EXHIBIT 10.11
Print Name of Subscriber __________________
Amount of Investment __________________
SUBSCRIPTION AGREEMENT
HydroGen, LLC ("Company") and the Investor hereby agree as follows:
1. Subscription for Securities. I (sometimes referred to herein as the
"Investor") hereby subscribe for and agree to purchase the number of limited
liability units ("Units") of the Company, in the number as set forth on the
signature page hereto, upon the terms and conditions described in this
Agreement. The price per-Unit is $125,000.
The Units are being offered in a private placement in accordance with the
terms set forth in the Confidential Private Placement Memorandum dated May 13,
2005 ("Memorandum"). Capitalized terms not defined herein will have the same
meaning as set forth in the Memorandum. The Units will have the terms and
conditions described herein and in the Memorandum. Battenkill Capital, Inc.
("Battenkill") is acting as exclusive placement agent for the offering. The
Company will pay Battenkill a fee, as described in the Memorandum, for its
services.
In connection with the offering of the Units and as a condition to the
consummation of the offering, the Company will be acquired by Chiste
Corporation, a Nevada corporation ("Chiste") by an exchange ("Exchange") of
membership units for shares of Series B Convertible Preferred Stock of Chiste
("Preferred Stock"), pursuant to an Exchange Agreement, a form of which is
included in the Memorandum and a copy of which the Investor acknowledges receipt
("Exchange Agreement"). Pursuant to the Exchange Agreement, immediately after my
subscription is accepted, the Units for which I subscribe will be converted into
shares of Preferred Stock, at the conversion rate set forth in the Memorandum
and I will receive certificates representing the Preferred Stock instead of the
Units.
Upon consummation of the offering and the Exchange, each Unit will be
exchanged for 4,239.425 shares of Preferred Stock (if the minimum under the
offering is sold) and 3,610.903 shares of Preferred Stock (if the maximum under
the offering is sold). Each share of Preferred Stock will be convertible into
185.35215 shares of common stock of Chiste, subject to adjustment. Once the
proposed one for 25 reverse split is consummated, each share of Preferred Stock
will convert into 7.4140860 shares of common stock of Chiste.
As a further condition to the consummation of the offering, after the
Exchange, there will be an investment in Chiste by one or more related
institutional investors of not less than $7,000,000 such that their investment
("Institutional Investment") combined with the minimum under the offering will
aggregate not less than $12,000,000 being invested in cash in Chiste and the
Company (excluding any Units sold for conversion of Company debt). The
investment by the institutional investors will be contingent on subscriptions
for the minimum offering amount being received by the Company. The investment by
the institutional investors will be governed by separate investment agreements
which may have different terms than this Agreement.
2. Offering Period. The Units will be offered for sale until the earlier of the
consummation of the Exchange or May 31, 2005. Battenkill and the Company may
agree to extend the May 31, 2005 date for up to an additional 60 days, without
notice to subscribers, at their discretion (such date, as it may be extended, is
referred to as the "Termination Date").
3. Investor Delivery of Documents and Payment. I hereby tender to Battenkill, as
placement agent for the Company (i) the full purchase price of the Units I am
purchasing, (ii) one manually executed copy of this Subscription Agreement with
the appropriate questionnaires therein completed, and (iii) the completed NASD
questionnaire attached to this Subscription Agreement. Simultaneously with
submitting this Subscription Agreement, I am wiring the subscription amount in
accordance with the directions on the cover sheet, and have contacted Xx. Xxxxx
Xxxxxxxxxx of Battenkill at (000) 000-0000. My subscription funds will be held
in an account maintained by Battenkill Capital, Inc. with Factory Point National
Bank, with an address at X.X. Xxx 0000, Xxxxxxxxxx Xxxxxx, Xxxxxxx 00000, under
the account name, "HydroGen Escrow Account." Prior to the earlier of the Closing
(as defined in Section 5 hereof) or the Termination Date, my subscription amount
will be held in the account which is a non-interest bearing segregated account
at Factory Point National Bank. If the Company does not receive and accept my
subscription by the earlier of the Closing or the Termination Date, my payment
will be returned to me without interest or deduction.
4. Acceptance or Rejection of Subscription. The Company and Battenkill have the
right to reject this subscription for the Units, in whole or in part for any
reason and at any time prior to the Closing, notwithstanding prior receipt by me
of notice of acceptance of my subscription. In the event my subscription is
rejected, my payment will be returned promptly to me without interest or
deduction and this Subscription Agreement will have no force or effect. The
Units subscribed for herein will not be deemed issued to or owned by me until
one copy of this Subscription Agreement has been executed by me and
countersigned by the Company and the Closing with respect to my subscription has
occurred.
