Document:

f8k013113ex10iii_snap.htm

Exhibit 10.3

 

CONSULTING AGREEMENT

This Consulting Agreement (“Agreement”) is effective as of February 1, 2013 (“Effective Date”) by and between Snap Interactive, Inc. (the “Company”) and Darrell Lerner (“Consultant”).  Consultant and the Company are sometimes collectively referred to herein as the “Parties” and individually as a “Party.”

In consideration of the promises and mutual covenants in this Agreement, the Company and Consultant agree as follows:

 

	
I.

	
SERVICES TO BE PROVIDED BY CONSULTANT

A.           Description of Consulting Services.  Subject to the terms of this Agreement, the Company agrees to retain Consultant, and Consultant agrees to serve as an advisor and consultant to the Company.  Consultant’s services during the Term (defined below) shall include assisting and advising the Company on legal, financial and other matters for which Consultant has knowledge that pertains to the Company, as the Company reasonably requests (the “Consulting Services”).  In performing the Consulting Services, Consultant agrees that he controls the details, method and manner of his work and will provide his own supplies, tools and equipment.

 

B.           Company’s Reliance.  The Company is entering into this Agreement in reliance on Consultant’s special and unique abilities in rendering the Consulting Services and Consultant shall use Consultant’s best effort, skill, judgment, and ability in rendering the Consulting Services.

 

C.           Nature of Relationship between Parties.  Consultant shall render the Consulting Services in this Agreement as an independent contractor.  Except as otherwise specifically agreed to by the Company in writing, Consultant shall have no authority or power to bind the Company with respect to third parties and Consultant shall not represent to third parties that Consultant has authority or power to bind the Company.  It is not the intention of the Parties to create, by virtue of this Agreement, any employment relationship, trust, partnership, or joint venture between Consultant and the Company or any of its affiliates, to make them legal representatives or agents of each other or to create any fiduciary relationship or additional contractual relationship among them.

 

	
II.

	
COMPENSATION FOR CONSULTING SERVICES

A.           Consulting Fee.  During the period beginning on the Effective Date and ending two (2) years after the Effective Date (the “Guaranteed Period”), the Company shall pay Consultant a monthly fee of $25,000 (the “Guaranteed Monthly Fee”).  If this Agreement is not terminated prior to the end of the Guaranteed Period, the Company shall pay Consultant a monthly fee of $5,000 (the “Conditional Monthly Fee” and, together with the Guaranteed Monthly Fee, the “Monthly Fees”) during the period beginning on the two-year anniversary of the Effective Date and ending upon the termination of this Agreement (the “Conditional Period”).  Payment of the Monthly Fees is conditioned upon Consultant’s compliance with all terms of this Agreement.  Consultant shall be paid in arrears on the last business day of the month for the Consulting Services.

 

  

  

  

 

B.           Benefits.  Consultant shall at all times be an independent contractor (and not an employee or agent of the Company); and, therefore, Consultant shall not be entitled to participate in any benefit plans or programs that the Company provides or may provide to its employees, including, but not limited to, pension, profit-sharing, medical, dental, workers’ compensation, occupational injury, life insurance and vacation or sick benefits.

 

C.           Workers’ Compensation.  Consultant understands and acknowledges that the Company shall not obtain workers’ compensation insurance covering Consultant.

 

	
III.

	
PAYMENT OF TAXES

A.           Federal, State, and Local Taxes.  Neither federal, state, or local income tax nor payroll tax of any kind shall be withheld or paid by the Company on behalf of Consultant.  Consultant shall not be treated as an employee of the Company with respect to services performed under the Agreement for federal, state, or local tax purposes.

 

B.           Tax Duties and Liabilities.  Consultant understands that he is responsible to pay, according to applicable law, all taxes for which Consultant may be liable.  The parties agree that any tax consequences or liability arising from the Company’s payments to Consultant shall be the sole responsibility of Consultant.  Should any state or federal taxing authority determine that any of the payments under this Agreement constitute income subject to withholding under any federal or state law, then Consultant agrees to indemnify and hold the Company harmless for any and all tax liability, including, but not limited to, taxes, levies, assessments, fines, interest, costs, expenses, penalties, and attorneys’ fees.

 

	
IV.

	
INDEMNIFICATIONS AND COVENANTS

A.           Consultant’s Standard of Care.  Subject to the other Agreement provisions, Consultant shall provide his services under this Agreement with the same degree of care, skill, and prudence that would be customarily exercised in the Company’s best interest.

