THEREOF HAS BEEN REGISTERED UNDER THOSE LAWS OR UNLESS INFOSONICS CORPORATION (THE “COMPANY”) HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO IT, THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THIS CERTIFIES THAT, for value received, _______________________, or its registered assigns (“Holder”), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined in Section 1.2 below), _____________ (_____) shares (“Shares”) of fully paid and non‐assessable common stock, par value $0.001 per share (the “Common Stock”), of InfoSonics Corporation, a Maryland corporation, at the per share purchase price (the “Warrant Price”) set forth in Section 1.1 below, subject to the further provisions of this Warrant.

Article I

EXERCISE OF WARRANT

The terms and conditions upon which this Warrant may be exercised, and the Shares subject hereto may be purchased, are as follows:

Section 1.1Warrant Price.  The Warrant Price shall be $3.02 per Share, subject to adjustment as provided in Article IV below. 

Section 1.2Method of Exercise.  Subject to the limitations in Section 1.3 below, Holder may at any time beginning on the date which is six (6) months from the effective date of this Warrant and for three (3) years from such date of effectiveness, or such later date as the Company may in its sole discretion determine (the “Exercise Period”), exercise in whole or in part the purchase rights evidenced by this Warrant.  Such exercise shall be effected by:

(a)the surrender of this Warrant, together with a duly executed copy of the form of notice of exercise attached hereto as Exhibit A, to the Secretary of the Company at its principal office;

(b)the payment to the Company, by cash, certified or cashier’s check payable to Company’s order or wire transfer to the Company’s account, of an amount equal to the aggregate Warrant Price for the number of Shares for which the purchase rights hereunder are being exercised.  Alternatively if then permitted under applicable securities laws, Holder may exercise this Warrant by delivering to the Company: (i) a properly executed notice of exercise together with a copy of irrevocable instructions (“Broker Instructions”) to a FINRA-member securities broker-dealer to promptly deliver to the Company cash or a check payable to the Company in the full amount of the Warrant Price for the total number of Shares being purchased against the Company’s delivery of the Shares for which this Warrant is exercised (if Holder and the securities broker comply with such procedures and enter into such agreements of indemnity and other agreements as the Company may reasonably prescribe as a condition of that payment procedure) or (ii) shares of Common Stock, free and clear of any and all liens, claims and encumbrances, having an aggregate Fair Market Value (as defined herein below) equal to the full amount of the Warrant Price for the total number of Shares being purchased.  Holder may also make payment in any combination of the permissible forms of payment described in the preceding sentence.  Additionally, if then permitted under applicable securities laws, if the Fair Market Value of the Shares at time of exercise is greater than the Warrant Price, Holder may exercise this Warrant or any portion hereof by indicating on the notice of exercise that Holder elects to exercise this Warrant on a net exercise basis (“Net Exercise Basis”).  The Company shall then issue to Holder a number of Shares determined using the following formula:

 

X = Y (A-B)

   A 

 

where 

 

	
 
	
X =
	
the number of Shares to be issued to Holder.

 

	
 
	
Y =
	
the number of Shares covered by this Warrant in respect of which the net exercise election is made pursuant to this Section.

 

	
 
	
A =
	
the Fair Market Value of one Share, as determined in accordance with the provisions hereof, as of the date this Warrant is exercised.

 

	
 
	
B =
	
the Warrant Price in effect as of the date this Warrant is exercised.

 

“Fair Market Value” of a share of Common Stock (for purposes of this section) means (a) if the Shares are traded on a national securities exchange, the average of the closing prices for the twenty (20) trading days prior to the date this Warrant is exercised; (b) if the Shares are traded on the OTC Bulletin Board or another market or quotation system, or the prices for the shares are published on the “Pink Sheets”, the average of the closing bid and ask prices posted for the Shares during the twenty (20) trading days prior to the date this Warrant is exercised; or (c) if the primary market for such Shares is not an exchange or quotation system, the fair market value thereof as shall be determined in good faith using appropriate valuation methods by the Board of Directors of the Company as of the date this Warrant is exercised; and

(c)the delivery to the Company, if necessary in the discretion of counsel for the Company, to assure compliance with the Securities Act of 1933, and applicable state securities laws, of an instrument executed by Holder certifying that the Shares are being purchased solely for the account of Holder and not with a view to any resale or distribution in violation of the Securities Act or applicable state securities laws.

Section 1.3Exercise Limitations.  Holder shall not have the right to exercise any portion of this Warrant to the extent that after giving effect to the issuance of Shares upon such exercise, Holder (together with Holders’s affiliates, and any other persons acting as a group together with Holder or any of Holders’s 

affiliates) would beneficially own in excess of 4.99% of the outstanding shares of Common Stock of the Company.

Section 1.4Issuance of Shares and New Warrant.  If the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to Holder.  If the purchase rights evidenced by this Warrant are exercised only in part, the Company shall also deliver to Holder at such time a new Warrant evidencing the purchase rights regarding the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continue in force and effect.  All new Warrants issued in connection with the provisions of this Section 1.4 shall bear the same date as this Warrant and shall be substantially identical in form and provisions to this Warrant except for the number of Shares purchasable thereunder.  Each person in whose name any certificate for Shares is to be issued shall for all purposes be deemed to have become the holder of record of such Shares on the date on which this Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open.

Article II

TRANSFERS

Section 2.1Transfers.  This Warrant and all rights hereunder are transferable in whole or in part by Holder subject to the provisions of Article VII below.  The transfer shall be recorded on the books of the Company upon (i) the surrender of this Warrant (together with a duly executed and endorsed copy of the form of transfer certificate attached hereto as Exhibit B) to the Secretary of the Company at its principal offices, and (ii) the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.  In the event of a partial transfer, the Company shall issue to the several holders one or more appropriate new Warrants.

Section 2.2Registered Holder.  Each holder of this Warrant agrees that until such time as any transfer pursuant to Section 2.1 above is recorded on the books of the Company, the Company may treat the registered Holder of this Warrant as the absolute owner.

Section 2.3Form of New Warrants.  All new Warrants issued in connection with transfers of this Warrant shall bear the same date as this Warrant and shall be substantially identical in form and provisions to this Warrant except for the number of Shares purchasable thereunder.

Article III

NO FRACTIONAL SHARES

Notwithstanding any adjustment (as required hereby) to the number of Shares purchasable upon the exercise of this Warrant, the Company shall not be required to issue any fraction of a Share upon exercise of this Warrant.  If, by reason of any change made pursuant to Article IV below, Holder would be entitled, upon the exercise of any rights evidenced hereby, to receive a fractional interest in a Share, the Company shall, at its election, upon such proper exercise of this Warrant, purchase such fractional interest for an amount in cash equal to the Fair Market Value of such fractional interest, determined as of the date of such exercise of this Warrant, or round up to the next whole share.