5. Closing and Delivery of Securities. The offering is being made on a "best
efforts, $5,000,000 minimum, $10,000,000 maximum" basis; however, the size of
the offering may be increased without notice to Investors. Officers and
directors of the Company and affiliates of Battenkill may invest in the offering
whose subscription funds will count towards the minimum, and any conversion of
the 6% Convertible Promissory Notes by Company members will not count towards
the minimum but such conversion will be included in the offering. The closing
and the release of funds to the Company or its designees is contingent on the
consummation of the Exchange and the Institutional Investment. The closing
("Closing") may occur at any time, as determined jointly by the Company, Chiste
and Battenkill, after satisfaction of the closing conditions before the
Termination Date, as herein set forth and in the Exchange Agreement. In the
event my subscription is accepted and there is a Closing, my payment will be
released to the Company or its designees and the certificates representing the
Preferred Stock of Chiste will be delivered promptly in due course to me along
with a fully executed version of this Agreement.
6. Offering to Accredited Investors. This offering is limited to accredited
investors as defined in Section 2(15) of the Securities Act of 1933, as amended
("Securities Act"), and Rule 501 promulgated thereunder, and is being made
without registration under the Securities Act in reliance upon the exemptions
contained in Sections 3(b), 4(2) and/or 4(6) of the Securities Act and
applicable state securities laws. As indicated by the responses on the signature
page hereof, the Investor is an accredited investor within the meaning of
Section 2(15) of the Securities Act and Rule 501 promulgated thereunder.
7. Registration Rights.
7.1. Filing of Registration Statement. Chiste, after the Closing and
acquisition of the Company by means of the Exchange, is hereby obligated to
include for resale by the investors in the offering (or subsequent holders,
referred to together as the "Holders") and by the Institutional Investment
holders, the Common Stock into which the Preferred Stock is convertible in a
registration statement under the Securities Act filed with the Securities and
Exchange Commission ("Commission") that it will initially file not later than
the later of 95 days after the consummation of the offering or 45 days after the
filing by Chiste of the financial statements of the Company and Chiste on a
combined basis in a Form 8-K or other periodic report. (The Common Stock is
being referred to in connection with the registration rights as the "Registrable
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Securities"). In addition, Chiste will "blue sky" the reoffer and resale of the
Registrable Securities in such state jurisdictions as Battenkill shall
reasonably request, provided that Chiste and the Company will not have to
qualify to do business in such state or consent to service of process other than
on a Form U-2. The registration statement will be for the resale of the
Registrable Securities in the hands of Holders (or their transferees as
permitted by federal securities laws). All costs associated with the
registration of the Registrable Securities, other than brokerage commissions and
counsel costs incurred by the holders in connection with resales of the
Registrable Securities which shall be the responsibility of the Holders, shall
be borne by Chiste. Chiste promptly will deliver such reasonable number of
prospectuses relating to the resale of the Common Stock as the Holder requests
after effectiveness of the registration statement for the Registrable
Securities.
7.2. Effective and Current. Chiste will use its reasonable commercial
efforts to keep the registration statement which registers the Registrable
Securities pursuant hereto effective and the related prospectus current until
the earlier of the date by which all of the Registrable Securities of the Holder
have been sold or the date that Registrable Securities of a Holder may be sold
pursuant to Rule 144 promulgated under the Securities Act (even though at such
date all the Registrable Securities may not be eligible for public sale under
Rule 144).
7.3. Amended Prospectus. Chiste will notify Holder of such Registrable
Securities as expeditiously as possible following the effectiveness of the
registration statement on which the Registrable Securities are registered,
and/or of any request by the Commission for the amending or supplementing of
such registration statement or prospectus. If the prospectus is amended to
comply with the requirements of the Securities Act, the Holder, if requested by
Chiste, will immediately cease making offers of the Registrable Securities and
return all prospectuses to Chiste, and Chiste will promptly provide the Holders
with revised prospectuses to enable the Holders to resume making offers of the
Registrable Securities. Chiste will promptly notify the Holder, if after
delivery of a prospectus to the Holder, that, in the judgment of Chiste, it is
advisable to suspend use of the prospectus delivered to the Holder due to
pending material developments or other events that have not yet been publicly
disclosed and as to which Chiste believes public disclosure would be detrimental
to Chiste. Upon receipt of such notice, each such Holder will immediately
discontinue any sales of Registrable Securities pursuant to such registration
statement until such Holder has received copies of a supplemented or amended
prospectus or until such Holder is advised in writing by Chiste that the then
current prospectus may be used and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such prospectus. Notwithstanding anything to the contrary herein, Chiste will
not exercise its rights under this subsection to suspend sales of Registrable
Securities for a period in excess of 60 days in any 365-day period.