 

B.           Confidentiality. In performing the Consulting Services, Consultant will have access to certain of the Company’s Confidential Information (as defined below).  Consultant acknowledges and agrees that all Confidential Information that will be provided to him during the Term of this Agreement is and shall continue to be the exclusive property of the Company.  Consultant agrees to keep all Confidential Information in strict confidence, and shall not use or disclose, or permit anyone to use or disclose, any Confidential Information except (i) as the Company consents to in writing, (ii) as required by law or judicial or regulatory process, or (iii) information that has become generally available to the public without any breach by Consultant of this paragraph.

 

C.           Confidential Information.  “Confidential Information” includes any information of any kind that is not generally known to the Company’s competitors or the public, concerning any matters affecting or relating to the Company’s business.  The definition of Confidential Information includes, but is not limited to, programming code, business methods, materials, content, and strategies relating to the Company’s applications, specifically, its online dating and social discovery applications on social networking platforms and their design, features and techniques, and the business of the Company and the Company's affiliated companies and subsidiaries, including, but not limited to, products, customer lists, data, databases, pricing policies, employment records and policies, operational methods, marketing plans and strategies, product development techniques or plans, business acquisition plans, new personnel acquisition plans, technical processes, designs and design projects, inventions and research programs, trade “know-how,” trade secrets, intellectual property and other business affairs of the Company and the Company's affiliated companies and subsidiaries.  Confidential Information includes not only information disclosed by the Company to Consultant, but also information developed or learned by Consultant himself during the course of Consultant’s services for the Company.

 

  

  

  

 

D.           Non-Compete.  Consultant acknowledges that the Company’s Confidential Information is extremely valuable and, as a result, the disclosure of Confidential Information to Consultant could easily be applied outside of the Company, thereby giving Consultant and any person or entity to whom Confidential Information is disclosed an unfair advantage, and failing to compensate the Company for its development of such Confidential Information.  Therefore, during the Term and for a period of one (1) year following the termination of this Agreement for any reason whatsoever, Consultant agrees not to, directly or indirectly, develop, launch, operate, seek employment with or consult on any applications, websites or products in the social discovery or online dating markets (the “Core Business”) or on any application, website or product that is competitive with any application, website or product of the Company.  The covenants contained in this Section IV.D. shall automatically terminate in the event that the Company experiences a dissolution, changes its Core Business or ceases operations.

 

E.           Non-Solicitation of Employees.  Consultant agrees that, except as otherwise agreed between the Parties in writing, for a period of six (6) months immediately following the later of the termination of this Agreement for any reason whatsoever or the end of the Term, Consultant shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees to leave their employment, or attempt to solicit, induce, recruit, encourage or take away the Company’s employees, either for himself or for any other person or entity.

 

F.           Non-Disparagement.  Consultant agrees that he will not say, write or cause to be said or written any statement that may be considered defamatory, derogatory or disparaging of the Company or any of its agents or affiliates, including, but not limited to, statements on any website, blog, social media channel or other outlet of any source whatsoever.

G.          Agreement to Return Company Property/Documents.  Following the termination of this Agreement for any reason, Consultant agrees that: (i) he shall not take, copy, alter, destroy, or delete any files, documents or other materials whether or not embodying or recording any Confidential Information, including copies, without obtaining in advance the explicit written consent of an authorized Company representative; and (ii) he shall promptly return to the Company all Confidential Information, documents, files, records and tapes (written or electronically stored) that have been in Consultant’s possession or control regarding the Company, and he shall not use or disclose such materials in any way or in any format, including written information in any form, information stored by electronic means, and any and all copies of these materials.  Consultant further agrees to return to the Company immediately all Company property issued at any time during the Term of this Agreement, including, without limitation, keys, equipment, computer(s) and computer equipment, devices, data, lists, information, correspondence, notes, memos, reports, or other writings prepared by the Company or Consultant on behalf of the Company.

 

  

  

  

 

H.           Non-Exclusive.  During the Term, provided that Consultant does not violate the covenants in this Section IV, which acts are expressly forbidden by this Agreement, the Company and Consultant agree that this Agreement does not create an exclusive relationship, and Consultant is free to perform services for other any other individual, company or other entity, whether for a fee or otherwise.

 

I.            Survival.  The provisions set forth in Section IV shall survive termination or expiration of this Agreement.  In addition, all provisions of this Agreement, which expressly continue to operate after the termination of this Agreement, shall survive the Agreement’s termination or expiration.

 

	
V.

