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SUBSCRIPTION AGREEMENT

Subscription Services Agreement

SUBSCRIPTION AGREEMENT | Document Parties: CROWDGATHER, INC. You are currently viewing:
This Subscription Services Agreement involves

CROWDGATHER, INC.

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Title: SUBSCRIPTION AGREEMENT
Governing Law: Nevada     Date: 5/27/2009
Law Firm: Baker Hostetler    

SUBSCRIPTION AGREEMENT, Parties: crowdgather  inc.
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Exhibit 10.1: SUBSCRIPTION AGREEMENT

 

THIS SUBSCRIPTION AGREEMENT (this “ Agreement ”), is dated as of __________ __, 2009, by and among CrowdGather, Inc., a Nevada corporation (the “ Company ”), and the subscribers identified on the signature page hereto (each a “ Subscriber ” and collectively “ Subscribers ”).

 

WHEREAS, the Company and the Subscribers are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the provisions of Section 4(2), Section 4(6), Regulation D (“ Regulation D ”), and/or Regulation S (“ Regulation S ”), as promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”).

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Subscribers, as provided herein, and the Subscribers, in the aggregate, shall purchase in new funds to the Company not less than approximately $1,300,000 and not more than approximately $2,400,000 in the aggregate (the “ Purchase Price ”) of units of the Company’s securities, consisting of 8% Secured Straight Convertible Debentures substantially in the form attached hereto as Exhibit A (the “ Debentures ”) and common stock purchase warrants substantially in the form attached hereto as Exhibit B (the “ Warrants ,” with the Debentures, the “ Units ”);

 

NOW, THEREFORE, in consideration of these presents and for such other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and the Subscribers hereby agree as follows:

 

1.            Closing Date .  The initial “ Closing Date ” shall be the same date as not less than approximately $1,300,000 of new funds representing the cash purchase price of a concurrent private placement of Units is transmitted by wire transfer or otherwise credited to or for the benefit of the Company.  The initial “ Closing ” of the transactions contemplated herein shall take place concurrently therewith at the offices of Baker & Hostetler llp, 600 Anton Blvd., Suite 900, Costa Mesa, California 92626, upon the satisfaction or waiver of all conditions to closing set forth in this Agreement.  Subject to the satisfaction or waiver of the terms and conditions of this Agreement, on the Closing Date, each Subscriber shall purchase, and the Company shall sell to each Subscriber, a Debenture in the initial principal amount as is set forth next to such Subscriber’s name on its respective Subscription Agreement.  In connection therewith, the Company shall grant to the Subscriber a Warrant for the purchase of shares of the Company’s common stock, $0.001 par value per share (the “ Common Stock ”), in an amount set forth next to such Subscriber’s name on its respective Subscription Agreement. One or more subsequent Closings shall occur on or before July 15, 2009, to a maximum Purchase Price of approximately $2,400,000.

 

2.            The Subscribers’ Conditions to the Initial  Closing .  Each of the following shall have occurred prior to or contemporaneously with the initial Closing, unless otherwise waived in writing by each Subscriber who has tendered a Subscription Agreement for the Initial Closing:

 

(a)           Not less than approximately $1,075,000 in outstanding principal and accrued interest and fees thereon shall have been converted into Units on substantially the same terms and conditions as those set forth herein, subject to any previously extant placement pricing rights in favor of such converting debt holders; and

 

 (b)          The Lock-up Agreements, as amended, substantially in the form attached hereto as Exhibit D, shall have been executed and delivered to the Company by those persons listed on Schedule 2(b).

 

3.            Reserved.

 

4.            The Subscriber’s Representations and Warranties .  Each Subscriber hereby represents and warrants to and agrees with the Company only as to such Subscriber that:

 

(a)            Organization and Standing of the Subscribers .  If such Subscriber is an entity, such Subscriber is a corporation, partnership, or other entity duly incorporated or organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization.

 

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(b)            Authorization and Power .  Such Subscriber has the requisite power and authority to enter into and perform this Agreement.  The execution, delivery, and performance of this Agreement by such Subscriber and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Subscriber or its board of directors, stockholders, partners, members, or managers, as the case may be, is required.  This Agreement has been duly authorized, executed, and delivered by such Subscriber and constitutes a valid and binding obligation of such Subscriber enforceable against such Subscriber in accordance with the terms hereof.