7.4. Indemnification.
(a) Chiste will indemnify the Holder of the Registrable Securities
to be sold pursuant to any registration statement hereunder, the officers and
directors of Holder, each underwriter of such Registrable Securities and each
person, if any, who controls such Holders or underwriters within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), or any state securities law or regulation,
against all loss, claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever incurred by the indemnified
party in any action or proceeding between (A) the indemnified party and any
third party or otherwise or (B) the indemnitor and the indemnified party only
with respect to an action or proceeding to enforce the indemnification
provisions of this Section 7.4(a) to which any of them may become subject under
the Securities Act, the Exchange Act or any other statute or at common law or
otherwise under the laws of any of the United States or foreign countries,
arising from such registration statement or based upon any untrue statement or
alleged untrue statement of a material fact contained in (x) any preliminary
prospectus, the registration statement or prospectus (as from time to time each
may be amended and supplemented); (y) any post-effective amendment or amendments
or any new registration statement and prospectus in which is included the
Registrable Securities; or (z) any application or other document or written
communication (collectively called "application") executed by Chiste or based
upon written information furnished by Chiste in any jurisdiction in order to
qualify the Registrable Securities under the securities laws thereof or filed
with the Commission, any state securities commission or agency or any securities
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exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, unless
such statement or omission is made in reliance upon, and in conformity with,
written information furnished to Chiste by and with respect to such registered
holders ("Purchaser Information") expressly for use in any preliminary
prospectus, the registration statement or prospectus, or any amendment or
supplement thereof, or in any application, as the case may be, or unless the
indemnities failed to deliver a final prospectus in which the material
misstatement or omission was corrected. Subject to the foregoing provisions of
this paragraph, Chiste will reimburse such Holder, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such Holder, underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action. Chiste agrees
promptly to notify Holder of the commencement of any litigation or proceedings
against Chiste or any of its officers, directors or controlling persons in
connection with the issue and sale or resale of the Registrable Securities or in
connection with the registration statement or prospectus.
(b) The Holder agree to indemnify and hold harmless Chiste, the
officers and directors of Chiste and each person, if any, who controls Chiste
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act or is controlled by Chiste, against all loss, claim, damage,
expense or liability to which Chiste or such controlling or controlled person
may become subject, under the Securities Act or otherwise insofar as such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
arise out of or are based upon written Purchaser Information that is included or
relied upon by Chiste in the registration statement or prospectus or any
amendment or supplement thereto or in any application; and will reimburse
Chiste, officer, director and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided that such
loss, claim, damage, expense or liability is found ultimately to arise out of or
be based upon such written Purchaser Information.
7.5. Assumption of Defense. Any party entitled to indemnification
hereunder ("Indemnified Party") will permit Chiste to assume the defense of any
such claim or any litigation resulting therefrom; provided, that counsel for
Chiste, who will conduct the defense of such claim or litigation, will be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld). The Indemnified Party may participate in such defense at such party's
expense; provided, however, that Chiste will pay such expense if representation
of such Indemnified Party by the counsel retained by Chiste would be
inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding; provided further that in no event will Chiste be required to pay the
expenses of more than one law firm per jurisdiction as counsel for the
Indemnified Party. Chiste is also responsible for the expenses of such defense
if Chiste does not elect to assume such defense. Chiste, in the defense of any
such claim or litigation may not, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation, and no Indemnified Party may consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Company, which consent may not be unreasonably withheld.
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7.6. Successors. The registration rights granted to the Holder inure to
the benefit of all the Holder's successors, heirs, pledges, assignees,
transferees and purchasers of the Common Stock, Warrants or underlying
securities, subject to the limitations of the federal securities laws.
7.7. Short Selling. The Holder agrees not to use any of the Registrable
Securities to cover any short position in the Common Stock if doing so would be
in violation of the applicable securities laws and otherwise will comply with
federal securities laws in the holding and sale of the Registrable Securities.
7.8. Voting and Selling Authority over Registrable Securities. Unless
otherwise specified on the signature page in the space provided, the person
executing this Subscription Agreement, subject to the voting agreement herein
contained, has or will have the voting and investment authority over the
Registrable Securities in respect of the Investor, subject to the provisions of
the voting agreement herein set forth. If that person shall no longer have such
authority, Chiste and the Company will be immediately notified. Until receipt of
such notice, Chiste and the Company may rely on this representation for purposes
of the registration statement and include such person's name in the registration
statement.