Article IV

ANTIDILUTION PROVISIONS

Section 4.1Stock Splits and Combinations.  If the Common Stock shall at any time be subdivided into a greater number of shares, then the number of Shares purchasable upon exercise of this Warrant shall be 

proportionately increased and the Warrant Price shall be proportionately decreased; and, conversely, if the Common Stock shall at any time be combined into a smaller number of shares, then the number of Shares purchasable upon exercise of this Warrant shall be proportionately reduced and the Warrant Price shall be proportionately increased.  Any adjustments under this Section 4.1 shall become effective at the close of business on the date the subdivision or combination becomes effective.

Section 4.2Reclassification, Exchange and Substitution.  If the Common Stock shall be changed into shares of any other class or classes of stock or other securities of the Company, whether by capital reorganization, reclassification, or otherwise, Holder shall, upon exercise of this Warrant, be entitled to purchase for the same aggregate consideration, in lieu of the Shares that Holder would have become entitled to purchase but for such change, such number, class and series of securities of the Company as would have been issuable in connection with such event to a holder of that number of shares of Common Stock purchasable upon exercise of this Warrant immediately prior to such reorganization, reclassification or other change.  The Warrant Price shall be appropriately adjusted to reflect that reorganization, reclassification or other change.  Any adjustments under this Section 4.2 shall become effective at the close of business on the date such change of the Common Stock into shares of any other class or classes of stock or other securities of the Company becomes effective.

Section 4.3Reorganizations, Mergers, Consolidations or Sale of Assets.  If at any time there shall be a reorganization involving the Common Stock (other than a stock split, combination, reclassification, exchange, or subdivision of shares provided for in Sections 4.1 and 4.2 above) or a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company’s assets to any other person, then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that Holder shall thereafter be entitled to receive upon exercise of this Warrant, in accordance with the terms hereof, in lieu of the Shares that Holder would have become entitled to purchase but for such event, such other securities or property of the Company, or of the successor corporation resulting from such event, to which Holder would have been entitled in such reorganization, merger, consolidation or sale if this Warrant had been exercised immediately before that reorganization, merger, consolidation or sale.  In any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of Holder after the reorganization, merger, consolidation, or sale to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.  The Company shall provide Holder with at least twenty (20) days’ prior written notice of any of the events described in the first sentence of this Section 4.3.

Section 4.4Certificate as to Adjustments.  In the case of each adjustment (including a readjustment) under this Article IV, the Company will promptly, and in any event within thirty (30) days after the event requiring the adjustment, compute such adjustment in accordance with the terms hereof and deliver or cause to be delivered to Holder a certificate describing in reasonable detail the event requiring the adjustment and setting forth such adjustment and the calculations and results of such adjustment.

Section 4.5Reservation of Stock Issuable Upon Exercise.  The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant.  If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

Section 4.6Method of Calculation.  All calculations under this Article IV shall be made to the nearest one hundredth of a share.

Article V

RIGHTS PRIOR TO EXERCISE OF WARRANT

This Warrant does not entitle Holder to any of the rights of a stockholder of the Company, including (without limitation) the right to receive dividends or other distributions, to vote or consent, or to receive notice as a stockholder of the Company.  If, however, at any time prior to the expiration of this Warrant and prior to its exercise,

(a)the Company shall declare any dividend payable in any securities upon outstanding shares of Common Stock or make any other distribution (other than a regular cash dividend) to the holders of shares of Common Stock;

(b)the Company shall offer to the holders of shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or

(c)a dissolution, liquidation or winding-up of the Company (other than in connection with a reorganization, consolidation, merger, or sale of all or substantially all of its assets as an entirety) shall be approved by the Company’s Board of Directors,

then, in any one or more of such events the Company shall give notice in writing of such event to Holder, at its address as it shall then appear on the Company’s records, at least twenty (20) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation or winding-up.  Such notice shall specify such record date or the date of closing the transfer books, as the case may be.

Any failure to give such notice or any defect therein, however, shall not affect the validity of any action taken in connection with such dividend, distribution or subscription rights, or such proposed dissolution, liquidation or winding-up.

Article VI

SUCCESSORS AND ASSIGNS

The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Holder and its successors and permitted assigns.

Article VII

RESTRICTED SECURITIES

	
Section 7.1
	
By acceptance of this Warrant, Holder hereby represents to the Company that this Warrant is being acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution thereof, and that Holder has no present intention of selling, granting any participation in, or otherwise distributing this Warrant or the Common Stock issuable upon exercise of this Warrant.  By acceptance of this Warrant, Holder further represents that Holder does not presently have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to this Warrant or the Common Stock issuable upon exercise of this Warrant.  Holder is an “accredited investor” as the term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act and has sufficient knowledge and experience in finance and business that it is capable of evaluating the risks and merits of its investment in the shares subject to this Warrant and Holder is able financially to bear the risks thereof.  Holder understands that the offer and sale of this Warrant and the offer and sale of the Common Stock issuable upon exercise of this Warrant have not been registered under the 

		
Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of Holder’s representations as expressed herein.  Holder further recognizes and acknowledges that because the offer and sale of this Warrant and the offer and sale of the Common Stock issuable upon exercise of this Warrant are unregistered, they may not be eligible for resale, and may only be resold in the future pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to a valid exemption from such registration requirements and that Holder must, therefore, bear the economic risk of such investment indefinitely.

	
Section 7.2
	
Holder acknowledges that this Warrant is, and each of the Shares issuable upon the exercise hereof will be, a restricted security, and that the certificate or certificates evidencing such Shares will bear a legend substantially similar to the following legend:

THE OFFER AND SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE OFFER AND SALE OF THE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

Article VIII

LOSS OR MUTILATION

Upon receipt by the Company of satisfactory evidence of the ownership of and the loss, theft, destruction, or mutilation of this Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of this Warrant and upon surrender and cancellation of this Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of Shares.

Article IX

NOTICES

All notices, requests, demands and other communications under this Warrant shall be in writing and shall be deemed to have been duly given on the date of receipt (or refusal of receipt) if delivered personally or by courier by the party to whom notice is to be given, or on the earlier of the third business day after the date of mailing or receipt if mailed to the party to whom notice is to be given by first class mail, registered or certified, postage prepaid, and properly addressed as follows: if to Holder, at its address as shown in the Company’s records; and if to the Company, at its principal office.  Either party may change its address for purposes of this Article IX by giving the other party written notice of the new address in the manner set forth above.

Article X

GOVERNING LAW; JURISDICTION

This Warrant shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant and all disputes arising hereunder shall be governed by, the laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application 

of the laws of any jurisdictions other than the State of Florida.  Any suit, action or proceeding seeking to enforce any provision of, or based on any dispute or matter arising out of or in connection with, this Warrant must be brought in the state and federal courts located in Miami, Florida.  The Company and Holder each (a) consent to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding, (b) irrevocably waive, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum, (c) will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (d) will not bring any action relating to this Warrant in any other court.

