Exhibit 10.1
SUBSCRIPTION AGREEMENT
FOR THE
PURCHASE OF SECURITIES OF
HC INNOVATIONS, INC.
MAY 22, 2007
HC INNOVATIONS, INC.
SUBSCRIPTION AGREEMENT FOR THE PURCHASE OF SECURITIES
HC INNOVATIONS, INC., a Delaware corporation (the "COMPANY"), is
offering (this "OFFERING") for sale to certain "ACCREDITED INVESTORS" as the
term is defined under Regulation D promulgated under the Securities Act of 1933,
as amended (the "Act"), 1,666,667 shares of its Common Stock, $0.001 par value
per share (the "COMMON STOCK") and warrants to purchase 833,333 shares of Common
Stock (the "WARRANTS").
WHEREAS, the Company is offering for sale 1,666,667 shares of its
Common Stock and Warrants to purchase 833,333 shares of its Common Stock to
certain of the Company's current shareholders.
NOW, THEREFORE, IT IS HEREBY AGREED:
PURCHASE AND SALE OF COMMON STOCK AND WARRANTS
(a) The undersigned investor agrees to purchase at the Closing and the Company
agrees to sell and issue at the Closing (but reasonably thereafter in connection
with the issuance of the Common Stock) ______________ shares of Common Stock and
Warrants to purchase ___________ shares of Common Stock, for a total
subscription amount of $____________ (the "SUBSCRIPTION AMOUNT"), or a purchase
price of $3.00 per share of Common Stock.
SUBSCRIPTION PROCEDURES
(a) To subscribe, the undersigned must:
(i) complete and sign this Subscription Agreement;
(ii) complete and sign the accompanying Confidential
Prospective Purchaser Questionnaire; and
(iii) complete and sign the accompanying Registration Rights
Agreement (Subscription Agreement, together with the
Confidential Prospective Purchaser Questionnaire and the
Registration Rights Agreement collectively referred to as
the "SUBSCRIPTION DOCUMENTS");
return the completed and signed Subscription Documents on behalf
of the Company at the following address:
Gersten Savage LLP
600 Lexington Avenue, 9th Floor
New York, NY 10022-6018
Attn: Peter J. Gennuso, Esq.
(IV) WIRE THE FUNDS TO:
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(b) The purchase and sale of the Common Stock and Warrants shall take
place remotely via the exchange of documents and signatures, at 10:00 a.m. (New
York time), on the date hereof, or at such other time and place as the Company
and the undersigned mutually agree upon, orally or in writing (which time and
place are designated as the "CLOSING").
PROSPECTIVE INVESTORS SHOULD RETAIN THEIR OWN PROFESSIONAL ADVISORS TO
REVIEW AND EVALUATE THE ECONOMIC, TAX, AND OTHER CONSEQUENCES OF AN INVESTMENT
IN THE COMPANY.
THE SECURITIES OFFERED HEREBY, HAVE NOT BEEN FILED OR REGISTERED WITH OR
APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
NO STATE SECURITIES LAW ADMINISTRATOR HAS PASSED ON OR ENDORSED THE MERITS OF
THIS OFFERING OR THE ACCURACY OR THE ADEQUACY OF THE OFFERING MATERIALS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IT IS INTENDED THAT THE SECURITIES OFFERED HEREBY WILL BE MADE AVAILABLE TO
ACCREDITED INVESTORS, AS DEFINED IN REGULATION D AND RULE 501 PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND UP TO THIRTY-FIVE
NON-ACCREDITED INVESTORS. THE SECURITIES OFFERED HEREBY ARE BEING OFFERED
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
APPLICABLE STATE SECURITIES LAWS FOR NONPUBLIC OFFERINGS. SUCH EXEMPTIONS LIMIT
THE NUMBER AND TYPES OF INVESTORS TO WHICH THE OFFERING WILL BE MADE AND
RESTRICT SUBSEQUENT TRANSFERS OF THE INTERESTS.
THE SECURITIES OFFERED HEREBY SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN
AFFORD TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. INVESTORS WILL BE REQUIRED
TO REPRESENT THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS OF THIS
OFFERING.
NO SECURITIES MAY BE RESOLD OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, REGISTRATION UNDER THE
APPLICABLE FEDERAL OR STATE SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE IS
MADE WITH SUCH REGISTRATION REQUIREMENTS.