7.9. Liquidated Damages. Chiste and Holder agree that Holder will suffer
damages if Chiste fails to fulfill its obligations pursuant to the first
sentence of Section 7.1 hereof and that it would not be possible to ascertain
the extent of such damages with precision. Accordingly, Chiste hereby agrees to
pay liquidated damages ("Liquidated Damages") to Holder if the registration
statement is not filed by Chiste within the time period set forth in such
provision ("Filing Default"). In the event of a Filing Default, Chiste shall as
Liquidated Damages pay to Holder, for each 30 day period of a Filing Default, an
amount in cash equal to 1% of the aggregate amount invested by Holder or his
predecessor pursuant to this Agreement up to a maximum of 10% of the aggregate
amount invested. The Company shall pay the Liquidated Damages on the later of
the 95th day after the consummation of the offering or the 45th day after the
filing by Chiste of the financial statements of the Company and Chiste on a
combined basis in a Form 8-K or other periodic report, and each 30th day
thereafter until the registration statement is filed with the Commission.
Notwithstanding the foregoing, Chiste shall have no liability for Liquidated
Damages to any Holder who is not named in a registration statement as a result
of any action or inaction of such Holder or as a result of any limitation
imposed by the Commission in respect of the Holder either as to the Holder or as
to the any securities included on the registration statement or any other person
whose securities are to be included on the registration statement. The
Liquidated Damages payable herein shall apply on a pro rata basis for any
portion of a 30-day period of a Filing Default.
8. Surrender Contingency.
8.1. Relinquishment of Securities. I agree that, if the NASD will not
grant clearance of the registration statement of Registrable Securities because
the Units, Preferred Stock or Common Stock held by me are considered part of
underwriters' compensation, I will surrender and relinquish said Registrable
Securities to Chiste or, alternatively, at the election of Battenkill, transfer
such securities to a third party designated by Battenkill (subject to an opinion
from Chiste's counsel that such transfer may be made to such third party under
the securities laws), in exchange for the remittal to me of the subscription
price paid hereunder either by Chiste, upon the surrender and relinquishment of
such securities, or by such third party, upon the transfer of such securities to
such third party. Battenkill is a third-party beneficiary of this Section 8.1
and this Section 8.1 may not be modified or amended without the prior written
agreement of Battenkill. I hereby authorize Battenkill to act as my agent and
attorney-in-fact to surrender or transfer the securities to Chiste or a third
party and to receive and hold on my behalf the subscription price to be remitted
to me by Chiste, upon the surrender and relinquishment of such securities, or by
such third party, upon the transfer of such securities to such third party.
9. Investor Representations and Warranties.
9.1. Investor Representations. I am aware that, except for any rescission
rights that may be provided under applicable laws, I am not entitled to cancel,
terminate or revoke this subscription, and any agreements made in connection
herewith will survive my death or disability. In order to induce the Company to
issue and sell the Units to me and Chiste to issue in the exchange the Preferred
Stock and thereafter the Common Stock upon its conversion, I represent and
warrant that the information relating to me stated herein is true and complete
as of the date hereof and will be true and complete as of the date on which my
purchase of Units becomes effective. If, prior to the final consummation of the
offer and sale of the Units, there should be any change in such information or
any of the information becomes incorrect or incomplete, I agree to notify the
Company and Chiste and supply the Company and Chiste promptly with corrective
information.
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9.2. Information About the Company and Chiste.
(a) I have read this subscription agreement, the Memorandum relating
to this offering and all exhibits listed therein and fully understand the
Memorandum, including the "Risk Factors" contained therein. I understand the
nature of the exchange transaction with Chiste and the prospective business of
the Company after the exchange. I have been given access to full and complete
information regarding the Company and Chiste and have utilized such access to my
satisfaction for the purpose of verifying the information included in the
Memorandum and exhibits thereto, and I have either met with or been given
reasonable opportunity to meet with officers of the Company for the purpose of
asking reasonable questions of such officers concerning the terms and conditions
of the offering of the Units and the business and operations of the Company and
Chiste and all such questions have been answered to my full satisfaction. I also
have been given an opportunity to obtain any additional relevant information to
the extent reasonably available to the Company and Chiste. I have received all
information and materials regarding the Company and Chiste that I have
reasonably requested. After my reading of the materials about the Company and
Chiste, I understand that there is no assurance as to the future performance of
the Company and Chiste.
