ADDENDUM TO SUBSCRIPTION AGREEMENT DATED _______, 2007
ADDENDUM
TO SUBSCRIPTION AGREEMENT
DATED
_______,
2007
This
Addendum (the “Addendum”)
relates to the TechoConcepts, Inc. (the “Company”
or
the
“Corporation”)
subscription agreement (the “Subscription
Agreement”)
for
the offering of units (“Units”),
with
each $30,000 Unit consisting of: (i) $30,000 of 8% secured convertible
debentures, convertible into shares of no par value common stock of the Company
(“Common
Stock”)
at
$1.50 per share, (ii) warrants to purchase 10,000 shares of Common Stock at
a
purchase price of $1.90 per share, and (iii) warrants to purchase 10,000 shares
of Common Stock at a purchase price of $2.75 per share.
This
Addendum supplements certain information contained in the Subscription Agreement
and the Offering Memorandum referenced therein and it exhibits. Capitalized
terms not otherwise defined herein shall have the meaning ascribed to them
in
the Subscription Agreement.
The
opening paragraph of the Subscription Agreement states as follows:
“Investors
purchasing 67 Units ($2,010,000) or more shall be issued additional warrants
(the “Additional
Warrants”)
at the
rate of 40,000 Additional Warrants per Unit purchased, which Additional Warrants
shall be identical in form to the Warrants, except that (a) 50% of such
Additional Warrants shall have
an
exercise price of $2.00 per share, shall not have a cashless exercise feature,
and shall expire eighteen (18) months from the Final Closing (defined below),
(b) 25% of such Additional Warrants shall have an exercise price of $2.50 per
share, and (c) 25% of such Additional Warrants shall have an exercise price
of
$3.50 per share.”
This
Addendum is to advise that the Additional Warrants shall have one additional
feature which will differ from the Warrants issued as part of the Units. This
feature will grant the holders of the Additional Warrants the right to receive
a
cash payment based upon the closing bid price of an acquirer’s stock or based
upon a Black Scholes valuation of the Additional Warrants in the event the
Company is acquired or sells all of its assets in a transaction in which the
Common Stock is valued at less than $3.50 per share. As a result of this right,
in place of Section 5(a) as set forth in the form of Warrant, the Additional
Warrant shall contain the following provision:
| (a) |
Merger
or Consolidation.
|
i. For
purposes of this Section 5(a), the term “Per Share Transaction Value” shall mean
(A) the
sum
of the (i) cash, notes, securities and other property of value; (ii) liabilities
(x) assumed by the purchaser (in the case of a sale of assets) and/or (y)
existing on the Corporation’s balance sheet at the time the transaction is
consummated (in the case of a merger or sale of stock); (iii) payments to be
made in installments; (iv) amounts paid or payable under consulting, supply,
service, distribution, licensing or lease agreements not to compete or similar
arrangements (including such payments to management); and, (v) contingent
payments (whether or not related to future earnings or operations), divided
by
(B) the number of shares of common stock of the Corporation outstanding
immediately prior to the merger.
ii. If
at any
time there shall be a merger or a consolidation of the Corporation with or
into
another corporation when the Corporation is not the surviving corporation and
where the Per Share Transaction Value equals or exceeds $3.50, then, as part
of
such merger or consolidation, lawful provision shall be made so that the holder
hereof shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the aggregate Exercise
Price then in effect, the number of shares of stock or other securities or
property (including cash) of the successor corporation resulting from such
merger or consolidation, to which the holder hereof as the holder of the stock
deliverable upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised immediately before
such merger or consolidation. In any such case, appropriate adjustment shall
be
made in the application of the provisions of this Warrant with respect to the
rights and interests of the holder hereof as the holder of this Warrant after
the merger or consolidation.
iii. In
case
the Corporation after the date hereof shall do any of the following (each,
a
"Triggering
Event")
in
which the Per Share Transaction Value is below $3.50: (a) consolidate or merge
with or into any other entity and the Corporation shall not be the continuing
or
surviving corporation of such consolidation or merger, or (b) transfer all
or
substantially all of its properties or assets to any other entity or person,
then, and in the case of each such Triggering Event, proper provision shall
be
made to the Exercise Price and the number of Warrant Shares that may be
purchased upon exercise of this Warrant so that, upon the basis and the terms
and in the manner provided in this Warrant, the Holder of this Warrant shall
be
entitled upon the exercise hereof at any time after the consummation of such
Triggering Event, to the extent this Warrant is not exercised prior to such
Triggering Event, to receive at the Exercise Price as adjusted to take into
account the consummation of such Triggering Event, in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering Event,
the
securities, cash and property to which such Holder would have been entitled
upon
the consummation of such Triggering Event if such Holder had exercised the
rights represented by this Warrant immediately prior thereto (including the
right of a shareholder to elect the type of consideration it will receive upon
a
Triggering Event), subject to adjustments (subsequent to such corporate action)
as nearly equivalent as possible to the adjustments provided for elsewhere
in
this Section 5, and the Exercise Price shall be adjusted to equal the product
of
(A) the closing bid price of the common stock of the continuing or surviving
corporation as a result of such Triggering Event as of the date immediately
preceding the date of the consummation of such Triggering Event multiplied
by
(B) the quotient of (i) the Exercise Price divided by (ii) the
Closing Bid Price of the Common Stock as of the date immediately preceding
the
date hereof; provided,
however,
the
Holder at its option may elect to receive an amount in cash equal to the value
of this Warrant calculated in accordance with the Black-Scholes formula.
Immediately upon the occurrence of a Triggering Event, the Corporation shall
notify the Holder in writing of such Triggering Event and provide the
calculations in determining the number of Warrant Shares issuable upon exercise
of the new warrant and the adjusted Exercise Price. Upon the Holder’s request,
the continuing or surviving corporation as a result of such Triggering Event
shall issue to the Holder a new warrant of like tenor evidencing the right
to
purchase the adjusted number of Warrant Shares and the adjusted Exercise Price
pursuant to the terms and provisions of this Section 5(a). Notwithstanding
the
foregoing to the contrary, this Section 5(a) shall only apply if the surviving
entity pursuant to any such Triggering Event is a company that has a class
of
equity securities registered
pursuant to the Securities Exchange Act of 1934, as amended, and its common
stock is listed or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board. In the event that the
surviving entity pursuant to any such Triggering Event is not a public company
that is
registered pursuant to the Securities Exchange Act of 1934, as amended, or
its
common stock is not listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board, then the Holder shall
have
the right to demand that the Corporation pay to the Holder an amount in cash
equal to the value of this Warrant calculated in accordance with the
Black-Scholes formula
Page
1 of
2
The
undersigned subscriber of Units hereby represents that he/she or it has
received, read and understands this Addendum to the Subscription Agreement
dated ____________,
2007.
|
Dated:
______________, 2007
|
|||
|
Very
truly yours,
|
|||
|
Name
of Individual #1 or Entity
|
|||
|
Authorized
Signature
|
|||
|
Name
of Individual #2, if applicable
|
|||
|
Authorized
Signature
|
Page 2
of 2