 

(c)            No Conflicts .  The execution, delivery, and performance of this Agreement and the consummation by such Subscriber of the transactions contemplated hereby or relating hereto do not and will not (i) result in a violation of such Subscriber’s charter documents or bylaws or other organizational documents or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration, or cancellation of any agreement, indenture, or instrument or obligation to which such Subscriber is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to such Subscriber or its properties (except for such conflicts, defaults, and violations as would not, individually or in the aggregate, have a material adverse effect on such Subscriber).  Such Subscriber is not required to obtain any consent, authorization, or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver, or perform any of its obligations under this Agreement or to purchase the Units in accordance with the terms hereof, provided that for purposes of the representation made in this sentence, such Subscriber is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

 

(d)            Information on Company .   Such Subscriber has had access to the EDGAR Website of the Commission to the periodic reports that the Company has filed with the Commission that are available at the EDGAR website (collectively, the “ SEC Reports ”).

 

(e)            Information on Subscriber .  Such Subscriber is an “ accredited investor ,” as such term is defined in Regulation D promulgated by the Commission under the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax, and other business matters as to enable such Subscriber to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment.  Such Subscriber has the authority and is duly and legally qualified to purchase and own the Units and their component parts and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.  The information set forth on the signature page hereto regarding such Subscriber is accurate.

 

(f)            Purchase of the Units .  On the Closing Date, such Subscriber will purchase the Units as principal for its own account for investment only and not with a view toward, or for resale in connection with, the public sale or any distribution thereof or of any of their component parts.

 

(g)            Compliance with Securities Laws .  Such Subscriber understands and agrees that the Units and their component parts have not been registered under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the 1933 Act (based in part on the accuracy of the representations and warranties of such Subscriber contained herein), and that such Debentures and Warrants, and the underlying shares of Common Stock must be held indefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state securities laws or is exempt from such registration.  Such Subscriber will comply with all applicable rules and regulations in connection with the sales of the Units, their component parts, and the underlying shares of Common Stock.

 

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(h)            Securities Legend .  The Debentures, the Warrants, and the underlying shares of Common Stock  shall bear the following or similar legend:

 

“THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATE-MENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

(i)            Communication of Offer .  The offer to sell the Units was directly communicated to such Subscriber by the Company.  At no time was such Subscriber presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

 

(j)            Authority; Enforceability .  This Agreement and other agreements delivered together with this Agreement or in connection herewith have been duly authorized, executed, and delivered by such Subscriber and are valid and binding agreements 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; and such Subscriber has full power and authority necessary to enter into this Agreement and such other agreements and to perform its obligations hereunder and under all other agreements entered into by such Subscriber relating hereto.

 

(k)            Restricted Securities .  Such Subscriber understands that the Units, their component parts, and the underlying shares of Common Stock, have not been registered under the 1933 Act and such Subscriber will not sell, offer to sell, assign, pledge, hypothecate, or otherwise transfer any of the Units, their component parts, or the underlying shares of Common Stock unless pursuant to an effective registration statement under the 1933 Act, or unless an exemption from registration is available.  Notwithstanding anything to the contrary contained in this Agreement, such Subscriber may transfer (without restriction and without the need for an opinion of counsel) the Units and their component parts to its Affiliates (as defined below) provided that each such Affiliate is an “ accredited investor ” under Regulation D and such Affiliate agrees to be bound by the terms and conditions of this Agreement.  For the purposes of this Agreement, an “ Affiliate ” of any person or entity means any other person or entity directly or indirectly controlling, controlled by, or under direct or indirect common control with such person or entity.  For purposes of this definition, “ control ” means the power to direct the management and policies of such person or firm, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise.

 

(l)            No Governmental Review .  Such Subscriber understands that no United States federal or state agency or any other governmental or state agency has passed on or made recommendations or endorsement of the Units and their component parts or the suitability of the investment in the Units nor have such authorities passed upon or endorsed the merits of the offering of the Units.

 

(m)            Correctness of Representations .  Such Subscriber represents as to such Subscriber that the foregoing representations and warranties are true and correct as of the date hereof and, unless such Subscriber otherwise notifies the Company prior to the Closing Date, shall be true and correct as of the Closing Date.

 

5.            Company Representations and Warranties .  The Company represents and warrants to and agrees with each Subscriber that:

 

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(a)            Due Incorporation .  The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of Nevada 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.  The Subsidiaries as of the Closing Date are set forth on Schedule 5(a).

 

(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 has been duly authorized, executed, and delivered by the Company and is a valid and binding agreement of the Company enforceable in accordance with its 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 this Agreement and to perform its obligations hereunder.

 

(d)            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 (“ Bulletin Board ”), or the Company’s stockholders is required for the execution by the Company of this Agreement and compliance and performance by the Company of its obligations hereunder, including, without limitation, the issuance and sale of the Units.

 

(e)            No Violation or Conflict .  Assuming the representations and warranties of the Subscribers in Section 4 are true and correct, neither the issuance and sale of the Units nor the performance of the Company’s obligations hereunder or thereunder by the Company will:

 

(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, charter, or bylaws of


 
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