(b) I have received no representation or warranty from the Company,
Chiste or Battenkill or any of their respective officers, directors, employees
or agents in respect of my investment in the Company and after the exchange,
Chiste. I am not participating in the offering as a result of or subsequent to:
(i) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television, radio or the
Internet or (ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
9.3. Speculative Investment. I am aware that the Units (and the Preferred
Stock and Common Stock into which they will be exchanged or converted) are a
speculative investment that involves a high degree of risk including, but not
limited to, the risk of losses from operations of the Company and the total loss
of my investment. I have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment in
the Units (and the Preferred Stock and Common Stock into which they will be
exchanged or converted) and have obtained, in my judgment, sufficient
information from the Company and Chiste to evaluate the merits and risks of an
investment in the Company and Chiste. I have not utilized any person as my
purchaser representative (as defined in Regulation D) in connection with
evaluating such merits and risks and have relied solely upon my own
investigation in making a decision to invest in the Company. I have been urged
to seek independent advice from my professional advisors relating to the
suitability of an investment in the Company in view of my overall financial
needs and with respect to the legal and tax implications of such investment. I
believe that the investment in the Units (and subsequently the Preferred Stock
and Common Stock) is suitable for me based upon my investment objectives and
financial needs, and I have adequate means for providing for my current
financial needs and contingencies and have no need for liquidity with respect to
my investment in the Company and Chiste. The investment in the Company does not
constitute all or substantially all of my investment portfolio.
9.4. Restrictions on Transfer. I understand that (i) none of the Units to
be issued in the offering and the Preferred Stock and Common Stock to be issued
in the exchange and conversion have been registered under the Securities Act or
the securities laws of certain states in reliance on specific exemptions from
registration, (ii) no securities administrator of any state or the federal
government has recommended or endorsed this offering or made any finding or
determination relating to the fairness of an investment in the Company or Chiste
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and (iii) the Company and Chiste are relying on my representations and
agreements for the purpose of determining whether this transaction meets the
requirements of the exemptions afforded by the Securities Act and certain state
securities laws. Other than as set forth herein, I acknowledge that there is no
assurance that the Company or Chiste will file any registration statement for
the securities I am purchasing, that such registration statement, if filed, will
be declared effective or, if declared effective, that the Company or Chiste will
be able to keep it effective until I sell the securities registered thereon.
Furthermore, I agree to furnish the Company and Chiste with such information
regarding myself and the distribution of the securities proposed by me as the
Company or Chiste may request in connection with any registration, qualification
or compliance with the Company's or Chiste's registration obligations set forth
herein.
9.5. Investment Representation. I am purchasing the Units (and
subsequently the Preferred Stock and Common Stock) for my own account for
investment and not with a view to, or for sale in connection with, any
subsequent distribution of the securities, nor with any present intention of
selling or otherwise disposing of all or any part of the securities. I
understand that, although there is a public market for Common Stock of Chiste,
there is no assurance that such market will continue. I understand and agree
that the Units, Preferred Stock and Common Stock cannot be resold, pledged,
assigned or otherwise disposed of unless they are subsequently registered under
the Securities Act and under applicable securities laws of certain states, or an
exemption from such registration is available. I understand that, except as set
forth herein, the Company and Chiste are under no obligation to register the
securities or to assist me in complying with any exemption from such
registration under the Securities Act or any state securities laws. I hereby
authorize the Company and Chiste to place a legend denoting the restrictions on
the certificates representing the Units, Preferred Stock and Common Stock.
9.6. Entity Authority. If the Investor is a corporation, partnership,
company, trust, employee benefit plan, individual retirement account, Xxxxx Plan
or other tax-exempt entity, it is authorized and qualified to become an investor
in the Company and subsequently, Chiste, and the person signing this
Subscription Agreement on behalf of such entity has been duly authorized by such
entity to do so.
9.7. No Offer Until Determination of Suitability. I acknowledge that any
delivery to me of the documents relating to the offering of the Units prior to
the determination by the Company of my suitability will not constitute an offer
of the Units until such determination of suitability is made.
9.8. For Florida Residents. None of the Units, Preferred Stock and Common
Stock have been registered under the Securities Act of 1933, as amended, or the
Florida Securities Act, by reason of specific exemptions thereunder relating to
the limited availability of the offering. The Units, Preferred Stock and Common
Stock cannot be sold, transferred or otherwise disposed of to any person or
entity unless subsequently registered under the Securities Act of 1933, as
amended, or the Securities Act of Florida, if such registration is required.
Pursuant to Section 517.061(11) of the Florida Securities Act, when sales are
made to five (5) or more persons in Florida, any sale made pursuant to
Subsection 517.061(11) of the Florida Securities Act will be voidable by such
Florida purchaser either within three days after the first tender of
consideration is made by the purchaser to the issuer, an agent of the issuer, or
an escrow agent, or within three days after the availability of the privilege is
communicated to such purchaser, whichever occurs later. In addition, as required
by Section 517.061(11)(a)(3), Florida Statutes and by Rule 3-500.05(a)
thereunder, if I am a Florida resident I may have, at the offices of the
Company, at any reasonable hour, after reasonable notice, access to the
materials set forth in the Rule that the Company can obtain without unreasonable
effort or expense.