ARTICLE XI

Miscellaneous

This Warrant and any terms hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.  The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its officers thereunto duly authorized as of the date first set forth above.

 

		
	
 
	
INFOSONICS CORPORATION

 

 

	
 
	
By:

Name: ______________________

Title: _______________________

	
 
	
 

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

InfoSonics Corporation
4435 Eastgate Mall, Suite 320

San Diego, California

Attention:  Vernon A. LoForti

 

Gentlemen:

 

The undersigned, _______________________, subject to the limitations set forth in Section 1.3 of the Warrant, hereby elects to purchase, pursuant to the provisions to the foregoing Warrant held by the undersigned, ____________ shares of the Common Stock of the Company.

 

The undersigned (check one and complete):

 

______  herewith encloses the Warrant and (i) cash, (ii) a certified or cashier’s check (drawn in favor of the Company), or (iii) has made a wire transfer to the Company’s account in the amount of $__________ in payment of the Warrant Price.

 

______  herewith encloses the Warrant and a copy of the applicable Broker Instructions, as defined in Section 1.2 of the Warrant.

 

______ herewith encloses the Warrant and hereby elects to exercise the Warrant on a Net Exercise Basis in accordance with the provisions of Section 1.2 of the Warrant.

 

 

The undersigned hereby represents and warrants as follows: 

 

(a)the undersigned is acquiring such shares of the Common Stock for his own account for investment and not for resale or with a view to distribution thereof in violation of the Securities Act and the regulations promulgated thereunder; and

 

(b)the undersigned is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act and, if an entity, was not organized for the purpose of acquiring the Warrant or such shares of the Common Stock.  The undersigned’s financial condition is such that he is able to bear the risk of holding such securities for an indefinite period of time and the risk of loss of his entire investment.  The undersigned has sufficient knowledge and experience in investing in companies similar to the Company so as to be able to evaluate the risks and merits of his investment in the Company.

 

Please issue a certificate or certificates for such shares of the Common Stock in the following name or names and denominations and deliver such certificate or certificates to the person or persons listed below at their respective address set forth below:

 

 

 

 

 

If said number of shares of the Common Stock shall not be all the shares of the Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to be issued in the name of the undersigned for the remaining balance of such shares of the Common Stock less any fraction of a share of Common Stock paid in cash pursuant to Article III of the attached warrant.

 

Capitalized terms used herein shall have the meaning given to such terms in the Warrant.

 

DATED:______________, ___________.

 

Signature: 

 

Address: 

 

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of Shares of Common Stock set forth below:

 

		
	
 

 

Name and Address of Assignee
	
 

No. of Shares

Common Stock

	
 

_________________________________________
	
 

_____________

	
 

_________________________________________
	
 

 

	
 

_________________________________________
	
 

 

 

and does hereby irrevocably constitute and appoint as Attorney ________________________________ to register such transfer on the books of _______________________________________ maintained for the purpose, with full power of substitution in the premises.

 

Dated:__________________________, _______.

 

 

 

 

 

_______________________________________

Name: 

 

NOTICE:The signature to this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alternation or enlargement or any change whatsoever.ifon-ex101_8.htm

 

Exhibit 10.1

InfoSonics Corporation

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “Subscription Agreement”) is made and entered into to be effective as of the effective date set forth on the signature page hereto (the “Effective Date”), by the undersigned subscriber (the “Subscriber”) for the benefit of InfoSonics Corporation, a Maryland corporation (the “Company”).  

The Subscriber acknowledges and agrees that the information that is being provided herein by the Subscriber will be relied upon by the Company and its Board (as defined below in Section 1(b)), in determining whether the Company can, in compliance with various securities and other laws that are applicable to it, admit the Subscriber as a shareholder of the Company. The Subscriber acknowledges that the offer and sale of the Units (as defined below) is being made pursuant to: (i) with respect to the shares of common stock, par value $0.001 (“Common Stock”), of the Company (the “Common Shares” and each a “Common Share”) comprising such Units, an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”); (ii) with respect to the shares of and 0% Series A Convertible Preferred Stock, par value $0.001 per share, of the Company (the “Preferred Shares” and each a “Preferred Share”) comprising such Units, an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof or Regulation D promulgated thereunder; and (iii) with respect to the Common Stock purchase warrants (the “Warrants” and each a “Warrant”) comprising such Units, and the shares of Common Stock issuable upon exercise of the Warrants (“Warrant Shares”), an exemption from the registration requirements of Section 5 of the Securities Act contained in Section 4(a)(2) thereof or Regulation D promulgated thereunder. 

In addition, the Subscriber acknowledges that the information requested in this Subscription Agreement is needed in order (a) to ensure compliance with anti-money laundering laws that are or may hereafter be applicable to the Company; (b) to determine whether the Subscriber is eligible to participate in “new issues”, as hereinafter defined, and (c) to determine whether the Subscriber is a “benefit plan investor” within the meaning of Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The Subscriber also understands and agrees that, although the Company will use its best efforts to keep the information provided in the answers to this Subscription Agreement strictly confidential, the Company may present this Subscription Agreement and the information provided in answers to it to such parties as it deems advisable if called upon to establish the availability under any applicable law of an exemption from registration of the Warrants or if the contents thereof are relevant to any issue in any action, suit, or proceeding to which the Company, the Board, or any of its affiliates is a party or by which it is or may be bound.

WHEREAS, the Company is offering units (“Units”) of the Company, with each Unit comprised of one (1) Common Share or one (1) Preferred Share, as determined herein, and (1) Warrant for one Common Share at an exercise price of $3.02 per Share, to certain qualified investors;

WHEREAS, the Company is offering for sale up to a total number of Units, with a purchase price per Unit as set forth in the accompanying Subscriber Profile, attached hereto;

WHEREAS, the Subscriber has carefully reviewed the risks of, and other considerations relating to, an investment in the Company, including this Subscription Agreement; and

WHEREAS, the Subscriber hereby tenders this subscription for Units in the Company on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the adequacy, receipt and sufficiency of which are hereby acknowledged, the Subscriber hereby agrees as follows:

 

1

 

 

 

 

1.Subscription.

(a)Subject to the terms and conditions hereof, the Subscriber hereby irrevocably subscribes for and agrees to contribute to the capital of the Company an amount in cash equal to the amount of the aggregate purchase price set forth in the accompanying Subscriber Profile, attached hereto (the “Aggregate Purchase Price”) and further agrees to be bound by the terms of this Subscription Agreement.  The accompanying Subscriber Profile shall be considered an integral part of this Subscription Agreement.  The Aggregate Purchase Price shall be payable in immediately available funds to such accounts as are designated by the Board. If a Subscriber’s subscription is accepted, the Subscriber will be required to fund the full Subscription Amount set forth in the attached Subscriber Profile.  The Board will notify the prospective Subscriber whether it is eligible to subscribe for Units, and will provide wiring instructions for payment of the foregoing amounts.  

