Exhibit 10.12
SUBSCRIPTION AGREEMENT
Chiste
Corporation,
a Nevada corporation
("Company"),
and the investor
specified on the signature page hereto
("Investor"),
together hereby agree as
follows:
1. Subscription for Securities. Investor hereby subscribes for and agrees to
purchase the number of shares of Series B Convertible Preferred Stock
("Preferred Stock") of the Company,
as set forth on the
signature page hereto,
upon the terms and conditions described in this Agreement.
The price
per-share
of Preferred Stock is $33.086191. Each share of Preferred Stock will be
convertible into 185.35215 shares of common stock of the
Company, subject
to
adjustment, including the proposed
one-for-25
reverse split, after
which each
share of Preferred Stock will convert into 7.4140860
shares of common stock
of
the Company ("Common Stock").
The
Preferred Stock is being offered in a private placement in accordance
with the terms set forth in this Agreement.
For information about the Company
and its reorganization which includes the
acquisition of HydroGen, LLC, an Ohio
limited liability company ("HydroGen"), the
Investor is being provided a copy of
a Confidential Private Placement Memorandum dated May 13, 2005
("Memorandum")
prepared by HydroGen, on which the Investor may rely.
Battenkill
Capital Inc.
("Battenkill") is acting as exclusive
placement agent for the offering by the
Company, and HydroGen has agreed to pay
Battenkill a fee for
the investment by
the Investor, in an amount equal to the fee
described in the
Memorandum due in
respect of the units being sold in the
HydroGen offering.
In
connection
with the offering of the units by HydroGen and as a
condition to the consummation of the HydroGen offering, HydroGen will be
acquired by the Company by an exchange
("Exchange") of the
HydroGen
membership
units for shares of the Preferred Stock,
pursuant to an
Exchange Agreement,
a
form of which is included in the Memorandum and a copy of which the
Investor
acknowledges receipt ("Exchange
Agreement").
As a
further condition to
the consummation
of the offering by
HydroGen,
after the Exchange, there will be an investment in the Company by one
or more
related institutional investors of not less than $7,000,000, of which the
investment by the Investor is a part, such that their aggregate investment
("Institutional Investment") combined with
the minimum amount of the offering by
HydroGen will aggregate not less than
$12,000,000
being invested,
in cash, in
the Company and HydroGen (excluding any
membership units sold upon conversion of
HydroGen debt). The investment by the
institutional investors will be contingent
on subscriptions for the minimum offering amount for the HydroGen
offering of
units as described in the Memorandum
being received in
escrow by HydroGen prior
to the Exchange. The subscriptions in the offering
by HydroGen will be governed
by separate investment agreements which may have different terms than this
Agreement.
Officers
and directors of the
Company, HydroGen and
Battenkill
and any
dealers selected by Battenkill may purchase securities in the offering by
HydroGen. Such securities will count towards the minimum.
HydroGen also will
permit holders of 6% Convertible
Promissory
Notes to convert their
notes into
securities in the offering, but these will
not count towards the minimum.
2. Investor Delivery of Documents and Payment.
The Investor
hereby tenders to
the Company (i) one manually executed copy of this Agreement with the
appropriate questionnaires therein completed, and (ii) the completed NASD
questionnaire attached to this Agreement and
(iii) the aggregate purchase price
of $2,443,018.17 for the shares of Preferred Stock
being purchased
hereunder
("Purchase Price"). The date of the tender of the this
Subscription
Agreement
and the Purchase Price shall be referred to
as the "Closing." The Closing of the
purchase of the shares of Preferred Stock
will be deemed to occur at the offices
of Graubard Miller, 405 Lexington Avenue,
New York, New York 10174.
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3. Sale of the Preferred Stock
3.1. Sale
of the Preferred Stock to the Investor. Subject in all respects
to the satisfaction of the terms and
conditions herein set forth and in reliance
upon the respective representations and warranties of the parties set forth
herein or in any document delivered pursuant hereto, the
Company agrees to sell
to the Investor the number of shares of
Preferred Stock,
free and clear of
all
liens, at the Closing hereof, as set forth in the signature page attached
hereto. Subject in all respects to the
satisfaction of the terms and conditions
to the Closing herein set forth and in reliance upon the respective
representations and warranties of the parties set forth herein or in any
document delivered pursuant hereto, the Investor agrees to purchase
from the
Company, at the Closing, the number of shares of Preferred Stock set forth
opposite such Investor's name on the
signature page hereto.
3.2.