9.9. Third Party Beneficiary. Chiste is a third party beneficiary of the
representations of the Investor in this Section 9.
10. Company Representations. The representations and warranties of the Company
set forth in the Exchange Agreement being made to Chiste, are incorporated
herein by reference, and may be relied upon by the Investor as if made to
directly to the Investor as of the Closing, subject to any modifications made to
the Exchange Agreement in respect of such representations and warranties prior
to or as of the Closing.
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11. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Investor and any of its officers, directors, stockholders, employees, agents and
attorneys against any and all losses, claims, demand, liabilities, and expenses
(including reasonable legal or other expenses incurred by each such person in
connection with defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such person or whether incurred by
the indemnified party in any action or proceeding between the indemnitor and
indemnified party or between the indemnified party and any third party) to which
any such indemnified party may become subject, insofar as such losses, claims,
demands, liabilities and expenses (a) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact made by the Company and
contained herein or incorporated by reference or (b) arise out of or are based
upon any breach by the Company of any representation, warranty or agreement made
by them and contained herein or incorporated by reference.
(b) I hereby agree to indemnify and hold harmless the Company,
Chiste and Battenkill, their respective officers, directors, stockholders,
employees, agents and attorneys against any and all losses, claims, demands,
liabilities, and expenses (including reasonable legal or other expenses incurred
by each such person in connection with defending or investigating any such
claims or liabilities, whether or not resulting in any liability to such person
or whether incurred by the indemnified party in any action or proceeding between
the indemnitor and indemnified party or between the indemnified party and any
third party) to which any such indemnified party may become subject, insofar as
such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
made by me and contained herein or (b) arise out of or are based upon any breach
by me of any representation, warranty or agreement made by me contained herein.
Each of Chiste and Battenkill is a third-party beneficiary of this Section 11(b)
and this Section 11(b) may not be modified or amended without the prior written
agreement of Chiste.
12. Voting Agreement.
(a) During the period commencing on the Closing and terminating on
the one year anniversary of the Closing, each Investor, in its capacity as a
shareholder of Chiste, either by reason of the Preferred Stock or Common Stock
(together the "Voting Shares"), agrees to vote or cause to be voted all Voting
Shares directly or indirectly owned by the Investor or over which the Investor
has the beneficial ownership or the right to vote and all Voting Shares which
the Investor acquires directly or indirectly or has the beneficial ownership or
right to vote in the future, at any meeting of the shareholders of Chiste, and
in any action by written consent of the shareholders of Chiste, in favor of a
nominee of Xxxxxxx Reverse Merger Fund, LLC ("KRM") to the board of directors of
Chiste and will not vote or cause to be voted for the removal from the board of
directors of the nominee of KRM. If the nominee of KRM is removed or otherwise
retires or resigns, then the Investor will act in accordance with the above for
any replacement nominee of KRM. The Investor agrees that the board of directors
of Chiste will consist of five persons during the term of this provision and
will take all such action so as to retain the board at such number, provided
that the number of directors may only be increased or decreased with the written
consent of KRM.
(b) During the period commencing on the Closing and terminating on
the one year anniversary of the Closing, each Investor, in its capacity as a
shareholder of Chiste, by reason of the Voting Shares, agrees to vote or cause
to be voted all Voting Shares directly or indirectly owned by the Investor or
over which the Investor has the beneficial ownership or the right to vote and
all Voting Shares which the Investor acquires directly or indirectly or has the
beneficial ownership or right to vote in the future, at any meeting of the
shareholders of Chiste, and in any action by written consent of the shareholders
of Chiste, (a) to approve a 1 for 25 reverse stock split of the outstanding
Common Stock of Chiste, with special treatment for certain of the Chiste
shareholders to preserve round lot stockholders ("Reverse Split"), (b) to
approve the change of the corporate name from Chiste to one recommended by the
board of directors to reflect the acquisition of the Company ("Name Change"),
and (c) all other actions as shall be necessary or desirable in connection with
or related to the foregoing, including without limitation, any amendment to the
articles of incorporation of Chiste to effect the foregoing.