	
TERM OF AGREEMENT; TERMINATION

A.           Term.  This Agreement is effective from the Effective Date and shall continue for a period of three (3) years thereafter (the “Term”); provided, however, that the Company may renew the Term of this Agreement by providing written notice to Consultant prior to or at the expiration of the Term.  In the event the Company does not renew the Term of this Agreement pursuant to this Section V.A., this Agreement shall terminate upon the expiration of the Term.  This Agreement governs all Consulting Services performed by Consultant for the Company during the Term of this Agreement.  If this Agreement is terminated prior to or at the expiration of the Term, all services shall be discontinued as of the date of such termination.

 

B.           Termination or Non-Renewal by the Company. The Company has the right to terminate this Agreement at any time, without notice.  In the event the Company terminates this Agreement without “Cause” (as defined below) during the Term, (i) the Company shall pay Consultant the amount of the Guaranteed Monthly Fees owed to Consultant for the remainder of the Guaranteed Period, if any, upon the termination of Consultant’s services, and (ii) the Company shall take all commercially reasonable actions to cause the Restricted Stock Awards (as defined herein) to be 100% vested as of the date of such termination to the extent such Restricted Stock Awards are not otherwise vested on such date.  In the event the Company terminates this Agreement during the Conditional Period for any reason, the Company shall be under no obligation to pay the amount of the Conditional Monthly Fees owed to Consultant for the remainder of the Conditional Period.  In the event that the Company does not renew the Term of this Agreement prior to or at the expiration of the Term without “Cause,” the Company shall take all commercially reasonable actions to cause the Restricted Stock Awards to be 100% vested as of the date the Term expires to the extent such Restricted Stock Awards are not otherwise vested on such date.  For purposes of this Section V.B., the “Restricted Stock Awards” means (a) the 325,000 shares of restricted common stock of the Company granted to Consultant pursuant to that certain Restricted Stock Award Agreement by and between the Company and Consultant, dated December 28, 2012; (b) the 600,000 shares  of restricted common stock of the Company granted to Consultant pursuant to that certain Restricted Stock Award Agreement by and between the Company and Consultant dated October 28, 2011, as amended by that certain First Amendment to Restricted Stock Award Agreement dated December 28, 2012; and (c) the 150,000 shares of restricted common stock of the Company granted to Consultant pursuant to that certain Restricted Stock Award Agreement by and between the Company and Consultant dated January 31, 2013.  For purposes of this Section V.B., “Cause” shall mean: (1) Consultant’s alleged commission of any felony or any offense involving moral turpitude, dishonesty, fraud, embezzlement, theft or misuse or misappropriation of money or other property; (2) Consultant’s behavior that is otherwise materially damaging to the operation and success of the Company or adversely affects the reputation of the Company as determined in the reasonable discretion of the Company; or (3) any material breach by Consultant of any term of this Agreement.

 

  

  

  

 

C.           Termination by Consultant.  Consultant has the right to terminate this Agreement at any time, without notice.  In the event Consultant terminates this Agreement, all amounts which otherwise would be payable by the Company to Consultant under this Agreement shall cease and the Company shall be excused and have no further obligation for payment of any further amounts to Consultant.

 

	
VI.

	
OTHER PROVISIONS

A.           Legal Resources.  During the Term, the Company shall provide Consultant with access to the Company’s legal resources, at no charge, for assistance with customary legal matters relating to the disposition of the Company’s equity securities, including the removal of legends from stock certificates, complying with the requirements of Rule 144 under the Securities Act of 1933, as amended, and complying with Section 13(d) of the Securities Exchange Act of 1934, as amended.

 

B.           Notices.  Any notice or other communication required, permitted or desired to be given under this Agreement shall be deemed delivered: when personally delivered; the next business day, if delivered by overnight courier; the same day, if transmitted by facsimile or electronic mail on a business day before noon, Central Time; the next business day, if otherwise transmitted by facsimile; and the third business day after mailing, if mailed by prepaid certified mail, return receipt requested, as addressed or transmitted as follows (as applicable):

 

If to Consultant:

Darrell Lerner

141 Great Neck Rd., Apt. 2H

Great Neck, NY 11021

darrelllerner@gmail.com

If to the Company:

Snap Interactive, Inc.

462 7th Ave., 4th Floor

New York, NY 10018

Attention:  Jon D. Pedersen, Sr.

jpedersen@snapinteractive.com

 

  

  

  

 

C.           Choice of Law.  This Agreement has been executed and delivered in, and shall be interpreted, construed, and enforced under the laws of, the State of New York, without giving effect to its conflicts of law principles.  The Parties knowingly and intentionally consent to jurisdiction in New York County, New York.  The Parties waive trial by jury in all matters.