(b)This Subscription Agreement shall not become binding unless (i) this subscription is accepted by the Company’s Board (the “Board”), on behalf of the Company as indicated by its signature on this Subscription Agreement; and (ii) such additional closing conditions as the Board shall require are satisfied.  This subscription shall not be deemed accepted by the Company until this Subscription Agreement is signed by a duly authorized person of the Board.  If this subscription is accepted, this Subscription Agreement shall become effective as between the Company and the Subscriber.  If this subscription is rejected by the Board on behalf of the Company, this Subscription Agreement and the Questionnaire (as that term is defined below) will be returned to the Subscriber as soon as reasonably practicable, and this subscription shall be rendered void and of no further force or effect.  The Subscriber hereby agrees that, notwithstanding the execution by the Subscriber of a counterpart of this Subscription Agreement, the Subscriber shall not be a stockholder (a “Stockholder”) in the Company until this subscription has been accepted by the Board on behalf of the Company as provided in Section 2 hereof, and the Units to be acquired by the Subscriber shall not be transferred to the Stockholder unless and until the acceptance of this subscription by the Board on behalf of the Company as provided in Section 2 hereof.

2.Acceptance of Subscription.  The Subscriber acknowledges and agrees that this subscription is made subject to the following terms and conditions:

(a)The Subscriber is committing to contribute capital to the Company in the amount set forth in the Subscriber Profile, and such commitment is irrevocable;

(b)In the event the Subscriber (together with the Subscriber’s affiliates, and any other persons acting as a group together with the Subscriber or any of the Subscriber’s affiliates (such persons, “Attribution Parties”)) beneficially owns or would beneficially own in excess of 4.99% of the Common Shares outstanding immediately after giving effect to the subscription hereunder (“Beneficial Ownership Limitation”), the Subscriber shall be issued Preferred Shares for any Units subscribed for in excess of the Beneficial Ownership Limitation;

(c)The Subscriber shall not have the right to exercise any portion of any Warrant subscribed for to the extent that after giving effect to the issuance of any Common Shares after exercise as set forth in the Warrant, the Subscriber (together with the Attribution Parties), would beneficially own in excess of the Beneficial Ownership Limitation;

(d)The Board on behalf of the Company shall have the right, in its sole and absolute discretion, to reject this subscription, in whole or in part, for any reason whatsoever; and

(e)The Subscriber shall return this Subscription Agreement to the Company.

3.Acknowledgments, Representations, Warranties and Covenants of the Subscriber.  The Subscriber acknowledges that in connection with the purchase of the Units, the Subscriber (i) with respect to the Common 

2

 

 

 

Shares, has reviewed the Company’s Registration Statement on Form S-3, filed with the Securities and Exchange Commission (“SEC”) on May 27, 2015, effective as of June 5, 2015 (“Registration Statement”), including the prospectus which forms a part of the Registration Statement (“Base Prospectus”) and the prospectus supplement dated on or around June 1, 2018, filed with the SEC pursuant to Rule 424(b) of the Rules and Regulations of the Securities Act (the “Prospectus Supplement” and, together with the Base Prospectus, the “Prospectus”) and (ii) with respect to the Preferred Shares, Warrants and Warrant Shares, has not been furnished with or relied on any offering literature or information.  The Subscriber acknowledges that he, she, or it has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Units and to obtain any additional information necessary to verify the accuracy of such information that the Company or Board possess or could acquire without unreasonable effort or expense.  To induce the Board to accept this subscription, the Subscriber acknowledges, represents, and warrants to, and agrees with, each of the Company and the Board that:

(a)With respect to the Preferred Shares, Warrants and Warrant Shares, if the Subscriber is a natural person who is a “U.S. Person” (as that term is defined in Rule 902(k) of Regulation S promulgated under the Securities Act) (a “U.S. Person”), the Subscriber (i) has a personal net worth or joint net worth with his or her spouse in excess of $1,000,000 (excluding the value of the Subscriber’s primary residence and deducting any amount by which indebtedness secured by the Subscriber’s primary residence exceeds the value of the Subscriber’s primary residence); or (ii) has individual income (not joint income with his or her spouse) in excess of $200,000 in each of the two (2) most recent years or joint income with his or her spouse in excess of $300,000 in each of those years and (in either case) has a reasonable expectation of reaching the same income level in the current year, and he or she has no reason to anticipate any change in personal circumstances, financial or otherwise, that may cause or require any resale of the Preferred Shares, Warrants or Warrant Shares.  If the Subscriber is not a natural person, the Subscriber and the person signing on its behalf represent and warrant that either (A) all owners of equity interests in the Subscriber meet the qualifications stated in the preceding sentence; (B) the Subscriber otherwise qualifies as an “accredited investor” as that term is defined in Rule 501(a) promulgated under the Securities Act, or (C) (x) the Subscriber is not a U.S. Person and is not acquiring the Preferred Shares, Warrants or Warrant Shares for the account or benefit of any U.S. Person and (y) at the time of the offer and sale of these Preferred Shares, Warrants and Warrant Shares, the Subscriber is outside the United States;

(b)The Subscriber acknowledges and confirms that (i) he, she or it understands the speculative nature of, and the risks involved in, an investment in the Company and is able to bear the economic risks of an investment in the Company; (ii) he, she or it is fully informed as to the business conducted by the Company; (iii) he, she, or it has adequate means of providing for his, her, or its current needs and possible contingencies and has no need now, and anticipates no need in the foreseeable future, to sell the Preferred Shares, Warrants or Warrant Shares for which the Subscriber hereby subscribes; (iv) he, she, or it understands that the offer and sale of the Preferred Shares, Warrants and Warrant Shares has not been registered under the Securities Act or the securities laws of any state and that the Preferred Shares, Warrants and Warrant Shares are being offered and sold pursuant to an exemption from registration thereunder; (v) the Preferred Shares, Warrants and Warrant Shares are being acquired by the Subscriber solely for his, her, or its own account (unless otherwise disclosed in writing to the Company), for investment purposes only, and not with a view to, or in connection with, any resale, distribution, subdivision, fractionalization or other distribution thereof; (vi) the Subscriber has no agreement or other arrangement, formal or informal, with any person to sell, transfer or pledge any part of the Preferred Shares, Warrants or Warrant Shares subscribed for hereby or which would guarantee to the Subscriber any profit or against any loss with respect to such Preferred Shares, Warrants or Warrant Shares, and he, she or it has no plans to enter into any such agreement or arrangement; (vii) the Company does not have a financial or operating history and any investment in the Company involves substantial risks; (viii) the Stockholders of the Company have only the limited voting rights, as set forth in the Company’s certificate of incorporation, by-laws, and those provided by applicable law; and (ix) the Subscriber understands that he, she, or it must bear the economic risk of his, her, or its investment for an indefinite period of time because the Preferred Shares, Warrants and Warrant Shares or any part thereof cannot be sold or otherwise transferred unless the offer and sale thereof is subsequently registered under the Securities Act (which the Company is not obligated and does not plan to do) or an exemption from such registration is available;