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(c) Each investor, by this provision, with respect to the Voting
Shares over which it has voting authority and any Voting Shares over which it
may have voting authority in the future, does hereby irrevocably constitute and
appoint Xxxxxx Xxxxxxxx and /or Xxxxxx Xxxxxx, acting individually or jointly,
or any nominee, with full power of substitution, as his or its true and lawful
attorney and proxy, for and in his or its name, place and stead, to vote or give
a consent in respect of each Voting Shares the Investor's proxy, at every
annual, special or adjourned meeting of the shareholders of Chiste (including
the right to sign his or its name as a shareholder to any consent, certificate
or other document relating to Chiste that may be permitted or required by
applicable law in respect of the voting of or consenting by the shareholders of
Chiste) in favor of the adoption and approval of the Reverse Split, Name Change
and other actions set forth in subpart (c) of paragraph (b) of this provision.
Each Investor shall perform all such other acts and execute all other documents
and instruments as may be reasonably required to vest in the lawful attorney and
proxy and Chiste to carry out the provisions of this provision.
(d) The obligations of each Investor pursuant to paragraphs (b) and
(c) of this Section 12, will terminate upon the consummation of the Reverse
Split and Name Change, including through the time of the filing of the amendment
to the articles of incorporation of Chiste.
(e) If any Investor or any of its affiliates or nominee is a member
of the board of directors or an officer of Chiste, nothing in this Section 12
will be deemed to limit or restrict the director or officer acting in his or her
capacity as a director or officer of Chiste, as the case may be, and exercising
his or her fiduciary duties and responsibilities, it being agreed and understood
that this Section 12 shall apply to the Investor solely in his or her or its
capacity as a shareholder and not to his, her or its actions, judgments or
decisions as a director or officer of Chiste.
13. Joinder Provision for LLC Operating Agreement.
(a) The Investor hereby agrees that the membership units of the
Company acquired in this offering are subject to the terms and conditions of an
Operating Agreement dated as of November 11, 2001 (as amended by the First
Amendment to the Operating Agreement dated May 14, 2004, and as further amended
by the Second Amendment to the Operating Agreement dated May 9, 2005 ("Operating
Agreement"), by and among the Company and its members.
(b) The Investor has reviewed and understands the Operating
Agreement and has the power to join in such agreement and to grant the power of
attorney set forth herein in Section 15, and upon such signature and delivery,
this Agreement and the power of attorney will constitute the Investor's valid
and binding obligation, enforceable in accordance with its terms.
(c) The Investor hereby agrees to be bound by the Operating
Agreement as if the Investor were an original signatory thereto. The Investor
acknowledges and understands that for purposes of the Operating Agreement, the
Investor shall have the same rights and obligations under the Operating
Agreement as the other members of the Company, proportionate to Investor's
membership interest as between the Investor and the other members of the
Company, unless otherwise agreed in writing by the members of the Company.
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14. Accession Agreement to Exchange Agreement.
(a) Other than as provided in this Subscription Agreement, no person
has any right to acquire, or has any other interest in, the Units being acquired
hereunder, and there are no voting trusts, or other agreements or understandings
with respect to the ownership or voting of the Units or the Preferred Stock into
which they will be exchanged or the Common Stock into which the Preferred Stock
will be converted.
(b) The Investor has the power to sign and deliver this Agreement
and grant the power of attorney set forth herein in Section 15, and upon such
signature and delivery, this Agreement and the power of attorney will constitute
the Investor's valid and binding obligation, enforceable in accordance with its
terms.
(c) The Investor has reviewed and understands the Exchange
Agreement, and the representations of the Investor set forth therein are true
and correct as of the date hereof and will be true and correct as of the closing
of the Exchange Agreement.
(d) By signing and delivering this Subscription Agreement, the
Investor agrees to be a party to, and bound by the terms and conditions of, the
Exchange Agreement. In particular, the Investor agrees to the indemnification
provisions in favor of Chiste set forth in the Exchange Agreement under which
Chiste will be entitled to damages from a breach of the representations,
warranties, covenants and agreements of the other members of the Company and
those of the Company.
(e) In connection with the exchange, the Company is authorized to deliver to
Chiste such documents as it requires to transfer the Units to Chiste pursuant to
the Exchange Agreement.
15. Power of Attorney for Operating Agreement and Exchange Agreement. Xxxxxx
Xxxxxxxx and Xxx Blomen, and each of them, are hereby irrevocably appointed
attorney-in-fact and authorized and empowered to act for and on behalf of the
Investor (each with full power of substitution in the premises) in connection
with (i) the Operating Agreement and any actions necessary thereunder to effect
the terms of the Exchange Agreement including execution of the aforementioned
agreements, (ii) the exchange of membership units pursuant to the Exchange
Agreement, (c) the notice and the indemnification provisions of the Exchange
Agreement, (d) this Subscription Agreement and (e) such other matters as are
reasonably necessary for the consummation of the Exchange Agreement and the
transactions contemplated by the Exchange. By the execution hereof, Xxxxxx
Xxxxxxxx and Xxxxxx Xxxxxx each hereby accepts such appointment and agrees to
act as the representative of the Investor within the power of the appointment.