 

D.           Limitations on Assignment.  In entering into this Agreement, the Company is relying on the unique services of Consultant; services from another company or contractor will not be an acceptable substitute.  Except as provided in this Agreement, Consultant may not assign this Agreement or any of the rights or obligations set forth in this Agreement without the explicit written consent of the Company.  Any attempted assignment by Consultant in violation of this paragraph shall be void.  Except as provided in this Agreement, nothing in this Agreement entitles any person other than the Parties to the Agreement to any claim, cause of action, remedy, or right of any kind.

 

E.           Waiver.  A Party’s waiver of any breach or violation of any Agreement provision shall not operate as, or be construed to be, a waiver of any subsequent breach of the same or other Agreement provision.

 

F.           Severability.  If any provision(s) of this Agreement is held to be invalid, illegal, or unenforceable for any reason whatsoever, (i) the validity, legality, and unenforceability of the remaining provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any provision held to be invalid, illegal, or unenforceable, that are not themselves invalid, illegal, or unenforceable), will not in any way be affected or impaired thereby, and (ii) the provision(s) held to be invalid, illegal, or unenforceable will be limited or modified in its or their application to the minimum extent necessary to avoid the invalidity, illegality or unenforceability, and, as so limited or modified, the provision(s) and the balance of this Agreement will be enforceable in accordance with their terms.

 

G.           Headings.  The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.

 

H.           Entire Agreement, Amendment, Binding Effect.  With the sole exception of the Severance and General Release Agreement, this Agreement constitutes the entire agreement between the Parties concerning the subject matter in this Agreement.  No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated in this Agreement by written amendment, such amendment to become effective on the date stipulated in it.  Consultant acknowledges and represents that in executing this Agreement, he did not rely, has not relied, and specifically disavows any reliance, on any communications, promises, statements, inducements, or representation(s), oral or written, by the Company, except as expressly contained in this Agreement. Any amendment to this Agreement must be signed by all parties to this Agreement.  This Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors, heirs, legal representatives, and permitted assigns (if any).

 

I.           Ambiguities.  Any rule of construction to the effect that ambiguities shall be resolved against the drafting party shall not apply to the interpretation of this Agreement.

J.           Review by Counsel.  Consultant and the Company acknowledge that they have had a reasonable time to review the Agreement and that both Parties have been represented by counsel in the drafting of this Agreement.

***********

 

  

  

  

 

By their signatures below, the Parties certify that they have read the above Agreement and agree to its terms:

Consultant:

 

	
/s/ Darrell Lerner 

	 
	
Darrell Lerner

	 
	Date:	January 31, 2013 	 
	 	 
	
The Company:

	 
	 	 	 
	
By: 

	/s/ Jon D. Pedersen, Sr. 	 
	Name:	
Jon D. Pedersen, Sr.

	 
	Title:	
Chief Financial Officer

	 
	Date:	
January 31, 2013f8k013113ex10iv_snap.htm

Exhibit 10.4

 

DCL Ventures, Inc.

 

SUBSCRIPTION AGREEMENT

Dated January 31, 2013

Shares of

Common Stock

 

  

  

  

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”) is entered into as of January 31, 2013, by and among DCL Ventures, Inc., a Delaware corporation (the “Company”), Darrell Lerner, an individual (“Lerner”), and Snap Interactive, Inc., a Delaware Corporation (“Purchaser” and, together with the Company and Lerner, the “Parties”).  Certain capitalized terms used herein are defined in ARTICLE VII below.

 

ARTICLE I

THE INITIAL INVESTMENT

 

1.1         Purchase and Sale of the Initial Shares.  Upon the terms and subject to the conditions set forth in this Agreement, the Company agrees to sell to Purchaser, and Purchaser agrees to purchase from the Company, shares (the “Initial Shares”) of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), at a purchase price per share equal to the lowest price per share paid by investors in the Initial Third Party Sale determined through bona fide negotiations with such investors (the “Initial Per Share Purchase Price”), for an aggregate purchase price of Fifty Thousand Dollars ($50,000) (the “Initial Purchase Price”).  Such purchase and sale of the Initial Shares shall be referred to herein as the “Initial Investment.”  The consummation of the Initial Investment shall be referred to herein as the “Initial Closing.”  The number of Initial Shares so purchased shall be equal to the quotient (rounded to the nearest whole number) obtained by dividing (a) the Initial Purchase price by (b) the Initial Per Share Purchase Price.

 

1.2         Conditions to Initial Investment.  The obligations of Purchaser to consummate the Initial Investment are subject to fulfillment of each of the following conditions at the time of the Initial Closing:

 

(a)         the Company shall have consummated the Initial Third Party Sale by December 31, 2013;

 

(b)         the representations and warranties of the Company and Lerner set forth in this Agreement shall be true and correct in all material respects, in each case, as of the date of this Agreement and as of the date of the Initial Closing, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date);

 

(c)         each of the Company and Lerner shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by it or him, respectively, on or prior to the date of the Initial Closing;

 

(d)         Purchaser shall have reviewed and approved the Company’s current business plan; provided, that such approval shall not be unreasonably withheld; and

 

(e)         Lerner shall be the majority stockholder holding a majority of the voting power in the Company.