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(c)Notwithstanding any other provision of this Subscription Agreement, the Subscriber will not sell, exchange, transfer, assign, pledge, hypothecate or otherwise dispose of (each, a “Transfer”) all or any part of the Preferred Shares, Warrants or Warrant Shares (or purport to do so), unless (i) either (x) the Transferee of the undersigned is an “accredited investor” and meets any other investor suitability requirements established by the Company or (y) the Transfer is made in an “offshore transaction” (as that term is defined in Rule 902(h) of Regulation S) in accordance with the provisions of Rule 904 of Regulation S; (ii) the Company receives an opinion of counsel satisfactory to the Board to the effect that such Transfer is being made in compliance with (A) the terms and conditions of this Subscription Agreement, and (B) pursuant to an exemption under, the Securities Act, any applicable U.S. state law, and the laws of any other applicable jurisdiction; (iii) such Transfer will not cause (A) the Company or the Board to be in violation of the Bank Secrecy Act, as amended, or any similar U.S. federal, state or foreign law or regulation, if applicable, or (B) the Warrants or the Warrant Shares to be held by a person currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (an “OFAC Party”); and (iv) such Transfer will not cause the Company to hold “plan assets” for purposes of ERISA (as that term is defined below) or similar state laws;

(d)The Subscriber has such knowledge and experience in financial and business matters that he, or she is, or if an entity, its governing persons are, capable of evaluating the merits and risks of an investment in the Company and of making an informed investment decision;

(e)The Subscriber has or has been given access to or has been furnished all information and documents regarding, the Company and its proposed investments that the Subscriber desires or has requested to receive or review in order to evaluate the merits and risks of investing in the Company and has been given sufficient opportunity to ask questions of, and receive answers from (to the extent available without unreasonable effort), the Company, the Board, and their representatives concerning the terms of the investment in the Company, including inquiries regarding the Company, its business, and its financial condition.  The Subscriber has obtained, in the Subscriber’s judgment, sufficient information from the Company to evaluate the merits and risks of an investment in the Company;

(f)There have been no representations, guaranties, or warranties made to the Subscriber by the Company, the Board, or their agents or employees, or by any other person, expressly or by implication, with respect to (i) the approximate length of time that the Subscriber will be required to remain an owner of the Preferred Shares, Warrants or Warrant Shares; (ii) the percentage of profit or amount of or type of consideration, profit, or loss (including, without limitation, tax benefits) to be realized, if any, as a result of investment in the Company; and (iii) the possibility that the past performance or experience on the part of any officer or partner of the Company, the Board, or their agents or employees or of any other person, might in any way indicate the predictable results of operations of the Company, or of ownership of Preferred Shares, Warrants or Warrant Shares;

(g)The Subscriber understands that no federal or state agency has passed on or made any recommendation, determination as to fairness or endorsement of the Preferred Shares, Warrants and Warrant Shares;

(h)The Subscriber is acquiring Preferred Shares, Warrants and Warrant Shares for his, her, or its own account, not for the benefit or account of any other person or entity, for investment and not with a view to, or for resale in connection with, any distribution or assignment thereof within the meaning of the Securities Act, in violation of the Securities Act or any applicable state securities law;

(i)The Subscriber can bear the economic risk of losing his, her or its entire investment;

(j)With respect to the Preferred Shares, Warrants and Warrant Shares, the Subscriber understands that (i) no public market currently exists for either the Preferred Shares, Warrants or Warrant Shares, (ii) one will not develop as a result of any or all subscriptions governed by this Subscription Agreement, and (iii) he or she, or if an entity, its governing persons, should not maintain any reasonable expectation of a public market existing in the future for the Preferred Shares, Warrants and Warrant Shares.  Subscribers to the Preferred Shares, Warrants and Warrant Shares, in the event their subscriptions are 

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accepted, must therefore bear the economic risk of their investment in the Company for an indefinite period of time;

(k)With respect to the Preferred Shares, Warrants and Warrant Shares, the Subscriber has been advised and understands that its investment is not readily marketable and is illiquid and involves a high degree of risk.  The Subscriber has no need for liquidity in its investment, has the ability to bear the economic risk of such investment, and at the present time and for an indefinite period of time can afford a complete loss of such investment.  The Subscriber’s overall commitment to investments which are not readily marketable is not disproportionate to the Subscriber’s net worth, and his, her, or its investment in the Company will not cause such overall commitment to become excessive;

(l)With respect to the Preferred Shares, Warrants and Warrant Shares, the Subscriber has adequate means of providing for his, her, or its current needs and personal contingencies and has no need for liquidity in his, her or its investment in the Company;

(m)With respect to the Preferred Shares, Warrants and Warrant Shares, the Subscriber understands that (i) the Preferred Shares, Warrants and Warrant Shares are restricted securities within the meaning of Rule 144 promulgated under the Securities Act (“Rule 144”); (ii) the offer and sale of the Preferred Shares, Warrants and Warrant Shares has not been registered under the Securities Act or any applicable state laws; (iii) the Company has no obligation, and has made no commitment, to the Subscriber to register any of the Preferred Shares, Warrants or Warrant Shares in order to permit them to be publicly resold; and (iv) the exemption from registration under Rule 144 will not be available unless the terms and conditions of Rule 144 have been complied with, and the Company has no obligation, and has made no commitment, to the Subscriber to so comply with any of such terms and conditions;

(n)The Subscriber will not transfer or offer to transfer his, her or its Preferred Shares, Warrants and Warrant Shares until he, she or it notifies the Company of his, her or its intention to do so and satisfies the requirements for transfer of the Preferred Shares, Warrants and Warrant Shares;

(o)The Subscriber understands that legends shall be placed on the certificates or other documents, if any, representing the Preferred Shares and Warrant Shares, which shall evidence the restrictions on transfer specified by applicable federal and state securities laws;

(p)The Subscriber’s investment activities are not subject to review or regulation by U.S. federal or state regulatory authorities;

(q)In formulating a decision to invest in the Company, the Subscriber:

(i)has carefully read this Subscription Agreement and understands and has evaluated the risks of a purchase of the Units and has relied on: (A) with respect to the Common Shares, on the information contained in this Subscription Agreement, the Registration Statement, and the Prospectus, and (B) with respect to the Preferred Shares, Warrants and Warrant Shares, solely on the information contained in this Subscription Agreement;

(ii)with respect to the Preferred Shares, Warrants and Warrant Shares, has not relied on any information provided by the Company, the Board, or any partner, officer, employee, agent, affiliate or subsidiary of any of them, except for information set forth in this Subscription Agreement;

(iii)has not reproduced, duplicated, or delivered this Subscription Agreement, or any other documents which may have been made available upon request to any other person, except to the Subscriber’s professional advisors or as instructed by the Board;

(iv)has such knowledge and experience in financial and business matters that the undersigned is capable of evaluating the merits and risk of investment in the Company and of 

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making an informed investment decision, has knowledge and understands the risks related to the business conducted by the Company; and has the capacity to analyze and protect its own interests in purchasing the Units and has determined that the Units are a suitable investment for the Subscriber;

(v)has read this Subscription Agreement, the Registration Statement, and the Prospectus, and understands, agrees and is aware that there are substantial risks incident to the purchase of the Units; and

(vi)has carefully considered and has, to the extent the Subscriber believes is necessary, discussed with the Subscriber’s professional legal, tax, and financial advisers the suitability of an investment in the Company for the undersigned’s particular legal, tax, and financial situation and the undersigned has determined that the Units are a suitable investment for the undersigned.

