Exhibit 99.1
SUBSCRIPTION AGREEMENT ROO MEDIA CORPORATION
This Subscription Agreement is made by and between ROO Media Corporation Inc., a
Delaware corporation (the "Company"), and the undersigned, a prospective
purchaser (the "Purchaser"), who is subscribing hereby for seventy-five (75)
shares of the Company's common stock (the "Shares"), in a private placement by
the Company (the "Offering") to one or more qualified investors. The Offering is
made pursuant to the terms of an Information Memorandum provided to Purchaser by
the Company (referred to herein as the "Disclosure Document"). Upon the
consummation of the merger of the Company with and into a NASDAQ OTCBB Listed
company, as described in the Disclosure Document (the "Merger"), the Shares
shall be automatically converted into approximately Fifteen Million (15,000,000)
shares of the common stock of the successor company ("Newco") following the
Merger. Purchaser acknowledges and understands that the sale of the Shares is
not covered by an effective Registration Statement pursuant to the United States
Securities Act of 1933, as amended (the "Act"). Accordingly, the reoffer and
resale of the Shares by the undersigned will be restricted pursuant to the Act.
In consideration of the Company's agreement to accept the undersigned as a
security holder of the Company upon the terms and conditions set forth herein,
the Purchaser agrees and represents as follows:
A. SUBSCRIPTION
The Purchaser hereby subscribes to purchase the Shares for the
aggregate purchase price of $200,000 (the "Subscription"). Upon satisfaction of
the conditions to closing set forth in Paragraph E of this Subscription
Agreement, the Purchaser shall pay and deliver to the Company the purchase price
for the Shares, in the form of a check or wire transfer (the "Payment"). As used
herein, the term "Shares" shall include shares of the Company's common stock as
well as the securities of any successor to the Company issued to the former
shareholders of the Company.
Upon delivery of the executed Subscription Agreement to the Company,
the Purchaser's commitment is irrevocable and cannot be withdrawn, subject to
the satisfaction of the conditions set forth in Paragraph E herein.
B. REGISTRATION RIGHTS
The Company has agreed, subject to the requirements and restrictions of
the Act and the terms and conditions of the Registration Rights Agreement
between the Company and the Purchaser, to include the reoffer and resale by
Purchaser of the Shares purchased in this Offering in a registration statement
under the Act (the "Registration Statement"). The Company has agreed to utilize
its best efforts to (i) file the Registration Statement with the Securities and
Exchange Commission (the "SEC") no later than March 31, 2004, and (ii) to take
such further actions and file such amendments to the Registration Statement as
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may be necessary to respond to any comments that the SEC may have in a timely
manner and to otherwise take such steps as may be necessary so that the
Registration Statement is declared effective as soon as reasonably practicable
after the filing thereof. The Purchaser shall cooperate with the Company in
connection with the preparation and filing of the Registration Statement and
shall take such actions as are reasonably requested by the Company in connection
therewith. Notwithstanding the Company's best efforts, in the event the Company
has not filed the Registration Statement with the SEC on or prior to April 15,
2004, or the Registration Statement is not declared effective by the SEC on or
prior to August 1, 2004, the Company agrees to issue to the Purchaser a number
of shares of its common stock equal to two percent (2%) of the total number of
Shares sold to Purchaser pursuant to this Subscription Agreement (the
"Additional Shares"). In addition, if, at the end of each fifteen (15) calendar
day period following April 15, 2004 or August 1, 2004, as applicable, the
Company still has not filed the Registration Statement with the SEC, the Company
shall issue to Purchaser a number of shares of its common stock equal to two
percent (2%) of the total number of Shares (including any Additional Shares)
sold or issued to Purchaser pursuant to this Subscription Agreement. Any
Additional Shares issued by the Company shall be included with the Shares on the
Registration Statement. Notwithstanding the foregoing, the Company shall not be
obligated to issue the Additional Shares if the delay in filing of the
Registration Statement is caused solely by the Purchaser's failure to deliver,
in a commercially reasonable and timely manner, the information regarding the
Purchaser that is needed by the Company to complete the Registration Statement.