THE OFFEREE, BY ACCEPTING DELIVERY OF THE OFFERING MATERIALS, AGREES TO RETURN
THE OFFERING MATERIALS AND ALL ACCOMPANYING OR RELATED DOCUMENTS TO THE COMPANY
UPON REQUEST IF THE OFFEREE DOES NOT AGREE TO PURCHASE ANY OF THE SECURITIES
OFFERED HEREBY.
ANY OFFERING MATERIALS SUBMITTED IN CONNECTION WITH THE PRIVATE PLACEMENT OF THE
SECURITIES DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED. ANY
REPRODUCTION OR DISTRIBUTION OF ANY OFFERING MATERIALS IN WHOLE OR IN PART, OR
THE DIVULGENCE OF ANY OF THEIR CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMPANY, IS PROHIBITED. ANY PERSON ACTING CONTRARY TO THE FOREGOING
RESTRICTIONS MAY PLACE HIM/HERSELF AND THE COMPANY IN VIOLATION OF FEDERAL OR
STATE SECURITIES LAWS.
NASAA UNIFORM LEGEND
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE UNDERSIGNED ACKNOWLEDGES THAT (A) THE COMMON STOCK; (B) THE
WARRANTS; AND (C) THE COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS,
ARE NOT REGISTERED UNDER THE ACT, OR THE SECURITIES LAWS OF ANY STATE, THAT
ABSENT AN EXEMPTION FROM REGISTRATION CONTAINED IN THOSE LAWS, THE ISSUANCE AND
SALE OF SUCH COMMON STOCK AND WARRANTS, AS APPLICABLE, WOULD REQUIRE
REGISTRATION, AND THAT THE COMPANY'S RELIANCE UPON SUCH EXEMPTION IS BASED UPON
THE UNDERSIGNED'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS CONTAINED IN THE
OFFERING MATERIALS (AS DEFINED BELOW).
1. The undersigned represents, warrants, and agrees as follows:
(a) The undersigned agrees that this Subscription Agreement is and
shall be irrevocable.
(b) The undersigned has carefully read (i) this Subscription Agreement,
(ii) the Company's filings with the United States Securities and Exchange
Commission, including, but not limited to, the Company's Quarterly Report on
Form 10-QSB for the quarter ended March 31, 2007, Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2006, and Registration Statement on Form
10-SB/A (Amendment No. 2), (iii) the Confidential Prospective Purchaser
Questionnaire, and (iv) the Registration Rights Agreement (collectively the
"OFFERING MATERIALS"), all of which the undersigned acknowledges have been
provided to the undersigned. The undersigned has been given the opportunity to
ask questions of, and receive answers from the Company concerning the terms and
conditions of this Offering and the Offering Materials and to obtain such
additional written information, to the extent the Company possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the same as the undersigned desires in order to
evaluate the investment. The undersigned further acknowledges that the
undersigned fully understands the Offering Materials, and the undersigned has
had the opportunity to discuss any questions regarding any of the Offering
Materials with the undersigned's counsel or other advisor. Notwithstanding the
foregoing, the only information upon which the undersigned has relied is that
set forth in the Offering Materials and the undersigned's own independent
investigation. The undersigned
acknowledges that the undersigned has received no representations or warranties,
whether written or oral, from the Company or its employees, director, or agents
in making this investment decision other than as set forth in the Offering
Materials.
(c) The undersigned is aware that the purchase of the Common Stock and
Warrants is a speculative investment involving a high degree of risk and that
there is no guarantee that the undersigned will realize any gain from this
investment, and that the undersigned could lose the total amount of the
undersigned's investment.
(d) The undersigned understands that no federal or state agency has
made any finding or determination regarding the fairness of this Offering of the
Common Stock and Warrants for investment, or any recommendation or endorsement
of this Offering of the Common Stock and Warrants.
(e) The undersigned is purchasing the Common Stock and Warrants for the
undersigned's own account, with the intention of holding the Common Stock and
Warrants, with no present intention of dividing or allowing others to
participate in this investment or of reselling or otherwise participating,
directly or indirectly, in a distribution of the Common Stock and Warrants, and
shall not make any sale, transfer, or pledge thereof without registration under
the Act and any applicable securities laws of any state or unless an exemption
from registration is available under those laws.
(f) The undersigned represents that the undersigned, if an individual,
has adequate means of providing for his or her current needs and personal and
family contingencies and has no need for liquidity in this investment in the
Common Stock and Warrants. The undersigned has no reason to anticipate any
material change in his or her personal financial condition for the foreseeable
future.
(g) The undersigned is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Securities Act and is financially
able to bear the economic risk of this investment, including the ability to hold
the Common Stock and Warrants indefinitely or to afford a complete loss of the
undersigned's investment in the Common Stock and Warrants.
