EXHIBIT
10.1
UNIT
SUBSCRIPTION
AGREEMENT
The undersigned (hereinafter “
Subscriber ”) hereby confirms its subscription for the
purchase of Units consisting of (i) one share of Common Stock, par
value $0.001 per share (“Common Stock”), of LIVE
CURRENT MEDIA INC. , a Nevada corporation (the “
Company ”), (ii) a two-year warrant to purchase
one-half share of Common Stock of the Company at an exercise price
of $0.78 , which is equal to a 20% premium to the Issue
Price (as defined herein) in the form attached hereto as Exhibit
A (the “20% Premium Warrant”), and (iii) a
three-year warrant to purchase one-half share of the Common Stock
of the Company at an exercise price of $0.91 , which is
equal to a 40% premium to the Issue Price in the form attached
hereto as Exhibit B (the “40% Premium Warrant”
and together with the 20% Premium Warrant, the
“Warrants”) on the terms described below.
The Units are sometimes referred to herein as
the “ Securities .”
In connection with this subscription, Subscriber
and the Company agree as follows:
A.
Subscription of the Subscriber .
1.
Purchase of Units . The undersigned (the
"Subscriber") hereby irrevocably agrees, represents and warrants
with, to and for the benefit of the Company, that such Subscriber
is executing this Agreement in connection with the subscription by
the Subscriber for ______________ Units of the Company, resulting
in the aggregate purchase price set forth on the Subscriber’s
signature page hereto based upon the “Issue Price” (as
defined herein). The Subscriber understands that the
Company is relying upon the accuracy and completeness of the
information contained herein in complying with its obligations
under federal and state securities and other applicable
laws. Subject to the terms and conditions of this
Agreement, upon execution and delivery hereof by the Subscriber,
the Subscriber hereby agrees to purchase the Units pursuant to the
transaction hereof, and against concurrent delivery of the purchase
price for such shares. The date upon which the final
subscription is accepted by the Company and the full Issue Price
has been tendered to the Company, shall be known as the
“Closing Date.”
2.
Offering . This offering of the Units (the
"Offering") is being made to a limited group of investors, all of
whom shall represent to the Company pursuant to this Agreement that
they are "accredited investors," as that term is defined in
Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act") or who have otherwise been qualified
as investors by the Company. All of the Units offered
hereby are being sold by the Company. The Company is
offering the Units for the consideration set forth
herein. The Company may sell less than all of the Units
offered hereby, and shall be entitled to accept subscriptions and
receive the Issue Price for each subscription prior to the entire
Offering being subscribed for. The Offering is being made on a
“best efforts” basis. The minimum subscription amount
per investor is $25,000. The maximum offering by the Company is
$6,000,000 worth of Units.
3.
Issue Price . The Issue Price of the Units shall be equal to
$0.65 .
B.
Representations and Warranties of the Subscriber
. The Subscriber hereby represents and warrants to the
Company as of the date hereof:
1.
Place of Business . The principal place of
business address (or residence) set forth below is such
Subscriber's true and correct principal place of business and is
the only jurisdiction in which an offer to sell the Common Stock
was made to such Subscriber and such Subscriber has no present
intention of moving its principal place of business to or of
becoming a resident of any other state or jurisdiction.
2.
Sale or Transfer of the Common Stock . The Subscriber
understands that the Common Stock and the shares underlying the
Warrants have not been registered under the Securities Act, or
under the laws of any other jurisdiction. The Subscriber
understands and agrees that transfer or sale of the Common Stock
and the shares underlying the Warrants may be restricted or
prohibited unless they are subsequently registered under the
Securities Act and, where required, under the laws of other
jurisdictions or an exemption from registration is
available. The Subscriber will not offer, sell, transfer
or assign its Common Stock or any interest therein and the shares
underlying the Warrants in contravention of this Agreement, the
Securities Act or any state or federal law. The
Subscriber understands and acknowledges that, because of the
substantial restrictions on the transferability of the Common Stock
and the shares underlying the Warrants, it may not be possible for
the Subscriber to liquidate the Subscriber's investment in the
Company readily, even in the case of an emergency.
3.
Representation of Accredited Investor Status, Investment
Experience and Ability to Bear Risk . Subscriber
acknowledges that the Offering has not been registered with the
Securities and Exchange Commission (or any other securities
commission or authority of any other jurisdiction) because the
Company is relying on an exemption from registration under Section
4(2) of the Securities Act and Regulation D promulgated thereunder.