Delivery of the Shares of Preferred Stock. At the Closing, the
Company will deliver to the Investor one or
more certificates, duly executed and
registered in such Investor's name,
representing shares of
Preferred Stock that
the Investor is purchasing hereunder, against payment by such Investor to
the
Company, by wire transfer of funds, of the
Purchase Price.
3.3.
Payment. Payment for the Preferred Stock will be made by wire
transfer to the account of the wholly owned
subsidiary of the Company, HydroGen
LLC, at the following:
National City Bank
ABA #041000124
For the Account of HydroGen LLC
A/C 657638180
4. Conditions to Issuance
4.1.
Closing. The obligation of the Investor to
purchase such Investor's
number of shares of Preferred Stock being
purchased at the Closing is subject to
the fulfillment to the Investor's satisfaction of each of the following
conditions:
(a)
Representations
and Covenants.
The representations and
warranties made by the Company in Section 7
hereof shall be true and correct in
all material respects, all covenants, agreements and conditions
contained in
this Subscription Agreement to be performed or complied with by the Company
prior to the Closing shall have been performed or complied with (or waived by
the Investor), and the Company shall have
obtained any approvals, consents and
qualifications necessary to perform its
obligations hereunder.
(b) Compliance Certificate. The Company shall have delivered
to the
Investor at the Closing a certificate signed on its behalf by its
President
certifying that the conditions specified in Section 4.1 hereof have been
fulfilled.
(c) Secretary's Certificate. At the Closing, the Company shall
have
delivered to the Investor copies of each of the following, in each case
certified by the Secretary of the Company to be in
full force and effect on the
date of the Closing.
(i) The articles
of incorporation of the Company as of the
Closing certified by the Secretary of
State as of a date not more than five (5)
days prior to the Closing;
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(ii) A good standing
certificate with
respect to the Company
certified by the Secretary of State as of a date not more
than ten (10) days
prior to the Closing;
(iii) The by-laws of the Company; and
(iv) Resolutions
of the Board and, as necessary, the
shareholders of the Company, the form and
substance of which are satisfactory to
the Investor, authorizing the adoption,
approval, execution and filing of the
Articles, and authorizing the execution, delivery and performance of this
Agreement and the related agreements,
and the transactions
contemplated
hereby
and thereby, including the issuance and sale of the
shares of Preferred
Stock
and the reservation of Common Stock for issuance upon conversion of the
Preferred Stock.
(d) Registration Rights Agreement. At or prior to the Closing,
the
Company and the Investor shall have executed and delivered the Registration
Rights Agreement.
(e) Sale of
Preferred Stock.
At or prior to the
Closing, HydroGen
shall have sold securities for not less than $5,000,000 that convert into
Preferred Stock at an equivalent
price of not less than
$33.086191 per share in
addition to the shares to be sold
hereunder,
which amount will be held in an
escrow account maintained by Battenkill
Capital, Inc.
(f) Legal Opinion. The
Company shall have delivered to the Investor
the opinion of Graubard Miller, counsel to the Company, with respect to such
matters as the Investor may reasonably
request, dated the date of the Closing,
in form and substance reasonably
satisfactory to the Investor.
(g) Fees and Expenses.
The Company shall pay an amount equal to 50%
of the total fees and expenses of the Investor's outside legal counsel;
provided, however, that the Company in no event shall be required to pay an
amount in excess of $25,000.
(h) Legal Investment. As of the Closing, the purchase of the
Preferred Stock by the Investor shall be legally permitted by all laws and
regulations to which each of the Investor
and the Company is subject.
(i) Qualifications. As of the Closing, all authorizations,
approvals
or permits of, or filings with any governmental authority, including state
securities or "Blue Sky" offices,
that are required by
law in connection
with
the lawful sale and issuance of Preferred
Stock shall have been duly obtained by
the Company, and shall be effective as of
the Closing.
(j) Proceedings and Documents. All corporate and other
proceedings
in connection with the transactions contemplated hereby and by the related
agreements, and all documents and instruments incident to such transactions,
shall be satisfactory in form and substance
to the Investor.
5. Offering to Accredited Investors. The subscription represented by this
Agreement is limited to accredited
investors as defined
in Section 2(15) of the
Securities Act of 1933, as amended
("Securities Act"),
and Rule 501 promulgated
thereunder, and is being made without
registration under the
Securities Act in
reliance upon the exemptions contained in
Sections 3(b), 4(2) and/or 4(6) of the
Securities Act and applicable state securities laws. As indicated by the
responses on the signature page hereof,
the Investor is an
accredited
investor
within the meaning of Section 2(15) of the Securities Act and Rule 501
promulgated thereunder.