In no event shall the issuance of any Additional Shares to the Purchaser
increase the aggregate amount of the Payment otherwise owed by Purchaser. The
form of the Registration Rights is attached to the Memorandum as Exhibit "A." At
Purchaser's option and upon delivery of notice to the Company from Purchaser,
the Registration Statement shall also cover, in addition to the reoffer and
resale of the Shares, the distribution of the Shares to the Purchaser's
shareholders.
C. REPRESENTATIONS AND WARRANTIES
1. The Purchaser understand that the Shares are being offered and sold under the
exemption from registration provided for in Section 4(2) of the Act, that this
Subscription was unsolicited, and no other offering literature or prospectus
other than the information already received has been provided, that this
transaction has not been scrutinized by the SEC or by and any administrative
agency charged with administration of the Securities laws of any state (except
some states where the transaction might be registered). As a material inducement
to the Company in connection with its consideration as to whether to accept this
Subscription, the Purchaser hereby represents and warrants to, and agrees with
the Company as follows:
(a) The Shares are being purchased for the Purchaser's own account, for
investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, or resale to others or to
fractionalization in whole or in part and that the offering and sale of the
Shares is intended to be exempt from registration under the Securities Act
of 1933 (the "Act") by virtue of Section 4(2) of the Act and the provisions
of Regulation D promulgated there under ("Regulation D"). In furtherance
thereof, the Purchaser represents, warrants, and agrees, except as expressly
set forth herein, no other person has or will have a direct or indirect
beneficial interest in such Shares and the Purchaser will not sell,
hypothecate, or otherwise transfer his Shares except in accordance with the
Act and applicable state securities laws or unless, in the opinion of
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counsel for the Company, an exemption from the registration requirements of
the Act and such laws is available.
(b) The Purchaser has been furnished with and has carefully read the
Disclosure Document.
(c) In evaluating the suitability of an investment in the Company, the
Purchaser has not relied upon any representations or other information
(whether oral or written) from the Company, or any of its agents other than
as set forth in the Disclosure Documents.
(d) The Purchaser hereby represents and warrants that all documents,
books and records and other information pertaining to the Company and this
investment that the Purchaser or its representatives, including Purchaser's
attorney, his accountant and/or other duly designated purchaser
representative, have deemed to be necessary in order for the Purchaser or
its representative to appropriately evaluate its investment in the Company
have been made available to the Purchaser by the Company.
(e) The Purchaser recognizes the Company (xi) has only been organized
since 2001 and that it has little financial or operating history, (ii) has
never been profitable and does not expect to be profitable in the
foreseeable future, (iii) has extremely limited financial resources and will
be dependant on proceeds from the sale of the Shares and other financings
for its working capital for the foreseeable future, (iv) that investment in
the Company involves substantial risks, and (v) the Purchaser has taken full
cognizance of and understands all of the risk factors related to the
purchase of Shares, including, but not limited to, those risk factors set
forth within the Information Memorandum.
(f) The Purchaser has carefully considered and has, to the extent the
Purchaser believes such discussion necessary, discussed with the Purchaser's
professional legal, tax and financial advisers the suitability of an
investment in the Company for the Purchaser's particular tax and financial
situation and the Purchaser has determined that the Shares are a suitable
investment for the Purchaser.
(g) The Purchaser has had an opportunity to review the Disclosure
Document and to discuss its contents with officers of the Company. Based on
the representations and warranties of the Company contained in the
Disclosure Document and in this Subscription Agreement, the Purchaser is
able (i) to bear the economic risk of this investment, (ii) to hold the
shares indefinitely, and (iii) presently to afford a complete loss of this
investment; the Purchaser has adequate means of providing for current needs
and personal contingencies, has no need for liquidity in this investment.
(h) The person executing this Subscription Agreement on behalf of the
Purchaser has been duly authorized and is duly qualified (A) to execute and
deliver this Subscription Agreement and all other instruments executed and
delivered on behalf of the Purchaser in connection with the purchase of the
Shares and (B) to purchase and hold Shares. The signature of the person
executing this Subscription Agreement on behalf of the Purchaser is binding
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upon the Purchaser and the Purchaser has not been formed for the specific
purpose of acquiring Shares.
