This
Warrant Assignment Agreement (this
“
Assignment
”)
is
made and entered into as of the ___ day of September 2008 (the
“
Effective
Date
”),
by
and between ________________ (the “
Assignor
”)
and
_______________ (the “
Assignee
”).
RECITALS
:
WHEREAS,
the Assignor is the owner of certain warrants (the
“
Warrants
”
)
to
purchase shares of common stock, par value $0.001 per share (the
“Stock”
),
issued
by Purple Beverage Company, Inc., a Nevada corporation (
“
Company
”
)
as set
forth on
Exhibit
A
annexed
hereto, at an initial exercise price of $2.00 per share, issued in connection
with Assignor’s purchase of Common Stock and Warrants during December 2007
pursuant to a Subscription Agreement by and between Assignor and Company
(the
“Subscription
Agreement
”);
WHEREAS,
Company has registered for resale 3,681,650 shares of Stock underlying
the
Warrants under the Securities Act of 1933, as amended, and Assignee desires
to
acquire up to such number of registered shares in one or more
closings;
WHEREAS,
the Company has amended the Warrants to (i) reduce the exercise price of
all
unexercised Warrants to $0.40 per share, (ii) grant to the Assignor of
the
Warrants, newly-issued restricted shares of the Company’s Stock in an amount
equal to 15% of the amount of Stock into which each unexercised Warrant
is
currently exercisable, (iii) permit the transfer and assignment of registered
Warrants with the reduced exercise price of $0.40 per share, and (iv) and
has
consented to the other transactions contemplated hereby, subject to the
terms
and conditions hereof;
WHEREAS,
the Assignor
acknowledges
and agrees that it is in Assignor’s interest that the Company seek to obtain
financing from the exercise of the Warrants and that Assignor has been
offered
the opportunity to exercise the Warrants owned by Assignor and determined
to
effectuate this transfer and assignment and that the exercise of Warrants
provides a benefit to Assignor by providing additional capital to the Company,
and that such is additional consideration for the assignment, and therefore
Assignor has elected to and
desires
to sell, transfer, assign and convey the Warrants to the Assignee and Assignee
desires to exercise such Warrants for cash contemporaneously or following
such
assignment.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties to this Assignment hereby agree
as
follows:
|
1.
|
Assignment
of Interest
.
In consideration of the payment of the Assignment Price to Assignor,
Assignor hereby sells, transfers, assigns and conveys to the
Assignee, as
of the Effective Date, all of Assignor’s right, title and interest in and
to the Warrants, free and clear of all liens, encumbrances, security
interests, claims or options and hereby irrevocably constitutes
and
appoints the officers of the Company as Assignor’s attorney-in-fact to
transfer the Warrants as well as underlying Stock upon exercise
of the
Warrants on the books
|
and
transfer records of the Company. Assignor and Assignee agree that neither
party
is making any representation or warranty to the other, except as expressly
set
forth in this Agreement.
|
2.
|
Acceptance
.
The Assignee hereby accepts the assignment of the Warrants and
expressly
assumes and promises to perform all obligations of Assignor under
the
Warrants. Assignee represents and warrants it is an “accredited investor”
as such term is defined in Rule 501(a) promulgated under the
Securities
Act of 1933, as amended.
|
|
3.
|
Assignment
Price
.
The Assignment Price of the Assignment hereunder shall be $0.01
per
share
.
|
|
4.
|
Exercise.
Assignee agrees to exercise the Warrant
in
such amount as shall be set forth in duly executed warrant exercise
forms
approved for such purpose in the form approved by the Company
and attached
to the form of Warrant as Exhibit A thereto,
and
agrees to transmit the warrant exercise price (number of shares
set forth
in Exhibit A multiplied by $0.40 per share) to the following
within two
(2) business days of the date of such
exercise:
|
Receiving
Bank
ABA
Wire # 063 000 021
Wachovia
Bank
350
East
Las Olas Blvd, Suite 1800
Ft
Lauderdale, FL 33301
(T)
954-765-3920
Beneficiary
Account
# 200 003 459 5990
Purple
Beverage Company, Inc
450
East
Las Olas Blvd, Suite 830
Ft
Lauderdale, FL 33301
(T)
954-462-8382
Assignee
shall deliver to Company an exercise notice in the form approved by the
Company
and attached to the form of Warrant as Exhibit A thereto.
|
5.
|
Condition
Precedent
.
A
condition precedent to the Assignment of the Warrant to the Assignee
and
the issuance of new warrants to Assignor and Assignee shall be
Company’s
receipt of the consent of the holders of Warrants and Shares
(as defined
in the Subscription Agreement) including underlying unexercised
Warrants,
sufficient to authorize the transactions contemplated hereby
(including as
set forth in paragraph 6 hereof) and thereupon the Assignment
shall become
effective.
|
|
6.
|
Consent
and Amendment of Warrant
.
By their execution below, Company, Assignor (in Assignor’s capacity as
Warrant holder with respect to the Warrants and in Assignor’s capacity as
owner of Shares as defined in and purchased pursuant to the Subscription
Agreement) and Assignee hereby consent to the Assignment of the
Warrants
provided herein, and all other transactions, amendments, modifications
and
waivers to the Warrants as contemplated herein, such consent
to be
effective upon the receipt of the written consent in accordance
with
Section 13(b) and 13 (h) of the Subscription Agreement for the
Shares
and
|
the
Warrants which shall constitute an amendment to the Subscription Agreement
and
all documents and agreements related thereto.
|
7.
|
Listing
Application.
Company agrees it shall use its best efforts to submit an AMEX
listing
application (or other national exchange as determined by the
Board of
Directors) prior to January 30,
2009.
|
|
8.
|
Future
Cooperation
.
Company, Assignor and Assignee mutually agree to cooperate at
all times
from and after the date hereof with respect to any of the matters
described herein, and to execute any further agreements or documents
as
may be reasonably requested by the other party for the purpose
of giving
effect to, evidencing or giving notice of the transaction evidenced
by
this Assignment.
|
|
9.
|
Counterparts
.
This Assignment may be executed in any number of counterparts,
all of
which taken together shall constitute one and the same
Assignment.
|
|
10.
|
Governing
Law
.
This
Agreement shall be governed by and construed in accordance with
the
internal laws of the State of New York without regard to principles
of
conflicts of laws. Any action brought by any party to this Agreement
against any other party concerning the transactions contemplated
by this
Agreement shall be brought only in the state courts of New York
or in the
federal courts located in the state and county of New York. The
parties to
this Agreement hereby irrevocably waive any objection to jurisdiction
and
venue of any action instituted hereunder and shall not assert
any defense
based on lack of jurisdiction or venue or based upon
forum
non conveniens
.
The
Parties executing this Agreement and other agreements referred
to herein
or delivered in connection herewith on behalf of the Company
agree to
submit to the in personam jurisdiction of such courts and hereby
irrevocably waive trial by jury.
The
prevailing Party shall be entitled to recover from the other
Party its
reasonable attorney’s fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection
herewith 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 such provision which may prove invalid
or
unenforceable under any law shall not affect the validity or
enforceability of any other provision of any
agreement.
|
IN
WITNESS WHEREOF, the undersigned have executed this Assignment effective
as of
the Effective Date.
ASSIGNOR:
By:
_____________________________
Name:
Title:
ASSIGNEE:
By:
_____________________________
Name:
Title:
AGREED
AND ACCEPTED:
COMPANY
By:
_____________________________
Name:
Title:
EXHIBIT
A
REGISTERED
WARRANTS OWNED
______________________________
REGISTERED
WARRANTS ASSIGNED
______________________________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
____________________________________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
___________________________________________________________________
Date
of
Report (Date of earliest event reported): July 16, 2008
PURPLE
BEVERAGE COMPANY, INC.
(Exact
Name of Registrant as Specified in Charter)
Nevada
|
|
000-52450
|
|
01-0670370
|
(State
or Other Jurisdiction
of
Incorporation)
|
|
(Commission
File Number)
|
|
(IRS
Employer
Identification
No.)
|
450
East Las Olas Blvd, Suite 830
Fort
Lauderdale, Florida
|
|
33301
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
(954)
462-8757
|
(Former
Name or Former Address, if Changed Since Last
Report)
|
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01.
|
Entry
into a Material Definitive
Agreement.
|
Barry
Honig Promissory Note
On
September 5, 2008, we issued a Promissory Note in favor of Barry Honig
(the
“Honig Note”) in the principal amount of $250,000. The Honig Note bears interest
on the unpaid principal balance at a rate of 5% per annum. All principal
and
accrued interest on the Honig Note is due and payable on the sooner of
October
24, 2008, or within five days of our receipt of funds in excess $250,000.
If we
default on the Honig Note, we will be obligated to pay interest on amounts
past
due at the rate of 18% per annum.
Chelsea
Development International LTD Promissory Notes
On
August
8, 2008, we issued a Promissory Note in favor of Chelsea Development
International LTD (the “Chelsea Note 1”) in the principal amount of $250,000.
The Chelsea Note 1 bears interest on the unpaid principal balance at a
rate of
8% per annum. All principal and accrued interest on the Chelsea Note 1
was due
and payable on or prior to September 7, 2008.
On
August
27, 2008, we issued a Promissory Note in favor of Chelsea Development
International LTD (the “Chelsea Note 2”) in the principal amount of $250,000.
The Chelsea Note 2 bears interest on the unpaid principal balance at a
rate of
8% per annum. All principal and accrued interest on the Chelsea Note 2
is due
and payable on or prior to September 26, 2008.
GS
Holding LLC Promissory Note
On
August
22, 2008, we issued a Promissory Note in favor of GS Holding LLC (the “GS
Holding Note”) in the principal amount of $100,000. The GS Holding Note bears
interest on the unpaid principal balance of 11% per annum. We are obligated
to
repay the GS Holding Note in monthly payments, with the first payment on
September 22, 2008 and the final payment on June 22, 2009.
Michael
Wallace Promissory Note
On
August
14, 2008, we issued a Promissory Note in favor of Michael Wallace, our
chief
financial officer, (the “Wallace Note”) in the principal amount of $45,000. The
Wallace Note bore interest on the unpaid principal balance at a rate
of 2.54 %
per annum. All principal and accrued interest on the Wallace Note was
payable on
demand. We repaid the Wallace Note on September 5, 2008.
Jay-2
Subscription Agreement
In
addition, on July 16, 2008, we entered into a subscription agreement (the
“Jay-2
Subscription Agreement”) with Jay-2 Investments, LLC (“Jay-2”) whereby Jay-2
subscribed to purchase our securities consisting of (a) a promissory note
in the
amount of $1,000,000 (the “Jay-2 Note”), (b) 200,000 shares (the “Jay-2 Shares”)
of the our $0.001 par value common stock, and (c) a two-year warrant (the
“A
Warrant”) to purchase 200,000 shares of our common stock at an exercise price of
$2.00 per share, all for an aggregate subscription price of $1,000,000.
The J-2
Shares were valued at the 10-trading-day volume weighted average price,
with the
final such trading day being the day preceding the execution of the Jay-2
Subscription Agreement (but in no event valued at less than $2.00 per
share.)
The
foregoing is not a complete summary of the terms of the material agreements
described in this Item 1.01, and reference is made to the complete text
of all
material agreements attached hereto as Exhibits 10.1-10.8.
Item
2.03.
|
Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a
Registrant.
|
The
information disclosed in Item 1.01 is incorporated herein by
reference.