(r)With respect to any estimates regarding possible future cash flows or other measures of economic performance of the Company (collectively, “Estimates”) that have been furnished to the Subscriber, the Subscriber is aware and understands that:

(i)such Estimates were developed using certain assumptions for which the Board or its representatives reasonably believed they had a reasonable basis at the time of preparation;

(ii)such Estimates and the underlying assumptions are inherently subject to significant uncertainties and contingencies, many of which are beyond the Board or its representatives’ control, and therefore actual results may vary materially and adversely from those projected or estimated;

(iii)such Estimates were not prepared with a view to compliance with published guidelines of the American Institute of Certified Public Accountants regarding forecasts or with generally accepted accounting principles; and

(iv)such Estimates have not been reviewed by independent accountants.

(s)The Subscriber has all requisite power and authority to execute and deliver this Subscription Agreement, to perform its obligations hereunder and thereunder, and to consummate the transactions that are the subject of this Subscription Agreement.  The Subscriber is not a party to, or bound by, any contract, charter, agreement, or instrument or, to the Subscriber or its signatory’s knowledge, subject to any order of or license issued by any governmental authority or provision of law, under the terms of which performance by the Subscriber according to the terms of this Subscription Agreement will be a default, event of acceleration, or grounds for termination, or whereby the timely performance by the Subscriber according to the terms of this Subscription Agreement may be prohibited, prevented, or delayed.  Any person signing this Subscription Agreement on behalf of the Subscriber has been duly authorized by the Subscriber to do so and has been authorized to delegate authority pursuant to a power of attorney to be granted under this Subscription Agreement.  The Subscriber has obtained all authorizations, consents, approvals, and clearances of all courts, governmental agencies, and authorities and such other persons, if any, required to permit the Subscriber to enter into this Subscription Agreement;

(t)The Subscriber is aware and understands that any U.S. federal income tax benefits which may be available to the Subscriber may be lost through adoption of new laws, amendments to existing laws or regulations, or changes in the interpretation of existing laws and regulations; the Subscriber is relying solely on its own tax and legal advisors with respect to the tax and other legal aspects of investment in the Company;

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(u)The Subscriber’s true and correct principal place of business is located at the address of the Subscriber set forth in the accompanying Subscriber Profile, and the Subscriber has no present intention of moving its principal place of business to any other state or jurisdiction;

(v)All information provided in the accompanying Subscriber Profile is true and correct;

(w)The Subscriber is not an organization (i) the income of which is exempt from taxation under Section 401 or 501 of the Internal Revenue Code of 1986, as amended (the “Code”); or (ii) that generally is taxed on its income under the Code only to the extent that it is engaged in an “unrelated trade or business” within the meaning of Section 513(a) of the Code;

(x)This Subscription Agreement constitutes the valid and binding obligation of the Subscriber, and is enforceable against the Subscriber in accordance with its terms;

(y)Neither the execution and delivery of this Subscription Agreement by the Subscriber nor the consummation of the transactions contemplated hereby violates any law or regulation applicable to the Subscriber, violates any order, writ, injunction, decree, or demand of any court or other governmental department, commission, board, bureau, agency or instrumentality, or conflicts with or results in a breach of any of the terms, conditions, or provisions of any agreement or instrument to which the Subscriber is a party or by which the assets of the Subscriber are bound (including, without limitation, the organizational documents if the Subscriber is other than a natural person) and any investment guidelines or restrictions of the Subscriber, or constitutes a default under such agreement or instrument;

(z)No representations or warranties have been made to the Subscriber by the Company, the Board or any partner, stockholder, officer, employee, agent, affiliate or subsidiary of any of them, other than the representations of the Company in this Subscription Agreement;

(aa)There are no actions, suits, or proceedings pending, or, to the knowledge of the Subscriber, threatened against or affecting the Subscriber or the assets of the Subscriber in any court or before or by any U.S. federal, state, municipal, foreign, or other governmental department, commission, board, bureau, agency or instrumentality which, if adversely determined, would impair the ability of the Subscriber to perform under this Subscription Agreement as provided herein;

(bb)The acceptance of the Subscriber’s subscription application together with the appropriate remittance will not breach any applicable anti-money laundering rules and regulations applicable to the Company and the Subscriber will provide verification of its identity reasonably satisfactory to the Company or the Board in respect of the acceptance of subscriptions, promptly on request in order to assure compliance with such anti-money laundering rules and regulations.  The Subscriber is not an OFAC Party, and no part of the amount paid or to be paid pursuant to capital commitments or a subscription hereunder represents or will represent property in which an OFAC Party has any interest, or represents or will represent proceeds of an unlawful activity;

(cc)Perkins Coie LLP, counsel to the Company has not represented the Subscriber, and has not rendered any legal advice to the Subscriber, in connection with the Subscriber’s investment in the Company and the transactions contemplated hereby;

(dd)With respect to the Preferred Shares, Warrants and Warrant Shares, the Subscriber has received no general solicitation or advertisements, and has attended no public seminar or other public promotional meeting relating to investments in the Company as the opportunity to invest in the Company was made only through direct, personal communication between the Subscriber and the representatives of the Company or its Board; and

(ee)Any information, understanding, agreement, acknowledgement, representation, or warranty which the Subscriber has heretofore furnished or made, or in connection herewith is furnishing or making, to the Company or the Board (including, without limitation, the information set forth in the 

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accompanying Questionnaire (as defined below)) is correct and complete as of the Effective Date and will be correct and complete as of the acceptance of this Subscription by the Company on the Closing Date (and will be relied upon by the Company and the Board) and shall survive the acceptance of this subscription, the closing of this subscription, and the dissolution of the Company, without limitation as to time.  Without limiting the foregoing, the Subscriber shall provide the Board with prompt written notice, including providing additional information as is necessary to make the information accurate and complete, in the event that any of the certifications, acknowledgments, representations, warranties, covenants, or agreements of the Subscriber contained in this Subscription Agreement ceases to be true at any time following the date hereof.  Further, the Subscriber understands and acknowledges that the Company will rely upon the representations and warranties contained in this Subscription Agreement and the attached forms in issuing any Units to the Subscriber and in making any decision to accept an investment by the undersigned in the Company, and the Subscriber agrees that the representations, warranties, covenants, and agreements set forth in this Subscription Agreement will survive any decision by the Company to accept an investment by the Subscriber in the Company.