The Investor, by the execution hereof, confirms such appointment and authority
and acknowledges and agrees that such appointment is irrevocable and coupled
with an interest, it being understood that the willingness of the Company and
Chiste to enter into the Exchange Agreement and exchange the Preferred Stock for
the Units is based, in part, on the appointment of a representative to act on
behalf of the Investor.
16. Severability; Remedies. In the event any parts of this Subscription
Agreement are found to be void, the remaining provisions of this Subscription
Agreement are nevertheless binding with the same effect as though the void parts
were deleted.
17. Governing Law and Jurisdiction. This Subscription Agreement will be deemed
to have been made and delivered in New York, New York and will be governed as to
validity, interpretation, construction, effect and in all other respects by the
internal laws of the State of New York. Each of the Company and the Investor
hereby (i) agrees that any legal suit, action or proceeding arising out of or
relating to this Subscription Agreement will be instituted exclusively in the
state courts of New York, in the County of New York, or in the United States
Southern District Court located in New York City, New York, (ii) waives any
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objection to the venue of any such suit, action or proceeding and the right to
assert that such forum is not a convenient forum for such suit, action or
proceeding, (iii) irrevocably consents to the jurisdiction of the above
mentioned courts in any such suit, action or proceeding, (iv) agrees to accept
and acknowledge service of any and all process that may be served in any such
suit, action or proceeding in the above mentioned courts, and (v) agrees that
service of process upon it mailed by certified mail to its address set forth on
my signature page will be deemed in every respect effective service of process
upon it in any suit, action or proceeding.
18. Counterparts. This Subscription Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument. The execution of this Subscription
Agreement may be by actual or facsimile signature.
19. Benefit. Except as otherwise set forth herein, this Subscription Agreement
is binding upon and inures to the benefit of the parties hereto (and Chiste,
Battenkill and KRM to the extent one or all of them is a third-party beneficiary
hereof) and their respective heirs, executors, personal representatives,
successors and assigns. Chiste, Battenkill and KRM each is a third-party
beneficiary with respect to any sections hereof that so state or that otherwise
indicate that Chiste, Battenkill and KRM would be entitled to rely on the
representations, warranties or covenants made by the Investor therein.
20. Notices. All notices, offers, acceptance and any other acts under this
Subscription Agreement (except payment) must be in writing, and is sufficiently
given if delivered to the addressees in person, by overnight courier service,
or, if mailed, postage prepaid, by certified mail (return receipt requested),
and will be effective three days after being placed in the mail if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. All communications to me
should be sent to my preferred address on the signature page hereto. All
communications to the Company should be sent to:
HydroGen, LLC
0000 Xxxxx 00Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
Tel: ()
Fax: ()
and Battenkill Capital, Inc.
0000 Xxxx Xxxxxx, Xxxxxxxx X, Xxxx X
XX Xxx 0000
Xxxxxxxxxx Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
21. Oral Evidence. This Subscription Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior oral and written agreements between the parties hereto with respect to the
subject matter hereof. This Subscription Agreement may not be changed, waived,
discharged, or terminated orally, but rather, only by a statement in writing
signed by the party or parties against which enforcement or the change, waiver,
discharge or termination is sought.
22. Section Headings. Section headings herein have been inserted for reference
only and will not be deemed to limit or otherwise affect, in any matter, or be
deemed to interpret in whole or in part, any of the terms or provisions of this
Subscription Agreement.
23. Survival of Representations, Warranties and Agreements. The representations,
warranties and agreements contained herein will survive the delivery of, and the
payment for, the Units and exchange of the Units for the Common Stock.
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24. Acceptance of Subscription. The Company may accept this Subscription
Agreement at any time for all or any portion of the securities subscribed for by
executing a copy hereof as provided and notifying me within a reasonable time
thereafter.
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================================================================================
ALL INVESTORS MUST SIGN The foregoing subscription is accepted and
AND PRINT NAME BELOW hereby agrees to be bound by its terms.
Signature:__________________________
Print Name:_________________________ HYDROGEN, LLC
Date:_______________________________
By: ______________________________________
Signature:__________________________ Print Name: Xxxxxx Xxxxxxxx
Print Name:_________________________ Title: Manager
Date:_______________________________ Date: July 7, 2005
================================================================================
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