ADDENDUM TO SUBSCRIPTION AGREEMENT
DATED _______, 2007
This Addendum (the “ Addendum ”) relates to the TechoConcepts, Inc. (the “ Company ” or the “ Corporation ”) subscription agreement (the “ Subscription Agreement ”) for the offering of units (“ Units ”), with each $30,000 Unit consisting of: (i) $30,000 of 8% secured convertible debentures, convertible into shares of no par value common stock of the Company (“ Common Stock ”) at $1.50 per share, (ii) warrants to purchase 10,000 shares of Common Stock at a purchase price of $1.90 per share, and (iii) warrants to purchase 10,000 shares of Common Stock at a purchase price of $2.75 per share. This Addendum supplements certain information contained in the Subscription Agreement and the Offering Memorandum referenced therein and it exhibits. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Subscription Agreement.
The opening paragraph of the Subscription Agreement states as follows:
“Investors purchasing 67 Units ($2,010,000) or more shall be issued additional warrants (the “ Additional Warrants ”) at the rate of 40,000 Additional Warrants per Unit purchased, which Additional Warrants shall be identical in form to the Warrants, except that (a) 50% of such Additional Warrants shall have an exercise price of $2.00 per share, shall not have a cashless exercise feature, and shall expire eighteen (18) months from the Final Closing (defined below), (b) 25% of such Additional Warrants shall have an exercise price of $2.50 per share, and (c) 25% of such Additional Warrants shall have an exercise price of $3.50 per share.”
This Addendum is to advise that the Additional Warrants shall have one additional feature which will differ from the Warrants issued as part of the Units. This feature will grant the holders of the Additional Warrants the right to receive a cash payment based upon the closing bid price of an acquirer’s stock or based upon a Black Scholes valuation of the Additional Warrants in the event the Company is acquired or sells all of its assets in a transaction in which the Common Stock is valued at less than $3.50 per share. As a result of this right, in place of Section 5(a) as set forth in the form of Warrant, the Additional Warrant shall contain the following provision:
i. For purposes of this Section 5(a), the term “Per Share Transaction Value” shall mean (A) the sum of the (i) cash, notes, securities and other property of value; (ii) liabilities (x) assumed by the purchaser (in the case of a sale of assets) and/or (y) existing on the Corporation’s balance sheet at the time the transaction is consummated (in the case of a merger or sale of stock); (iii) payments to be made in installments; (iv) amounts paid or payable under consulting, supply, service, distribution, licensing or lease agreements not to compete or similar arrangements (including such payments to management); and, (v) contingent payments (whether or not related to future earnings or operations), divided by (B) the number of shares of common stock of the Corporation outstanding immediately prior to the merger.
ii. If at any time there shall be a merger or a consolidation of the Corporation with or into another corporation when the Corporation is not the surviving corporation and where the Per Share Transaction Value equals or exceeds $3.50, then, as part of such merger or consolidation,