4.Additional Purchase of Shares.  The Subscriber agrees that if the Subscriber subscribes for or purchases additional Units, he, she, or it shall be deemed to have executed this Subscription Agreement as of the date of each such additional subscription or purchase, and the Subscriber covenants that all such information therein shall be true and correct as of each such date except to the extent the Subscriber delivers to the Company prior written notice of any changes.  If any such notice is delivered, the Company, in its sole and absolute discretion, may then accept or reject the additional subscription or purchase.

5.Issuance of Units.  

(a)The Company shall issue the Units to the Subscriber within thirty (30) days of the Company’s filing of a listing of additional shares notification (“Additional Shares Notification”) with the Nasdaq Stock Market (“NASDAQ”) in connection with the sale and issuance of the Units, if the Company shall not have received any objections thereto from NASDAQ (such day the “Closing Date”);

(b)If the Company has not issued the Units within the period specified in Section 5(a), above, the Company shall promptly return the Aggregate Purchase Price to the Subscriber; 

(c)On the Closing Date, the Company shall deliver to the Subscriber a Warrant, in the form attached here to as Exhibit A, registered in the name of the Subscriber to purchase up to a number of shares of Common Stock equal to one hundred percent (100%) of such Subscriber’s Shares (as set forth on the Subscriber Profile), with an exercise price equal to $3.02 per share, subject to adjustment therein. 

6.Indemnification.  To the fullest extent permitted by law, the Subscriber hereby agrees to indemnify and hold harmless (a) the Company, the Board, and each of their respective partners, promoters, sponsors, stockholders, officers, directors, employees, agents, and attorneys and their respective successors and assigns; (b) each other person or entity, if any, who “controls” any of the aforementioned within the meaning of Section 15 of the Securities Act; and (c) the respective partners, stockholders, officers, directors, employees, agents and affiliates of each of the persons and entities described in clause (a) or (b) above (collectively the “Indemnified Parties”), from and against any and all losses, claims, damages, liabilities, or expenses (including, without limitation, attorneys’ fees, judgments, fines, and amounts paid in settlement, investigation, preparation or defense) and any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) due to or arising out of (i) any breach of any representation, warranty, covenant, or agreement made by the Subscriber in this Subscription Agreement, or in connection herewith or therewith; (ii) any actual or alleged misrepresentation or misstatement of facts or omission to represent or state facts by the Subscriber to the Company or the false acknowledgment, understanding, representation, or warranty or breach; (iii) any action arising as a result of the offer, sale, or distribution of any of the Units by the Subscriber in violation of the Securities Act, or other applicable federal or state law; or (iv) any action, suit, or proceeding brought by the Subscriber against any of the Indemnified Parties in which the Subscriber does not prevail.  The covenants, warranties, and representations contained herein shall be for the benefit of the Company and its stockholders, parents, affiliates, and subsidiaries, and each of them shall be entitled to all of the rights that such covenants, warranties, and representations shall confer. Stockholders will not be individually obligated with respect to any such 

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indemnification beyond their respective capital; provided, however, that Stockholders may be required to return to the Company certain distributions from the Company for the purpose of meeting any such indemnification obligations for a period of twelve (12) months following the termination of the Company.

7.Confidentiality.

(a)The Stockholder shall maintain the confidentiality of (i) Non-Public Information (as that term is defined below); and (ii) any information subject to a confidentiality agreement binding upon the Company or the Board, so long as such information has not become otherwise publicly available unless, after reasonable notice to the Company by the Stockholder, such Stockholder is otherwise compelled by court order or other legal process or in response to other governmentally imposed reporting or disclosure obligations to disclose such information; provided that each Stockholder may disclose Non-Public Information (as defined below) to its officers, directors, agents and professional consultants upon notification to such officer, director, agent or consultant that such disclosure is made in confidence and shall be kept in confidence.  As used in this Section 7(a), “Non-Public Information” means information regarding the terms of this Subscription Agreement, and information regarding the Company and the Board received by such Stockholder pursuant to this Subscription Agreement, but does not include information that (i) was publicly known at the time such Stockholder receives such information pursuant to this Subscription Agreement; (ii) subsequently becomes publicly known through no act or omission by such Stockholder; or (iii) is communicated to such Stockholder by a third party free of any obligation of confidence known to such Stockholder.  The Stockholder will not use any such confidential information, including the Non-Public Information, for any purpose other than evaluating its potential investment in the Company.

(b)The Company may, to the maximum extent permitted under the laws of the State of Maryland and applicable law, keep confidential from the Stockholders for such period as the Board deems reasonable, any information the disclosure of which the Board in good faith believes is not in the best interest of the Company or could damage the Company or its business or which the Board or the Company is required by law or by an agreement with a third party to keep confidential.

(c)Notwithstanding any provision in this Subscription Agreement or in any other agreement or statement relating to the transaction to the contrary, each Stockholder (or prospective Stockholder) and any of their officers, directors, representatives, or other agents (in each case, a “Party”) is authorized to disclose to any and all persons, beginning immediately upon commencement of discussions regarding the transactions contemplated herein, and without limitation of any kind, the tax treatment and tax structure of such transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to such Party relating to such tax treatment and tax structure, except to the extent that such disclosure is subject to restrictions reasonably necessary to comply with applicable federal and state securities laws (including, without limitation, the rules and regulations applicable to private placements).  For purposes of this authorization, “tax treatment” and “tax structure” have the meanings provided, respectively, in Treasury Regulations Sections 1.6011-4(c)(8) and (9) (or any other similar provision enacted under state or local law).  Nothing herein is intended to imply that the Board, the Company, or any of their officers, directors, employees, agents, representatives, or affiliates (x) has made or provided to, or for the benefit of, any Party any oral or written statement as to any potential United States federal tax consequences that are related to, or may result from, the transactions contemplated herein or (y) has provided any accounting, tax or legal advice to any Stockholder (or prospective Stockholder).  Each Stockholder (or prospective Stockholder) should consult its own advisors regarding its participation in the transactions contemplated herein, including, without limitation, the tax consequences of such transactions.

8.Other Matters.

(a)The Subscriber agrees that, except as provided herein, this Subscription Agreement or any agreement made hereunder or pursuant hereto may not be cancelled, terminated or revoked by him, her, or it except upon the written consent of the Company.

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(b)The Subscriber agrees that this Subscription Agreement and the foregoing acknowledgments, representations, and covenants are true and accurate as of the Effective Date and shall be true and accurate as of the Closing Date, and shall survive his, her or its admission as a Stockholder of the Company and any investigation made by any party relying on the same or any acceptance or rejection of this subscription.

(c)The Subscriber agrees to execute any and all further documents necessary or advisable, in the sole and absolute discretion of the Company, in connection with his, her, or it becoming a holder of the Units or any portion thereof.