Subscriber believes that at the time of the sale of the
Common Stock to Subscriber, Subscriber (or, if Subscriber is a
corporation, limited liability company or trust, each of its equity
owners) qualifies as an "accredited investor" (as defined under
Rule 501 of Regulation D promulgated under the Securities Act)
using the following qualification factors (check all appropriate
items):
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$1,000,000
Net Worth Test:
I, Subscriber,
am a natural person and my individual net worth, or joint net worth
with my spouse (if any), inclusive of home,
furnishings and automobiles, at the time of this purchase is in
excess of $1,000,000.
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$200,000
Individual/$300,000 Joint Annual Income Test:
I, Subscriber,
am a natural person and my individual annual gross income
(exclusive of my spouse's income) has been in excess of $200,000 in
each of the two most recent tax years, and I reasonably expect
individual annual gross income (exclusive of my spouse's income) to
be in excess of $200,000 for the current tax year; or I am a
natural person and my joint annual gross income (including my
spouse's annual gross income) has been in excess of $300,000 in
each of the two most recent tax years, and I reasonably expect our
joint annual gross incomes to be in excess of $300,000 for the
current tax year.
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("Income" under this test is defined
as adjusted gross income for federal income tax purposes
plus (i) deductions for long-term capital gains under the
Internal Revenue Code; (ii) deductions for depletion under section
611 et seq. of the Code; (iii) any exclusion for interest received on tax-exempt securities;
and (iv) any losses of a Company allocated to the individual
limited partners of the Company as reported on Form
1040).
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Bank or
Investment Company Test:
Subscriber is a bank as defined in section
3(a)(2) of the Securities Act, or any savings and loan association
or other institution as defined in section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or fiduciary
capacity; or is a broker or dealer registered pursuant to section
15 of the Securities Exchange Act of 1934; or is an insurance
company as defined in section 2(13) of the Securities Act; or is
any investment company registered under the Investment Corporation
Act of 1940, or a business development company as defined in
section 2(a)(48) of that Act; or is a Small Business Investment
Corporation licensed by the U.S. Small Business Administration
under section 301(c) or (d) of the Small Business Investment Act of
1958; is a plan established and maintained by a state, its
political subdivision, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000; or is an
employee benefit plan within the meaning of the employee Retirement
Income Security Act of 1974, if the investment decision is made by
a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000, or, if a self-directed plan,
with investment decisions made solely by persons that are
accredited investors.
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Private
Business Development Corporation Test:
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Subscriber is a
private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940.
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IRC Section
501(c)(3) Organization Test:
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Subscriber is
an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust,
or Company, not formed for the specific purpose of acquiring the
securities being offered, with total assets in excess of
$5,000,000.
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Direct
Relationship to Issuer Test:
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Subscriber is a
director, executive officer, partner or manager of the Company of
the securities being offered or sold, or any director, executive
officer or manager of a partner or partner of that
issuer.
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$5,000,000
Noninvestment Trust Test:
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Subscriber is a
trust with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the securities being offered, whose
purchase is directed by a "sophisticated person" as described in
section 230.506(b)(2)(ii).
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Equity
Entity Comprised of Accredited Investors Test:
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Subscriber is
any equity entity in which all of the equity owners are accredited
investors as defined above. Subscriber has had one
of the persons responsible for overseeing and/or managing one or
more of Subscriber’s financial accounts complete the
attestation in Section D hereof in order to verify the information
in this Section B:
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Yes
_________
No _________
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For
Canadian Private Placement Subscribers
If a
Subscriber is Canadian resident, such Canadian resident Subscriber
must, in addition to meeting the “accredited investor”
eligibility requirements as defined under Rule 501 of Regulation D
promulgated under the Securities Act, certify that he, she or it is
an “accredited investor” as defined by applicable
Canadian securities laws. In this regard, each Canadian
resident Subscriber must complete and sign an “Accredited
Investor Status Certificate” in the form of Certificate
attached hereto as Exhibit C.
In addition,
Subscriber is knowledgeable and experienced with respect to the
financial and business activities contemplated by the Company and
is capable of evaluating the risks and merits of investing in the
Common Stock and, in making a decision to proceed with this
investment, has not relied upon any representations, warranties or
agreements, other than those set forth in this Agreement and can
bear the economic risk of an investment in the Company for an
indefinite period of time, and can afford to suffer the complete
loss thereof.
4.