(i) The Purchaser has had the opportunity to consult with advisors, and
recognizes that the Company's counsel, accountants and other advisors have
not represented and do not represent the Purchaser's interest in an
investment in the Company.
2. Representations of the Company
The Company hereby represents and warrants to, and agrees with
the Purchaser as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware; and
(b) The execution, delivery and performance of this Agreement have been
duly authorized by the Board of Directors of the Company. The Company has
full corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. This Agreement constitutes a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms and conditions except to the extent the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or affecting the enforcement of creditors' rights or by general equitable
principles.
(c) The Company has duly authorized the issuance and delivery of the
Common Stock upon terms and conditions set forth herein, and upon such
issuance and delivery against payment, the Common Stock will be validly
issued, fully paid and non-assessable.
(d) The Offering is a private placement by the Company exempt from the
registration requirements of the Act pursuant to Section 4(2) thereunder.
(e) Upon the consummation of the Merger, the Shares shall be
automatically converted into no less than Fifteen Million (15,000,000) shares
of the common stock of Newco.
(f) Upon the consummation of the Merger and the closing of the sale of
the Shares pursuant to the terms of this Subscription Agreement, Purchaser
shall be the owner of not less than Forty Million (40,000,000) shares of the
common stock of Newco and such shares shall represent not less than
twenty-five and nine-tenths percent 25.5% of the issued and outstanding
shares of Newco on a fully-diluted basis.
3. The foregoing representations and warranties are true and accurate as of the
date hereof, shall be true and accurate as of the date of the acceptance hereof
by the Company and shall survive thereafter. If such representations and
warranties shall not be true and accurate in any respect, the Purchaser or the
Company, as the case may be, will, prior to such acceptance, given written
notice of such fact to the other party specifying which representations and
warranties are not true and accurate and the reasons therefore.
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4. The Purchaser and the Company shall indemnify and hold harmless one another
or any of their respective officers, employees, registered representatives,
agents, attorneys, directors, or control persons of any such entity
(collectively, "Representatives") who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, against losses,
liabilities and expenses (including reasonable attorneys' fees, judgments, fines
and amounts paid in settlement or otherwise) incurred by the Purchaser, the
Company or their respective Representatives, by reason of or arising from or
relating to any actual or alleged (i) breach of any of the representations,
warranties, covenants or agreements set forth in this Subscription Agreement;
(ii) any misrepresentation or misstatement of facts or any material omission to
represent or state facts made by such party to the other party concerning
himself or his financial position in connection with the offering or sale of the
Shares set forth in this Subscription Agreement, the Information Memorandum or
any other Disclosure Document which is not remedied by timely notice to the
other party as provided above.
C. INVESTOR INFORMATION
The Purchaser will only accept subscriptions from persons who meet
certain suitability standards.
D. UNDERSTANDINGS
1. The Purchaser understands, acknowledges and agrees with the Company and
as follows:
(a) This subscription is and shall be irrevocable, subject to the
satisfaction of the closing conditions set forth in paragraph E herein.
(b) No federal or state agency has made any finding or determination as
to the fairness of this offering for investment, nor any recommendation or
endorsement of the Shares.
(c) Currently, there is no public market for the Shares or any of the
Company's securities and there is no certainty that such a market will ever
develop. There can be no assurance that the Purchaser will be able to sell or
dispose of his Shares. Moreover, no assignment, sale, transfer, exchange or
other disposition of the Shares can be made other than in accordance with all
applicable securities laws.
(e) There can be no assurance as to the federal or state tax results of
an investment in Shares.
(f) Any information which the Purchaser receives which is not contained
in the Disclosure Documents and is not otherwise available to the public
shall be deemed to be confidential and nonpublic, and all such information
shall be kept in confidence by the Purchaser and shall neither be used by the
Purchaser to the Purchaser's personal benefit (other than in connection with
his subscription for shares) nor disclosed to any third party for any reason;
provided, that this obligation shall not apply to any such information which
(i) is part of the public knowledge or literature and readily accessible at
the date hereof; (ii) becomes part of the public knowledge or literature and
readily accessible by publication (except as a result of a breach of these
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provisions); or (iii) is received from third parties (except third parties
who disclose such information in violation of any confidentiality agreements
including, without limitation, any Subscription Agreement they may have with
the Company).
(g) The Purchaser has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of investment in the Company and of making an informed investment
decision.
(h) The Purchaser has had prior personal or business relationships with
the Company or its officers or directors or by reason of the Purchaser's
business or financial experience, has the capacity to protect the Purchaser's
own interest in connection with this transaction.
2. The representations, warranties, understandings, acknowledgments and
agreements of Purchaser in this Agreement are true and accurate as of the date
hereof, shall be true and accurate as of the date of the acceptance hereof by
the Company and shall survive thereafter.
E. CLOSING CONDITIONS
In addition to the other conditions to the sale of the Shares described
herein, the closing of the sale of the Shares to Purchaser, and the obligation
of the Purchaser to deliver the Payment to the Company, is expressly conditioned
upon the satisfaction of each of the following conditions to the satisfaction of
Purchaser, in its discretion, unless such conditions are waived by Purchaser:
1. The Merger is completed and Company (or its successor) is an SEC
reporting company under the terms of the Securities and Exchange Act of 1934, as
amended;
2. The shares of the Company's (or its successor's) common stock are
listed for trading on the OTC Bulletin Board;
3. The Purchaser shall have received a certificate, dated as of the
date hereof (the "Closing Date"), of the President or an Executive or Senior
Vice President and a principal financial or accounting officer of the Company in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties of the
Company in the Disclosure Document are true and correct, (ii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date, (iii) there
has been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Disclosure Documents or as described in such certificate, and (iv) the Merger
has been completed and the shares of the Company's (or its successor's) common
stock are listed for trading on the OTC Bulletin Board; and
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4. The Purchaser shall have received an opinion, dated such Closing
Date, of counsel for the Company, that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Disclosure Document
and to enter into and perform its obligations under the Subscription Agreement
and the Registration Rights Agreement.
(ii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business as described in the Disclosure Document,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a material
adverse effect on the Company's business, financial condition or operations.
(iii) The Subscription Agreement and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
(iv) The Shares have been duly authorized, are validly issued, fully
paid and nonassessable; and the outstanding shares of the Company's common stock
have been duly authorized and validly issued, are fully paid and nonassessable.
(v) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the consummation of
the transactions contemplated by the Subscription Agreement and the Registration
Rights Agreement in connection with the issuance or sale of the Shares by the
Company, except such as may be required under state securities laws;
(vi) The execution, delivery and performance of the Subscription
Agreement and the Registration Rights Agreement and the issuance and sale of the
Shares and compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over the Company or any of its
properties, or the charter or by-laws of the Company, or, to such counsel's
knowledge, any agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the properties of the Company is
subject, and the Company has full power and authority to authorize, issue and
sell the Shares as contemplated by the Subscription Agreement.
(vii) The sale of the Shares to Purchaser pursuant to the Registration
Rights Agreement is exempt from the registration requirements of the Act
pursuant to Section 4(2) thereof; and
(viii) The Company (or its successor) is an SEC reporting company and
its shares of common stock are listed for trading on OTC Bulletin Board.
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F. MISCELLANEOUS
1. All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, singular, or plural as the identity of the
person or persons may require.
2. Neither this Subscription Agreement nor any provisions hereof shall
be waived, modified, changed, discharged, terminated, revoked, or canceled
except by an instrument in writing signed by the party against whom any change,
discharge, or termination is sought.
3. Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed to the other
party at the address of such party set forth on the signature page, as amended
from time to time, or, in the case of the Purchaser, at the address provided in
this Subscription Agreement, or to such other address furnished by notice given
in accordance with this Article E.
4. Failure of either party to exercise any right or remedy under this
Subscription Agreement or any other agreement between the Company and the
Purchaser, or otherwise, or delay by either party in exercising such right or
remedy, will not operate as a waiver thereof. No waiver by either party will be
effective unless and until it is in writing and signed by such party.