(h) The undersigned represents that the undersigned's overall
commitment to this investment is not disproportionate to the undersigned's net
worth, and the undersigned's investment in the Common Stock and Warrants will
not cause such overall commitment to become excessive. The undersigned
understands that the statutory basis on which the Common Stock and Warrants are
being sold to the undersigned and others would not be available if the
undersigned's present intention were to hold the Common Stock and Warrants for a
fixed period or until the occurrence of a certain event. The undersigned
realizes that in the view of the Commission, a purchase now with a present
intent to resell by reason of a foreseeable specific contingency or any
anticipated change in the market value, or in the condition of the Company, or
that of the industry in which the business of the Company is engaged or in
connection with a contemplated liquidation, or settlement of any loan obtained
by the undersigned for the acquisition of the Common Stock and Warrants, and for
which such Common Stock and Warrants may be pledged as security or as donations
to religious or charitable institutions for the purpose of securing a deduction
on an income tax return, would, in fact, represent a purchase
with an intent inconsistent with the undersigned's representations to the
Company and the Commission would then regard such sale as a sale for which the
exemption from registration is not available. The undersigned will not pledge,
transfer, or assign this Subscription Agreement.
(i) The undersigned represents that the funds provided for this
investment are either separate property of the undersigned, community property
over which the undersigned has the right of control, or are otherwise funds as
to which the undersigned has the sole right of management.
(j) FOR PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES ONLY: If
the undersigned is a partnership, corporation, trust, or other entity, (i) the
undersigned has enclosed with this Subscription Agreement appropriate evidence
of the authority of the individual executing this Subscription Agreement to act
on its behalf (e.g., if a trust, a certified copy of the trust agreement; if a
corporation, a certified corporate resolution authorizing the signature and a
certified copy of the articles of incorporation; or if a partnership, a
certified copy of the partnership agreement), (ii) the undersigned represents
and warrants that it was not organized or reorganized for the specific purpose
of acquiring the Common Stock and Warrants, (iii) the undersigned has the full
power and authority to execute this Subscription Agreement on behalf of such
entity and to make the representations and warranties made herein on its behalf,
and (iv) this investment in the Company has been affirmatively authorized, if
required, by the governing board of such entity and is not prohibited by the
governing documents of the entity.
(k) The address shown under the undersigned's signature at the end of
this Subscription Agreement is the undersigned's principal residence if he or
she is an individual, or its principal business address if a corporation or
other entity.
(l) The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Common Stock and Warrants.
(m) The undersigned acknowledges that the certificates for the
securities comprising the Common Stock and Warrants which the undersigned will
receive will contain a legend substantially as follows:
"THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE."
The undersigned further acknowledges that (i) if the
Common Stock and Warrants become publicly traded, any necessary stop transfer
orders will be placed upon the
Company's Common Stock and Warrants, as applicable, in accordance with the Act,
and (ii) the Company is under no obligation to aid the undersigned in obtaining
any exemption from the registration requirements.
2. PREEMPTIVE RIGHT. In the event that the Company issues any equity
securities or securities convertible into equity securities within twenty four
(24) months from the date hereof (an "Issuance"), the undersigned shall have a
right, but not an obligation, to participate in such Issuance. The undersigned's
participation shall be based, pro-rata on the undersigned's percentage of
ownership in the shares of outstanding Common Stock of the Company immediately
prior to the Issuance. The foregoing shall not apply in the case of issuances of
securities to employees, officers and directors (and their respective
affiliates), consultants, advisers and vendors, in an aggregate amount not to
exceed 15% of the outstanding capital stock of the Company as of the Closing,
computed as if all the transactions contemplated hereby had been consummated.
Notwithstanding the foregoing, in the event that the Company conducts any single
offering of its securities for at least $10 million (whether underwritten or
not), then this provision shall not apply, unless the Company and/or any
underwriter consent.
3. The undersigned expressly acknowledges and agrees that the Company
is relying upon the undersigned's representations contained in the Offering
Materials.
4. The undersigned subscriber acknowledges that the undersigned
understands the meaning and legal consequences of the representations and
warranties which are contained herein and hereby agrees to indemnify, save and
hold harmless the Company and its officers, directors and counsel, from and
against any and all claims or actions arising out of a breach of any
representation, warranty or acknowledgment of the undersigned contained in any
of the Offering Materials. Such indemnification shall be deemed to include not
only the specific liabilities or obligations with respect to which such
indemnity is provided, but also all reasonable costs, expenses, counsel fees and
expenses of settlement relating thereto, whether or not any such liability or
obligation shall have been reduced to judgment. In addition, the undersigned's
representations, warranties, and indemnification contained herein shall survive
the undersigned's purchase of the Common Stock and Warrants hereunder. The
undersigned specifically acknowledges that he has reviewed the risks set forth
in the Offering Materials, as well as the financial statements included therein.