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6. Investor Representations and
Warranties.
6.1.
Investor Representations. In order to induce the Company to issue
and
sell the Preferred Stock to the Investor and
thereafter issue to it
the Common
Stock upon its conversion, it represents and warrants that the information
relating to it stated herein is true and
complete as of the date hereof. If such
information is incorrect or incomplete, the Investor agrees to notify the
Company and supply the Company promptly
with corrective information.
6.2.
Information
About the Company and
HydroGen. The Investor has read
this Agreement, the Exchange Act Documents (as hereinafter defined), the
Memorandum relating to the HydroGen
offering and all exhibits listed therein and
fully understands the Memorandum, including the "Risk Factors" contained
therein. The Investor understands the
nature of the exchange transaction between
the Company and HydroGen and the
prospective
business of the
Company after the
Exchange. The Investor has been given access to information regarding the
Company and HydroGen and has utilized
such access to its
satisfaction
for the
purpose of making its investment decision,
and the Investor has
either met with
or been given reasonable opportunity to meet with officers of the
Company for
the purpose of asking reasonable questions
of such officers concerning the terms
and conditions of the offering of the Preferred Stock and the business and
operations of the Company and HydroGen. The Investor also has been given an
opportunity to obtain any additional relevant information to the extent
reasonably available to the Company and
HydroGen. The Investor
has received all
information and materials regarding the Company and HydroGen that has been
reasonably requested. After the Investor's reading of the materials about
the
Company and HydroGen, it understands that
there is no assurance as to the future
performance of the Company and
HydroGen.
6.3.
Speculative
Investment.
The Investor is aware that the
Preferred
Stock and Common Stock into which the
Preferred Stock is convertible represents
a speculative investment that involves a
high degree of risk including, but not
limited to, the risk of losses from
operations of the Company and the total loss
of the Investor's investment. The Investor has the knowledge and
experience in
financial and business matters as to be capable of
evaluating
the merits and
risks of an investment in the Preferred
Stock and Common Stock into which it may
be converted. The Investor has not utilized any person as the Investor's
purchaser representative (as defined in Regulation D) in connection with
evaluating such merits and risks and has relied solely upon its own
investigation in making a decision to invest in the Company. The Investor
believes that the investment in the
Preferred Stock and
subsequently the Common
Stock) is appropriate to the investment
objectives of the
Investor and complies
with the limitations of the investment
strategies of the Investor.
6.4.
Restrictions
on Transfer. The Investor understands that (i) the
Preferred Stock and upon the conversion the
Common Stock has not been registered
under the Securities Act or the securities laws of any state in reliance on
specific exemptions from registration,
(ii) no securities
administrator of
any
state or the federal government has recommended or endorsed this offering or
made any finding or determination relating to the fairness of an
investment in
the Company, and (iii) the Company is relying
on the Investor
representations
and agreements for the purpose of
determining whether this transaction meets the
requirements of the exemptions afforded by the Securities Act and state
securities laws. Other than as set forth herein and
in the Registration
Rights
Agreement, the Investor acknowledges that
there is no assurance that the Company
will file any registration statement for the securities
being purchased,
that
such registration statement, if filed, will be declared effective or, if
declared effective, that the Company will
be able to keep it effective until the
securities registered thereon are sold.
6.5.
Investment
Representation. The
Investor is purchasing the Preferred
Stock and will subsequently acquire the Common Stock for its own account for
investment and not with a view to, or for sale in connection with, any
subsequent distribution of the securities, nor with any present intention of
selling or otherwise disposing of all or any part of the securities. The
Investor understands that, although there
is a public market for Common Stock of
the Company, there is no assurance that such
market will continue. The Investor
understands and agrees that the Preferred Stock and Common Stock cannot be
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resold, pledged, assigned or otherwise disposed of
unless they are subsequently
registered under the Securities Act and under applicable securities laws of
certain states, or an exemption from such registration is available. The
Investor understands that, except as set forth herein and in
the Registration
Rights Agreement, the Company is under no obligation
to register the securities
or to assist the Investor in complying with
any exemption from such registration
under the Securities Act or any state securities laws. The Investor hereby
authorizes the Company to place a legend denoting the restrictions on the
certificates representing the Preferred
Stock and Common Stock.