Item
9.01
|
Financial
Statements and Exhibits
|
(d)
Exhibits
Exhibit
No.
|
|
Description
|
|
|
|
10.1
|
|
$250,000
Promissory Note to Barry Honig, dated September 5, 2008
|
10.2
10.3
|
|
$250,000
Promissory Note to Chelsea Development International LTD, dated
August 8,
2008
$250,000
Promissory Note to Chelsea Development International LTD, dated
August 27,
2008
|
10.4
|
|
$100,000
Promissory Note to GS Holding LLC, dated August 22,
2008
|
10.5
|
|
Subscription
Agreement between Purple Beverage Company, Inc. and Jay-2 Investments,
LLC, dated July 16, 2008
|
10.6
|
|
$1,000,000
Promissory Note to Jay-2 Investments, LLC, dated July 16,
2008
|
10.7
|
|
Class
A Common Stock Purchase Warrant, dated July 16, 2008
|
10.8
|
|
$45,000
Promissory Note to Michael Wallace , dated August 14,
2008
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended,
the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
|
|
Purple
Beverage Company, Inc.
|
|
|
|
Dated:
September 9, 2008
|
By:
|
/s/
Theodore Farnsworth
|
|
Name:
Theodore
Farnsworth
|
|
Title:
Chief
Executive Officer
|
INDEX
TO EXHIBITS
Exhibit
No.
|
|
Description
|
|
|
|
10.1
|
|
$250,000
Promissory Note to Barry Honig, dated September 5, 2008
|
10.2
10.3
|
|
$250,000
Promissory Note to Chelsea Development International LTD, dated
August 8,
2008
$250,000
Promissory Note to Chelsea Development International LTD, dated
August 27,
2008
|
10.4
|
|
$100,000
Promissory Note to GS Holding LLC, dated August 22,
2008
|
10.5
|
|
Subscription
Agreement between Purple Beverage Company, Inc. and Jay-2 Investments,
LLC, dated July 16, 2008
|
10.6
|
|
$1,000,000
Promissory Note to Jay-2 Investments, LLC, dated July 16,
2008
|
10.7
|
|
Class
A Common Stock Purchase Warrant, dated July 16, 2008
|
10.8
|
|
$45,000
Promissory Note to Michael Wallace , dated August 14,
2008
|
PROMISSORY
NOTE
$250,000.00
|
September
5,
2008
|
FOR
VALUE
RECEIVED, the undersigned, PURPLE BEVERAGE COMPANY, INC., a Nevada corporation
(“Debtor”), promises to pay to the order of Barry Honig., or its successors or
assigns (“Lender”), on the sooner of October 24, 2008, or within five days of
receipt by the Debtor of funds in excess of Two Hundred and Fifty Thousand
Dollars and no cents (“Maturity Date”) at 551 Fifth Avenue, Suite 1601, New
York, New York 10176, or at such other place as the Lender may designate
from
time to time in writing to the Debtor, in lawful money of the United States
of
America, the principal Sum of Two Hundred and Fifty Thousand Dollars and
no
cents ($250,000.00), together with interest on the unpaid principal balance
of
this Note from the date hereof until paid at five percent (5%) per annum.
In the
event of Debtor’s default hereunder, interest on amounts past due pursuant to
this Note shall be paid at a rate of eighteen percent (18%) per annum.
Interest
shall be computed on the basis of a 360-day year.
On
or
prior to October 3, 2008 Debtor shall use its best efforts to prepare and
shall
file with the Securities and Exchange Commission a registration statement
with
the SEC for a primary offering of not less than 24 million newly-issued
registered shares of common stock of Debtor, plus 2.5 million shares for
third
party resale, and shall file an original listing application with a national
securities exchange, and shall authorize a reverse stock split, such
registration statement to be declared effective and the common stock listed
(including any reverse split) on or prior to the Maturity Date, unless
extended
by the Lender, failure to take any such action shall constitute a default
under
this Note. The obligations of this paragraph shall survive repayment of
the
Note.
The
delay
or failure to exercise any right hereunder shall not waive such right.
The
undersigned hereby waives demand, presentment, protest, notice of dishonor
or
nonpayment, notice of protest, any and all delays or lack of diligence
in
collection hereof and assents to each and every extension or postponement
of the
time of payment or other indulgence.
In
the
event of default hereunder such that this Note is placed in the hands of
an
attorney for collection (whether or not suit is filed), or if this Note
is
collected by suit or legal proceedings or through bankruptcy proceedings,
Debtor
agrees to pay reasonable attorney’s fees and expenses of
collection.
This
Note
shall be governed by, and construed and interpreted in accordance with,
the laws
of the State of New York. Exclusive jurisdiction relating to this Note
shall
vest in courts located in New York State.
IN
WITNESS WHEREOF, the undersigned has duly executed and delivered this Note
the
date and year first above written.
|
|
|
|
PURPLE
BEVERAGE COMPANY , INC.
|
|
|
|
|
By:
|
/s/
Michael W. Wallace
|
|
Name:
Michael W. Wallace
|
|
Title:
EVP and CFO
|
:
ATTEST:
/s/
Theodore Farnsworth
UNSECURED
PROMISSORY NOTE
$250,000.00
|
Ft.
Lauderdale, Florida
|
August
8,
2008
Purple
Beverage Company, Inc., a Nevada corporation (“
Maker
”).
hereby promises to pay to the order of Chelsea Development International
LTD.
(“
Lender
”),
in
lawful money of the United States of America, the lesser of Two Hundred
Fifty
Thousand Dollars ($250,000.00) or the principal balance outstanding under
this
Unsecured Promissory Note, together with accrued and unpaid interest thereon,
if
any, at the rate or rates set forth below (“
Balance
Due
”),
on or
before thirty (30) days from the date hereof.
The
unpaid principal amount of this Unsecured Promissory Note shall bear interest
at
a rate of 8.0% until the date on which this Unsecured Promissory Note has
been
paid in full. If any interest is determined to be in excess of the then
legal
maximum rate, then that portion of each interest payment representing an
amount
in excess of the then legal maximum rate shall be deemed a payment of principal
and applied against the principal of the obligations evidenced by this
Unsecured
Promissory Note.
This
Unsecured Promissory Note may be prepaid in whole or in part at any time,
without premium or penalty or notice.
This
Unsecured Promissory Note is being delivered in, is intended to be performed
in,
shall be construed and interpreted in accordance with, and be governed
by the
internal laws of, the State of Florida, without regard to principles of
conflict
of laws.
This
Unsecured Promissory Note may only be amended, modified or terminated by
an
agreement in writing signed by the party to be charged. This Unsecured
Promissory Note shall be binding upon the successors and assigns of the
Maker
and inure to the benefit of the Lender and his permitted successors. endorsees
and assigns. This Unsecured Promissory Note shall not be transferred without
the
express written consent of Lender, provided that if Lender consents to
any such
transfer or if notwithstanding the foregoing such a transfer occurs, then
the
provisions of this Unsecured Promissory Note shall be binding upon any
successor
to Maker and shall inure to the benefit of and be extended to any holder
thereof.
|
|
|
|
PURPLE
BEVERAGE COMPANY, INC.
a
Nevada corporation
|
|
|
|
|
By:
|
/s/
Theodore Farnsworth
|
|
Theodore
Farnsworth,
|
|
its
Chief Executive Officer
|
UNSECURED
PROMISSORY NOTE
|
Ft.
Lauderdale, Florida
|
|
August
27, 2008
|
Purple
Beverage Company, Inc., a Nevada corporation (“
Maker
”),
hereby promises to pay to the order of Chelsea Development International
LTD.
(‘
Lender
”),
in
lawful money of the United States of America, the lesser of Two Hundred
Fifty
Thousand Dollars ($250,000.00) or the principal balance outstanding under
this
Unsecured Promissory Note, together with accrued and unpaid interest thereon,
if
any, at the rate or rates set forth below (‘
Balance
Due
”),
on or
before thirty (30) days from the date hereof.
The
unpaid principal amount of this Unsecured Promissory Note shall bear interest
at
a rate of 8.0% until the date on which this Unsecured Promissory Note has
been
paid in full. If any interest is determined to be in excess of the then
legal
maximum rate, then that portion of each interest payment representing an
amount
in excess of the then legal maximum rate shall be deemed a payment of principal
and applied against the principal of the obligations evidenced by this
Unsecured
Promissory Note.
This
Unsecured Promissory Note may be prepaid in whole or in part at any time,
without premium or penalty or notice.
This
Unsecured Promissory Note is being delivered in, is intended to be performed
in,
shall be construed and interpreted in accordance with, and be governed
by the
internal laws of, the State of Florida, without regard to principles of
conflict
of laws.
This
Unsecured Promissory Note may only be amended, modified or terminated by
an
agreement in writing signed by the party to be charged. This Unsecured
Promissory Note shall be binding upon the successors and assigns of the
Maker
and inure to the benefit of the Lender and his permitted successors, endorsees
and assigns. This Unsecured Promissory Note shall not be transferred without
the
express written consent of Lender, provided that if Lender consents to
any such
transfer or if notwithstanding the foregoing such a transfer occurs, then
the
provisions of this Unsecured Promissory Note shall be binding upon any
successor
to Maker and shall inure to the benefit of and be extended to any holder
thereof.
PURPLE
BEVERAGE COMPANY, INC.
|
a
Nevada corporation
|
|
|
By:
|
/s/
Theodore Farnsworth
|
|
Theodore
Farnsworth
|
|
its
Chief Executive Officer
|
UNSECURED
PROMISSORY NOTE
|
Ft.
Lauderdale, Florida
|
|
August
22, 2008
|
Purple
Beverage Company, Inc., a Nevada corporation (“
Maker
”),
hereby promises to pay to the order of GS Holding LLC, an individual or
order
(“
Lender
”),
in
lawful money of the United States of America, the lesser of One Hundred
Thousand
Dollars ($100,000.00) or the principal balance outstanding under this Unsecured
Promissory Note, together with accrued and unpaid interest thereon, if
any, at
the rate or rates set forth below.
The
unpaid principal amount of this Unsecured Promissory Note shall bear interest
at
a rate of 11% until the date on which this Unsecured Promissory Note has
been
paid in full. If any interest is determined to be in excess of the then
legal
maximum rate, then that portion of each interest payment representing an
amount
in excess of the then legal maximum rate shall be deemed a payment of principal
and applied against the principal of the obligations evidenced by this
Unsecured
Promissory Note.
This
Unsecured Promissory Note shall be paid in accordance with the schedule
attached
(Exhibit A) and may be prepaid in whole or in part at any time, without
premium
or penalty or notice.
This
Unsecured Promissory Note is being delivered in, is intended to be performed
in.
shall be construed and interpreted in accordance with, and be governed
by the
internal laws of, the State of Florida. without regard to principles of
conflict
of laws.
This
Unsecured Promissory Note may only be amended, modified or terminated by
an
agreement in writing signed by the party to be charged. This Unsecured
Promissory Note shall be binding upon the successors and assigns of the
Maker
and inure to the benefit of the Lender and his permitted successors, endorsees
and assigns. This Unsecured Promissory Note shall not be transferred without
the
express written consent of Lender, provided that if Lender consents to
any such
transfer or ii notwithstanding the foregoing such a transfer occurs, then
the
provisions of this Unsecured Promissory’ Note shall be binding upon any
successor to Maker and shall inure to the benefit of and be extended to
any
holder thereof.
PURPLE
BEVERAGE COMPANY, INC.
|
a
Nevada corporation
|
|
|
By:
|
/s/
Theodore Farnsworth
|
|
Theodore
Farnsworth, Chief Executive Officer
|
Exhibit
A
Purple
Beverage Company
Debt
Amortization Schedule
GS
Holding LLC
Inception
|
8/22/2008
|
Principal
|
$
100,000
|
Interest
Rate
|
11%
|
|
|
Payment
|
|
Interest
|
|
Principal
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
8/22/08
|
|
|
|
|
|
|
|
|
|
|
$
|
100,000
|
|
|
9/22/08
|
|
$
|
11,000
|
|
|
934
|
|
$
|
10,066
|
|
$
|
89,934
|
|
|
10/22/08
|
|
$
|
11,000
|
|
|
813
|
|
$
|
10,187
|
|
$
|
79,747
|
|
|
11/22/08
|
|
$
|
11,000
|
|
|
745
|
|
$
|
10,255
|
|
$
|
69,492
|
|
|
12/22/08
|
|
$
|
11,000
|
|
|
628
|
|
$
|
10,372
|
|
$
|
59,121
|
|
|
1/22/09
|
|
$
|
11,000
|
|
|
552
|
|
$
|
10,448
|
|
$
|
48,672
|
|
|
2/22/09
|
|
$
|
11,000
|
|
|
455
|
|
$
|
10,545
|
|
$
|
38,128
|
|
|
3/22/09
|
|
$
|
11,000
|
|
|
322
|
|
$
|
10,678
|
|
$
|
27,449
|
|
|
4/22/09
|
|
$
|
11,000
|
|
|
256
|
|
$
|
10,744
|
|
$
|
16,706
|
|
|
5/22/09
|
|
$
|
11,000
|
|
|
151
|
|
$
|
10,849
|
|
$
|
5,857
|
|
|
6/22/09
|
|
$
|
5,912
|
|
|
55
|
|
$
|
5,857
|
|
$
|
(0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
104,912
|
|
$
|
4,912
|
|
$
|
100,000
|
|
$
|
(0
|
)
|
PURPLE
BEVERAGE COMPANY, INC.
SUBSCRIPTION
AGREEMENT
Purple
Beverage Company, Inc. 450 E.
Las
Olas
Blvd., Suite 830 Ft.
Lauderdale,
Florida 33301
Attn:
Theodore Farnsworth, CEO
Dear
Mr.
Farnsworth:
The
undersigned, Jay-2 Investments, LLC, a California limited liability company,
hereby subscribes to purchase the securities (the “
Securities
”)
of
Purple Beverage Company, Inc., a Nevada corporation (the “
Company
”),
consisting of a promissory note in the face amount of $1,000,000 (the
“
Note
”),
in
the form attached hereto as Exhibit A; not less than 200,000 shares (the
“
Shares
”)
of the
Company’s $.001 par value Common Stock (“
Common
Stock
”);
a
two-year warrant, in the form attached hereto as Exhibit B (the “
A
Warrant
”),
to
purchase up to 200,000 shares of the Company’s Common Stock (the number of
shares of the Company’s Common Stock underlying the A Warrant to be calculated
on a pro rata basis as determined by the face amount of the Note) at an
exercise
price of $2.00 per underlying share (the “
Initial
Warrant Exercise Price
”),
in
accordance with this agreement. This subscription may be rejected in whole
or in
part by the Company, in its sole and absolute discretion for any cause
or for no
cause.