Own Advice . In connection with the Subscriber's
investment in the Company, the Subscriber has carefully considered
and has, to the extent the Subscriber believes such discussion
necessary, discussed with the Subscriber's professional legal, tax
and financial advisers (the "Investment Advisors") the suitability
of an investment in the Common Stock for the Subscriber's
particular tax and financial situation and the Subscriber has
determined that the Common Stock are a suitable investment for the
Subscriber.
5.
Company History; Risks . The Subscriber represents and
warrants that the Subscriber is aware (i) that the Company has
limited operating history; (ii) that the Common Stock involve
a substantial degree of risk of loss of the Subscriber's entire
investment and that there is no assurance of any income from the
Subscriber's investment; and (iii) that any federal and/or
state income tax benefits which may be available to the Subscriber,
if any, may be lost through the adoption of new laws or
regulations, to changes to existing laws and regulations and to
changes in the interpretation of existing laws and
regulations. The Subscriber further represents that the
Subscriber is relying solely on the Subscriber's own conclusions or
the advice of the Subscriber's Investment Advisors with respect to
tax aspects of any investment in the Common Stock. The Subscriber
further represents that it has read and reviewed the
Company’s filings made with the Securities and Exchange
Commission.
6.
Inquiries . The Subscriber and its Investment
Advisors have been given access to, and prior to the execution of
this Agreement, have been provided with an opportunity to ask
questions of, and receive answers from, the Company officers
concerning the Company and the terms and conditions of the Offering
and the Common Stock, and to obtain any other information which the
Subscriber and the Subscriber's Investment Advisors required with
respect to the Company and an investment in the Company in order to
evaluate such investment and verify the accuracy of all information
furnished to the Subscriber and its Investment Advisors regarding
the Company. All such questions, if asked, were answered
satisfactorily and all information or documents provided were found
to be satisfactory. Neither the Subscriber nor its
Investment Advisors have been furnished any offering literature on
which they have relied on other this Agreement and the Subscriber
and its Investment Advisors have relied only on this
Agreement. At no time was the Subscriber presented with
or solicited by any leaflet, public promotion meeting, newspaper or
magazine article, radio or television advertisement or any other
form of general advertising or general solicitation.
7.
Authority . The Subscriber is authorized and has
full right and power to subscribe for the Common Stock and to
perform the Subscriber's obligations pursuant to the provisions of
this Agreement; the person signing this Agreement and any other
instrument executed and delivered herewith on behalf of such
Subscriber has been duly authorized by such entity and has full
power and authority to do so. If the Subscriber is a corporation,
partnership, unincorporated association or other entity, the person
signing this agreement has the legal capacity to authorize, deliver
and be bound by this Subscription Agreement and to take all actions
required pursuant hereto and further certifies that all necessary
approvals of directors, shareholders or otherwise have been given
and obtained; and if the Subscriber is an individual, it is of the
full age of majority in the jurisdiction in which the Subscriber is
resident and is legally competent to execute, deliver and be bound
by this Subscription Agreement and take all action pursuant
hereto.
8.
No Default . The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and
thereby will not conflict with, or result in any violation of or
default pursuant to, any provision of any governing instrument
applicable to the Subscriber, or any agreement or other instrument
to which the Subscriber is a party or by which the Subscriber or
any of the Subscriber's properties are bound or any permit,
franchise, judgment, decree, statute, rule or regulation applicable
to the Subscriber or any of the Subscriber's business or
properties.
9.
ERISA . If the Subscriber is an employee benefit plan
subject to ERISA, then such Subscriber acknowledges that such
Subscriber has been informed of and understands the operations and
business of the Company, and represents that such Subscriber's
investment in the Company (i) is permissible under the documents
and instruments governing such plan; (ii) satisfies the
diversification requirements of ERISA; (iii) is prudent considering
all the facts and circumstances, including the fact that there is
no trading market for the Common Stock; and (iv) is not a
"prohibited transaction" within the meaning of Section 406 of
ERISA.
10.
Purchase Entirely For Own Account . This
Agreement is made with the Subscriber in reliance upon the
Subscriber's representations to the Company, which by the
Subscriber's execution of this Agreement, the Subscriber hereby
confirms, that the Common Stock issuable to the Subscriber will be
acquired for investment for the Subscriber's own account, not as a
nominee or agent, and not with a view to the resale or distribution
of any part thereof, and that the Subscriber has no present
intention of selling, granting any participation in, or otherwise
distributing the same. The Subscriber represents and
warrants that the Subscriber has no contract, understanding,
agreement or arrangement with any person to sell or transfer or
pledge to such person or anyone else any of the Common Stock for
which the Subscriber hereby subscribes (in whole or in part) or any
interest therein; and the Subscriber represents and warrants that
the Subscriber has no present plans to enter into any such
contract, undertaking, agreement or arrangement.