 

1.3         Timing of the Initial Closing.  The Initial Closing shall take place simultaneously with, or promptly after, the closing of the Initial Third Party Sale; provided, that if the Initial Third Party Sale occurs on or before March 31, 2013, the Initial Closing shall take place no later than March 31, 2013.

 

  

  

  

 

1.4         The Initial Closing; Delivery of the Initial Shares.  Upon the terms and subject to the conditions set forth in Section1.2 of this Agreement, at the Initial Closing:

 

(a)         Purchaser shall pay the Initial Purchase Price to the Company by wire transfer of immediately available funds to such bank account as the Company may designate in writing;

 

(b)         the Company and Purchaser shall execute and deliver a stockholders’ agreement, or a joinder or counterpart to an existing stockholders’ agreement, dated as of the Initial Closing (the “Stockholders’ Agreement”), containing customary “tag-along/drag-along” rights and such other stockholder rights afforded any other third party investor in the Company participating in the Initial Third Party Sale; and

 

(c)         in consideration of the foregoing, the Company shall deliver to Purchaser a stock certificate representing the Initial Shares.

 

ARTICLE II

THE SECONDARY INVESTMENT

 

2.1         Purchase and Sale of the Secondary Shares.  Upon the terms and subject to the conditions set forth in this Agreement, the Company agrees to sell to Purchaser, and Purchaser agrees to purchase from the Company, additional shares (the “Secondary Shares” and, together with the Initial Shares, the “Shares”) of Common Stock at the Initial Per Share Purchase Price for an aggregate purchase price of One Hundred and Fifty Thousand Dollars ($150,000) (the “Secondary Purchase Price”).  Such secondary purchase and sale shall be referred to herein as the “Secondary Investment” and, together with the Initial Investment, the “Investments.”  The number of Secondary Shares so purchased shall be equal to the quotient (rounded to the nearest whole number) obtained by dividing (a) the Secondary Purchase Price by (b) the Initial Per Share Purchase Price.

 

2.2         Conditions to Secondary Investment.  The obligations of Purchaser to consummate the Secondary Investment are subject to fulfillment of each of the following conditions at the time of the Secondary Closing:

 

(a)         the Company shall have consummated: (i) the Initial Third Party Sale and (ii) the Secondary Third Party Sale;

 

(b)         the closing of the Secondary Third Party Sale shall have occurred on or prior to the end of Purchaser’s next fiscal quarter after the fiscal quarter during which the Initial Closing occurred;

 

(c)         the representations and warranties of the Company and Lerner set forth in this Agreement shall be true and correct in all material respects, in each case, as of the date of this Agreement and as of the date of the Secondary Closing, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date);

 

(d)         each of the Company and Lerner shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by it or him, respectively, on or prior to the date of the Secondary Closing;

 

(e)         Purchaser shall have reviewed and approved the Company’s current business plan; provided, that such approval shall not be unreasonably withheld; and

 

  

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(f)         Lerner shall be the majority stockholder holding a majority of the voting power in the Company.

 

2.3         Secondary Closing.  Upon the terms and subject to the conditions described in this Agreement, the Secondary Purchase Price shall be paid in six (6) quarterly payments of Twenty Five Thousand Dollars ($25,000) each (each a “Secondary Investment Payment”).  The first Secondary Investment Payment shall be made prior to or at the end of Purchaser’s next fiscal quarter after the fiscal quarter during which the Initial Closing occurred.  The remaining five Secondary Investment Payments shall be made in five subsequent quarterly payments prior to or at the end of each subsequent fiscal quarter, with the final Secondary Investment Payment being made prior to or at the end of Purchaser’s sixth fiscal quarter after the fiscal quarter during which the Initial Closing occurred.  Purchaser shall make each Secondary Investment Payment by wire transfer of immediately available funds to such bank account as the Company may designate in writing.  The Company shall deliver to Purchaser a stock certificate representing the Secondary Shares against delivery of the initial Secondary Investment Payment (the “Secondary Closing”).

 

ARTICLE III

ADDITIONAL COVENANTS AND AGREEMENTS

 

3.1         Put Right Generally.  Purchaser shall have the right to require the Company or Lerner to repurchase promptly the Secondary Shares from Purchaser if, at any time prior to the thirty month anniversary of the date of the Secondary Closing, Lerner is not a stockholder, employee, or member of the board of directors of the Company. The repurchase price of any securities repurchased by the Company, Lerner, or the Company’s or Lerner’s permitted assigns pursuant to this Section 3.1 shall be equal to the greater of (a) the fair market value of such securities (as determined by the board of directors of the Company in good faith) on the repurchase date and (b) One Hundred and Fifty Thousand Dollars ($150,000).

 

3.2         Lerner Salary Restriction.  The Company shall not pay to Lerner, and Lerner shall not collect from the Company, any salary (other than a nominal annual salary paid for legal purposes, which shall not exceed $1,000 per year) or any other cash compensation until August 1, 2014, except as otherwise agreed in writing by Purchaser.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND LERNER

 

The Company and Lerner represent and warrant to Purchaser:

 

4.1         Organization.  The Company is duly incorporated and in good standing under the laws of the State of Delaware.  The Company does not own, directly or indirectly, any Capital Stock in any other Person, or any securities convertible into or exercisable for any such Capital Stock and is not a party to or bound by any joint venture or similar agreement other than this Agreement.  The Company is not, nor is it directly or indirectly controlled by or acting on behalf of any Person that is, an investment company within the meaning of the Investment Company Act of 1940, as amended.

 

4.2         Power and Authority.  The Company has all requisite power to execute, deliver and perform its obligations under this Agreement and to issue the Shares as of the date hereof.  The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite actions on the part of the Company.  This Agreement has been duly executed and delivered by the Company and Lerner and constitutes, and will constitute, valid obligations of the Company and Lerner, respectively, legally binding upon and enforceable against the Company and Lerner in accordance with its respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and (b) general principles of equity relating to enforceability (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

  

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4.3         Capitalization.  The authorized, issued and outstanding Capital Stock of the Company is as set forth on Schedule 4.3 attached hereto.  The Company does not have any outstanding Capital Stock or options, warrants, calls, subscriptions, preemptive rights or other rights, convertible securities, agreements or commitments of any character obligating the Company to issue, transfer or sell any of its Capital Stock or any other equity interest in the Company or any securities convertible into or exchangeable for such Capital Stock or equity interests, or contractual obligations to repurchase, redeem or otherwise acquire any of its Capital Stock.

 

4.4         Actions Pending.  There is no action, suit, proceeding, dispute or investigation pending, and, to the knowledge of the Company and Lerner, there is no action, suit, proceeding, dispute or investigation otherwise threatened, (a) which questions the validity or legality of, or seeks damages in connection with, this Agreement or any action taken or to be taken pursuant to this Agreement, or (b) against the Company or Lerner or any of their respective properties or rights by or before any governmental authority with respect to the Company or its assets, business or properties.

 

4.5         The Shares.  Assuming the accuracy of Purchaser’s representations and warranties in ARTICLE V below, the issuance of the Shares is exempt from the registration requirements of the Securities Act of 1933, as amended (the “1933 Act”), and from the registration or qualification requirements of all applicable state securities Laws.

 

4.6         Conflicting Agreements and Other Matters.  Neither the execution and delivery of this Agreement nor the compliance by the Company with the terms and provisions hereof conflicts with or results in a breach of the terms, conditions or provisions of, or constitutes a default under, or results in any violation of (a) the Organizational Documents of the Company, (b) any Law to which the Company is subject, or (c) any contract or agreement to which the Company or Lerner is a party.

 

4.7         Use of Proceeds.  The proceeds from the sale of the Shares will be used for general corporate purposes strictly in furtherance of the Company’s business plan approved by Purchaser in accordance with the terms of this Agreement.  None of the proceeds will be used in violation of Section 3.2 of this Agreement.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to the Company and Lerner:

 

5.1         Power and Authority.  Purchaser has all requisite power to execute, deliver and perform its obligations under this Agreement as of the date hereof.  The execution, delivery and performance by Purchaser of this Agreement have been duly authorized by all requisite actions on the part of Purchaser.  This Agreement has been duly executed and delivered by Purchaser, and constitutes a valid obligation of Purchaser, legally binding upon and enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity relating to enforceability (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

  

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5.2         Nature of Purchase.  Purchaser will purchase the Shares for Purchaser’s own account and not with a view to, or intention of, distribution thereof in violation of the 1933 Act.  Purchaser is an “accredited investor,” as that term is defined in Regulation D promulgated under the 1933 Act.  Purchaser is knowledgeable in financial matters and is able to evaluate the risks and benefits of the Investments.  Purchaser understands and acknowledges that such Investments are of a speculative nature, involve a high degree of risk, and are subject to risk of loss.  Purchaser acknowledges and understands that (a) neither the Shares nor the sale of the Shares have been registered under the 1933 Act, or registered or qualified under the securities Laws of any state, (b) there is no market for the Shares, and (c) the Shares may be subject to transfer restrictions as provided in any Stockholders’ Agreement.  Purchaser has had an opportunity to ask questions and receive answers concerning the terms and conditions of the Investments and has had full access to such other information concerning the Company as has been requested.

