SUBSCRIPTION AGREEMENT AND INVESTOR QUESTIONNAIRE GEEKS ON CALL HOLDINGS, INC. Minimum Offering of $3,000,000 (300 Units) Maximum Offering of $5,000,000 (500 Units) Offering Price $10,000 per Unit
Name
of Subscriber
|
Memorandum
No._________
|
SUBSCRIPTION
AGREEMENT AND INVESTOR QUESTIONNAIRE
Minimum
Offering of $3,000,000 (300 Units)
Maximum
Offering of $5,000,000 (500 Units)
Offering
Price $10,000 per Unit
THE
SECURITES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE DILUTION AND MAY BE PURCHASED ONLY BY PERSONS WHO QUALIFY
AS
“ACCREDITED INVESTORS” UNDER RULE 501 (a) OF REGULATION D UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
THIS
DOCUMENT HAS NOT BEEN FILED WITH OR REVIEWED BY THE UNITED STATES SECURITIES
AND
EXCHANGE COMMISSION OR ANY OTHER COMMISSION OR REGULATORY AUTHORITY, AND HAS
NOT
BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF ANY STATES NOR HAS ANY
SUCH COMMISSION, AUTHORITY OR ATTORNEY GENERAL DETERMINED WHETHER IT IS ACCURATE
OR COMPLETE OR PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
Placement
Agent:
First
Montauk Securities Corp.
SUBSCRIPTION
AGREEMENT AND INVESTOR QUESTIONNAIRE
THIS
SUBSCRIPTION AGREEMENT AND INVESTOR QUESTIONNAIRE IS TO BE COMPLETED BY EACH
PERSON WHO DESIRES TO PURCHASE SECURITIES OF GEEKS ON CALL HOLDINGS, INC. (THE
“COMPANY”)
IN
CONNECTION WITH THE PROPOSED PRIVATE PLACEMENT (THE “OFFERING”)
OF UP
TO 500 UNITS( NOT INCLUDING AN OVERALLOTMENT OPTION OF AN ADDITIONAL 100 UNITS)
, EACH UNIT COMPIRSED OF (A) 5,000 SHARES OF COMMON STOCK OF THE COMPANY AND
(B)
WARRANTS TO PURCHASE 2,500 SHARES OF COMMON STOCK (THE “SECURITIES”) AS
DESCRIBED IN THE CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM DATED AS OF OCTOBER
22, 2007, AS AMENDED AND SUPPLEMENTED (THE “MEMORANDUM”).
THIS
MATERIAL DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO
BUY ANY SECURITIES. THE OFFERING WILL BE MADE SOLELY PURSUANT TO THE TERMS
AND
CONDITIONS OF THE MEMORANDUM WHICH CONTAINS MATERIAL INFORMATION REQUIRED TO
BE
REVIEWED IN CONNECTION WITH ANY INVESTMENT DECISION. ALL TERMS NOT DEFINED
HEREIN SHALL HAVE THE MEANING ASCRIBED TO THEM IN THE MEMORANDUM.
INSTRUCTIONS:
Items
to
be delivered by all Subscribers:
a.
|
One
(1) completed and executed Subscription Agreement and Investor
Questionnaire.
|
b.
|
Payment
in the amount of subscription, by wire transfer of funds or check.
All
checks should be made payable to “SIGNATURE BANK AS ESCROW AGENT FOR GEEKS
ON CALL AMERICA, INC.”
|
For
Information and Wire Transfer Instructions:
Placement
Agent:
First
Montauk Securities Corp.
Parkway
109 Office Center
000
Xxxxxx Xxxxxxx Xxxx
Xxx
Xxxx,
Xxx Xxxxxx 00000
Tel.:
(000) 000-0000
Attention:
Xxxxxx Xxxxxxxxxx
THE
SUBSCRIBER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES.
The
Units
comprised of shares of Common Stock and the Warrants (collectively the
“Securities”)
of the
Company, as well as the terms of the Offering, which are described in the
Memorandum, are being offered without registration under the Securities Act
of
1933, as amended (the “Act”),
or
the securities laws of any state or any other jurisdiction, in reliance on
the
exemption contained in Section 4(2) of the Act and Regulation D promulgated
thereunder and on similar exemptions under applicable state laws. Under
Regulation D of the Act and/or certain state laws, the Company is required
to
determine that an individual, or an individual together with a “Subscriber
representative” or each individual equity owner of an “investing entity” meets
certain suitability requirements before selling Securities to such individual
or
entity. You understand that the Company and the Placement Agent will rely upon
the following information to determine whether you meet such suitability
requirements.