5. Arbitration.
(a) Any dispute, controversy or claim arising out of, relating to,
or in connection with, this Subscription Agreement, or the breach,
termination or validity thereof, except for claims for equitable, including
injunctive, relief, shall be finally settled by arbitration conducted in
accordance with this Section. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association (the
"AAA") in effect at the time of the arbitration, except as they may be
modified herein or by mutual agreement of the parties. The seat of the
arbitration shall be Los Angeles, CA.. Each party hereby irrevocably submits
to the jurisdiction of the arbitrator in Los Angeles, CA and waives any
defense in an arbitration based upon any claim that such party is not
subject personally to the jurisdiction of such arbitrator, that such
arbitration is brought in an inconvenient forum or that such venue is
improper.
(b) The arbitration shall be conducted by one arbitrator, who shall
be appointed by the AAA. The arbitrator shall have the authority only to
enforce the legal and contractual rights of the parties and shall not add
to, modify, disregard, or refuse to enforce any contractual provision. There
shall be no pre-arbitration discovery. The parties acknowledge and agree
that by entering into this Subscription Agreement they are agreeing to this
arbitration provision and are waiving all rights to a trial by jury. The
arbitral award shall be in writing and shall be final and binding on the
parties. The award shall include an award of costs, including the fees and
costs of the arbitrators and reasonable attorneys' fees and disbursements in
accordance with the arbitrator's view of the merits of the parties'
respective positions in the dispute. Except upon a finding of actual fraud,
intentional or knowing misrepresentation, willful and knowing omissions of
material fact or willful misconduct, no such award shall include punitive
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damages. Judgment upon the award may be entered by any governmental
authority having jurisdiction thereof or having jurisdiction over the
parties or their assets.
6. This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of New York
(without giving effect to principles of conflicts of law) and shall be binding
upon and shall inure to the benefit of the parties and their respective heirs,
estate, legal representatives, successors and assigns.
7. In the event that any provision of this Subscription Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
8. This Subscription Agreement along with the Exhibits hereto
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede any and all prior or contemporaneous
representations, warranties, agreements and understandings in connection
therewith. Except as otherwise provided in this Section 8, this Subscription
Agreement may be amended only by a writing executed by all parties hereto. No
party shall be liable or bound to the other in any manner by any warranties,
representations or covenant except as specifically set forth herein.
9. Title to the Shares shall be taken as follows: Avenue Group, Inc., a
Delaware corporation.
10. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided herein.
11. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
12. The titles of the paragraphs and subparagraphs of this Agreement
are for convenience and are not to be considered in construing this Agreement.
13. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or if
deposited the United States Post Office, be registered or certified mail,
addressed to a party at its address hereinafter shown below its signature or at
such other address as such party may designate by ten (10) days advance written
notice to the other party.
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14. The warranties and representations of the Company contained in or
made pursuant to this Agreement shall survive the executions and delivery of
this Agreement and the Closing hereunder.
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ROO MEDIA CORPORATION. SUBSCRIPTION AGREEMENT SIGNATURE PAGE
This page constitutes the Signature Page for the Subscription
Agreement. The Purchaser represents to you that (a) the information contained
herein is complete and accurate on the date hereof and may be relied upon by you
and (b) the Purchaser will notify you immediately of any change in any of such
information occurring prior to the acceptance of the subscription and will
promptly send you written confirmation of such change. The Purchaser hereby
certifies that he has read and understands the Disclosure Documents and this
Subscription Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Subscription Agreement this 28th day of November, 2003.
ROO Media Corporation.
/s/ Xxxxxx Xxxxx
----------------------------------------
By: Xxxxxx Xxxxx
Its: CEO
Avenue Group, Inc.,
/s/ Xxxxxxxx Xxxxxx
----------------------------------------
By: Xxxxxxxx Xxxxxx
Its: Executive Vice President
Tax I.D. No.:
Address: 00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxx, XX 00000
75
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Number of Shares
$200,000 (US)
Total Purchase Price
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION THEREFROM IS
AVAILABLE.
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