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:
350 East Las
Olas Blvd., Suite 830
Fort
Lauderdale, FL 33301
Name: Purple Beverage Company,
Inc.
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,
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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;
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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 ”);
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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;
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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;
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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;
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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;
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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;
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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
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The undersigned
has been informed of and understands the following.
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There are
substantial restrictions on the transferability of the
Securities;
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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;
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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:
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The approximate
or exact length of time that the undersigned will be required to
remain a holder of the Securities;
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The amount of
consideration, profit, or loss to be realized, if any, as a result
of an investment in the Company;
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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;
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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;
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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.
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Any material
inaccuracy in the declarations, representations, and warranties
hereinabove set forth;
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The disposition
of the Securities or any part thereof by the undersigned, contrary
to the foregoing declarations, representations, and
warranties;
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Any action,
suit, or proceeding based upon:
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the claim that
said declarations, representations, or warranties were inaccurate
or misleading or otherwise cause for obtaining damages or redress
from the Company; or
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the disposition
of the Securities or any part thereof.
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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
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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;
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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;
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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;
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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;
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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
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The undersigned
shall not use any of the Shares to cover any short sales made prior
to the effective date of such registration statement
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6.
Representations and Warranties of the
Company . The Company
hereby makes the following representations and warranties to the
Purchaser:
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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.
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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.
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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.
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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.
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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.
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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:
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(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.
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The
Securities . The
Securities upon issuance:
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(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, t
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