 

5.3         Stock Legend.  Purchaser acknowledges that the certificates for the Shares will contain a legend substantially as follows:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘ACT’), OR THE SECURITIES LAWS OF ANY STATE.  THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.”

 

The requirement that the Shares contain the legend set forth above shall cease and terminate when the Shares are transferred pursuant to Rule 144 promulgated under the 1933 Act.  Upon the consummation of an event described in the immediately preceding sentence, the Company, upon the surrender of certificates containing such legend, shall, at its own expense (without the need for any opinion of counsel for Purchaser), deliver to the holder of any such securities as to which the requirement for such legend shall have terminated, one or more new certificates evidencing such securities not bearing such legend.

 

5.4         Independent Investment Decision.  Purchaser (a) has received and reviewed copies of this Agreement, the Organizational Documents of the Company, and such other documents and information as Purchaser has deemed necessary or appropriate for the purpose of making its own investment analysis of and decision to purchase the Shares, and (b) has independently conducted its own independent financial and business investigation of the Shares, the Company and any matter relevant to the value of the Shares.

 

5.5         Conflicting Agreements and Other Matters.  Neither the execution and delivery of, nor the consummation by Purchaser of the transactions contemplated by, nor the compliance by Purchaser with the terms and provisions of, this Agreement will conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, or result in any violation of, any contract, agreement or other instrument to which such Purchaser is a party or to which any of its properties may be bound.

 

  

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ARTICLE VI

INDEMNIFICATION

 

Each of the Company, Lerner and Purchaser acknowledge that they understand the meaning and legal consequences of the representations, warranties, agreements, certifications and covenants made by such Party in this Agreement, and the Company and Lerner, on the one hand,  and Purchaser, on the other hand (the “Indemnifying Party”), agree, to the fullest extent permitted by applicable law, to indemnify and hold harmless the Company, Lerner and the Company’s directors, officers, employees, shareholders, agents and affiliates, on the one hand, and Purchaser and its directors, officers, employees, shareholders, agents and affiliates, on the other hand (the “Indemnified Party”), from and against any and all losses, damages, costs, expenses or liabilities (including all expenses incurred in investigating, preparing or defending against any claim whatsoever and attorneys’ fees) arising out of, based upon or relating in any way to (a) any false representation, warranty or certification made by the Indemnifying Party, or a breach or failure by the Indemnifying Party to comply with any covenant, certification or agreement made by such Indemnifying Party, in this Agreement or in any other document furnished by such Indemnifying Party in connection with this transaction and (b) any action for securities law violations instituted by the Indemnifying Party or its affiliates which is finally resolved against such Indemnifying Party or its affiliates.  Notwithstanding the foregoing, nothing contained in this Agreement shall relieve (nor is intended to relieve) an Indemnified Party of any liability to the extent (and only to the extent) such liability may not be waived, modified or limited under applicable law (including liability under certain U.S. securities laws which, under certain circumstances, may impose liability even on persons acting in good faith).

 

ARTICLE VII

DEFINITIONS

 

For the purpose of this Agreement, the following terms shall have the meanings indicated.

 

“Capital Stock” shall mean (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person.

 

“Initial Third Party Sale” shall mean the initial sale of shares of Common Stock to investors other than Purchaser, Lerner or affiliates controlled by Lerner, for an amount equal to or greater than One Hundred Thousand Dollars ($100,000).

 

“Law” shall mean any domestic or foreign federal, state or local statute, law (whether statutory or common law), ordinance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree or arbitration award or finding (including, without limitation,  those of any applicable self-regulatory organization).

 

“Organizational Documents” shall mean (a) the certificate or articles of incorporation, organization or formation and the bylaws, the partnership agreement or operating or limited liability company agreement (as applicable), and (b) any documents comparable to those described in clause (a) as may be applicable pursuant to any applicable Law.

 

“Person” shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof.

 

“Secondary Third Party Sale” shall mean the sale, concurrent with, or following, the Initial Third Party Sale, of additional shares of Common Stock (exclusive of those sold in the Initial Third Party Sale) to investors other than Purchaser, Lerner or affiliates controlled by Lerner, for an amount equal to or greater than One Hundred Thousand Dollars ($100,000).