If,
between the date that the undersigned has completed the subscription procedures
as set forth in this Subscription Agreement and the date on which such
subscription is accepted by the Company pursuant to section 5, below, the
Company subdivides or combines its issued and outstanding shares, the number
of
Shares set forth here and above, the number of shares represented by the
A
Warrant, and the Initial Warrant Exercise Price shall be proportionately
adjusted. Any questions regarding this document or the investment described
herein should be directed to Theodore Farnsworth, Chief Executive Officer,
Purple Beverage Company, Inc., 450 E. Las Olas Blvd., Suite 830, Ft. Lauderdale,
Florida 33301; telephone: (877) 347-3836 X 210, fax: (954) 462-8758; e-mail:
tfarnsworth@drinkpurple.com.
1.
Purchase
.
Subject
to the terms and conditions hereof, the undersigned hereby irrevocably
agrees to
purchase the Securities, consisting of (a) the Note with an initial face
amount
of $1,000,000; (b) that number of Shares set forth on the Signature Page
(such
Shares valued at the 10-trading-day Volume Weighted Average Price, with
the
final such trading day being the trading day immediately preceding the
execution
of this Subscription Agreement by the undersigned, but in no event, valued
at
less than $2.00 per Share); and (c) an A Warrant to purchase up to 200,000
shares of Common Stock, for an aggregate subscription price of $1,000,000,
and
tenders such purchase price by means of a check (cashiers, certified, or
personal), money order, or wire transfer made payable to: “
Purple
Beverage Company, Inc.
”
The
wire transfer instructions are:
Wachovia
Bank
350
East
Las Olas Blvd., Suite 830
Fort
Lauderdale, FL 33301
954-462-8382
Name:
Purple Beverage Company, Inc.
Routing#:
067 006 432
Account#:
200 003 459 5990
2.
Representations
and Warranties of the Purchaser
.
The
undersigned hereby makes the following representations and warranties to
the
Company, and the undersigned agrees to indemnify, hold harmless, and pay
all
causes of action, lawsuits, debts, controversies, damages, claims, demands
and
judgments (including litigation expenses and reasonable attorneys’ fees) up to
an amount not to exceed $1,000,000 and the net proceeds from the sale of
the
Shares and Common Stock issuable upon exercise of the A Warrants, incurred
by
the Company, and its past and present officers, directors, employees, agents,
successors and assigns, whether or not under federal or state securities
laws,
arising out of or in connection with the undersigned’s misrepresentation or
breach of any of the representations and warranties set forth herein, including,
without limitation,
|
(a)
|
The
undersigned is the sole and true party in interest and is not
purchasing
the Securities for the benefit of any other person and has not
granted any
other person any right or option or any participation or beneficial
interest in any of the Securities;
|
|
(b)
|
The
undersigned confirms receipt and careful review of all written
material
provided by, or on behalf of, the Company in respect of its business
and
prospects, and all information provided by the Company to its
stockholders
and the undersigned in respect of its business and prospects,
including
all attachments and exhibits thereto The undersigned understands
that all
books, records, and documents of the Company relating to this
investment
have been and remain available for inspection by the undersigned
upon
reasonable notice. The undersigned confirms that all documents
requested
by the undersigned have been made available, and that the undersigned
has
been supplied with all of the additional information concerning
this
investment that has been requested. The undersigned confirms
that it has
obtained sufficient information, in its judgment or that of its
independent purchaser representative, if any, to evaluate the
merits and
risks of this investment. The undersigned confirms that it has
had the
opportunity to obtain such independent legal and tax advice and
financial
planning services as the undersigned has deemed appropriate prior
to
making a decision to subscribe for the Securities. In making
a decision to
purchase the Securities, the undersigned has relied exclusively
upon its
experience and judgment, or that of its purchaser representative,
if any,
upon such independent investigations as it, or they, deemed appropriate,
and upon information provided by the Company in writing or found
in the
books, records, or documents of the Company and available at
the EDGAR
website of the Securities and Exchange Commission (the “
SEC
”);
|
|
(c)
|
In
evaluating the suitability of this investment the undersigned
has not
relied upon any representations or other information (whether
oral or
written), other than that furnished to the undersigned by the
Company or
its representatives or available at the EDGAR website of the
SEC. The
undersigned acknowledges and represents that no representations
or
warranties have been made to the undersigned by the Company or
its
directors, officers or any agents or representatives with respect
to the
business of the Company, the financial condition of the Company
and/or the
economic, tax or any other aspect or consequence of the purchase
of the
Securities and the undersigned has not relied upon any information
concerning the Company, written or oral, other than supplied
to the
undersigned by the Company or available at the EDGAR website
of the
SEC;
|
|
(d)
|
The
undersigned has such knowledge and experience in financial and
business
matters that the undersigned is capable of an evaluation of the
merits and
risks of the undersigned’s investment in the
Securities;
|
|
(e)
|
THE
UNDERSIGNED IS AWARE THAT AN INVESTMENT IN THE COMPANY IS HIGHLY
SPECULATIVE AND SUBJECT TO SUBSTANTIAL RISKS.
The undersigned is capable of bearing the high degree of economic
risk and
burdens of this venture, including, but not limited to, the possibility
of
a complete loss, the lack of a sustained and orderly public market,
and
limited transferability of the Securities, which may make the
liquidation
of this investment impossible for the indefinite future. The
undersigned
has the financial ability to bear the economic risks of its investment,
has adequate means of providing for its current needs and personal
contingencies, and has no need for liquidity in this investment.
The
undersigned’s commitment to investments that are not readily marketable is
not disproportionate to its net worth, and this investment will
not cause
such overall commitment to become
excessive;
|
|
(f)
|
The
offer to sell the Securities was directly communicated to the
undersigned
by such a manner that the undersigned, or his purchaser representative,
if
any, was able to ask questions of and receive answers from the
Company or
a person acting on its behalf concerning the terms and conditions
of this
transaction. At no time, except in connection and concurrently
with such
communicated offer, was the undersigned presented with or solicited
by or
through any leaflet, public promotional meeting, television advertisement,
or any other form of general
advertising;
|
|
(g)
|
The
Securities are being acquired solely for the undersigned’s own account for
investment, and are not being purchased with a view towards resale,
distribution, subdivision, or fractionalization
thereof;
|
|
(h)
|
The
undersigned understands that the Securities have not been registered
under
the Securities Act of 1933, as amended (the “
Securities
Act
”),
or any state securities laws, in reliance upon exemptions from
regulation
for non-public offerings. The undersigned understands that the
Securities
or any interest therein may not be, and agrees that the Securities
or any
interest therein will not be, resold or otherwise disposed of
by the
undersigned unless the Securities are subsequently registered
under the
Securities Act and under appropriate state securities laws or
unless the
Company receives an opinion of counsel satisfactory to it that
an
exemption from registration is
available
|
|
(i)
|
The
undersigned has been informed of and understands the
following.
|
|
(1)
|
There
are substantial restrictions on the transferability of the
Securities;
|
|
(2)
|
No
federal or state agency has made any finding or determination
as to the
fairness for public investment, nor any recommendation nor endorsement,
of
the Securities;
|
|
(j)
|
None
of the following information has ever been represented, guaranteed,
or
warranted to the undersigned, expressly or by implication by
any broker,
the Company, or agent or employee of the foregoing, or by any
other
person:
|
|
(1)
|
The
approximate or exact length of time that the undersigned will
be required
to remain a holder of the
Securities;
|
|
(2)
|
The
amount of consideration, profit, or loss to be realized, if any,
as a
result of an investment in the
Company;
|
|
(3)
|
That
the past performance or experience of the Company; its officers,
directors, associates, agents, affiliates, or employees; or any
other
person will in any way indicate or predict economic results in
connection
with the plan of operations of the Company or the return on the
investment;
|
|
(k)
|
The
undersigned has not distributed any information relating to this
investment to anyone other than its members representative, and
legal, tax
and financial advisors, if any;
|
|
(l)
|
The
undersigned hereby agrees to indemnify the Company and to hold
it harmless
from and against any and all liability, damage, cost, or expense,
including its attorneys’ fees and costs, up to an amount not to exceed
$1,000,000 and the net proceeds from the sale of the Shares and
Common
Stock issuable upon exercise of the A Warrants, incurred on account
of or
arising out of.
|
|
(1)
|
Any
material inaccuracy in the declarations, representations, and
warranties
hereinabove set forth;
|
|
(2)
|
The
disposition of the Securities or any part thereof by the undersigned,
contrary to the foregoing declarations, representations, and
warranties;
|
|
(3)
|
Any
action, suit, or proceeding based
upon:
|
|
(i)
|
the
claim that said declarations, representations, or warranties
were
inaccurate or misleading or otherwise cause for obtaining damages
or
redress from the Company; or
|
|
(ii)
|
the
disposition of the Securities or any part
thereof.
|
The
foregoing representations, warranties, agreements, undertakings and
acknowledgements are made by the undersigned with the intent that they
be relied
upon in determining the undersigned’s suitability as a purchaser of the
Securities. In addition, the undersigned agrees to notify the Company
immediately of any change in any representation, warranty or other information
that occurs prior to
the
issue
date of the Securities.
3.
Transferability
.
Prior
to the issue date of the Securities, the undersigned agrees not to transfer
or
assign the obligations or duties contained in this Subscription Agreement
or any
of the undersigned’s interest in this Subscription Agreement except to a
subsidiary or affiliate of the undersigned.
4.
Accredited
Investor; Off-Shore Transaction; Not a U.S. Person
.
The
undersigned is an “
accredited
investor
,”
as
that term is defined in Rule 501(c) of Regulation D promulgated under the
Securities Act.
5.
Acknowledgements,
Understandings, and Agreements of the Purchaser
.
The
undersigned acknowledges, understands, and agrees that
|
(a)
|
The
Company reserves the right to reject all, but not less than all
of this
subscription in its sole and absolute discretion for any cause
or for no
cause;
|
|
(b)
|
The
undersigned will be promptly notified by the Company whether
this
subscription has been accepted, and if not accepted in whole,
the Company
will promptly pay and the undersigned agrees to accept the return
of all
of the funds tendered to the Company as a refund or a return,
and in
either case without interest thereon or deduction
therefrom;
|
|
(c)
|
The
Securities shall be deemed issued and owned by the undersigned
upon the
Company’s receipt of the purchase price therefor and its acceptance
thereof;
|
|
(d)
|
The
Securities (and their component parts) have not been registered
under the
Securities Act or any other applicable securities laws, by reason
of their
issuance in a transaction that does not require registration
thereunder
(based in part on the accuracy of the representations and warranties
of
the undersigned contained herein), and that the Securities must
be held
indefinitely unless a subsequent disposition is registered as
required or
is exempt from such registration;
|
|
(e)
|
The
SEC currently takes the position that coverage of short sales
of shares of
the Company’s Common Stock “
against
the box
”
prior to the effective date of a Registration Statement registering
the
re-sale of the Shares is a violation of Section 5 of the Securities
Act,
as set forth in Item 65, Section 5 under Section A of the Manual
of
Publicly Available Telephone Interpretations, dated July 1997,
compiled by
the Office of Chief Counsel, Division of Corporation Finance
of the SEC;
and
|
|
(f)
|
The
undersigned shall not use any of the Shares to cover any short
sales made
prior to the effective date of such registration
statement
|
6.
Representations
and Warranties of the Company
.
The
Company hereby makes the following representations and warranties to the
Purchaser:
|
(a)
|
Due
Incorporation
.
The Company is a corporation or other entity duly incorporated
or
organized, validly existing and in good standing under the laws
of the
jurisdiction of its incorporation or organization and has the
requisite
corporate power to own its properties and to carry on its business
as
presently conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned
by it makes
such qualification necessary, other than those jurisdictions
in which the
failure to so qualify would not have a Material Adverse Effect.
For
purposes hereof, a “
Material
Adverse Effect
”
shall mean a material adverse effect on the financial condition,
results
of operations, prospects, properties, or business of the Company
and its
Subsidiaries taken as a whole. For purposes of this Agreement,
“
Subsidiary
”
means, with respect to any entity at any date, any corporation,
limited or
general partnership, limited liability company, trust, estate,
association, joint venture or other business entity of which
more than 30%
of (i) the outstanding capital stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the
board of
directors or other managing body of such entity, (ii) in the
case of a
partnership or limited liability company, the interest in the
capital or
profits of such partnership or limited liability company or (iii)
in the
case of a trust, estate, association, joint venture or other
entity, the
beneficial interest in such trust, estate, association or other
entity
business is, at the time of determination, owned or controlled
directly or
indirectly through one or more intermediaries, by such entity.
As of the
date hereof, the Company does not have any
Subsidiaries.
|
|
(b)
|
Outstanding
Stock
.
All issued and outstanding shares of capital stock of the Company
have
been duly authorized and validly issued and are fully paid and
non-assessable.
|
|
(c)
|
Authority;
Enforceability
.
This Agreement, the Note, the Shares, the A Warrant, and all
other
agreements delivered together with this Agreement or in connection
herewith to which the Company is a party (collectively, the “
Transaction
Documents
”)
have been duly authorized, executed and delivered by the Company
and are
valid and binding agreements 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 generally and to general
principles of equity. The Company has full corporate power and
authority
necessary to enter into and deliver the Transaction Documents
and to
perform its obligations thereunder.
|
|
(d)
|
Capitalization
and Additional Issuances
.
The authorized and outstanding capital stock of the Company and
Subsidiaries as of the date of this Agreement is set forth in
the
Company’s Registration Statement on Form S-1, Pre-Effective Amendment
No.
2 (the “
S-1
”),
as filed with the SEC on July
2,
2008.
Subject to a standard threshold of materiality, there are no
outstanding
agreements or preemptive or similar rights affecting the Common
Stock or
equity and no outstanding rights, warrants or options to acquire,
or
instruments convertible into or exchangeable for, or agreements
or
understandings with respect to the sale or issuance of any shares
of
Common Stock or equity of the Company or Subsidiaries or other
equity
interest in the Company or Subsidiaries except as described
therein.
|
|
(e)
|
Consents
.
No consent, approval, authorization or order of any court, governmental
agency or body or arbitrator having jurisdiction over the Company,
Subsidiaries or any of their Affiliates, the OTC Bulletin Board
(“
OTCBB
”)
or the Company’s shareholders is required for the execution by the Company
of the Transaction Documents and compliance and performance by
the Company
of its obligations under the Transaction Documents, including,
without
limitation, the issuance and sale of the Securities and the shares
of
Common Stock issuable upon exercise of the A Warrants (“
Warrant
Shares
”).
The Transaction Documents and the Company’s performance of its obligations
thereunder have been approved by the Company’s Board of
Directors.
|
|
(f)
|
No
Violation or Conflict
.
Assuming the representations and warranties of the undersigned
and the
acknowledgements, understandings, and agreements of the undersigned
contained herein are true and correct, neither the issuance and
sale of
the Securities and Warrant Shares nor the performance of the
Company’s
obligations under the Transaction Documents by the Company
will:
|
(i)
violate,
conflict with, result in a breach of, or constitute a default (or an
event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles of incorporation
or
bylaws of the Company, (B) to the Company’s knowledge, any decree, judgment,
order, law, treaty, rule, regulation or determination applicable to
the Company
of any court, governmental agency or body, or arbitrator having jurisdiction
over the Company or over the properties or assets of the Company, (C)
the terms
of any bond, debenture, note, or any other evidence of indebtedness,
or any
agreement, stock option or other similar plan, indenture, lease, mortgage,
deed
of trust, or other instrument to which the Company is a party, by which
the
Company is bound, or to which any property of the Company is subject,
or (D) the
terms of any “lock-up” or similar provision of any underwriting or other
agreement to which the Company, or any of its Affiliates is a party
or obligor,
except the violation, conflict, breach, or default of which would not
have a
Material Adverse Effect or
(ii)
result
in
the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company except as described herein;
or
(iii)
result
in
the acceleration of the due date of any obligation of the Company;
or
(iv)
will
result in the triggering of any piggy-back registration rights, ratchet,
anti-dilution, price reset or similar rights of any person or entity holding
securities of the Company or having the right to receive securities of
the
Company.
|
(g)
|
The
Securities
.
The Securities upon issuance:
|
(i)
are,
or
will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the Securities
Act and
any applicable state securities laws;
(ii)
have
been, or will be, duly and validly authorized and on the date of issuance
of the
Shares and Warrant Shares, such Shares and Warrant Shares will be duly
and
validly issued, fully paid and non-assessable and if registered pursuant
to the
Securities Act and resold pursuant to an effective registration statement
will
be free trading and unrestricted;
(iii)
will
not
have been issued or sold in violation of any preemptive or other similar
rights
of the holders of any securities of the Company; and
(iv)
will
not
subject the holders thereof to personal liability by
reason
of
solely being such holders.
(h)
Litigation
.
There
is no pending or, to the best knowledge of the Company, threatened action,
suit,
proceeding or investigation before any court, governmental agency or body,
or
arbitrator having jurisdiction over the Company, that would affect the
execution
by the Company or the performance by the Company of its obligations under
the
Transaction Documents. There is no pending or, to the best knowledge of
the
Company, basis for or threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, which litigation, if adversely determined, would have
a
Material Adverse Effect
|
(i)
|
No
Market Manipulation
.
The Company has not taken, and will not take, directly or indirectly,
any
action designed to, or that might reasonably be expected to,
cause or
result in stabilization or manipulation of the price of the Common
Stock
to facilitate the sale or resale of the Securities or Warrant
Shares or
affect the price at which the Securities or Warrant Shares may
be issued
or resold.
|
|
(j)
|
Information
Concerning Company
.
Since the dates of the most recent financial statements included
in the
S-1, there has been no Material Adverse Event relating to the
Company’s
business, financial condition or affairs not disclosed therein.
The S-1,
including the exhibits and financial statements included therewith,
does
not contain any untrue statement of a material fact or omit to
state a
material fact required to be stated therein or necessary to make
the
statements therein, taken as a whole, not misleading in light
of the
circumstances when made.
|
|
(k)
|
Stop
Transfer
.
The Company will not issue any stop transfer order or other order
impeding
the sale, resale, or delivery of any of the Securities, except
as may be
required by any applicable federal or state securities laws and
unless
contemporaneous notice of such instruction is given to the
undersigned.
|
|
(l)
|
Defaults
.
The Company is not in violation of its articles of incorporation
or
bylaws. The Company is not in (i) default under or in violation
of any
other material agreement or instrument to which it is a party
or by which
it or any of its properties are bound or affected, which default
or
violation would have a Material Adverse Effect, (ii) default
with respect
to any order of any court, arbitrator or governmental body or
subject to
or party to any order of any court or governmental authority
arising out
of any action, suit or proceeding under any statute or other
law
respecting antitrust, monopoly, restraint of trade, unfair competition,
or
similar matters, or (iii) violation of any statute, rule, or
regulation of
any governmental authority which violation would have a Material
Adverse
Effect.
|
|
(m)
|
No
General Solicitation
.
The Company, and to its knowledge, no person acting on its behalf,
has
engaged in any form of general solicitation or general advertising
(within
the meaning of Regulation D under the Securities Act) in connection
with
the offer or sale of the
Securities.
|
|
(n)
|
No
Undisclosed Liabilities
.
The Company has no liabilities or obligations which are material,
individually or in the aggregate, other than those incurred in
the
ordinary course of the Company business since the date of the
most recent
audited financial statements of the Company contained in the
S-1, and
which, individually or in the aggregate, would reasonably be
expected to
have a Material Adverse Effect
|
|
(o)
|
No
Undisclosed Events or Circumstances
.
Since the date of the most recent audited financial statements
of the
Company contained in the S-1, no event or circumstance has occurred
or
exists with respect to the Company or its business, properties,
operations
or financial condition, that, under applicable law, rule or regulation,
requires public disclosure or announcement prior to fourteen
days after
the date hereof by the Company but which has not been so publicly
announced or disclosed in the S-1.
|
|
(p)
|
Dilution
.
The Company’s executive officers and director understand the nature of the
Securities being sold hereby and recognize that the issuance
of the
Securities and Warrant Shares will have a potential dilutive
effect on the
equity holdings of other holders of the Company’s equity or rights to
receive equity of the Company. The board of directors of the
Company has
concluded, in its good faith business judgment, that the issuance
of the
Securities is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Warrant
Shares
upon exercise of the A Warrant is binding upon the Company and
enforceable
regardless of the dilution such issuance may have on the ownership
interests of other stockholders of the Company or parties entitled
to
receive equity of the Company.
|
|
(q)
|
No
Disagreements with Accountants and Lawyers
.
There are no material disagreements of any kind presently existing,
or
reasonably anticipated by the Company to arise between the Company
and the
accountants and lawyers presently employed by the Company, including
but
not limited to disputes or conflicts over payment owed to such
accountants
and lawyers, nor have there been any such disagreements during
the two
years prior to the Closing Date.
|
|
(r)
|
Investment
Company
.
The Company is not an “investment company” within the meaning of the
Investment Company Act of 1940, as
amended.
|
|
(s)
|
Foreign
Corrupt Practices
.
Neither the Company, nor to the knowledge of the Company, any
agent or
other person acting on behalf of the Company, has (i) directly
or
indirectly, used any funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses related to foreign
or domestic
political activity, (ii) made any unlawful payment to foreign
or domestic
government officials or employees or to any foreign or domestic
political
parties or campaigns from corporate funds, (iii) failed to disclose
fully
any contribution made by the Company (or made by any person acting
on its
behalf of which the Company is aware) which is in violation of
law, or
(iv) violated in any material respect any provision of the Foreign
Corrupt
Practices Act of 1977, as amended.
|
|
(t)
|
Reporting
Company
.
The Company is a publicly-held company subject to reporting obligations
pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended
(the “
1934
Act
”)
and has a class of Common Stock registered pursuant to Section
12(g) of
the 1934 Act. Pursuant to the provisions of the 1934 Act, the
Company has
timely filed all reports and other materials required to be filed
thereunder with the SEC during the preceding twelve
months.
|
|
(u)
|
Quotation
.
The Company’s Common Stock is quoted on the OTCBB under the symbol PPBV.
The Company has not received any oral or written notice that
its Common
Stock is not eligible nor will become ineligible for continued
quotation
on the OTCBB nor that it does not meet all requirements for the
continuation of such listing. The Company satisfies all of its
requirements for the continued quotation of its Common Stock
on the
OTCBB.
|
|
(v)
|
DTC
Status
.
The Company’s transfer agent is a participant in, and the Common Stock is
eligible for transfer pursuant to, the Depository Trust Company
Automated
Securities Transfer Program.
|
|
(w)
|
Company
Predecessor and Subsidiaries
.
All representations made by or relating to the Company of a historical
or
prospective nature and all undertakings contained herein shall,
if
applicable, relate, apply, and refer to the Company and the Subsidiaries
and their respective predecessors.
|
|
(x)
|
Solvency
.
Based on the financial condition of the Company as of June 30,
2008 after
giving effect to the receipt by the Company of the purchase price
of the
Securities, (i) the Company’s fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect
of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; and (ii) the current cash flow of
the
Company, together with the proceeds the Company would receive,
were it to
liquidate all of its assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or
in respect
of its debt when such amounts are required to be paid. To the
best
knowledge of the Company, no event has occurred that would make
the
foregoing representations inaccurate as of the date this Subscription
Agreement is accepted by the Company. The Company does not intend
to incur
debts beyond its ability to pay such debts as they mature (taking
into
account the timing and amounts of cash to be payable on or in
respect of
its debt).
|
|
(y)
|
Correctness
of Representations
.
The Company represents that the foregoing representations and
warranties
are true and correct as of the date hereof in all material respects,
and,
unless the Company otherwise notifies the undersigned prior to
the date
the Securities are delivered to the undersigned, shall be true
and correct
in all material respects as such date;
provided
,
that, if such representation or warranty is made as of a different
date in
which case such representation or warranty shall be true as of
such
date.
|
|
(z)
|
Survival
.
The foregoing representations and warranties shall survive the
date on
which the undersigned’s subscription has been accepted by the
Company.
|
7.
Covenants
of the Company
.
The
Company covenants and agrees with the undersigned as follows:
|
(a)
|
Stop
Orders
.
The Company will advise the undersigned, within 24 hours after
it receives
notice of issuance by the SEC, any state securities commission
or any
other regulatory authority, of any stop order or of any order
preventing
or suspending any offering of any securities of the Company,
or of the
suspension of the qualification of the Common Stock of the Company
for
offering or sale in any jurisdiction, or the initiation of any
proceeding
for any such purpose.
|
|
(b)
|
Listing/Quotation
.
The Company shall promptly secure the quotation or listing of
the Shares
and Warrant Shares upon each national securities exchange, or
automated
quotation system upon which they are or become eligible for quotation
or
listing (subject to official notice of issuance) and shall maintain
same
so long as the A Warrant is outstanding. The Company will maintain
the
quotation or listing of its Common Stock on the OTCBB, American
Stock
Exchange, National Capital Market, Nasdaq Global Market, Nasdaq
Global
Select Market, or New York Stock Exchange (whichever of the foregoing
is
at the time the principal trading exchange or market for the
Common Stock
(the “
Principal
Market
”),
and will comply in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Principal
Market, as
applicable. The Company will provide the undersigned copies of
all notices
it receives notifying the Company of the threatened and actual
delisting
of the Common Stock from any Principal Market. As of the date
of on which
the Company has accepted the undersigned’s subscription, the OTCBB is the
Principal Market
|
|
(c)
|
Market
Regulations
.
The Company shall notify the SEC, the Principal Market, and applicable
state authorities, in accordance with their requirements, of
the
transactions contemplated by this Agreement, and shall take all
other
necessary action and proceedings as may be required and permitted
by
applicable law, rule and regulation, for the legal and valid
issuance of
the Securities to the undersigned and promptly provide copies
thereof to
the undersigned.
|
|
(d)
|
Filing
Requirements
.
From the date of this Subscription Agreement and until three
(3) years
thereafter (unless the Shares and the Warrant Shares have been
resold or
transferred by the undersigned pursuant to a registration statement,
if
any, or pursuant to Rule 144, [the date of occurrence of the
second such
event being the “
End
Date
”]),
the Company will (A) cause its Common Stock to be registered
under Section
12(b) or 12(g) of the 1934 Act, (B) comply in all respects with
its
reporting and filing obligations under the 1934 Act, and (C)
voluntarily
comply with all reporting requirements that are applicable to
an issuer
with a class of shares registered pursuant to Section 12(b) or
Section
12(g) of the 1934 Act, if the Company is not subject to such
reporting
requirements. The Company will not take any action or file any
document
(whether or not permitted by the Securities Act or the 1934 Act
or the
rules thereunder) to terminate or suspend its reporting and filing
obligations under said acts until the End Date. Until the End
Date, the
Company will take no action and will not refrain from taking
any action
that would cause the listing or quotation of the Common Stock
on all
Principal Markets to cease and will comply in all respects with
the
Company’s reporting, filing, and other obligations under the bylaws or
rules of the Principal Market, as applicable. The Company agrees
to timely
file a Form D with respect to the transaction contemplated hereby,
if
required under Regulation D, and to provide a copy thereof to
the
undersigned promptly after such
filing.
|
|
(e)
|
Reservation
.
Prior to the Closing Date, and at all times thereafter, the Company
shall
have reserved, on behalf of the undersigned, from its authorized
but
unissued Common Stock, a number of share of Common Stock equal
to the
amount of Warrant Shares issuable upon exercise of the A
Warrant.
|
|
(f)
|
DTC
Program
.
At all times that the A Warrant is outstanding, the Company will
employ as
the transfer agent for the Common Stock, Shares and Warrant Shares
a
participant in the Depository Trust Company Automated Securities
Transfer
Program.
|
|
(g)
|
Taxes
.
From the date of this Agreement and until the End Date, the Company
will
promptly pay and discharge, or cause to be paid and discharged,
when due
and payable, all lawful taxes, assessments and governmental charges
or
levies imposed upon the income, profits, property or business
of the
Company;
provided,
however
,
that any such tax, assessment, charge or levy need not be paid
if the
validity thereof shall currently be contested in good faith by
appropriate
proceedings and if the Company shall have set aside on its books
adequate
reserves with respect thereto, and
provided,
further
,
that the Company will pay all such taxes, assessments, charges,
or levies
forthwith upon the commencement of proceedings to foreclose any
lien which
may have attached as security
therefor.
|
|
(h)
|
Insurance
.
From the date of th
i
s
Agreement and until the End Date, the Company will keep its assets
which
are of an insurable character insured by financially sound and
reputable
insurers against loss or damage by fire, explosion, and other
risks
customarily insured aga
i
nst
by companies in the Company’s line of business, in amounts sufficient to
prevent the Company from becoming a co-insurer and not in any
event less
than one hundred percent (100%) of the insurable value of the
property
insured less reasonable deductible amounts; and the Company will
maintain,
with financially sound and reputable insurers, insurance against
other
hazards and risks and liability to persons and property to the
extent and
in the manner customary for companies in similar businesses similarly
situated and to the extent available on commercially reasonable
terms.
|
|
(i)
|
Books
and Records
.
From the date of this Agreement and until the End Date, the Company
will
keep true records and books of account in which full, true, and
correct
entries will be made of all dealings or transactions in relation
to its
business and affairs in accordance with generally accepted accounting
principles applied on a consistent
basis.
|
|
(j)
|
Governmental
Authorities
.
From the date of this Agreement and until the End Date, the Company
shall
duly observe and conform in all material respects to all valid
requirements of governmental authorities relating to the conduct
of its
business or to its properties or
assets.
|
|
(k)
|
Intellectual
Property
.
From the date of this Agreement and until the End Date, the Company
shall
maintain in full force and effect its corporate existence, rights,
and
franchises and all licenses and other rights to use intellectual
property
owned or possessed by it and reasonably deemed to be necessary
to the
conduct of its business, unless it is sold for
value.
|
|
(l)
|
Properties
.
From the date of this Agreement and until the End Date, the Company
will
keep its properties in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make
all
necessary and proper repairs, renewals, replacements, additions,
and
improvements thereto; and the Company will at all times comply
with each
provision of all leases to which it is a party or under which
it occupies
property if the breach of such provision could reasonably be
expected to
have a Material Adverse Effect.
|
|
(m)
|
Confidentiality/Public
Announcement
.
From the date of this Agreement and until the End Date, the Company
agrees
that it will not disclose publicly or privately the identity
of the
undersigned unless expressly agreed to in writing by the undersigned
but
only to the extent required by law and then only upon five days
prior
notice to the undersigned.
|
|
(n)
|
Non-Public
Information
.
The Company covenants and agrees that neither it nor any other
person
acting on its behalf will at any time provide the undersigned
or its agent
or counsel with any information that the Company believes constitutes
material non-public information. The Company understands and
confirms that
the undersigned shall be relying on the foregoing representations
in
effecting transactions in securities of the Company. In the event
that the
Company believes that a notice or communication to the undersigned
contains material, nonpublic information, relating to the Company
or
Subsidiaries, the Company shall so indicate to the undersigned
contemporaneously with delivery of such notice or information.
In the
absence of any such indication, the undersigned shall be allowed
to
presume that all matters relating to such notice and information
do not
constitute material, nonpublic information relating to the Company
or its
Subsidiaries.
|
|
(o)
|
Notices
.
For so long as the undersigned holds any of the Note, the Shares,
the A
Warrant, or the Warrant Shares, the Company will maintain a United
States
address and United States fax number for notices purposes under
the
Transaction Documents.
|
|
(p)
|
No
Loans Senior
.
Until the Note has been repaid in full, the Company will not
permit any
person to become a creditor, whose obligations are senior to
the
obligations of the Company as set forth in the Note;
provided,
however
,
that the Company may incur obligations senior to those of the
Note in
respect of secured trade payables and those in favor of licensed
commercial lenders, in each case incurred in the ordinary course
of the
Company’s business;
provided,
further
,
that the Company’s obligation to its Chief Financial Officer in the
principal amount of $93,000 shall be deemed to be senior to the
Company’s
obligations under the note, which $93,000 obligation shall be
paid in full
concurrently with the acceptance of this Agreement by the Company.
Except
as described in the previous sentence, no creditor or person
has rights to
payment from the Company or to the Company’s assets upon distribution
which rights are senior to the rights of the undersigned upon
acceptance
of this Subscription Agreement by the Company except for amounts
that, as
of the date such obligation was incurred or the date on which
such
obligation will be incurred, are secured by assets of equal or
greater
value in commercial arrangements incurred in the normal course
of
business.
|
|
(q)
|
The
Company agrees to indemnify, hold harmless, reimburse and defend
the
undersigned, the undersigned’s officers, directors, agents, Affiliates,
members, managers, control persons, and principal shareholders,
against
any claim, cost, expense, liability, obligation, loss or damage
(including
reasonable legal fees) of any nature, incurred by or imposed
upon the
undersigned or any such person which results, arises out of or
is based
upon (i)
any
material misrepresentation by Company or breach of any material
representation or warranty by Company in any Transaction Document,
or
other agreement delivered pursuant hereto; or (ii) after any
applicable
notice and/or cure periods, any breach or default in performance
by the
Company of any material covenant or undertaking to be performed
by the
Company under any Transaction Document, or any other agreement
entered
into by the Company and the undersigned relating
hereto.
|
|
(r)
|
In
the event commencing one hundred and eighty-one (181) days after
the date
this Subscription Agreement is accepted by the Company and ending
one year
after such acceptance, the undersigned is not permitted to resell
any of
the Shares or Warrant Shares without any restrictive legend or
if such
sales are permitted but subject to volume limitations or further
restrictions on resale as a result of the unavailability to Subscriber
of
Rule 144(b)(1) under the 1933 Act (as in effect and the date
on which such
subscription is accepted by the Company pursuant to section 5,
above) (a
“
144
Default
”),
for any reason except for the undersigned’s status as an Affiliate or
“control person” of the Company, then the Company shall pay the
undersigned as liquidated damages (“
Liquidated
Damages
”)
and not as a penalty an amount equal to one and one-half percent
(1.5%)
for each thirty (30) days (or such lesser pro-rata amount for
any period
less than thirty (30) days) of the purchase price of the Shares
and
Warrant Shares owned by the Subscriber during the pendency of
the 144
Default. For purposes of this Section 7(r), the purchase price
of the
Shares will be deemed to be Two Dollars ($2.00) per Share. The
purchase
price of actually held Warrant Shares will be the aggregate exercise
price
thereof. Liquidated Damages must be paid in cash within ten (10)
days
after each thirty (30) day period or shorter period for which
Liquidated
Damages are payable.
|
8.
State
Securities Laws
.
The
Company represents that based on the accuracy of the representations and
warranties of the undersigned contained herein, the offering and sale of
the
Securities is exempt from qualification under the securities laws of the
State
of California.
9.
Regulation
D
.
Notwithstanding anything herein to the contrary, every person or entity
who, in
addition to or in lieu of the undersigned, is deemed to be a “
purchaser
”
pursuant to Regulation D promulgated under the Securities Act or any state
law
does hereby make and join in making all of the covenants, representations,
and
warranties made by the undersigned.
10.
Acceptance
.
Execution and delivery of this Subscription Agreement shall constitute
an
irrevocable offer to purchase the Securities indicated, which offer may
be
accepted or rejected in whole but not in part by the Company in its sole
and
absolute discretion for any cause or for no cause which if rejected must
be so
rejected within twenty-four hours after delivery to the Company. Acceptance
of
this offer by the Company shall be indicated by its execution
hereof.
11.
Miscellaneous
.
The
following provisions relate and apply to each of the Transaction Documents
and
are deemed incorporated in each such other agreement regardless of the
actual
agreement referred to.
|
(a)
|
Notices
.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing
and,
unless otherwise specified herein, shall be (i) personally served,
(ii)
deposited in the mail, registered or certified, return receipt
requested,
postage prepaid, (iii) delivered by reputable air courier service
with
charges prepaid, or (iv) transmitted by hand delivery, telegram,
or
facsimile, addressed as set forth below or to such other address
as such
party shall have specified most recently by written notice. Any
notice or
other communication required or permitted to be given hereunder
shall be
deemed effective (a) upon hand delivery or delivery by facsimile,
with
accurate confirmation generated by the transmitting facsimile
machine, at
the address or number designated below (if delivered on a business
day
during normal business hours where such notice is to be received),
or the
first business day following such delivery (if delivered other
than on a
business day during normal business hours where such notice is
to be
received) or (b) on the second business day following the date
of mailing
by express courier service, fully prepaid, addressed to such
address, or
upon actual receipt of such mailing, whichever shall first occur.
The
addresses for such communications shall be: (i) if to the Company,
to:
Purple Beverage Company, Inc, 450 E. Las Olas Blvd., #830, Ft
Lauderdale,
Florida 33301, Attn: Theodore Farnsworth, President, facsimile:
(954)
462-8758, with an additional copy by facsimile only (which shall
not
constitute notice) to: Bryan Cave LLP, 1900 Main Street, Suite
700,
Irvine, CA 92614, Attn: Randolf W. Katz, Esq., facsimile: (949)
223-7100,
(ii) if to the undersigned, to: the address and facsimile number
indicated
on the signature page hereto, with an additional copy by facsimile
only
(which shall not constitute notice)to: Grushko & Mittman, P.C., 551
Fifth Avenue, Suite 1601, New York, New York 10176, facsimile:
(212)
697-3575.
|
|
(b)
|
Entire
Agreement Assignment
.
This Subscription Agreement and other documents delivered in
connection
herewith represent the entire agreement between the parties hereto
with
respect to the subject matter hereof and may be amended only
by a writing
executed by the Company and the undersigned. Neither the Company
nor the
undersigned has relied on any representations not contained or
referred to
in this Subscription Agreement and the documents delivered herewith.
No
right or obligation of the Company or undersigned shall be assigned
without prior notice to and the written consent of the other
party.
|
|
(c)
|
Counterparts/Execution
.
This Subscription Agreement may be executed in any number of
counterparts
and by the different signatories hereto on separate counterparts,
each of
which, when so executed, shall be deemed an original, but all
such
counterparts shall constitute but one and the same instrument.
This
Subscription Agreement may be executed by facsimile signature
and
delivered by facsimile
transmission.
|
|
(d)
|
Law
Governing Subscription Agreement
.
This Subscription Agreement shall be governed by and construed
in
accordance with the laws of the State of New York without regard
to
principles of conflicts of laws. Any action brought by either
party
against the other concerning the transactions contemplated by
this
Subscription Agreement shall be brought only in the state courts
of
California or in the federal courts located in the state of California,
Los Angeles county. The parties to this Subscription Agreement
hereby
irrevocably waive any objection to jurisdiction and venue of
any action
instituted hereunder and shall not assert any defense based on
lack of
jurisdiction or venue or based upon forum non conveniens. The
parties
executing this Subscription Agreement and other agreements referred
to
herein or delivered in connection herewith on behalf of the Company
agree
to submit to the in personam jurisdiction of such courts and
hereby
irrevocably waive trial by jury. The prevailing party shall be
entitled to
recover from the other party its reasonable attorney’s fees and costs. In
the event that any provision of this Subscription Agreement or
any other
agreement delivered in connection herewith 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 such
provision which may prove invalid or unenforceable under any
law shall not
affect the validity or enforceability of any other provision
of any
agreement.
|
|
(e)
|
Specific
Enforcement, Consent to Jurisdiction
.
The Company and undersigned acknowledge and agree that irreparable
damage
would occur in the event that any of the provisions of this Subscription
Agreement were not performed in accordance with their specific
terms or
were otherwise breached. It is accordingly agreed that the parties
shall
be entitled to seek an injunction or injunctions to prevent or
cure
breaches of the provisions of this Subscription Agreement and
to enforce
specifically the terms and provisions hereof, this being in addition
to
any other remedy to which any of them may be entitled by law
or equity.
Subject to Section 11(d) hereof, the Company hereby irrevocably
waives,
and agrees not to assert in any such suit, action or proceeding,
any claim
that it is not personally subject to the jurisdiction in California
of
such court, that the suit, action or proceeding is brought in
an
inconvenient forum or that the venue of the suit, action or proceeding
is
improper. Nothing in this Section shall affect or limit any right
to serve
process in any other manner permitted by
law.
|
|
(f)
|
Damages
.
In the event the undersigned is entitled to receive any liquidated
damages
pursuant to the Transaction Documents, the undersigned may elect
to
receive the greater of actual damages or such liquidated
damages.
|
|
(g)
|
Maximum
Payments
.
Nothing contained herein or in any document referred to herein
or
delivered in connection herewith shall be deemed to establish
or require
the payment of a rate of interest or other charges in excess
of the
maximum permitted by applicable law. In the event that the rate
of
interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess
of such
maximum shall be credited against amounts owed by the Company
to the
undersigned and thus refunded to the
Company.
|
|
(h)
|
Calendar
Days
.
All references to “days” in the Transaction Documents shall mean calendar
days unless otherwise stated. The terms “business days” and “trading days”
shall mean days that the New York Stock Exchange is open for
trading for
three or more hours. Time periods shall be determined as if the
relevant
action, calculation or time period were occurring in New York
City. Any
deadline that falls on a non-business day in any of the Transaction
Documents shall be automatically extended to the next business
day and
interest, if any, shall be calculated and payable through such
extended
period.
|
|
(i)
|
Captions:
Certain Definitions
.
The captions of the various sections and paragraphs of this Subscription
Agreement have been inserted only for the purposes of convenience;
such
captions are not a part of this Subscription Agreement and shall
not be
deemed in any manner to modify, explain, enlarge or restrict
any of the
provisions of this Subscription Agreement. As used in this Subscription
Agreement the term “person” shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability
company,
a trust, an unincorporated organization and a government or any
department
or agency thereof.
|
|
(j)
|
Severability
.
In the event that any term or provision of this Subscription
Agreement
shall be finally determined to be superseded, invalid, illegal
or
otherwise unenforceable pursuant to applicable law by an authority
having
jurisdiction and venue, that determination shall not impair or
otherwise
affect the validity, legality or enforceability: (i) by or before
that
authority of the remaining terms and provisions of this Subscription
Agreement, which shall be enforced as if the unenforceable term
or
provision were deleted, or (ii) by or before any other authority
of any of
the terms and provisions of this Subscription
Agreement
|
|
(k)
|
Successor
Laws
.
References in the Transaction Documents to laws, rules, regulations
and
forms shall also include successors to and functionally equivalent
replacements of such laws, rules, regulations and
forms.
|
IN
WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
on the
date set forth on the signature page.
The
undersigned desires to take title in the Securities as an individual. The
exact
spelling of name(s) under which title to the Securities shall be taken,
and the
exact location for delivery of the Securities, is (please print):
Names(s)
|
JAY-2
INVESTMENTS, LLC
|
|
|
(address)
|
137
North Larchmont Boulevard, #484
|
|
Los
Angeles, California 90004
|
|
Fax
Number:
|
SUBSCRIPTION
AGREEMENT
SIGNATURE
PAGE
Purchase
Price subscribed:
|
|
$
|
1,000,000
|
|
|
Face Amount of Note:
|
|
$
|
1,000,000
|
|
|
|
|
|
|
|
Number of Shares subscribed:
|
|
|
200,000
|
|
|
|
|
|
|
|
Number
of A warrants:
|
|
|
200,000
|
|
JAY-2
INVESTMENTS, LLC
|
Name
of Purchaser(s) (Please print or
type)
|
Social Security/Tax Identification Number:
|
|
Mailing Address:
|
137
North Larchmont Boulevard, #484
|
|
Los
Angeles, CA 90004
|
|
Fax
Number:
|
Executed
at ______________________________, this 16
th
day of
July, 2008.
(location)
SUBSCRIPTION
ACCEPTED:
PURPLE
BEVERAGE COMPANY, INC.
|
/s/
Theodore Farnsworth
|
|
Theodore
Farnsworth, Chief Executive Officer
|
DATE:
July 16, 2008
PROMISSORY
NOTE
$1,000,000.00
|
Ft.
Lauderdale, Florida
|
|
July
16, 2008
|
Purple
Beverage Company, Inc., a Nevada corporation (the “
Maker
”),
hereby promises to pay to the order of Jay-2 Investments, LLC, a California
limited liability company (the “
Holder
”),
in
lawful money of the United States of America, the sum of One Million and
00/l00ths Dollars ($1,000,000.00), together with accrued and unpaid interest
thereon, at the rate set forth below, on or before October —, 2008 (the
“
Maturity
Date
”);
provided, however, that all such sums shall become due and payable upon
the
earlier to occur occurrence of (i) a “
Financing
Transaction
”
(as
defined below) or (ii) an “
Event
of Default
”,
as
defined below-,
provided,
further
,
that
except upon the occurrence of a Financing Transaction, an Event of Default,
or
an event that, with the passage of time or the giving of notice, could
become an
Event of Default, the Maturity Date may be extended by the Company in writing
at
any time prior to the Maturity Date in its sole and absolute discretion
for up
to 30 days, which extension shall not constitute an Event of
Default.
The
unpaid principal amount of this Promissory Note shall bear interest at
a rate
per annum equal to eleven percent (11%) calculated on the basis of a 365-day
year and the actual number of days elapsed. If any interest is determined
to be
in excess of the then legal maximum rate, then that portion of each interest
payment representing an amount in excess of the then legal maximum rate
shall be
deemed a payment of principal and applied against the principal of the
obligations evidenced by this Promissory Note. This maker shall not have
any
grace period to pay any monetary amounts due under this Promissory Note.
After
the Maturity Date, accelerated or otherwise, and during the pendency of
an Event
of Default, a default interest rate of eighteen percent (18%) per annum
shall
apply to the amounts owed hereunder.
This
Promissory Note may be prepaid in whole or in part at any time, or from
time to
time, without premium or penalty and without prior notice to or consent
by the
Holder. Amounts prepaid may not be re-borrowed.
Within
two business days of the occurrence of a Financing Transaction, the Maker
shall
immediately tender to the Holder all sums of principal, interest, and other
fees
then remaining unpaid hereunder. For purposes herein, a “
Financing
Transaction
”
shall
be deemed to have occurred upon the Maker receiving in cash, in one or
a series
of debt or equity transactions, an amount of funds not less than $2,000,000
in
gross proceeds.
This
Promissory Note was issued by the Maker pursuant to a Subscription Agreement
(“
Subscription
Agreement
”)
dated
July 16, 2008. The terms of the Subscription Agreement, including but not
limited to the obligations of the Maker thereunder are incorporated herein
by
this reference. Upper case terms not otherwise defined herein shall have
the
meanings ascribed to them in this Subscription Agreement.
Upon
the
occurrence of an Event of Default, the Holder may make all sums of principal,
interest, and other fees then remaining unpaid hereunder immediately due
and
payable. The occurrence with respect to the Maker of any of the following
events
is an “
Event
of Default
”:
|
•
|
The
Maker materially breaches any material covenant or any other
term or
condition of this Promissory Note or Subscription Agreement in
any
material respect;
|
|
•
|
The
Securities and Exchange Commission issues a “stop trade” order in respect
of the Maker’s common stock, which order remains effective for a period of
not less than ten consecutive trading
days;
|
|
•
|
The
Maker’s common stock no longer constitutes an “OTCBB Eligible Security”
(as that term is defined in Marketplace Rule 6530 of FINRA);
provided,
however,
that such lack of eligibility shall not constitute an Event of
Default if
the Common Stock is listed or quoted on any other Principal
Market;
|
|
•
|
The
Maker shall make an assignment for the benefit of creditors,
or apply for
or consent to the appointment of a receiver or trustee for it
or for a
substantial part of its property or business or such a receiver
or trustee
shall otherwise be appointed;
|
|
•
|
The
Maker shall materially default under any bond, debenture, note
or other
evidence of indebtedness for money borrowed, under any guarantee
or under
any mortgage, or indenture pursuant to which there shall be issued
or by
which there shall be secured or evidenced any indebtedness for
money
borrowed by the Maker or any of its subsidiaries, whether such
indebtedness now exists or shall hereafter be created, which
default shall
have resulted in indebtedness of at least $250,000 becoming due
and
payable prior to the date on which it would otherwise become
due and
payable and shall not have been cured by the Maker or waived
by the
Lender,
|
|
•
|
Any
money judgment, writ, or similar final process shall be entered
or filed
against the Maker or any of its property or other assets for
more than
$250,000 and shall remain unvacated, unbonded, or unstayed for
a period of
thirty (30) days;
|
|
•
|
Bankruptcy,
insolvency, reorganization, or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law for
the relief
of debtors shall be instituted by or against the
Maker.
|
|
•
|
Any
material representation or warranty of the Maker made herein,
in any
Transaction Document, or in any agreement, statement or certificate
given
in writing pursuant hereto or in connection herewith or therewith
shall be
false or misleading in any material respect as of the date made
or the
date of this Promissory Note.
|
|
•
|
A
default by Maker under any one or more obligations in an aggregate
monetary amount in excess of $350,000 after the due date thereof
and any
applicable cure period.
|
The
Maker
hereby waives presentment, demand, notice of dishonor, protest, notice
of
protest, and all other demands, protests, and notices in connection with
the
execution, delivery, performance, collection, and enforcement of this Promissory
Note. If default is made in the payment of this Promissory Note, the Maker
shall
pay to the Holder reasonable costs of collection, including reasonable
attorney’s fees.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the
mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set
forth
below or to such other address as such party shall have specified most
recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received),
or the
first business day following such delivery (if delivered other than on
a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for
such
communications shall be: (i) if to the Maker, to: Purple Beverage Company,
Inc.,
450 E. Las Olas Blvd., #830, Ft. Lauderdale, Florida 33301, Attn: Theodore
Farnsworth, President, facsimile: (954) 462-8758, with an additional copy
by
facsimile only (which shall not constitute notice) to: Bryan Cave LLP,
1900 Main
Street, Suite 700, Irvine, California 92614, Attn: Randolf W. Katz, Esq.,
facsimile: (949) 223-7100, (ii) if to the Holder, to: Jay-2 Investments,
LLC,
137 North Larchmont Boulevard, #484, Los Angeles, California 90004, facsimile:
__________, with an additional copy by facsimile only (which shall not
constitute notice) to: Grushko & Mittman, P.C., 551 Fifth Avenue, Suite
1601, New York, New York 10176, facsimile: (212) 697-3575.
No
failure or delay on the part of the Holder hereof in the exercise of any
power,
right or privilege hereunder shall operate as a waiver thereof nor shall
any
single or partial exercise of any such power, right or privilege preclude
other
or further exercise thereof or of any other right, power or privilege.
All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
The
term
“Note” and “Promissory Note” and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented. This Promissory
Note may not be amended without the consent of the Holder.
This
Promissory Note shall be binding upon the Maker and its successors and
assigns,
and shall inure to the benefit of the Holder and its successors and assigns.
The
Maker may not assign its obligations under this Promissory Note.
This
Promissory Note shall be governed by and construed in accordance with the
laws
of the State of New York without regard to conflicts of laws principles
that
would result in the application of the substantive laws of another jurisdiction.
Any action brought by either party against the other concerning the transactions
contemplated by this Agreement must be brought only in the civil or state
courts
of California or in the federal courts located in the State of California,
County of Los Angeles. Both parties and the individual signing this Agreement
on
behalf of the Maker agree to submit to the jurisdiction of such courts.
The
prevailing party shall be entitled to recover from the other party its
reasonable attorney’s fees and costs. In the event that any provision of this
Promissory Note 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 such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability
of
any other provision of this Promissory Note. Nothing contained herein shall
be
deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Maker in any other jurisdiction to collect on
the
Maker’s obligations to Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other decision
in
favor of the Holder.
“This
Promissory Note shall be deemed an unconditional obligation of Maker for
the
payment of money.”
Whenever
any payment or any action to be made shall be due on a Saturday, Sunday
or a
public holiday under the laws of the State of California, such payment
may be
due or action shall be required on the next succeeding business day and,
for
such payment, such next succeeding day shall be included in the calculation
of
the amount of accrued interest payable on such date.
[Signature
on following page.]
PURPLE
BEVERAGE COMPANY, INC.
|
a
Nevada
|
|
|
By:
|
/s/
Theodore Farnsworth
|
|
Theodore
Farnsworth
|
|
Chief
Executive Officer
|
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT
TO
RULE 144 OR RULE 144A UNDER SAID
ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE
SECURITIES.
|
Right
to Purchase 200,000 shares of Common Stock of Purple Beverage
Company,
Inc. (subject to adjustment as provided
herein)
|
CLASS
A COMMON STOCK PURCHASE WARRANT
No.
2008-A-003
|
Issue
Date: July 16, 2008
|
PURPLE
BEVERAGE COMPANY, INC., a corporation organized under the laws of the State
of
Nevada (the “
Company
”),
hereby certifies that, for value received, JAY-2 INVESTMENTS, LLC, 137
North
Larchmont Boulevard, #484, Los Angeles, California 90004, facsimile:
__________
or
its
assigns (the “
Holder
”),
is
entitled, subject to the terms set forth
below,
to
purchase from the Company at any time commencing on the Issue Date until
5:00
p.m., ET on the second anniversary of the Issue Date (the
“Expiration
Date
”),
up to
200,000 fully paid and nonassessable shares of Common Stock at a per share
purchase price of $2.00. The aforedescribed purchase price per share, as
adjusted from time to time as herein provided, is referred to herein as
the
“
Purchase
Price
.”
The
number and character of such shares of Common Stock and the Purchase Price
are
subject to adjustment as provided herein. The Company may reduce the Purchase
Price for some or all of the Warrants, temporarily or permanently. Capitalized
terms used and not otherwise defined herein shall have the meanings set
forth in
that certain Subscription Agreement (the “
Subscription
Agreement
”),
dated
as of July 16, 2008, entered into by the Company and the Holder.
As
used
herein the following terms, unless the context otherwise requires, have
the
following respective meanings:
(a)
The
term
“
Company
”
shall
include Purple Beverage Company, Inc. and any corporation which shall succeed
or
assume the obligations of Purple Beverage Company, Inc. hereunder.
(b)
The
term
“
Common
Stock
”
includes (a) the Company’s common stock, $.001 par value per share, as
authorized on the date of the Subscription Agreement, and (b) any other
securities into which or for which any of the securities described in (a)
may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(c)
The
term
“
Other
Securities
”
refers
to any stock (other than Common Stock) and other securities of the Company
or
any other person (corporate or otherwise) that the holder of the Warrant
at any
time shall be entitled to receive, or shall have received, on the exercise
of
the Warrant, in lieu of or in addition to Common Stock, or which at any
time
shall be issuable or shall have been issued in exchange for or in replacement
of
Common Stock or Other Securities pursuant to Section 4 or
otherwise.
(d)
The
term
“
Warrant
Shares
”
shall
mean the Common Stock issuable upon exercise of this Warrant
1.
Exercise
of Warrant.
1.1.
Number
of Shares Issuable upon Exercise
.
From
and after the Issue Date through and including the Expiration Date, the
Holder
hereof shall be entitled to receive, upon exercise of this Warrant in whole
in
accordance with the terms of subsection 1.2 or upon exercise of this Warrant
in
part in accordance with subsection 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.
1.2.
Full
Exercise
.
This
Warrant may be exercised in full by the Holder hereof by delivery of an
original
or facsimile copy of the form of subscription attached as Exhibit A hereto
(the
“
Subscription
Form
”)
duly
executed by such Holder and delivery within two days thereafter of payment,
in
cash, wire transfer or check payable to the order of the Company, in the
amount
obtained by multiplying the number of shares of Common Stock for which
this
Warrant is then exercisable by the Purchase Price then in effect The original
Warrant is not required to be surrendered to the Company until it has been
fully
exercised.
1.3.
Partial
Exercise
.
This
Warrant may be exercised in part (but not for a fractional share) by delivery
of
a Subscription Form in the manner and at the place provided in subsection
1.2
except that the amount payable by the Holder on such partial exercise shall
be
the amount obtained by multiplying (a) the number of whole shares of Common
Stock designated by the Holder in the Subscription Form by (b) the Purchase
Price then in effect On any such partial exercise provided the Holder has
surrendered the original Warrant, the Company, at its expense, will forthwith
issue and deliver to or upon the order of the Holder hereof a new Warrant
of
like tenor, in the name of the Holder hereof or as such Holder (upon payment
by
such Holder of any applicable transfer taxes) may request, the whole number
of
shares of Common Stock for which such Warrant may still be
exercised.
1.4.
Fair
Market Value
.
Fair
Market Value of a share of Common Stock as of a particular date (the
“
Determination
Date
”)
shall
mean:
(a)
If
the
Company’s Common Stock is listed, traded or quoted on the NASDAQ Global Market,
NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock
Exchange, the American Stock Exchange, LLC, the OTC Bulletin Board, or
the Pink
Sheets, LLC, then the average of the closing or last sale prices, respectively,
reported for the ten trading days immediately preceding the Determination
Date;
(b)
If
the
Company’s Common Stock is not listed, traded or quoted on the NASDAQ Global
Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New
York
Stock Exchange, the American Stock Exchange, LLC, the OTC Bulletin Board,
or the
Pink Sheets, LLC, but is traded in the over-the-counter market, then the
average
of the closing bid and ask prices reported for the ten trading days immediately
preceding the Determination Date;
(c)
Except
as
provided in clause (d) below and Section 3.1, if the Company’s Common Stock is
not so publicly listed, traded or quoted, then as the Holder and the Company
agree, or in the absence of such an agreement, by arbitration in accordance
with
the rules then standing of the American Arbitration Association, before
a single
arbitrator to be chosen from a panel of persons qualified by education
and
training to pass on the matter to be decided with such arbitration to be
conducted in Los Angeles, California; or
(d)
If
the
Determination Date is the date of a liquidation, dissolution or winding-up,
or
any event deemed to be a liquidation, dissolution or winding-up pursuant
to the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share
in
respect of the Common Stock in liquidation under the charter, assuming
for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable
upon exercise of all of the Warrants are outstanding at the Determination
Date.
1.5.
Company
Acknowledgment
.
The
Company will, at the time of the exercise of the Warrant, upon the request
of
the Holder hereof, acknowledge in writing its continuing obligation to
afford to
such Holder any rights to which such Holder shall continue to be entitled
after
such exercise in accordance with the provisions of this Warrant If the
Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such
rights.
1.6.
Trustee
for Warrant Holders
.
In the
event that a bank or trust company shall have been appointed as trustee
for the
Holder of the Warrants pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise
payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
1.7
Delivery
of Stock Certificates, etc. on Exercise
.
The
Company agrees that the Warrant Shares shall be deemed to be issued to
the
Holder hereof as the record owner of such shares as of the close of business
on
the date on which delivery of a Subscription Form shall have occurred and
payment made for such shares as aforesaid. As soon as practicable after
the
exercise of this Warrant in full or in part, and in any event within five
(5)
business days thereafter (the “
Warrant
Share Delivery Date
”),
the
Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Holder
hereof, or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws,
a
certificate or certificates for the number of duly and validly issued,
fully
paid and non-assessable shares of Common Stock (or Other Securities) to
which
such Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share of
Common
Stock, together with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise. The Company understands that a delay
in the
delivery of the Warrant Shares after the Warrant Share Delivery Date could
result in economic loss to the Holder. As compensation to the Holder for
such
loss, the Company agrees to pay (as liquidated damages and not as a penalty)
to
the Holder for late issuance of Warrant Shares upon exercise of this Warrant
the
proportionate amount of $100 per business day after the Warrant Share Delivery
Date for each $10,000 of Purchase Price of Warrant Shares for which this
Warrant
is exercised which are not timely delivered. The Company shall pay any
payments
incurred under this Section in immediately available funds upon demand.
Furthermore, in addition to any other remedies which may be available to
the
Holder, in the event that the Company fails for any reason to effect delivery
of
the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke
all
or part of the relevant Warrant exercise by delivery of a notice to such
effect
to the Company, whereupon the Company and the Holder shall each be restored
to
their respective positions immediately prior to the exercise of the relevant
portion of this Warrant, except that the liquidated damages described above
shall be payable through the date notice of revocation or rescission is
given to
the Company.
1.8
Buy-In
.
In
addition to any other rights available to the Holder, if the Company fails
to
deliver to a Holder the Warrant Shares as required pursuant to this Warrant
within five (5) business days after the Warrant Share Delivery Date and
the
Holder or a broker on the Holder’s behalf purchases (in an open market
transaction or otherwise) shares of common stock to deliver in satisfaction
of a
sale by such Holder of the Warrant Shares which the Holder was entitled
to
receive from the Company (a “
Buy-In
”),
then
the Company shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (A) the Holder’s
total purchase price (including brokerage commissions, if any) for the
shares of
common stock so purchased exceeds (B) the aggregate Purchase Price of the
Warrant Shares required to have been delivered, together with interest
thereon
at a rate of 15% per annum, accruing until such amount and any accrued
interest
thereon is paid in full (which amount shall be paid as liquidated damages
and
not as a penalty). For example, if a Holder purchases shares of Common
Stock
having a total purchase price of $11,000 to cover a Buy-In with respect
to
$10,000 of Purchase Price of Warrant Shares to have been received upon
exercise
of this Warrant, the Company shall be required to pay the Holder $1,000,
plus
interest The Holder shall provide the Company written notice indicating
the
amounts payable to the Holder in respect of the Buy-In.
2.
Cashless
Exercise
.
(a)
If
a
registration statement (a “
Registration
Statement
”)
is
effective for the public unrestricted resale of all of the Warrant Shares
issuable upon exercise of this Warrant, then commencing six months after
the
Issue Date, this Warrant may be exercised in whole or in part for cash
only as
set forth in Section 1 above. If such Registration Statement is not available,
payment upon exercise may be made at the option of the Holder either in
(i)
cash, wire transfer or by check payable to the order of the Company equal
to the
applicable aggregate Purchase Price, (ii) by delivery of Common Stock issuable
upon exercise of the Warrants in accordance with Section (b) below or (iii)
by a
combination of any of the foregoing methods, for the number of Common Stock
specified in such form (as such exercise number shall be adjusted to reflect
any
adjustment in the total number of shares of Common Stock issuable to the
holder
per the terms of this Warrant) and the holder shall thereupon be entitled
to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined
as
provided herein.
(b)
Subject
to the provisions herein to the contrary, if the Fair Market Value of one
share
of Common Stock is greater than the Purchase Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant for cash, the holder
may
elect to receive shares equal to the value (as determined below) of this
Warrant
(or the portion thereof being cancelled) by together with the properly
endorsed
Subscription Form in which event the Company shall issue to the holder
a number
of shares of Common Stock computed using the following formula:
X=
Y
(A-B)
A
|
Where
X=
|
the
number of shares of Common Stock to be issued to the
holder
|
|
|
|
|
Y=
|
the
number of shares of Common Stock purchasable under the Warrant
or, if only
a portion of the Warrant is being exercised, the portion of the
Warrant
being exercised (at the date of such calculation)
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A=
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the
average of the closing sale prices of the Common Stock for the
ten (10)
trading days immediately prior to (but not including) the Exercise
Date,
(or if no such closing prices are available, then the Fair Market
Value)
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B=
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Purchase
Price (as adjusted to the date of such
calculation)
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For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the
holding
period for the Warrant Shares shall be deemed to have commenced, on the
date
this Warrant was originally issued pursuant to the Subscription
Agreement
3.
Adjustment
for Reorganization, Consolidation, Merger, etc.
3.1.
Fundamental
Transaction
.
If, at
any time while this Warrant is outstanding, (A) the Company effects any
merger
or consolidation of the Company with or into another entity, (B) the Company
effects any sale of all or substantially all of its assets in one or a
series of
related transactions, (C) any tender offer or exchange offer (whether by
the
Company or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, (D) the Company consummates a stock purchase agreement
or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more persons
or
entities whereby such other persons or entities acquire more than the 50%
of the
outstanding shares of Common Stock (not including any shares of Common
Stock
held by such other persons or entities making or party to, or associated
or
affiliated with the other persons or entities making or party to, such
stock
purchase agreement or other business combination), (E) any “
person
”
or
“
group
”
(as
these terms are used for purposes of Sections 13(d) and 14(d) of the 1934
Act)
is or shall become the “
beneficial
owner
”
(as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50%
of the
aggregate Common Stock of the Company, or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for
other
securities, cash or property (in any such case, a “
Fundamental
Transaction
”),
then,
upon any subsequent exercise of this Warrant, the Holder shall have the
right to
receive, for each Warrant Share that would have been issuable upon such
exercise
immediately prior to the occurrence of such Fundamental Transaction, at
the
option of the Holder, (a) upon exercise of this Warrant, the number of
shares of
Common Stock of the successor or acquiring corporation or of the Company,
if it
is the surviving corporation, and any additional consideration (the
“
Alternate
Consideration
”)
receivable upon or as a result of such reorganization, reclassification,
merger,
consolidation or disposition of assets by a Holder of the number of shares
of
Common Stock for which this Warrant is exercisable immediately prior to
such
event or (b) if the Company is acquired in (1) a transaction where the
consideration paid to the holders of the Common Stock consists solely of
cash,
(2) a “
Rule
13e-3 transaction
”
as
defined in Rule 13e-3 under the 1934 Act, or (3) a transaction involving
a
person or entity not traded on a national securities exchange, the Nasdaq
Global
Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, cash
equal
to the Black-Scholes Value. For purposes of any such exercise, the determination
of the Purchase Price shall be appropriately adjusted to apply to such
Alternate
Consideration based on the amount of Alternate Consideration issuable in
respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Purchase Price among the Alternate Consideration in
a
reasonable manner reflecting the relative value of any different components
of
the Alternate Consideration. If holders of Common Stock are given any choice
as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions,
any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and evidencing the Holder’s right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor
or
surviving entity to comply with the provisions of this Section 3.1 and
insuring
that this Warrant (or any such replacement security) will be similarly
adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
“
Black-Scholes
Value
”
shall
be determined in accordance with the Black-Scholes Option Pricing Model
obtained
from the “
OV
”
function on Bloomberg L.P. using (i)
a
price
per share of Common Stock equal to the VWAP of the Common Stock for the
Trading
Day immediately preceding the date of consummation of the applicable Fundamental
Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the
date of
such request and (iii) an expected volatility equal to the 100 day volatility
obtained from the HVT function on Bloomberg L.P. determined as of the Trading
Day immediately following the public announcement of the applicable Fundamental
Transaction.
3.2.
Dissolution
.
In the
event of any d
i
ssolution
of the Company following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution, shall at
its
expense deliver or cause to be delivered the stock and other securities
and
property (including cash, where applicable) receivable by the Holder of
the
Warrants after the effective date of such dissolution pursuant to this
Section 3
to a bank or trust company (a “
Trustee
”)
having
a principal office in Los Angeles, California, as trustee for the Holder
of the
Warrants. Such property shall be delivered only upon payment of the Warrant
exercise price.
3.3.
Continuation
of Terms
.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the Other Securities and property receivable on the exercise of this Warrant
after the consummation of such reorganization, consolidation or merger
or the
effective date of dissolution following any such transfer, as the case
may be,
and shall be binding upon the issuer of any Other Securities, including,
in the
case of any such transfer, the person acquiring all or substantially all
of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4 In
the
event this Warrant does not continue in full force and effect after the
consummation of the transaction described in this Section 3, then only
in such
event will the Company’s securities and property (including cash, where
applicable) receivable by the Holder of the Warrants be delivered to the
Trustee
as contemplated by Section 3.2.
4.
Extraordinary
Events Regarding Common Stock
.
In the
event that the Company shall (a) issue additional shares of the Common
Stock as
a dividend or other distribution on outstanding Common Stock, (b) subdivide
its
outstanding shares of Common Stock, or (c) combine its outstanding shares
of the
Common Stock into a smaller number of shares of the Common Stock, then,
in each
such event, the Purchase Price shall, simultaneously with the happening
of such
event, be adjusted by multiplying the then Purchase Price by a fraction,
the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number
of shares of Common Stock outstanding immediately after such event, and
the
product so obtained shall thereafter be the Purchase Price then in effect
The
Purchase Price, as so adjusted, shall be readjusted in the same manner
upon the
happening of any successive event or events described herein in this Section
4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof, be entitled to receive shall be adjusted
to
a number determined by multiplying the number of shares of Common Stock
that
would otherwise (but for the provisions of this Section 4 be issuable on
such
exercise by a fraction of which (a) the numerator is the Purchase Price
that
would otherwise (but for the provisions of this Section 4 be in effect,
and (b)
the denominator is the Purchase Price in effect on the date of such
exercise.
5.
Certificate
as to Adjustments
.
In each
case of any adjustment or readjustment in the shares of Common Stock (or
Other
Securities) issuable on the exercise of the Warrants, the Company at its
expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of
the
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or receivable
by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of
shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Purchase Price and the number of shares of Common Stock to
be
received upon exercise of this Warrant, in effect immediately prior to
such
adjustment or readjustment and as adjusted or readjusted as provided in
this
Warrant. The Company will forthwith mail a copy of each such certificate
to the
Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant
to Section 10 hereof).
6.
Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements
.
The
Company will at all times reserve and keep available, solely for issuance
and
delivery on the exercise of the Warrants, all shares of Common Stock (or
Other
Securities) from time to time issuable on the exercise of the Warrant.
This
Warrant entitles the Holder hereof to receive copies of all financial and
other
information distributed or required to be distributed to the holders of
the
Company’s Common Stock.
7.
Assignment;
Exchange of Warrant
.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“
Transferor
”).
On
the surrender for exchange of this Warrant, with the Transferor’s endorsement in
the form of Exhibit B attached hereto (the “
Transferor
Endorsement Form
”)
and
together with an opinion of counsel reasonably satisfactory to the Company
that
the transfer of this Warrant will be in compliance with applicable securities
laws, the Company will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form
(each a
“
Transferee
”),
calling in the aggregate on the face or faces thereof for the number of
shares
of Common Stock called for on the face or faces of the Warrant so surrendered
by
the Transferor.
8.
Replacement
of Warrant
.
On
receipt of evidence reasonably satisfactory to the Company of the loss,
theft,
destruction or mutilation of this Warrant and, in the case of any such
loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or,
in the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense, twice only, will execute and deliver, in lieu thereof,
a
new Warrant of like tenor.
9.
Maximum
Exercise
.
The
Holder shall not be entitled to exercise this Warrant on an exercise date,
in
connection with that number of shares of Common Stock which would be in
excess
of the sum of (i) the number of shares of Common Stock beneficially owned
by the
Holder and its affiliates on an exercise date, and (ii) the number of shares
of
Common Stock issuable upon the exercise of this Warrant with respect to
which
the determination of this limitation is being made on an exercise date,
which
would result in beneficial ownership by the Holder and its affiliates of
more
than 4.99% of the outstanding shares of Common Stock on such date. For
the
purposes of the immediately preceding sentence, beneficial ownership shall
be
determined in accordance with Section 13(d) of the 1934 Act and Rule 13d-3
thereunder. Subject to the foregoing, the Holder shall not be limited to
aggregate exercises which would result in the issuance of more than 4.99%.
The
restriction described in this paragraph may be waived, in whole or in part,
upon
sixty-one (61) days prior notice from the Holder to the Company to increase
such
percentage to up to 9.99%. The Holder may allocate which of the equity
of the
Company deemed beneficially owned by the Subscriber shall be included in
the
4.99% amount described above and which shall be allocated to the excess
above
4.99%.
10.
Warrant
Agent
.
The
Company may, by written notice to the Holder of the Warrant, appoint an
agent (a
“
Warrant
Agent
”)
for
the purpose of issuing Common Stock (or Other Securities) on the exercise
of
this Warrant pursuant to Section 1, exchanging this Warrant pursuant to
Section
7, and replacing this Warrant pursuant to Section 8, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case
may be,
shall be made at such office by such Warrant Agent.
11.
Transfer
on the Company’s Books
.
Until
this Warrant is transferred on the books of the Company, the Company may
treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
12.
Notices
.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the
mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set
forth
below or to such other address as such party shall have specified most
recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received),
or the
first business day following such delivery (if delivered other than on
a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for
such
communications shall be: if to the Company, to: Purple Beverage Company,
Inc.,
450 E. Las Olas Blvd., #830, Ft. Lauderdale, Florida 33301, Attn: Theodore
Farnsworth, President, facsimile: (954) 462-8758, with an additional copy
by
facsimile only (which shall not constitute notice) to: Bryan Cave LLP,
1900 Main
Street, Suite 700, Irvine, California 92614, Attn: Randolf W. Katz, Esq.,
facsimile: (949) 223-7100, and (ii) if to the Holder, to the address and
facsimile number listed on the first paragraph of this Warrant, with an
additional copy by facsimile only (which shall not constitute notice) to:
Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York
10176, facsimile number: (212) 697-3575.
13.
Law
Governing This Warrant
.
This
Warrant shall be governed by and construed in accordance with the laws
of the
State of New York without regard to principles of conflicts of
laws.
Any
action brought by either party against the other concerning the transactions
contemplated by this Warrant shall be brought only in the state courts
of
California or in the federal courts located in the State of California,
County
of Los Angeles. The parties to this Warrant hereby irrevocably waive any
objection to jurisdiction and venue of any action instituted hereunder
and shall
not assert any defense based on lack of jurisdiction or venue or based
upon
forum
non conveniens.
The
Company and Holder waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney’s fees and costs. In the
event that any provision of this Warrant or any other agreement delivered
in
connection herewith 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 such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of
any other provision of any agreement.
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
PURPOSE
BEVERAGE COMPANY, INC.
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By:
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/s/
Theodore Farnsworth
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Theodore
Farnsworth, Chief Executive Officer
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Exhibit
A
FORM
OF
SUBSCRIPTION
(to
be
signed only on exercise of Warrant)
TO:
PURPLE BEVERAGE COMPANY, INC.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.
_____)
hereby irrevocably elects to purchase (check applicable box):
___
_______
shares of the Common Stock covered by such Warrant; or
___
the
maximum number of shares of Common Stock covered by such Warrant pursuant
to the
cashless exercise procedure set forth in Section 2.
The
undersigned herewith makes payment of the full purchase price for such
shares at
the price per share provided for in such Warrant, which is $__________.
Such
payment takes the form of (check applicable box or boxes):
___
$________
in lawful money of the United States; and/or
___
the
cancellation of such portion of the attached Warrant as is exercisable
for a
total of _______ shares of Common Stock (using a Fair Market Value of
$
_____
per
share for purposes of this calculation); and/or
___
the
cancellation of such number of shares of Common Stock as is necessary,
in
accordance with the formula set forth in Section 2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.
The
undersigned requests that the certificates for such shares be issued in
the name
of, and delivered to___________________________________________ whose address
is
_______________________________________
___________________________________________________.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be
made
pursuant to registration of the Common Stock under the Securities Act of
1933,
as amended (the “
Securities
Act
”),
or
pursuant to an exemption from registration under the Securities
Act.
Dated:
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(Signature
must conform to name of holder as specified on the face of the
Warrant)
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(Address)
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Exhibit
B
FORM
OF
TRANSFEROR ENDORSEMENT
(To
be
signed only on transfer of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “
Transferees
”
the
right represented by the within Warrant to purchase the percentage and
number of
shares of Common Stock of PURPLE BEVERAGE COMPANY, INC. to which the within
Warrant relates specified under the headings “
Percentage
Transferred
”
and
“
Number
Transferred
,”
respectively, opposite the name(s) of such person(s) and appoints each
such
person Attorney to transfer its respective right on the books of PURPLE
BEVERAGE
COMPANY, INC. with full power of substitution in the premises.
Transferees
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Percentage
Transferred
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Number
Transferred
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Dated:
________________, ________________
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(Signature
must conform to name of holder as specified on the face of the
warrant)
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Signed
in the presence of:
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(Name)
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(address)
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ACCEPTED
AND AGREED:
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[TRANSFEREE]
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(address)
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(Name)
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