5. The Company represents that it has been duly and validly
incorporated and is validly existing and in good standing as a corporation under
the laws of the State of Delaware. The Company represents that it has all
requisite power and authority, and all necessary authorizations, approvals and
orders required as of the date hereof to own its properties and conduct its
business and to enter into this Subscription Agreement and the other Offering
Materials and to be bound by the provisions and conditions hereof or therein.
The Company further represents that the securities offered hereby are being
offered pursuant to an exemption from the registration requirements of the Act
and applicable state securities laws for nonpublic offerings.
6. The undersigned's rights to have the shares of the Company's Common
Stock and the shares of Company's Common Stock issuable upon the exercise of the
Common Stock and
Warrants registered are set forth in a separate Registration Rights Agreement of
even date herewith by and among the Company and the holders of the Common Stock
and Warrants.
7. Except as otherwise specifically provided for hereunder, no party shall be
deemed to have waived any of his, her, or its rights hereunder or under any
other agreement, instrument, or papers signed by any of them with respect to the
subject matter hereof unless such waiver is in writing and signed by the party
waiving said right. Except as otherwise specifically provided for hereunder, no
delay or omission by any party in exercising any right with respect to the
subject matter hereof shall operate as a waiver of such right or of any such
other right. A waiver on any one occasion with respect to the subject matter
hereof shall not be construed as a bar to, or waiver of, any right or remedy on
any future occasion. All rights and remedies with respect to the subject matter
hereof, whether evidenced hereby or by any other agreement, instrument, or
paper, will be cumulative, and may be exercised separately or concurrently.
8. The parties have not made any representations or warranties with respect to
the subject matter hereof not set forth herein, and this Subscription Agreement,
together with any instruments executed simultaneously herewith, constitutes the
entire agreement between them with respect to the subject matter hereof. All
understandings and agreements heretofore existing between the parties with
respect to the subject matter hereof are merged in this Subscription Agreement
and any such instrument, which alone fully and completely express their
agreement.
9. This Subscription Agreement may not be changed, modified, extended,
terminated, or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Subscription Agreement.
10. The parties agree to execute any and all such other and further instruments
and documents, and to take any and all such further actions reasonably required
to effectuate this Subscription Agreement and the intent and purposes hereof.
11. If any provision or any portion of any provision of this Subscription
Agreement or the application of any such provision or any portion thereof to any
person or circumstance, shall be held invalid or unenforceable, the remaining
portion of such provision and the remaining portion of such provision as is held
invalid or unenforceable to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
12. This Subscription Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware and the undersigned hereby consents to
the jurisdiction of the courts of the State of New York and/or the United States
District Court for the Southern District of New York.
ALL SUBSCRIBERS MUST COMPLETE A COPY OF THIS PAGE
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(PRINT NAME OF SUBSCRIBER)
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ____ day of May, 2007.
Common Stock and Warrant Subscription Amount $______
1. |__| Individual
2. |__| Joint Tenants with Right of Survivorship
3. |__| Community Property
4. |__| Tenants in Common
5. |__| Corporation/Partnership
6. |__| IRA of________________
7. |__| Trust
Date Opened ___________
8. |__| As a Custodian for________________
Under the Uniform Transfer to Minors Act of the
State of ___________
9. |__| Married with Separate Property
10. |__| Keogh of ____________
EXECUTION BY SUBSCRIBER WHO IS A NATURAL PERSON
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Exact Name in Which Title is to be Held
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(Signature)
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Name (Please Print)
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Title of Person Executing Agreement
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Address: Number and Street
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City State Zip Code
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Social Security Number
Accepted this ___ day of May, 2007, on behalf of HC INNOVATIONS, INC.
By:
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Name:
Title:
EXECUTION BY SUBSCRIBER WHICH IS A CORPORATION,
PARTNER, TRUST, ETC.
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Exact Name in Which Title is to be Held
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(Signature)
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Name (Please Print)
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Title of Person Executing Agreement
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Address: Number and Street
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City State Zip Code
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Tax Identification Number
Accepted this ___ day of May, 2007 on behalf of HC INNOVATIONS, INC.
By:
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Name:
Title: