-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U7hvJe37v0usaQNpmX7BHY1aHJUnMk0iGBhrOquA+EGBUp+tUPFXZhueROCqvYvU GFfBCHtRsGmaPpz8OJz6jg== 0001193125-11-034104.txt : 20110214 0001193125-11-034104.hdr.sgml : 20110214 20110214094535 ACCESSION NUMBER: 0001193125-11-034104 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20110214 DATE AS OF CHANGE: 20110214 GROUP MEMBERS: KEVIN A. RICHARDSON, II SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EDIETS COM INC CENTRAL INDEX KEY: 0001094058 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 560952883 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-60653 FILM NUMBER: 11602541 BUSINESS ADDRESS: STREET 1: 1000 CORPORATE DRIVE STREET 2: SUITE 600 CITY: FORT LAUDERDALE STATE: FL ZIP: 33334 BUSINESS PHONE: 954-360-9022 MAIL ADDRESS: STREET 1: 1000 CORPORATE DRIVE STREET 2: SUITE 600 CITY: FORT LAUDERDALE STATE: FL ZIP: 33334 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Prides Capital Partners, LLC CENTRAL INDEX KEY: 0001295315 IRS NUMBER: 200654530 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 200 HIGH STREET STREET 2: SUITE 700 CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 617 778 9200 MAIL ADDRESS: STREET 1: 200 HIGH STREET STREET 2: SUITE 700 CITY: BOSTON STATE: MA ZIP: 02110 SC 13D/A 1 dsc13da.htm SCHEDULE 13D AMENDMENT NO. 13 Schedule 13D Amendment No. 13

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Rule 13d-101. Information to be included in Statements Filed Pursuant to § 240.13d-1(a) and Amendments Thereto Filed)

 

 

SCHEDULE 13D

(Amendment No. 13)

Under the Securities Exchange Act of 1934

 

 

 

eDiets.com, Inc.

(Name of Issuer)

 

 

 

COMMON STOCK, $0.001 par value per share

(Title of Class of Securities)

 

280597105

(CUSIP Number)

 

Kevin A. Richardson, II    

Prides Capital Partners, L.L.C.

200 State Street, 13th Floor

Boston MA 02109

(617) 778-9200

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

 

February 7, 2011

(Date of Event which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box  ¨.

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §§ 240.13d-7 for other parties to whom copies are to be sent.

 

*   The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 


SCHEDULE 13D

 

 

CUSIP NO. 280597105

 

         
  1.   

NAME OF REPORTING PERSON

 

Prides Capital Partners, L.L.C.

  2.  

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*

(a)  ¨        (b)  x

 

  3.  

SEC USE ONLY

 

  4.  

SOURCE OF FUNDS*

 

    See Item 3

  5.  

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)  ¨

 

  6.  

CITIZENSHIP OR PLACE OF ORGANIZATION

 

    Delaware

       7.    

SOLE VOTING POWER

 

    -0-

     8.   

SHARED VOTING POWER

 

    38,536,258**

     9.   

SOLE DISPOSITIVE POWER

 

    -0-

   10.   

SHARED DISPOSITIVE POWER

 

    38,536,258**

11.

 

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

    38,536,258**

12.

 

CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES  ¨

 

13.

 

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

    60.3% **

14.

 

TYPE OF REPORTING PERSON

 

    OO (Limited Liability Corporation)

 

** See Item 5


SCHEDULE 13D

 

 

CUSIP NO. 280597105

 

         
  1.   

NAME OF REPORTING PERSON

 

Kevin A. Richardson, II

  2.  

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*

(a)  ¨        (b)  x

 

  3.  

SEC USE ONLY

 

  4.  

SOURCE OF FUNDS*

 

    See Item 3

  5.  

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)  ¨

 

  6.  

CITIZENSHIP OR PLACE OF ORGANIZATION

 

    USA

       7.    

SOLE VOTING POWER

 

    5,121,757**

     8.   

SHARED VOTING POWER

 

    38,536,258**

     9.   

SOLE DISPOSITIVE POWER

 

    5,121,757**

   10.   

SHARED DISPOSITIVE POWER

 

    38,536,258**

11.

 

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

    43,658,015**

12.

 

CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES  ¨

 

13.

 

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

    68.4% **

14.

 

TYPE OF REPORTING PERSON

 

    IN

 

** See Item 5


CUSIP NO. 280597105   SCHEDULE 13D  

This Amendment No. 13 to Schedule 13D is being filed by Prides Capital Partners, L.L.C., a Delaware Limited Liability Company (“Prides”), and Kevin A. Richardson, II (together with Prides, the “Reporting Persons” and each, a “Reporting Person”). The Schedule 13D filed on May 19, 2006 (the “Schedule 13D”), and amended by Amendment No. 1 filed on June 20, 2006, Amendment No. 2 filed on July 7, 2006, Amendment No. 3 filed on August 8, 2006, Amendment No. 4 filed on March 29, 2007, Amendment No. 5 filed on May 15, 2007, Amendment No. 6 filed on August 20, 2007, Amendment No. 7 filed on September 6, 2007, Amendment No. 8 filed on January 11, 2008, Amendment No. 9 filed on June 3, 2008, Amendment No. 10 filed on July 2, 2009, Amendment No. 11 filed on April 22, 2010 and Amendment No. 12 filed on June 17, 2010, by the Reporting Persons is hereby amended and supplemented as set forth in this Amendment No. 13.

Each Item below amends and supplements the information disclosed under the corresponding Item of the Schedule 13D. Unless otherwise indicated herein, capitalized terms used but not defined in this Amendment No. 13 shall have the same meaning herein as are ascribed to such terms in the Schedule 13D.

Item 3. Source and Amount of Funds or Other Consideration

The information in Item 4 below is incorporated by reference into this Item 3.

Item 4. Purpose of Transaction

On February 7, 2011, Kevin A. Richardson, II entered into a Subscription Agreement with the Issuer (the “Subscription Agreement”). Under the terms of the Subscription Agreement, Mr. Richardson agreed to purchase 1,939,394 newly issued shares of Common Stock and a warrant to purchase 969,697 shares of Common Stock (the “Warrant”) for an aggregate cash purchase price of $800,000 in a private placement. Mr. Richardson funded the purchase price from his personal funds.

The Warrant has an initial exercise price of $0.3535 per share, expires on February 7, 2014, is exercisable immediately upon issuance and provides for a cashless “net” exercise under certain conditions. The exercise price of the Warrant and the number of Common Shares issuable upon the exercise of the Warrant are subject to adjustment under certain circumstances; however, no adjustment to the exercise price will be made that would reduce the exercise price below $0.34 per share.

Also on February 7, 2011, the Issuer entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Mr. Richardson, an investment fund controlled by Prides Capital Partners L.L.C. (the “Prides Fund”), and certain other investors that agreed to purchase shares of Common Stock and warrants to purchase shares of Common Stock, in the private placement, concurrently with Mr. Richardson or on or before February 11, 2011 (the “Private Placement”). Pursuant to the Registration Rights Agreement, the Issuer has agreed to register the resale of (i) the shares of Common Stock issued to Mr. Richardson and the shares of Common Stock issuable upon exercise of the Warrant, (ii) the shares of Common Stock issued to other investors in the Private Placement, (iii) the shares of common stock issuable upon the exercise of additional warrants issued to other investors in the Private Placement, and (iv) certain other unregistered Common Shares already held by certain of the investors in the Private Placement and the Prides Fund.

The foregoing descriptions of the Subscription Agreement, the Warrant, and the Registration Rights Amendment do not purport to be complete and are qualified in their entirety by reference to such agreements, each of which is incorporated by reference in its entirety into this Item 4. Copies of the Subscription Agreement, the Warrant, and the Registration Rights Amendment are filed as Exhibits 99.2, 99.3 and 99.4 respectively, hereto.

The purpose of the Reporting Persons entering into the foregoing transactions was for investment purposes and these transactions were made in the ordinary course of business. Although no Reporting Person has any specific plan or


proposal to acquire or dispose of the shares of Common Stock, warrants or stock options, consistent with the investment purpose, each Reporting Person, at any time, and from time to time, may acquire additional shares of Common Stock, warrants or stock options or dispose of or exercise (as the case may be) any or all of its shares of Common Stock, warrants or stock options depending upon an ongoing evaluation of the investment in the shares of Common Stock, warrants or stock options, prevailing market conditions, other investment opportunities, liquidity requirements of the Reporting Persons or other investment considerations. Also, consistent with the investment purpose, the Reporting Persons may engage in communications with one or more stockholders of the Issuer, one or more officers or employees of the Issuer, one or more members of the board of directors of the Issuer, and/or one or more representatives of the Issuer regarding the Issuer, including but not limited to its management, operations, business results, plans, and prospects. The Reporting Persons may discuss ideas that, if affected, may result in any of the following: the acquisition by the Reporting Persons of additional shares of Common Stock or other securities of the Issuer, an extraordinary corporate transaction involving the Issuer, and/or changes in the Board or management of the Issuer. Except to the extent the foregoing may be deemed a plan or proposal or as provided by the Debt Conversion Agreements, the Securities Subscription and Purchase Agreements, and the Registration Rights Amendment, neither of the Reporting Persons has any plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.

Item 5. Interest in Securities of the Issuer

(a) - (b) As reported by the Issuer in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010, as of November 11, 2010, there were 57,418,520 shares of Common Stock issued and outstanding. Based on such information, the Reporting Persons report beneficial ownership of 43,658,015 shares of Common Stock representing 68.4% of the Common Stock; taking into account the 3,811,818 shares of Common Stock issued in the Private Placement as reported in the Company’s Current Report on Form 8-K filed on February 11, 2011, the 969,697 shares of Common Stock issuable upon the exercise of the Warrant and the 1,663,463 shares of Common Stock issuable upon the exercise of warrants (other than the Warrant) and stock options held by the Reporting Persons that are presently exercisable or exercisable within the next 60 days. The shares reported include (1) 37,181,980 shares of Common Stock of the Issuer, (2) 1,209,652 shares of Common Stock issuable upon exercise of warrants (other than the Warrant) that are presently exercisable or exercisable within the next 60 days and (3) 144,626 fully-vested stock options that are presently exercisable or exercisable within the next 60 days, for which the Reporting Persons share voting and investment power. In addition, the shares reported include (1) 3,841,875 shares of Common Stock of the Issuer, (2) 969,697 shares of Common Stock issuable upon the exercise of the Warrant and (3) 310,185 shares of Common Stock issuable upon the exercise of warrants (other than the Warrant) and stock options held by the Reporting Persons that are presently exercisable or exercisable within the next 60 days, held by Mr. Richardson, who is also a director of the Issuer, and for which Mr. Richardson exercises sole voting and investment power.

Prides and Mr. Richardson may be deemed to constitute a group for purposes of Section 13(d) or Section 13(g) of the Act. Prides expressly disclaims (i) that Prides is a member of any group for purposes of Section 13(d) or 13(g) of the Act, and (ii) that Prides has agreed to act as a group other than as described in this Statement on Schedule 13D.

As a partner and controlling person of Prides, Mr. Richardson may be deemed to beneficially own any shares of Common Stock, warrants or stock options that Prides may beneficially own, or be deemed to beneficially own. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission that Mr. Richardson is the beneficial owner of Common Stock, warrants or options referred to in the immediately preceding sentence for purposes of Section 13(d) of the Act or for any other purpose, and such beneficial ownership is expressly disclaimed except to the extent of any pecuniary interest therein.


CUSIP NO. 280597105   SCHEDULE 13D  

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

None of the Reporting Persons is a party to any contract, arrangement, understanding or relationship with respect to any securities of the Issuer, including but not limited to the transfer or voting of any securities of the Issuer, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, except as disclosed herein.

Item 7. Material to be Filed as Exhibits

 

Exhibit 99.1    Joint Filing Agreement, dated as of February 11, 2011, by and between the Reporting Persons
Exhibit 99.2    Subscription Agreement, dated as of February 11, 2011, by and between Kevin A. Richardson II and eDiets.com, Inc.
Exhibit 99.3    eDiets.com, Inc. Warrant for the purchase of shares of Common Stock, dated February 7, 2011
Exhibit 99.4    Registration Rights Agreement, dated as of February 7, 2011, by and among eDiets.com, Inc., holders of shares of Common Stock listed on Exhibit A thereto, and Prides Capital Partners, LLC


CUSIP NO. 280597105   SCHEDULE 13D  

SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

Dated: February 14, 2011

 

Prides Capital Partners, L.L.C.
By:  

/s/ Murray A. Indick

  Murray A. Indick
  Member

 

Kevin A. Richardson, II
By:  

/s/ Murray A. Indick

  Murray A. Indick
  Attorney-in-Fact
EX-99.1 2 dex991.htm EXHIBIT 99.1 Exhibit 99.1
CUSIP NO. 280597105   SCHEDULE 13D  

Exhibit 99.1

JOINT FILING AGREEMENT

The undersigned, being duly authorized thereunto, hereby execute this agreement as an exhibit to this Schedule 13D to evidence the agreement of the below-named parties, in accordance with the rules promulgated pursuant to the Securities Exchange Act of 1934, to file this Schedule jointly on behalf of each such party.

Dated: February 14, 2011

 

Prides Capital Partners, L.L.C.
By:  

/s/ Murray A. Indick

  Murray A. Indick
  Member

 

Kevin A. Richardson, II
By:  

/s/ Murray A. Indick

  Murray A. Indick
  Attorney-in-Fact
EX-99.2 3 dex992.htm EXHIBIT 99.2 Exhibit 99.2

Exhibit 99.2

c/o Prides Capital Partners, LLC

200 State Street, 13th Floor

Boston, MA 02109

February 7, 2011

eDiets.com, Inc.

1000 Corporate Drive Suite 600

Fort Lauderdale FL 33334

Re: Additional Equity Investment

Dear Sirs:

This letter agreement (this “Agreement”) will confirm our agreement on the matters described below:

 

  1. Pursuant to this Agreement and subject to its terms and conditions, and concurrently with the execution of this Agreement, the undersigned (the “Investor”) hereby subscribes for and purchases from eDiets.com, Inc., a Delaware corporation (the “Company”), and the Company hereby issues and sells to the Investor, in a private placement, the following securities (the “Securities”) for an aggregate purchase price of $800,000.00:

 

  a. 1,939,394 newly issued shares (the “Investor Shares”) of common stock, par value $0.001 per share (the “Common Stock”), of the Company at a purchase price of $0.4125 per share; and

 

  b. a warrant (the “Warrant”), in the form attached hereto as Exhibit A, to purchase shares of Common Stock.

 

  2. Concurrently with the execution of this Agreement, the Company and the Investor have entered into a registration rights agreement, in the form attached hereto as Exhibit B (the “Registration Rights Agreement” and together with this Agreement and the Warrant, the “Agreements”).

 

  3.

The Company will file with the SEC, as soon as practicable, but in any event within five days, after the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “2010 Form 10-K”), a registration statement to enable the Company to commence a rights offering (the “Rights Offering”), pursuant to which, among other customary things, (A) the Company would distribute to existing stockholders the right to purchase newly issued shares of Common Stock equal to up to 15% of the then outstanding shares of Common Stock; (B) the price per share of Common Stock in the Rights Offering would be not less than the greater of $0.4125 per

 

1


 

share and 85% of the then-current market price of the Common Stock, as mutually agreed to by the Company and the Investor; (C) stockholders who fully exercise their rights would have the customary, pro rata right to subscribe for additional shares of Common Stock unclaimed by other stockholders in the Rights Offering; and (D) concurrently with the commencement of the Rights Offering, the shares of Common Stock issuable in connection with the Rights Offering would be registered under applicable securities laws and, if possible at the time, listed on the Nasdaq Capital Market. The Investor will purchase at least $300,000.00 of Common Stock offered pursuant to the Rights Offering at the price per share set forth therein, including pursuant to any over-subscription rights.

 

  4. Certificates representing the Investor Shares and the Warrants and registered in the Investor’s name and address as set forth in Section 13(b) of this Agreement will be delivered to the Investor as promptly as practicable after the date of this Agreement.

 

  5. The Investor hereby represents and warrants to, and covenants with, the Company as follows:

 

  a. the Investor was at the time it was offered the Securities, is as of the date hereof and will be on each date the Investor exercises the Warrant an “accredited investor” (as such term is defined in Rule 501 of Regulation D promulgated pursuant to the Securities Act of 1933, as amended (the “Securities Act”)); is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in securities presenting an investment decision similar to that involved in the purchase of the Securities; has requested, received, reviewed and considered all information the Investor deemed relevant in making an informed decision to purchase the Securities; and is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment;

 

  b. the Investor understands that the Securities are “restricted securities” and have not been registered under the Securities Act, or registered or qualified under any state securities law, in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the representations made by the Investor in this Agreement; the Investor is acquiring the Securities in the ordinary course of business and for the Investor’s own account for investment only, has no present intention of distributing any of such Securities and has no arrangement or understanding with any other persons regarding the distribution of such Securities; and

 

  c. the Investor will not, directly or indirectly, 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, except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder.

 

2


  6. The Company hereby represents and warrants to, and covenants with, the Investor as follows:

 

  a. The Company is duly incorporated and validly existing in good standing under the laws of the State of Delaware, has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is registered or qualified to do business and in good standing in each jurisdiction in which it owns or leases property or transacts business and where the failure to be so qualified would have a material adverse effect upon the Company and its subsidiaries as a whole or the business, financial condition, prospects, properties, operations or assets of the Company and its subsidiaries as a whole or the Company’s ability to perform its obligations under the Agreements in all material respects, 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;

 

  b. The Company has all requisite power and authority to execute, deliver and perform its obligations under each of the Agreements; the execution, delivery and performance by the Company of each of the Agreements, and the consummation by the Company of the transactions contemplated by each of the Agreements, and the Rights Offering have been duly authorized by all necessary corporate action, and no further action on the part of the Company or its board of directors or stockholders is required;

 

  c. The execution, delivery and performance by the Company of each of the Agreements, and the consummation by the Company of the transactions contemplated by each of the Agreements and the Rights Offering, do not and will not (i) result in any violation of the certificate of incorporation or by-laws of the Company; (ii) conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any such subsidiary is bound or to which any of their respective properties are subject; or (iii) violate any existing applicable law of any governmental entity having jurisdiction over the Company;

 

  d. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, par value $0.01 per share. As of the date hereof, (i) 57,418,520 shares of Common Stock were issued and outstanding and (ii) no shares of preferred stock were issued and outstanding; and

 

  e. The Securities and the Warrant Shares (as defined in the Warrant) have been duly authorized, and when issued and paid for in accordance with the terms of this Agreement or the Warrant, as applicable, will be duly and validly issued, fully paid and nonassessable, subject to no lien, claim or encumbrance (except for any such lien, claim or encumbrance created, directly or indirectly, by the Investor).

 

3


  7. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by the Company and the Investor herein shall survive the execution of this Agreement, the delivery to the Investor of the Securities being purchased and the payment therefor, and a party’s reliance on such representations and warranties shall not be affected by any investigation made by such party or any information developed thereby.

 

  8. The Company will (i) notify the Investor and its counsel at least five business days prior to (x) filing a registration statement with respect to the Warrant Shares, the Other Shares (as defined in the Registration Rights Agreement) or the Rights Offering (or any amendment or supplement to such registration statement) or the 2010 Form 10-K (or any amendment thereto) or (y) submitting any correspondence to NASDAQ relating to the listing of the Common Stock on the Nasdaq Capital Market; (ii) concurrently with such notice, provide the Investor and its counsel copies of the documents or correspondence referred to in the preceding clause (i); (iii) provide to the Investor and its counsel, as promptly as practicable after receipt by the Company, copies of all correspondence from the SEC or NASDAQ relating to such registration statements, 2010 Form 10-K or listing; (iv) notify the Investor in writing a reasonable time prior to any discussions or meetings with (x) the SEC relating to such registration statements or 2010 Form 10-K or (y) NASDAQ relating to the listing of the Common Stock on the Nasdaq Capital Market; (v) permit the Investor and its counsel to participate in any such discussions (and to attend any such meetings) with the SEC or NASDAQ; and (vi) in good faith, consider all reasonable comments or other input from the Investor and its counsel with respect to such registration statements, 2010 Form 10-K, listing or discussions with the SEC or NASDAQ.

 

  9. Subject to Section 11, prior to February 7, 2012, without the prior written consent of the Investor, which consent shall not be unreasonably withheld, conditioned or delayed, the Company shall not offer, issue or sell, in a private placement, any shares of Common Stock, or any option, right, warrant or other security exercisable or exchangeable or convertible into, or any other right to acquire, directly or indirectly, Common Stock (collectively, the “Company Offered Securities”) for a price or exercise price per share that is less than $0.4125.

 

  10.

Subject to Section 11, if, prior to August 7, 2012, the Company proposes to offer, issue or sell, in a private placement, any Company Offered Securities, the Company shall, no later than 25 calendar days prior to the consummation of such transaction (a “Matching Rights Transaction”), give notice in writing (the “Matching Rights Offer Notice”) to the Investor of such Matching Rights Transaction. The Matching Rights Offer Notice shall describe all material terms of the proposed Matching Rights Transaction, identify the proposed purchaser, and contain an offer (the “Matching Rights Offer”) to sell to the Investor, at the same price, for the same consideration to be paid by the proposed purchaser (provided, that, in the event any of such consideration is non-cash consideration, at the election of the Investor, the Investor may pay cash equal to the value of such non-cash consideration), and upon the same other terms and conditions, an aggregate number of

 

4


 

Company Offered Securities equal to the total number of Company Offered Securities proposed to be purchased in the Matching Rights Transaction; provided, however, that the Investor may elect to purchase any or all of such Company Offered Securities. If the Investor fails to accept in writing the Matching Rights Offer on or before the 15th calendar day after the Company’s delivery of the Matching Rights Offer Notice, then, subject to the next sentence of this Section 10, the Investor shall have no further rights with respect to the proposed Matching Rights Transaction and the Company may proceed with the proposed Matching Rights Transaction, free of any right on the part of the Investor under this Section 10 in respect thereof. Notwithstanding the immediately preceding sentence, if the Company has not completed the proposed Matching Rights Transaction within 60 days after the date the Investor receives the Matching Rights Offer Notice, then, prior to August 7, 2012 and subject to Section 11, the Company will not offer, issue or sell, in a private placement, any Company Offered Securities without first complying with this Section 10.

 

  11. Notwithstanding anything to the contrary in this Agreement, Sections 9 and 10 shall not apply to (i) any issuance or distribution of any class of capital stock of the Company as a result of any split, distribution, reclassification or reorganization of or in respect of the equity securities of the Company, (ii) any offer, sale or issuance of Company Offered Securities to (x) all holders of any class of capital stock of the Company, including the Rights Offering, or (y) the general public, (iii) the exercise of the Warrants or the other warrants described on Exhibit A of the Registration Rights Agreement, (iv) issuances of Company Offered Securities to officers, employees, directors or consultants of the Company or any subsidiary pursuant to any stock purchase, stock option or employee benefit plan or other compensatory arrangement that is approved by the board of directors of the Company, where the primary purpose of such issuance is not to raise additional equity capital for the Company or (v) the issuance and sale of Common Stock and warrants pursuant to (x) the letter agreement between the Company and Haus Capital Fund, L.P., dated February 7, 2011 or (y) the letter agreement between the Company and BBS Capital Fund, L.P., dated February 7, 2011.

 

  12. As promptly as practicable, but in any event within 10 days, after the date of this Agreement, the Company will reimburse the Investor for all reasonable out of pocket fees and expenses, including attorneys’ fees and expenses, incurred by the Investor in connection with the preparation, negotiation and delivery of the Agreements and the consummation of the transactions contemplated thereby.

 

  13. All notices, requests, consents and other communications hereunder shall be in writing, shall be delivered by first-class registered or certified mail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, and shall be deemed given: (i) if delivered by first-class registered or certified mail, upon the business day received, (ii) if delivered by nationally recognized overnight carrier, one business day after timely delivery to such carrier, (iii) if delivered by FedEx (or comparable service), two business days after timely delivery to such carrier, or (iv) if delivered by facsimile, upon electric confirmation of receipt, and shall be addressed as follows, or to such other address or addresses as may have been furnished in writing by a party to another party pursuant to this paragraph:

 

  a. if to the Company, to:

eDiets.com, Inc.

1000 Corporate Drive Suite 600

Fort Lauderdale FL 33334

Attention: Chief Executive Officer

Facsimile: (954) 938-0031

 

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  b. if to the Investor, to:

c/o Prides Capital Partners, LLC

200 State Street, 13th Floor

Boston, MA 02109

Facsimile: (617) 778-9299.

 

  14. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor. Any waiver of a provision of this Agreement must be in writing and executed by the party against whom enforcement of such waiver is sought.

 

  15. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

 

  16. This Agreement, together with the Warrant and the Registration Rights Agreement, sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior agreements, negotiations and understandings between the parties, both oral and written, relating to the subject matter hereof, and is not intended to confer upon any person other than the parties hereto any rights, benefits or remedies. If any provision contained in this Agreement is determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

  17. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to its choice of law provisions to the extent such principles or rules would require or permit the application of the laws of another jurisdiction.

 

  18.

Any proceeding or action based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the State of Delaware or, in the case of claims to which the federal courts have exclusive subject matter jurisdiction, any federal court of the United States of America sitting in the State of Delaware), and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all

 

6


 

claims in respect of the proceeding or action shall be heard and determined only in any such court, and agrees not to bring any proceeding or action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section 18, and each party agrees that service of process by registered or certified mail, return receipt requested, at its address specified in Section 13 is reasonably calculated to give actual notice.

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

  19. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. No party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party, and any purported assignment without such prior written consent shall be null and void.

 

  20. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when such counterparts have been signed by each party hereto and delivered to the other party. In the event that any signature is delivered by fax or electronic mail, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature were an original.

[Remainder of Page Intentionally Left Blank.]

 

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If the foregoing accurately reflects our agreement regarding the matters described above, please so indicate by executing a copy of this Agreement in the space provided below and returning such executed copy to the undersigned.

 

Very truly yours,

/s/ Kevin A. Richardson, II

Kevin A. Richardson II

AGREED AND ACCEPTED:

EDIETS.COM, INC.

 

By:  

/s/ Thomas J. Hoyer

  Name:   Thomas J. Hoyer
  Title:   CFO

 

8

EX-99.3 4 dex993.htm EXHIBIT 99.3 Exhibit 99.3

Exhibit 99.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT OR THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

eDiets.com, Inc.

Warrant for the Purchase of Shares of

Common Stock

February 7, 2011

FOR VALUE RECEIVED, eDiets.com, Inc., a Delaware corporation (the “Company”), hereby certifies that Kevin A. Richardson II, or his assigns, is entitled to purchase from the Company, at any time or from time to time commencing on the date hereof (the “Initial Exercise Date”) and expiring at 5:00 P.M., New York City time, on February 7, 2014 (the “Expiration Date”), 969,697 fully paid and non-assessable shares of Common Stock (as the same may be adjusted as provided herein, the “Warrant Shares”) for a per share exercise price of $0.3535 (as the same may be adjusted as provided herein, the “Per Share Warrant Price”). The number of Warrant Shares issuable upon exercise of this Warrant and the Per Share Warrant Price are subject to adjustment as hereinafter provided. Capitalized terms used and not otherwise defined in this Warrant shall have the meanings specified in Section 8, unless the context otherwise requires.

1. Exercise of Warrant.

(a) This Warrant may be exercised, in whole at any time or in part from time to time, commencing on the Initial Exercise Date and expiring at 5:00 P.M., New York City time, on the Expiration Date by delivering to the Company at the address set forth in Section 9 hereof, (i) this Warrant, (ii) a written notice, in substantially the form of the Exercise Notice attached hereto (the “Exercise Notice”), of the Holder’s election to exercise this Warrant, and (iii) an amount of cash (or other Permitted Consideration) equal to the Per Share Warrant Price

 

1


multiplied by the number of Warrant Shares to which such exercise relates. At the election of the Holder, this Warrant may be exercised on a “net exercise” basis, and without the payment by the Holder of any additional consideration, by having the Company retain that number of shares of Common Stock issuable to the Holder upon such exercise with a fair value equal to the aggregate Per Share Warrant Price of the Warrant Shares subject to such exercise (determined by reference to the closing sales price of the Common Stock on the date of the Exercise Notice).

(b) If this Warrant is exercised in part, the Company will deliver to the Holder within three Trading Days after the date such Holder delivers to the Company this Warrant and an Exercise Notice, together with the payment of the aggregate Per Share Warrant Price for such exercise, a new Warrant covering the Warrant Shares that have not been exercised. By the expiration of the third Trading Day following the Holder’s delivery of a Warrant, together with an Exercise Notice and the payment of the aggregate Per Share Warrant Price for such exercise, the Company shall (i) issue a certificate or certificates in the name of the Holder for the largest number of whole shares of the Common Stock to which the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu of any fractional share of the Common Stock to which the Holder shall be entitled, pay to the Holder cash in an amount equal to the fair value of such fractional share (determined by reference to the closing sales price of the Common Stock on the date of the Exercise Notice), and (ii) deliver the other securities and properties receivable upon the exercise of this Warrant, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant.

(c) If, by the third Trading Day after the date that the Holder delivers to the Company this Warrant, an Exercise Notice, together with the payment of the aggregate Per Share Warrant Price for such exercise, the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 1(b), then the Holder will have the right to rescind such exercise.

(d) If, by the third Trading Day after the date that the Holder delivers to the Company this Warrant, an Exercise Notice, together with the payment of the aggregate Per Share Warrant Price for such exercise, the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 1(b), and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of the Common Stock at the time of the obligation giving rise to such purchase obligation and (2) at the option of the

 

2


Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.

2. Certain Adjustments. The Per Share Warrant Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.

(a) If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case (x) the Per Share Warrant Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately before such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event and (y) the number of shares of Common Stock subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a number determined by multiplying the number of shares of Common Stock subject to purchase upon exercise in full of this Warrant immediately before such event by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding after giving effect to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

(b) If, at any time while this Warrant is outstanding, (1) the Company effects any merger or consolidation of the Company with or into another person, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any liquidation, dissolution, reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then thereafter this Warrant shall represent the right to receive, for the same aggregate exercise price and in lieu of the Warrant Shares, upon exercise of this Warrant, the same amount and kind of securities, cash or property as the holder of this Warrant would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been exercised immediately prior to such Fundamental Transaction (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Per Share Warrant Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common

 

3


Stock in such Fundamental Transaction, and the Company shall apportion the Per Share Warrant Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s option and request, any successor to the Company or surviving entity (and, if an entity different from the successor or surviving entity, the entity whose capital stock or assets the Holders of Common Stock are entitled to receive as a result of such Fundamental Transaction) in such Fundamental Transaction shall, either (1) issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Per Share Warrant Price upon exercise thereof, or (2) purchase the Warrant from the Holder for a purchase price, payable in cash within five trading days after such request (or, if later, on the effective date of the Fundamental Transaction), equal to the Black Scholes value of the remaining unexercised portion of this Warrant on the date of such request. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity (and, if an entity different from the successor or surviving entity, the entity whose capital stock or assets the Holders of Common Stock are entitled to receive as a result of such Fundamental Transaction) to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

(c) If, at any time while this Warrant is outstanding, the Company shall issue additional shares of Common Stock for consideration per share less than the then current market price (determined (a) in the event that the Common Stock is publicly listed, by reference to the closing sales price of the Common Stock on the date of such issue or (b) in the event that the Common Stock is not publicly listed, by reference to the then current market value of each share of Common Stock as determined by the Board of Directors of the Company in good faith; provided, however, that in the event of a sale, merger, liquidation, dissolution or winding up of the Company (each, a “Liquidity Event”), current market price means the amount per share payable to the holders of the Common Stock upon the consummation of such Liquidity Event), then the Per Share Warrant Price of the Warrant Shares shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Per Share Warrant Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares which the aggregate consideration received by the Company for the total number of additional shares of Common Stock so issued would purchase at the then current fair market price, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such additional shares of Common Stock so issued; provided, however, that no adjustment under this Section 2(c) shall operate to reduce the Per Share Warrant Price of the Warrant Shares to a price that is less than $0.34 per share, representing the closing bid price for one share of the Common Stock on February 4, 2011. Notwithstanding the foregoing, no adjustment to the Per Share Warrant Price shall be required under this Section 2(c): (i) in connection with the issuance of shares of Common Stock and/or options, warrants or other Common Stock purchase rights and the Common Stock issued pursuant to such options, warrants or other rights (as adjusted for any stock dividends, combinations, splits, recapitalizations and the

 

4


like after the date hereof) issued or to be issued after the date hereof to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to stock purchase, stock option or employee benefit plans or other arrangements that are approved by the board of directors of the Company; (ii) in connection with a bona fide firm commitment underwritten public offering with a nationally recognized underwriter which generates gross proceeds to the Company in excess of $15 million; (iii) upon conversion of any options, warrants or other rights to acquire shares of Common Stock that are outstanding on the day immediately preceding the date hereof; provided, however, that the terms of such options, warrants or rights are not amended, modified or changed on or after the date hereof; or (iv) in connection with shares of Common Stock issued as consideration for the acquisition of another company or business in which the shareholders of the Company do not have a majority ownership interest, which acquisition has been approved by the board of directors of the Company, provided that after giving effect to such acquisition the Company is the surviving entity.

(d) All calculations under this Section 2 shall be made to the nearest cent or the nearest 1 /100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company.

(e) Upon the occurrence of each adjustment pursuant to this Section 2, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Per Share Warrant Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. The Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.

(f) The Company will not, by amendment of its Certificate of Incorporation or by-laws, or through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of or otherwise alter any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the registered Holder of this Warrant against impairment.

3. Fully Paid Stock; Taxes. The Company agrees that the shares of Common Stock represented by each and every certificate for Warrant Shares delivered on the exercise of this Warrant shall at the time of such delivery, be duly authorized, validly issued and outstanding, fully paid and nonassessable, and not subject to liens, preemptive rights or rights of first refusal, and the Company will take all such actions as may be necessary to assure that the par value or stated value, if any, per share of the Common Stock is at all times equal to or less than the then Per Share Warrant Price. The Company further covenants and agrees that it will pay, when due and payable, any and all Federal and state stamp, original issue or similar taxes which may be payable in respect of the issue of any Warrant Share or any certificate thereof to the extent required because of the issuance by the Company of such security.

 

5


4. Registration Under Securities Act.

(a) The Holder shall, with respect to the Warrant Shares, have the registration rights set forth in the Registration Rights Agreement. By acceptance of this Warrant, the Holder agrees to comply with the provisions of the Registration Rights Agreement.

(b) Until the later of (i) such time as the Holder shall be eligible to resell all of its Warrant Shares without volume restrictions pursuant to Rule 144(k) promulgated under the Securities Act (assuming Holder is not an “affiliate” of the Company, as defined in Rule 144), as evidenced by a legal opinion to such effect delivered by the Company’s counsel and acceptable to each of the Company’s transfer agent and the Holder, or (ii) the date on which all Warrant Shares have been sold under a Registration Statement or pursuant to Rule 144 (“Rule 144”) as promulgated under the Securities Act, the Company shall use its reasonable best efforts to file with the Securities and Exchange Commission all current reports and the information as may be necessary to enable the Holder to effect sales of the Warrant Shares in reliance upon Rule 144 promulgated under the Securities Act.

5. Investment Intent; Restrictions on Transferability.

(a) The Holder represents, by accepting this Warrant, that the Holder understands that this Warrant and any securities obtainable upon exercise of this Warrant have not been registered for sale under Federal or state securities laws and are being offered and sold to the Holder pursuant to one or more exemptions from the registration requirements of such securities laws. Certificates representing Warrant Shares may bear the restrictive legend set forth on the first page hereof. The Holder understands that the Holder must bear the economic risk of such Holder’s investment in this Warrant and any Warrant Shares or other securities obtainable upon exercise of this Warrant for an indefinite period of time, as this Warrant and such Warrant shares or other securities have not been registered under Federal or state securities laws and therefore cannot be sold unless subsequently registered under such laws, or an exemption from such registration is available.

(b) The Holder, by such Holder’s acceptance of this Warrant, represents to the Company that such Holder is acquiring this Warrant and will acquire any Warrant Shares or other securities obtainable upon exercise of this Warrant for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act. The Holder agrees that this Warrant and any such Warrant Shares or other securities will not be sold or otherwise transferred unless (i) a registration statement with respect to such transfer is effective under the Securities Act or (ii) such sale or transfer is made pursuant to one or more exemptions from the Securities Act.

6. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver to the Holder, a new Warrant of like date, tenor and denomination.

7. Warrant Holder Not Stockholder. This Warrant does not confer upon the Holder any right to vote or to consent to or receive notice as a stockholder of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a stockholder, prior to the exercise hereof; this Warrant does, however, require certain notices to Holders as set forth herein.

 

6


8. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the following meanings:

Assignment” shall mean a notice of assignment substantially in the form of Exhibit A attached hereto.

Business Day” shall mean any day except Saturday, Sunday and any day that is a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

Common Stock” shall mean the common stock, par value $0.001 per share, of the Company, for which this Warrant is exercisable and any securities into which such common stock may hereafter be classified.

Exercise Notice” shall mean a notice substantially in the form of Exhibit C attached hereto.

Holder” shall mean the holder of this Warrant.

Partial Assignment” shall mean a notice of partial assignment substantially in the form of Exhibit B attached hereto.

Permitted Consideration” shall mean cash or other funds immediately available to the Company.

Registration Rights Agreement” shall mean that certain Registration Rights Agreement, dated as of February 7, 2011, by and among the Company, the Holder and the other parties thereto.

Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded in the over the counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over the counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

Trading Market” shall mean whichever of the New York Stock Exchange, the AMEX, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

 

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9. Communication. All notices and communications hereunder shall be in writing and shall be deemed to be duly given if sent by registered or certified mail, return receipt requested, via a national recognized overnight mail delivery service, or by facsimile (provided the sender receives a machine-generated confirmation of successful transmission), as follows:

if to the Company, to:

eDiets.com, Inc.

1000 Corporate Drive, Suite 600

Fort Lauderdale FL 33334

Attention: Chief Executive Officer

Telephone: (954) 938-0031

and

if to the Holder of this Warrant, to such Holder at the address listed on the records of the Company.

10. Reservation of Warrant Shares; Listing. The Company shall at all times prior to the Expiration Date (a) have authorized and in reserve, and shall keep available, solely for issuance and delivery upon the exercise of this Warrant, the shares of the Common Stock and other securities and properties as from time to time shall be receivable upon the exercise of this Warrant, free and clear of all restrictions on sale or transfer, other than under Federal or state securities laws, and free and clear of all preemptive rights and rights of first refusal; and (b) use its reasonable best efforts to keep the Warrant Shares authorized for listing on any national securities exchange, the Nasdaq National Market, the Nasdaq Capital Market or the OTC Bulletin Board.

11. Headings; Severability. The headings of this Warrant have been inserted as a matter of convenience and shall not affect the construction hereof. If any provision contained in this Warrant is determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

12. Applicable Law. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to its choice of law provisions to the extent such principles or rules would require or permit the application of the laws of another jurisdiction.

13. Specific Performance. The Company agrees that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms maybe specifically enforced by a decree for the specific performance of any obligation contained herein or by an injunction against a violation of any of the terms hereof or otherwise. In the event that any action shall be brought in equity to enforce the provisions of this Warrant, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law, and each party waives any requirement of the other party to post a bond or other security in connection with seeking specific performance.

 

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14. Amendment, Waiver, etc. Except as expressly provided herein, neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

[Signature page follows]

 

9


IN WITNESS WHEREOF, the Company has caused this Warrant to be duly signed by its undersigned duly authorized officer as of the date first above referenced.

 

EDIETS.COM, INC.
By:  

/s/ Thomas J. Hoyer

  Name:   Thomas J. Hoyer
  Title:   CFO

 

10


EXHIBIT A

ASSIGNMENT

FOR VALUE RECEIVED hereby sells, assigns and transfers unto                      the foregoing Warrant and all rights evidenced thereby, and does irrevocably constitute and appoint                     , attorney, to transfer said Warrant on the books of eDiets.com, Inc.

 

Dated:                     

       Signature:      
       Address:      

 

11


EXHIBIT B

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED                      hereby assigns and transfers unto                      the right to purchase                      shares of the Common Stock, par value $.001 per share, of eDiets.com, Inc. covered by the foregoing Warrant, and a proportionate part of said Warrant and the rights evidenced thereby, and does irrevocably constitute and appoint                     , attorney, to transfer that part of said Warrant on the books of eDiets.com, Inc.

 

Dated:                     

       Signature:      
       Address:      

 

12


EXHIBIT C

EXERCISE NOTICE

The undersigned hereby elects to purchase                      shares of Common Stock of eDiets.com, Inc. pursuant to the attached Warrant, and, if such Holder is not utilizing the cashless (or net) exercise provisions set forth in the Warrant, encloses herewith $              in cash, certified or official bank check or checks or other immediately available funds, which sum represents the aggregate Per Share Warrant Price for the number of shares of Common Stock to which this Exercise Notice relates, together with any applicable taxes payable by the undersigned pursuant to the Warrant.

By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act of 1933.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:                                                              .

 

Date:                        
   Signature
   Name:
   Address:
   Social Security or Tax I.D. Number:

 

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EX-99.4 5 dex994.htm EXHIBIT 99.4 Exhibit 99.4

Exhibit 99.4

EXECUTION COPY

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the “Agreement”) is made as of February 7, 2011, by and among eDiets.com, Inc., a Delaware corporation (the “Company”), the holders of shares of the Company’s common stock listed on Exhibit A attached hereto and incorporated herein by reference (each an “Investor” and collectively the “Investors”), and Prides Capital Partners, LLC (“Prides”). The Investors and Prides are sometimes referred to herein individually as a “Holder” and collectively as the “Holders.”

R E C I T A L S

A. On the date of this Agreement, the Company has sold and issued to certain of the Investors and has agreed to sell and issue to certain of the Investors shares (the “Investor Shares”) of common stock, par value $0.001 per share (the “Common Stock”), of the Company and warrants (the “Warrants”) to purchase shares of Common Stock (such shares, as the same may be adjusted as provided in the Warrants, the “Warrant Shares”), in each case, in a private placement (the “Offering”), in the respective amounts and for the respective cash consideration set forth on Exhibit A next to each such Investor’s name, in each case, under the terms and subject to the conditions of those certain Securities Subscription and Purchase Agreements of even date herewith (each, a “Purchase Agreement” and collectively, the “Purchase Agreements”), between the Company and each Investor.

B. Certain of the Investors and Prides Capital Partners, LLC holds certain unregistered shares of Common Stock (the “Other Shares”).

C. The execution and delivery of this Agreement by the Company and the Investors are a condition to the completion of the transactions described above.

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

  1. Registration Procedures and Expenses. The Company shall:

a. subject to receipt of reasonably necessary information from each Holder, prepare and file with the Securities and Exchange Commission (the “SEC”), as soon as practicable, but in any event within five days, after the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “Filing Date”), a registration statement (the “Registration Statement”) on Form S-3 (except if the Company is not then eligible to register on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) to enable the resale by the Holders from time to time of (w) the Investor Shares, (x) the Warrant Shares issued or issuable, the (y) Other Shares and (z) the shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the Investor Shares, the Warrant Shares or the Other Shares (collectively, the


Registrable Securities”); and, if possible at the time of such registration, cause such Registrable Securities to be registered for listing on the Nasdaq Capital Market;

b. use its best efforts, subject to receipt of necessary information from each Holder, to cause the Registration Statement to become effective as soon as practicable, but in no event later than 30 days after the Filing Date (the “Required Effective Date”); provided, however, if the SEC requires the Company to amend or supplement its preliminary Registration Statement, the Required Effective Date shall be no later than 90 days after the Filing Date;

c. use its best efforts to prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus (the “Prospectus”) included as part of the Registration Statement as may be necessary to keep the Registration Statement current and effective for a period (the “Effectiveness Period”) ending on the earlier of (i) the date on which all Holders may sell all Registrable Securities held by the Holders pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or any successor rule (“Rule 144”) or (ii) such time as all Registrable Securities held by the Holders have been sold pursuant to a registration statement or Rule 144, and to notify each Holder promptly upon such Registration Statement and each post-effective amendment thereto, being declared effective by the SEC; provided, however, if (x) after such Registration Statement has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency, court or other person for any reason not attributable to the Holders and such interference is not thereafter eliminated or (y) the conditions specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived, other than by reason of a failure by the Holders, then the Company shall use its best efforts to cause such condition or conditions to be remedied and register the Registrable Securities in accordance herewith as soon as possible.

d. furnish to any Holder such number of copies of the Registration Statement and the Prospectus (including supplemental prospectuses) as such Holder may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Registrable Securities by such Holder;

e. file documents required of the Company for normal blue sky clearance in states specified in writing by each Holder; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented;

f. bear all expenses (other than underwriting discounts and commissions, if any) in connection with the procedures in paragraph (a) through (e) of this Section 1 and the registration of the Registrable Securities pursuant to the Registration Statement, whether or not such registration becomes effective;

 

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g. advise each Holder, promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the SEC delaying or suspending the effectiveness of the Registration Statement or of the initiation of any proceeding for that purpose; and the Company shall promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued; and

h. with a view to making available to each Holder the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit each Holder to sell Registrable Securities to the public without registration, the Company covenants and agrees to use its commercially reasonable efforts to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) such date as all Registrable Securities may be resold pursuant to Rule 144 or any other rule of similar effect of (B) such date as all Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and under the Securities Exchange Act of 1934, as amended (“Exchange Act”); and (iii) furnish to each Holder, (A) a written statement by the Company that it has complied with the reporting requirements of the Securities Act and the Exchange Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such Holder of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration.

The Company understands that each Holder disclaims being an underwriter, but acknowledges that a determination by the SEC that such Holder is deemed an underwriter shall not relieve the Company of any obligations it has hereunder.

 

  2. Transfer of Registrable Securities After Registration; Suspension.

a. Each Holder agrees that it shall not effect any disposition of the Registrable Securities that would constitute a sale within the meaning of the Securities Act, other than in transactions exempt from the registration requirements of the Securities Act or as contemplated in the Registration Statement and as described below, and that each Holder shall promptly notify the Company of any material changes in the information set forth in the Registration Statement regarding such Holder or such Holder’s plan of distribution.

b. Except in the event that paragraph (c) below applies, the Company shall: (i) if deemed necessary by the Company, prepare and file from time to time with the SEC a post-effective amendment to the Registration Statement or a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document

 

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so that such Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and so that, as thereafter delivered to purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) provide each Holder copies of any documents filed pursuant to Section 2(b)(i); and (iii) upon request, inform each Holder who so requests that the Company has complied with its obligations in Section 2(b)(i) (or that, if the Company has filed a post-effective amendment to the Registration Statement which has not yet been declared effective, the Company will notify such Holder to that effect, will use its best efforts to secure the effectiveness of such post-effective amendment as promptly as possible and will promptly notify such Holder pursuant to Section 2(b)(i) hereof when the amendment has become effective).

c. Subject to paragraph (d) below, in the event: (i) of any request by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related Prospectus or for additional information; (ii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose; or (iv) of any event or circumstance which necessitates the making of any changes in the Registration Statement or Prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; then the Company shall promptly deliver a certificate in writing to each Holder (the “Suspension Notice”) to the effect of the foregoing and, upon receipt of such Suspension Notice, such Holder will refrain from selling any Registrable Securities pursuant to the Registration Statement (a “Suspension”) until such Holder is advised in writing by the Company that the current Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in any such Prospectus. In the event of any Suspension, the Company will use its reasonable best efforts to cause the use of the Prospectus so suspended to be resumed as soon as reasonably practicable after delivery of a Suspension Notice to such Holder. In addition to and without limiting any other remedies (including, without limitation, at law or

 

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at equity) available to such Holder, such Holder shall be entitled to specific performance in the event that the Company fails to comply with the provisions of this Section 2(c). Each Holder covenants that from the date hereof it will maintain in confidence the receipt and content of any Suspension Notice provided in accordance with this paragraph (c).

d. Notwithstanding the foregoing paragraphs of this Section 2, the Company shall use its commercially reasonable efforts to ensure that (i) any Suspension shall not exceed thirty (30) days individually and Suspensions shall not exceed ninety (90) days in the aggregate, during any twelve month period and (iii) each Suspension shall be separated by a period of at least thirty (30) days from a prior Suspension (each Suspension that satisfies the foregoing criteria being referred to herein as a “Qualifying Suspension”).

e. If a Suspension is not then in effect, each Holder may sell Registrable Securities under the Registration Statement, provided that it complies with any applicable prospectus delivery requirements. Upon receipt of a request therefor, the Company will provide an adequate number of current Prospectuses to such Holder and to any other parties requiring such Prospectuses.

f. In the event of a sale of Registrable Securities by a Holder, unless such requirement is waived by the Company in writing, the Holder must also deliver to the Company’s transfer agent, with a copy to the Company, a Certificate of Subsequent Sale substantially in the form attached hereto as Exhibit B (“Certificate of Subsequent Sale”), so that the Registrable Securities may be properly transferred.

g. The Company agrees that it shall, immediately prior to the Registration Statement being declared effective, deliver to its transfer agent an opinion letter of counsel, opining that at any time the Registration Statement is effective, the transfer agent shall issue, in connection with the sale of the Registrable Securities, certificates representing such Registrable Securities without restrictive legend, provided the Registrable Securities are to be sold pursuant to the Prospectus contained in the Registration Statement and the transfer agent receives a Certificate of Subsequent Sale. Upon receipt of such opinion, the Company shall cause the transfer agent to confirm, for the benefit of the Holder, that no further opinion of counsel is required at the time of transfer in order to issue such Registrable Securities without restrictive legend.

The Company shall cause its transfer agent to issue a certificate without any restrictive legend to a purchaser of any Registrable Securities from any Holder, if (a) the sale of such Registrable Securities is registered under the Registration Statement (including registration pursuant to Rule 415 under the Securities Act) and such Holder has delivered a Certificate of Subsequent Sale to the Transfer Agent; (b) such Holder has provided the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Registrable

 

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Securities may be made without registration under the Securities Act; or (c) such Registrable Securities are sold in compliance with Rule 144. In addition, the Company shall, at the request of any Holder, remove the restrictive legend from any Registrable Securities held by such Holder following the expiration of the holding period required by Rule 144.

 

  3. Indemnification. For the purpose of this Section 3:

a. the term “Selling Shareholder” shall mean a Holder and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;

b. the term “Registration Statement” shall include any final Prospectus, exhibit, supplement or amendment included in or relating to, and any document incorporated by reference in, the Registration Statement (or deemed to be a part thereof) referred to in Section 1; and

c. the term “untrue statement” shall mean any untrue statement or alleged untrue statement, or any omission or alleged omission to state in the Registration Statement a material fact required to be stated therein or necessary to make the statements therein, not misleading.

d.

(1) The Company agrees to indemnify and hold harmless each Selling Shareholder from and against any losses, claims, damages or liabilities to which such Selling Shareholder may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon (i) any untrue statement of a material fact contained in any Registration Statement, (ii) any inaccuracy in the representations and warranties of the Company contained in the Agreement or the failure of the Company to perform its obligations hereunder or (iii) any failure by the Company to fulfill any undertaking included in the Registration Statement, and the Company will reimburse such Selling Shareholder for any reasonable legal expense or other actual accountable out of pocket expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, an untrue statement made in the Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Selling Shareholder specifically for use in preparation of the Registration Statement, or the failure of such Selling Shareholder to comply with the covenants and agreements in Section 2 hereof or any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to such Selling Shareholder prior to the pertinent sale or sales by such Selling Shareholder.

 

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(2) Each Holder agrees to indemnify and hold harmless the Company (and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, each officer of the Company who signs the Registration Statement and each director of the Company) from and against any losses, claims, damages or liabilities to which the Company (or any such officer, director or controlling person) may become subject (under the Securities Act or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (i) any failure to comply with the covenants and agreements contained in Section 2 hereof, or (ii) any untrue statement of a material fact contained in the Registration Statement if, and only if, such untrue statement was made in reliance upon and in conformity with written information furnished by or on behalf of such Holder specifically for use in preparation of the Registration Statement, and such Holder will reimburse the Company (or such officer, director or controlling person), as the case may be, for any reasonable legal expense or other actual accountable out-of-pocket expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim. The obligation to indemnify shall be limited to the net amount of the proceeds received by such Holder from the sale of the Registrable Securities pursuant to the Registration Statement.

(3) Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 3, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 3 (except to the extent that such omission materially and adversely affects the indemnifying party’s ability to defend such action) or from any liability otherwise than under this Section 3. Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof (unless it has failed to assume the defense thereof and appoint counsel reasonably satisfactory to the indemnified party), such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the reasonable opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person; provided further, however, that no indemnifying person shall be responsible for the fees and expenses of more than one separate

 

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counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement; provided, however, that such consent shall not be unreasonably withheld. No indemnifying person shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could reasonably have been a party and indemnification could have been sought hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding.

(4) If the indemnification provided for in this Section 3 is unavailable to or insufficient to hold harmless an indemnified party under paragraphs 3(d)(1) or 3(d)(2) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and the respective Holder, on the other hand, in connection with the statements or omissions or other matters which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company, on the one hand, or the respective Holder, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if such Holder was treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this Section 3(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 3(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 3(d), such Holder shall not be required to contribute any amount in excess of the amount by which the gross amount received by such Holder from the sale of the Registrable Securities to which such loss relates exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue statement. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each Holder’s obligations in this subsection to contribute are several in proportion to their sales of Registrable Securities to which such loss relates and not joint.

 

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The parties to this Agreement hereby acknowledge that they are sophisticated business persons who were represented by counsel during the negotiations regarding the provisions hereof including, without limitation, the provisions of this Section 3, and are fully informed regarding said provisions. They further acknowledge that the provisions of this Section 3 fairly allocate the risks in light of the ability of the parties to investigate the Company and its business in order to assure that adequate disclosure is made in the Registration Statement as required by the Securities Act and the Exchange Act.

4. Termination of Conditions and Obligations. The conditions precedent imposed by this Agreement upon the transferability of the Registrable Securities shall cease and terminate as to any particular number of the Registrable Securities when such Registrable Securities shall have been effectively registered under the Securities Act and sold or otherwise disposed of in accordance with the intended method of disposition set forth in the Registration Statement covering such Registrable Securities or at such time as an opinion of counsel reasonably satisfactory to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

5. Information Available. So long as the Registration Statement is effective covering the resale of Registrable Securities owned by a Holder, the Company will furnish (or, to the extent such information is available electronically through the Company’s filings with the SEC, the Company will make available) to such Holder:

a. as soon as practicable after it is available, one copy of (i) its Annual Report to Shareholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by an independent registered public accounting firm), and (ii) if not included in substance in the Annual Report to Shareholders, its Annual Report on Form 10-K (the foregoing, in each case, excluding exhibits);

b. upon the reasonable request of such Holder, all exhibits excluded by the parenthetical to subsection (a)(ii) of this Section 5 as filed with the SEC and all other information that is made available to shareholders; and

c. upon the reasonable request of a Holder, an adequate number of copies of the Prospectuses to supply to any other party requiring such Prospectuses; and the Company, upon the reasonable request of a Holder, will meet with such Holder or a representative thereof at the Company’s headquarters during the Company’s normal business hours to discuss all information relevant for disclosure in the Registration Statement covering the Registrable Securities and will otherwise reasonably cooperate with such Holder conducting an investigation for the purpose of reducing or eliminating such Holder’s exposure to liability under the Securities Act, including the reasonable production of information at the Company’s headquarters; provided, however, that the Company shall not be required to disclose any confidential information to or meet at its headquarters with such Holder until and unless such Holder shall have entered into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, with the Company with respect thereto.

 

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6. Limits on Additional Issuances. Except for the issuance of stock options under the Company’s stock option plans, the issuance of common stock under the Company’s employee stock purchase plan or upon exercise of outstanding options and warrants and the Offering, the Company will not, for a period of six (6) months following the closing of the Offering, offer for sale or sell any securities unless, in the opinion of the Company’s counsel, such offer or sale does not jeopardize the availability of exemptions from the registration and qualification requirements under applicable securities laws with respect to the Offering. The foregoing shall not apply to securities issued in connection with any acquisition, including by way of merger, or purchase of stock or all or substantially all of the assets of any third party. Except for the issuance of stock options under the Company’s stock option plans, the issuance of common stock under the Company’s employee stock purchase plan or upon exercise of outstanding options and warrants, the issuance of common stock purchase warrants, and the offering contemplated hereby, the Company has not engaged in any such offering during the six (6) months prior to the date of this Agreement. The foregoing provisions shall not prevent the Company from filing a “shelf” registration statement pursuant to Rule 415 under the Securities Act, but the foregoing provisions shall apply to any sale of securities thereunder.

7. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be delivered by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, and shall be deemed given: (i) if delivered by first-class registered or certified mail domestic, upon the business day received, (ii) if delivered by nationally recognized overnight carrier, one (1) business day after timely delivery to such carrier, (iii) if delivered by FedEx (or comparable service), two (2) business days after timely delivery to such carrier, or (iv) if delivered by facsimile, upon electric confirmation of receipt and shall be addressed as follows, or to such other address or addresses as may have been furnished in writing by a party to another party pursuant to this paragraph:

 

  a. if to the Company, to:

eDiets.com, Inc.

1000 Corporate Drive, Suite 600

Fort Lauderdale FL 33334

Attention: Chief Executive Officer

Telephone: (954) 938-0031

 

  b. if to a Holder, to such Holder’s address on Exhibit A.

8. Amendments; Waiver. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Holders. Any waiver of a provision of this Agreement must be in writing and executed by the party against whom enforcement of such waiver is sought.

9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. No party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other, and any purported assignment without such consent shall be null and void.

 

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10. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

11. Entire Agreement; Severability. This Agreement, together with the Purchase Agreements and the Warrants, sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior agreements, negotiations and understandings between the parties, both oral and written, relating to the subject matter hereof, and is not intended to confer upon any person other than the parties hereto any rights, benefits or remedies. If any provision contained in this Agreement is determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to its choice of law provisions to the extent such principles or rules would require or permit the application of the laws of another jurisdiction.

13. Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. Any proceeding or action based upon, arising out of or related to this Agreement or the transactions contemplated hereby may be brought in the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the State of Delaware or, in the case of claims to which the federal courts have exclusive subject matter jurisdiction, any federal court of the United States of America sitting in the State of Delaware), and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the proceeding or action shall be heard and determined only in any such court, and agrees not to bring any proceeding or action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section 13, and each party agrees that service of process by registered or certified mail, return receipt requested, at its address specified in Section 7 is reasonably calculated to give actual notice.

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

14. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each

 

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party hereto and delivered to the other parties. In the event that any signature is delivered by fax or electronic mail, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature were an original.

15. Effectiveness. Notwithstanding anything in this Agreement to the contrary, (i) BBS Capital Fund, L.P. shall have no rights under this Agreement, and none of the Company and the other parties to this Agreement shall have any obligations to BBS Capital Fund, L.P. under this Agreement, unless and until the closing of the transactions contemplated by the Purchase Agreement to which BBS Capital Fund, L.P. is a party shall have occurred; and (ii) Haus Capital Fund, L.P. shall have no rights under this Agreement, and none of the Company and the other parties to this Agreement shall have any obligations to Haus Capital Fund, L.P. under this Agreement, unless and until the closing of the transactions contemplated by the Purchase Agreement to which Haus Capital Fund, L.P. is a party shall have occurred.

[Remainder of Page Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be duly executed (in the case of the Company, by its authorized officer) as of the day and year first above written.

 

EDIETS.COM, INC.
By:  

  /s/ Thomas J. Hoyer

  Name: Thomas J. Hoyer
  Title: CFO

 

KEVIN A. RICHARDSON II

    /s/ Kevin A. Richardson, II

 

LEE S. ISGUR

    /s/ Lee S. Isgur

 

BBS CAPITAL FUND, L.P.
By:  

    /s/ Berke Bakay

  Name: Berke Bakay
  Title: Managing Director


HAUS CAPITAL FUND, L.P.
By:  

    /s/ William P. Haus

  Name: William P. Haus
  Title: Principal & General Partner

 

PRIDES CAPITAL PARTNERS, LLC

By:  

    /s/ Kevin A. Richardson, II

  Name: Kevin A. Richardson, II
  Title: Managing Member


Exhibit A

INVESTORS

 

NAME OF INVESTOR

  

ADDRESS

   INVESTOR
SHARES
PURCHASED
     WARRANT
SHARES
     AGGREGATE
CONSIDERATION
 
Kevin A. Richardson II   

c/o Prides Capital Partners, LLC

200 State Street, 13th Floor

Boston, MA 02109

Facsimile: (617) 778-9299

     1,939,394         969,697       $ 800,000   
Lee S. Isgur   

One Cedar Lane

Woodside, CA 94062

Facsimile: (650) 529-9205

     242,424         121,212       $ 100,000   
BBS Capital Fund, L.P.   

4975 Preston Park Blvd.

Suite 775 W

Plano, TX 75093

Facsimile: (972) 985-2101

     1,240,000         620,000       $ 511,500   
Haus Capital Fund, L.P.   

Preston Park Financial Center

4975 Preston Park Blvd.,

Suite 780 W

Plano, TX 75093

Facsimile: (972) 985-7084

     390,000         195,000       $ 160,875   

HOLDER

Prides Capital Partners, LLC

200 State Street, 13th Floor

Boston, MA 02109

Facsimile: (617) 778-9299


Exhibit B

eDiets.com, Inc.

CERTIFICATE OF SUBSEQUENT SALE

[Transfer Agent]

 

  

 

  

Dear Sir/Madam:

RE: Sale of Shares of Common Stock of eDiets.com, Inc. (the “Company”) pursuant to the Company’s Prospectus dated                      (the “Prospectus”)

The undersigned hereby certifies, in connection with the sale of shares of Common Stock of the Company included in the table of Selling Shareholders in the Prospectus, that the undersigned has sold the Shares pursuant to the Prospectus and in a manner described under the caption “Plan of Distribution” in the Prospectus and that such sale complies with all applicable securities laws, including, without limitation, the Prospectus delivery requirements of the Securities Act of 1933, as amended.

 

Selling Shareholder (the beneficial owner):  

 

Record Holder (e.g., if held in name of nominee):  

 

Restricted Stock Certificate No.(s):  

 

Number of Shares Sold:  

 

Date of Sale:  

 

In the event that you receive a stock certificate(s) representing more shares of Common Stock than have been sold by the undersigned, then you should return to the undersigned a newly issued certificate for such excess shares in the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you should place a stop transfer on your records with regard to such certificate.

 

Dated:                            Very truly yours,
      By:  

 

      Print Name:  

 

      Title:  

 

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