6.6. Entity Authority.
The Investor
represents that it is either a
corporation, partnership, company, trust, employee benefit plan,
individual
retirement account, Keogh Plan or other tax-exempt
entity, and pursuant to its
constituent documents it is authorized and qualified to become an
investor in
the Company, and the person(s) signing this Agreement on behalf
of such entity
has been duly authorized by such entity to
do so.
6.7. For Florida Residents. None of the Units, Preferred Stock and
Common Stock have been registered
under the Securities
Act of 1933, as amended,
or the Florida Securities Act, by reason of specific exemptions thereunder
relating to the limited availability of the
offering. The Units, Preferred Stock
and Common Stock cannot be sold, transferred or otherwise disposed of to any
person or entity unless subsequently registered under the Securities Act of
1933, as amended, or the Securities Act of Florida, if such registration is
required. Pursuant to Section 517.061(11) of the Florida
Securities Act,
when
sales are made to five (5) or more persons
in Florida, any sale made pursuant to
Subsection 517.061(11) of the Florida Securities Act will be voidable by
such
Florida purchaser either within three days after the first tender of
consideration is made by the purchaser to
the issuer, an agent of the issuer, or
an escrow agent, or within three days after
the availability of the privilege is
communicated to such purchaser, whichever
occurs later. In addition, as required
by Section 517.061(11)(a)(3),
Florida
Statutes and by Rule 3-500.05(a)
thereunder, if I am a Florida resident I may have, at the offices of the
Company, at any reasonable hour, after reasonable notice, access to the
materials set forth in the Rule that the
Company can obtain without unreasonable
effort or expense.
7. Company Representations. In order to induce the
Investor to purchase
the
Preferred Stock, the Company represents and warrants to the Investor the
representations and warranties set forth in
this section.
7.1.
Organization.
The Company is duly
organized and validly existing in
good standing under the laws of the State
of Nevada. The Company
has two wholly
owned subsidiaries, ICON Acquisition Inc., a Delaware
corporation ("ICON"), and
HydroGen, each of which is duly organized,
validly existing and in good standing
under the laws of its jurisdiction of
organization.
Together ICON and
HydroGen
are referred to as the Subsidiaries. Each of the Company and its
Subsidiaries
has full power and authority to own,
operate and occupy its
properties
and to
conduct its business as presently
conducted and as described in the
documents
filed by the Company under the Securities
Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act"),
for the
12 months prior to the date hereof,
including,
without limitation, its most
recent report for the year ended March
31, 2005 on Form
10-KSB (the
"Exchange
Act Documents") and is registered or qualified to do business and in good
standing in each jurisdiction in which the nature
of the business
conducted by
it or the location of the properties owned or leased by it requires such
qualification and where the failure to be so qualified would have a material
adverse effect upon the condition
(financial or otherwise), earnings, business,
properties or operations of the Company and
its Subsidiaries,
considered as one
enterprise (a "Material Adverse Effect"),
and no proceeding has
been instituted
in any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and
authority or qualification.
7.2.
Capitalization.
(a) The authorized capital stock of the Company consists of
65,000,000 shares of common stock,
par value $0.001 per
share ("Common Stock")
and 10,000,000 shares of preferred stock, par value $0.001 per share,
of which
1,500,000 shares will be designated as Preferred Stock pursuant to the
Certificate of Designations of Series B Convertible
Preferred Stock. At the
close of business on the business day prior
to the date hereof,
(i) 9,396,629
shares of Common Stock were issued and outstanding, all of which are validly
issued, fully paid and non-assessable; (ii) 953.827 shares of Preferred
Stock
were issued and outstanding; (iii) 8,558,600 shares (pre-split)
of Common Stock
were reserved for issuance upon the
exercise of outstanding options to purchase
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Company Common Stock granted to certain employees of Company or other
parties
("Company Stock Options"); (iv) 2,400,000 shares of Common
Stock were reserved
for issuance upon the exercise of
outstanding warrants
to purchase Common Stock
("Chiste Warrants"); and (v) no shares of Common Stock were reserved for
issuance upon any outstanding convertible notes, debentures or securities
("Convertible Securities"). All shares of Common Stock
subject to issuance
as
aforesaid, upon issuance on the terms and
conditions specified in the instrument
pursuant to which they are issuable,
will be duly
authorized,
validly issued,
fully paid and non-assessable. All outstanding shares of Common Stock and all
outstanding Chiste Warrants have been issued
and granted in compliance with (i)
all applicable securities laws and (in all
material respects)
other applicable
laws and regulations, and (ii) all requirements set forth in any applicable
contracts. The Preferred Stock, subject to
the approval of Chiste's stockholders
which in any case shall be required to have
occurred subsequent to the Closing
("Stockholder Approval"): (i) shall be convertible
into 185.35215 shares of
Common Stock for each share of Preferred
Stock, subject to adjustment for a
proposed reverse split at the rate of one
for 25 shares of Common Stock, with
odd lot protection ("Conversion Shares").