The Subscriber represents and warrants that the
funds representing the Aggregate Subscription Price which will be
advanced by the Subscriber hereunder will not represent proceeds of
crime and the Subscriber acknowledges that the Company may in the
future be required by law to disclose the Subscriber's name and
other information relating to this Subscription Agreement and the
Subscriber's subscription hereunder, on a confidential basis, and
to the best of the Subscriber's knowledge (i) none of the
subscription funds to be provided by the Subscriber (a) have been
or will be derived from or related to any activity that is deemed
criminal under the laws of the United States of America, or any
other jurisdiction, or (b) are being tendered on behalf of a person
or entity who has not been identified to the Subscriber, and (ii)
it shall promptly notify the Company if the Subscriber discovers
that any of such representations ceases to be true, and to provide
the Company with appropriate information in connection
therewith.
The Subscriber
represents and warrants that the current structure of this
transaction and all transactions and activities contemplated
hereunder is not a plan or scheme to evade the registration
provisions of the Securities Act.
The Subscriber
acknowledges that:
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no securities
commission or similar regulatory authority has reviewed or passed
on the merits of the Common Stock; and
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there is no
government or other insurance covering the Common Stock;
and
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there are risks
associated with the purchase of the Common Stock; and
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there are
restrictions on the Subscriber's ability to resell the Common Stock
and it is the responsibility of the Subscriber to find out what
those restrictions are and to comply with them before selling the
Common Stock; and
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the Company has
advised the Subscriber that the Company is relying on an exemption
from the requirements to provide the Subscriber with a prospectus
and to sell securities through a person or company registered to
sell securities under applicable securities laws and, as a
consequence of acquiring the Common Stock pursuant to this
exemption, certain protections, rights and remedies provided by
applicable securities laws, including statutory rights of
rescission or damages, will not be available to the
Subscriber.
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The Subscriber
represents and warrants that it has not received nor does it expect
to receive any financial assistance from the Company, directly or
indirectly, in respect of the Subscriber's purchase of the Common
Stock.
The Subscriber
represents and warrants that neither the Company, nor any of their
respective directors, officers, employees or representatives, have
made any representations (oral or written) to the Subscriber
regarding the future value of the Common Stock.
The Subscriber
acknowledges that (i) the Company may complete secured or unsecured
debt financings or equity financings in the future in order to
develop the Company's business and to fund its ongoing development,
(ii) there is no assurance that such financings will be available
and, if available, on reasonable terms, (iii) any such future
financings may have a dilutive effect on current security holders,
including the Subscriber, and (iv) if such future financings are
not available, the Company may be unable to fund its ongoing
development and the lack of capital resources may result in the
failure of its business.
The Subscriber
will not, directly or indirectly, except in compliance with (that
is, only to the extent required to comply with) the Securities Act
and such other securities or “Blue Sky” laws as may be
applicable, (i) offer, sell, pledge, transfer or otherwise dispose
of (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) any of the Securities, (ii) engage in any short
sale which results in a disposition of any of the Securities by
Investor, or (iii) hedge the economic risk of the
Subscriber’s investment in the Securities.
C.
Representations and Warranties of the Company .
1.
Organization, Good Standing and Qualification . The Company
is a corporation duly organized, validly existing, in good standing
under the laws of the State of Nevada and has all requisite
corporate power and corporate authority to carry on its business as
now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good
standing in the State of Nevada. The Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, except where
the failure to be so qualified would not have a material adverse
effect on the Company.
2.
Capitalization. As of October 28, 2008, the
authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, of which (i) 21,856,026 shares are issued
and outstanding, and (ii) 6,356,104 shares are reserved for
issuance upon exercise of outstanding warrants, options and other
convertible securities. All such issued and outstanding shares have
been duly authorized and validly issued and have been offered,
issued, sold, and delivered by the Company in compliance with
applicable federal and state securities laws.
3.
Authorization . The Company has all requisite corporate
power to execute, deliver and perform its obligations under this
Agreement and all other agreements contemplated hereby and thereby
and to issue the Common Stock in accordance with the terms
hereof. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement and all
other agreements and obligations contemplated hereby and thereby,
the performance of all obligations of the Company hereunder and
thereunder, and the authorization, issuance (or reservation for
issuance), sale and
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