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SUBSCRIPTION AGREEMENT

LLC Subscription Agreement

SUBSCRIPTION AGREEMENT | Document Parties: PURPLE BEVERAGE COMPANY, INC. | Jay-2 Investments, LLC You are currently viewing:
This LLC Subscription Agreement involves

PURPLE BEVERAGE COMPANY, INC. | Jay-2 Investments, LLC

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Title: SUBSCRIPTION AGREEMENT
Governing Law: New York     Date: 9/9/2008
Law Firm: Bryan Cave    

SUBSCRIPTION AGREEMENT, Parties: purple beverage company  inc. , jay-2 investments  llc
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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 ”);

 

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(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;

 

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(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.

 

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(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;

 

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(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.

 

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(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:

 

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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.

 

 

(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.

 

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(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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