Upon the issuance of the shares of the
Preferred Stock, and, subject to the
Stockholder Approval, the Conversion Shares
issuable upon conversion thereof, when issued, will be validly issued,
fully
paid and non-assessable.
(b) Except
as contemplated by this Agreement and for the
registration rights held by investors in HydroGen before the Exchange and as
disclosed in the Exchange Act Documents and the Memorandum, there are no
registration rights, and there is no voting trust, proxy, rights plan,
antitakeover plan or other agreement or
understanding to which Chiste, or any of
its shareholders known to Chiste, is a party or by which it is bound with
respect to any equity security of any class
of Chiste.
7.3. Due
Authorization and
Valid Issuance. The
Company has all requisite
power and authority to execute,
deliver and perform
its obligations under
this
Agreement and the Registration Rights Agreement (together "Investor
Agreements"), and the Investor Agreements have
been duly authorized and validly
executed and delivered by the Company and
constitute
legal, valid and binding
agreements of the Company enforceable against the Company in
accordance
with
their terms, except as rights to indemnity and
contribution
may be limited by
state or federal securities laws or the public policy underlying such laws,
except as enforceability may be limited by applicable
bankruptcy,
insolvency,
reorganization, moratorium or similar laws
affecting creditors' and contracting
parties' rights generally and except as
enforceability may be subject to general
principles of equity (regardless of whether
such enforceability is considered in
a proceeding in equity or at law), and as
they are subject to
interpretation by
courts and governmental agencies, arbitration panels or authorities
applicable
to the Company or its Subsidiaries. The Preferred Stock being
purchased by the
Investor hereunder and the Conversion
Shares issuable pursuant to the Preferred
Stock, upon issue pursuant to the terms thereof, will be duly authorized,
validly issued, fully-paid and
non-assessable.
7.4.
Non-Contravention. The
execution and delivery of the Agreements, the
issuance and sale of the Preferred Stock
under this Agreement and the Conversion
Shares pursuant to the Preferred
Stock, the fulfillment of the terms of the
Investor Agreements and the consummation of the transactions contemplated
thereby will not (A) conflict with or constitute a violation of, or default
(with the passage of time or otherwise)
under, (i) any material bond, debenture,
note or other evidence of indebtedness,
lease, contract,
indenture,
mortgage,
deed of trust, loan agreement, joint
venture or other agreement or instrument to
which the Company or any Subsidiary is a party or by which it or any
of its
Subsidiaries or their respective properties
are bound, (ii) the charter, by-laws
or other organizational documents of the
Company or any Subsidiary, or (iii) any
law, administrative regulation,
ordinance or order of
any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties,
except in the case of clauses (i) and
(iii) for any such conflicts, violations or defaults
which are not
reasonably
likely to have a Material Adverse Effect or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material
properties or assets
of the Company or any
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Subsidiary or an acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any material bond,
debenture,
note or any
other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which
any of them is bound
or to which any of
the
material property or assets of the Company
or any Subsidiary is subject. Other
than and subject to shareholder consent for the reverse split of the Common
Stock and filings with the Securities and Exchange Commission and state
securities authorities and compliance with
the requirements in respect thereof,
no consent, approval, authorization or other order of, or registration,
qualification or filing with, any
regulatory body,
administrative
agency, or
other governmental body in the United
States or any other person is required for
the execution and delivery of the Investor
Agreements,
and the valid
issuance
and sale of the Preferred Stock to be sold
pursuant to this
Agreement, and the
valid issuance of the Conversion
Shares under the
Preferred Stock,
other than
such as have been made or obtained.
7.5.
Authorization of
Shares. The Preferred
Stock to be sold pursuant to
this Agreement, and the Conversion Shares
to be issued pursuant to the Preferred
Stock, have been duly authorized, and when issued and paid for in
accordance
with the terms of this Agreement and the terms of the
Preferred Stock,
as the
case may be, will be duly and validly
issued, fully paid and non-assessable. The
outstanding shares of capital stock of the Company have been duly and validly
issued and are fully paid and non-assessable, have been issued in compliance
with all federal and state securities laws, and were not
issued in violation of
any preemptive rights or similar rights to
subscribe for or purchase securities.
Except as set f