(d)All notices, consents, or other communication to be given under this Subscription Agreement by any party to any other party shall be in writing and shall be deemed to have been given (i) when delivered by hand (with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (iv) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or such other address for a party as shall be specified in a notice given in accordance with this Section 7(d)).

Notice to Subscriber:Subscriber’s address, facsimile, and email listed in the Subscriber Profile

 

Notice to Company:Address:InfoSonics Corporation

4435 Eastgate Mall, Suite 320

San Diego, CA 92121

Email: vern.loforti@infosonics.com

Attention: Vernon A. LoForti

(e)The parties acknowledge and agree that this Subscription Agreement and the obligations and undertakings of the parties hereunder will be performable in Miami, Florida.  This Subscription Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida.  If any action is brought to enforce or interpret this Subscription Agreement, venue for such action shall be in Miami-Dade County, Florida.

(f)If any provision of this Subscription Agreement or any other document delivered pursuant hereto is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable; this Subscription Agreement or such other document shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof or thereof; and the remaining provisions hereof and thereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.

(g)No failure or delay on the part of any party in exercising any right, power or privilege hereunder or under any of the documents delivered in connection with this Subscription Agreement shall operate as a waiver of such right, power or privilege; nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(h)This Subscription Agreement and the obligations contained herein shall continue in full force and effect until terminated upon the earlier to occur of (i) the execution by all parties hereto of a written instrument terminating the Subscriber’s obligations hereunder; or (ii) the termination or dissolution of the Company or any successor entity thereto; or (iii) the Board’s refusal on behalf of the Company to accept this subscription as provided in Section 2 hereof.

(i)This Subscription Agreement (including the Questionnaire) constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and this Subscription 

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Agreement can be amended only by an amendment in writing signed by the parties hereto.  This Subscription Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and the heirs, successors and legal representatives of the parties hereto. 

(j)This Subscription Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes, and all of which when taken together shall constitute a single counterpart instrument.  Executed signature pages to any counterpart instrument may be detached and affixed to a single counterpart, with such single counterpart with multiple executed signature pages affixed thereto constituting the original counterpart instrument.  All of those counterpart pages shall be read as though one, and they shall have the same force and effect as if all the signers had executed a single signature page.

(k)This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and may be amended only by a writing executed by the party to be bound thereby.

9.Communications to Subscriber

(a)The Board shall send confirmation of a subscription for Units, a copy of this Subscription Agreement, and any other communications to the address indicated in the Subscriber Profile, attached hereto.

(b)The Board may request from the Subscriber such additional information as it may deem necessary to evaluate the eligibility of the Subscriber to acquire Units, and may request from time to time such information as it may deem necessary to determine the eligibility of the Subscriber to hold Units or to enable the Board to determine the Company’s compliance with applicable regulatory requirements or tax status, and the Subscriber shall provide such information as may reasonably be requested.  The Subscriber agrees to notify the Board promptly if there is any change with respect to any of the information or representations contained herein (or any other part of the Subscription Booklet hereto) and to provide the Board with such further information as the Board may reasonably require.

 

[Signature Page Follows]

 

 

 

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IN WITNESS WHEREOF, the Subscriber has hereby executed this Subscription Agreement as of the Effective Date set forth below.

Signature of Subscriber (if an individual):

Printed Name of Subscriber:Subscriber’s Street Address:

Street

Signature of SubscriberCity, State  Zip Code

Date: _______________________

Subscriber’s Social Security Number

Signature of Subscriber (if other than an individual):

Printed Name of Subscriber:Subscriber’s Street Address:

City

By:

Printed Name:_______________________
State  Zip Code

Title: ______________________________

Date:_______________________
Subscriber’s Federal EIN (if applicable)

 

 

Acknowledged and Accepted:

INFOSONICS CORPORATION
a Maryland corporation

By:
Vernon A. LoForti
Vice President of Corporate Development, 

Compliance and Investor Relations

 

Effective Date: 

 

 

 

[Signature Page to Subscription Agreement]

 

 

SUBSCRIBER PROFILE

Terms used but not otherwise defined herein shall have the meanings ascribed to such terms as set forth in the Subscription Agreement.

Total Number of Units Offered: 

Purchase Price Per Unit: $_______________________________

Aggregate Purchase Price: $_______________________________

											
	
Number of Common Shares: 
	
Number of Warrants:

	
 
	
 

	
Number of Preferred Shares: 
	
 

	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
(1)
	
Name of Subscriber (Please Print or Type)
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
Name of person exercising investment 
discretion for Subscriber (trustee or fiduciary, etc.)
	
 

	
 
	
 
	
 

	
(2)
	
Social Security Number/Tax I.D. Number: _____________________

	
 
	
 
	
 

	
(3)
	
Type of Subscriber - Please check one:

	
 
	
 
	
Individual
	
 
	
Limited Liability Company

	
 
	
 
	
Partnership
	
 
	
Individual Retirement Account

	
 
	
 
	
Corporation
	
 
	
Foundation

	
 
	
 
	
Trust
	
 
	
Employee Benefit Plan

	
 
	
 
	
Tenants in Common
	
 
	
Endowment

	
 
	
 
	
Joint Tenants
	
 
	
Other

	
 
	
 
	
 

	
(4)
	
Domicile (in the case of individuals) or jurisdiction in which organized:

	
 
	
 
	
 

	
(5)
	
Residence or principal place of 
business address:

 
	
 
	
Mailing address (if different):

	
 
	
Name
	
 
	
Name

	
 
	
 

 
	
 
	
 

	
 
	
Company
	
 
	
Company

	
 
	
 

 
	
 
	
 

	
 
	
Street
	
 
	
Street

	
 
	
 
	
 
	
 

 

	
 
	
City, State, Zip Code
	
 
	
City, State, Zip Code

	
 
	
 
	
 
	
 

	
 
	
Attn: 
	
 
	
 
	
Attn:

 
	
 

	
 
	
Telephone number:
	
 
	
 
	
Telephone number:
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
Fax number:
	
 
	
 
	
Fax number:
	
 

 

						
	
 
	
Email:
	
 
	
 
	
Email:
	
 

	
 
	
 

 
	
 
	
 
	
 
	
 

 

 

 

 

IN WITNESS WHEREOF, the Subscriber has hereby executed this Subscriber Profile as of the Effective Date.

Signature of Subscriber (if an individual):

Printed Name of Subscriber:Subscriber’s Street Address:

Street

Signature of SubscriberCity, State  Zip Code

Date: _______________________

Subscriber’s Social Security Number

Signature of Subscriber (if other than an individual):

Printed Name of Subscriber:Subscriber’s Street Address:

City

By:

Printed Name:_______________________
State  Zip Code

Title: ______________________________

Date:_______________________
Subscriber’s Federal EIN (if applicable)

 

 

 

EXHIBIT A

 

Form of Warrant

 

(attached)

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