 

  

6

  

 

ARTICLE VIII

MISCELLANEOUS

 

8.1         Fees and Expenses.  Each Party shall bear their respective legal and other expenses incurred in connection with the negotiation, execution and delivery of this Agreement.

 

8.2         Amendments.  This Agreement may be amended only with the written agreement of the Parties.

 

8.3         Entire Agreement.  This Agreement (together with any agreement expressly referenced herein) embodies the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to the subject matter hereof.

 

8.4         Successors and Assigns.  All covenants and other agreements in this Agreement made by or on behalf of any of the Parties shall bind and inure to the benefit of the respective successors and assigns of the Parties (including, without limitation, any permitted transferee).

 

8.5         Notices.  All notices and communications provided for hereunder shall be in writing and sent by first class mail or nationwide overnight delivery service (with charges prepaid) to the address for notice set forth on the signature pages hereof.  All addresses for notices shall remain operative until written notice of a change of address is delivered in accordance with this Section 8.5 to the Party charged with giving a notice.

 

8.6         Descriptive Headings.  The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

 

8.7         Survival of Representations and Warranties.  All representations, warranties, covenants and agreements of the Company contained herein shall survive consummation of the Investments.

 

8.8         Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the Parties shall be governed by, the internal law of the State of New York, excluding conflict-of-laws principles of such State that would require the application of the laws of a jurisdiction other than such State.

 

8.9         Counterparts.  This Agreement may be executed in two or more counterparts (or counterpart signature pages), each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

 

8.10       WAIVER OF JURY TRIAL.  THE PARTIES HEREBY WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THE PARTIES ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

  

7

  

 

8.11       Binding Agreement.  This Agreement shall become binding on the Company, Lerner and Purchaser when executed by the Company, Lerner and Purchaser.

 

8.12       Venue.  Each Party irrevocably consents to the exclusive jurisdiction and venue of any state court located in New York County in the State of New York in connection with any matter based upon or arising out of this Agreement or the transactions contemplated hereby, agrees that process may be served upon them in any manner authorized by the Laws of the State of New York for such Persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue, or process.

 

[Remainder of page intentionally left blank. Signature pages follow.]

 

  

8

  

IN WITNESS WHEREOF, each of the undersigned has executed, or has caused its duly authorized representative to execute, this Agreement as of the date first set forth hereinabove.

	 	
DCL VENTURES, INC.,

a Delaware corporation

	 
	 	 	 	 
	
 

	
By: 

	/s/ Darrell Lerner	 
	 	Name:  	Darrell Lerner	 
	 	Title:	President	 
	 	 	 	 
	 	Address for Purposes of Notice:	 
	 	 	141 Great Neck Rd., Apt. 2H	 
	 	 	Great Neck, NY	 
	 	 	11021	 
	 	 	 	 
	 	
DARRELL LERNER

	 
	 	 	 	 
	 	By:	/s/ Darrell Lerner	 
	 	Name:	Darrell Lerner	 
	 	 	 	 
	 	Address for Purposes of Notice:	 
	 	 	
Darrell Lerner

141 Great Neck Rd., Apt. 2H

Great Neck, NY  11021

	 
	 	 	 	 
	 	
SNAP INTERACTIVE, INC.,

a Delaware corporation

	 
	 	 	 	 
	 	By:	/s/ Jon D. Pedersen, Sr.	 
	 	Name:	Jon D. Pedersen, Sr.	 
	 	Title:	
Chief Financial Officer

	 
	 	 	 	 
	 	Address for Purposes of Notice:	 
	 	 	
Snap Interactive, Inc.

462 7th Ave., 4th Floor

New York, NY  10018

Attention:  Jon D. Pedersen, Sr.

	 

 

Signature Page to Subscription Agreement

 

  

  

  

 

SCHEDULE 4.3

Capitalization of the Company

 

	
Authorized Capital Stock:

	 	 	 
	  	 	 	 
	
50,000,000 shares of Common Stock, par value $0.0001 per share.

	 	 	 
	
10,000,000 shares of Series A Preferred Stock, par value $0.0001 per share.

	 	 	 
	  	 	 	 
	
Post-capitalization issued Capital Stock:

	 	 	 
	  	 	 	 
	
Common Stock:

	 	 	 
	
N/A

	 	 	0	 
	
Total Common Stock:

	 	 	0	 
	  	 	 	 	 
	
Series A Preferred Stock:

	 	 	 	 
	
Darrell Lerner

	 	 	4,000,000	 
	
Total Preferred Stock:

	 	 	4,000,000	 
	
Total Capital Stock:

	 	 	4,000,000

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