THE
COMPANY WILL NOT SELL SECURITIES TO ANY SUBSCRIBER WHO HAS NOT FILLED OUT,
AS
THOROUGHLY AS POSSIBLE, EXECUTED AND DELIVERED THIS SUBSCRIPTION AGREEMENT
AND
INVESTOR QUESTIONNAIRE (THE “SUBSCRIPTION
AGREEMENT.”)
IN
THE CASE OF A SUBSCRIBER THAT IS A PARTNERSHIP, TRUST, CORPORATION OR OTHER
ENTITY, AN AUTHORIZED OFFICER, OR GENERAL PARTNER OR EACH EQUITY OWNER OR
BENEFICIARY, AS APPLICABLE, MUST COMPLETE THIS SUBSCRIPTION AGREEMENT. This
Subscription Agreement is merely a request for information and does not
constitute an offer to sell or a solicitation of an offer to buy the Units.
No
sale will occur prior to the acceptance of any subscription by the Company
and
the Placement Agent. The Company and First Montauk, as Placement Agent, reserve
the right to reject any subscription for any reason or to accept subscriptions
for less than the minimum subscription of $50,000 (5 Units). The Company and
First Montauk will promptly return any money without interest thereon or
deduction therefrom to a Subscriber whose subscription is rejected in whole
or
in part as the case may be. Subscribers should also understand that they may
be
required to furnish additional information to the Company.
THE
SUBSCRIPTION SHALL NOT BE BINDING UPON THE UNDERSIGNED SUBSCRIBER UNTIL (A)
THE
SUBSCRIBER HAS HAD AN OPPORTUNITY TO REVIEW A SUPPLEMENT TO THE MEMORANDUM
DESCRIBING ALL OF THE MATERIAL TERMS OF THE COMPANY’S MERGER TRANSACTION WITH
GEEKS ON CALL AMERICA, INC., A VIRGINIA CORPORATION AND CONFIRMS HIS
SUBSCRIPTION AND (B) THE COMPANY AND THE PLACEMENT ACCEPT SUCH
SUBSCRIPTION
The
Securities are being offered by the Company through First Montauk, as Placement
Agent. The purpose of this Subscription Agreement is to determine whether you
meet certain standards, because the Securities will not be registered under
the
Act and will be sold only to persons who are “Accredited Investors,” as that
term is defined in Rule 501(a) of Regulation D, promulgated under the
Act.
Your
answers to the Subscription Agreement questions will be kept confidential.
At
all times, however, you hereby agree that the Company may present this
Subscription Agreement to such parties as it deems appropriate in order to
assure itself that the offer and the sale of the Units to you will not result
in
violations of federal or state securities laws which are being relied upon
by
the Company in connection with the offer and sale thereof and as otherwise
required by law or any regulatory authority.
Please
type or clearly print your answers, and state “none” or “not applicable” when
appropriate. Please complete Section A and each other section you are requested
to complete in Question A3. If there is insufficient space for any of your
answers, please attach additional pages. If the Units are to be owned by more
than one individual or by a corporation or partnership, you may need extra
copies of this Subscription Agreement. You may use photocopies or request extra
copies from the Company or the Placement Agent.
SECTION
A: SUBSCRIBER INFORMATION
Al.
|
Name(s)
of SUBSCRIBER(s):
|
________________________________________ |
________________________________________ | ||
________________________________________ | ||
A2.
|
Principal
Amount of Units Subscribed for: (Minimum Subscription is $50,000
(5
Units))
|
$____________
|
A3.
|
Manner
of Ownership of Securities:
|
|
_____
|
One
Individual
|
Please
complete Sections A, B and C.
|
_____
|
Husband
and Wife Tenants by the Entirety
|
Please
have one spouse complete Sections A and B. Please have both spouses
complete Section C.
|
_____
|
Tenants
in Common
|
Please
have each individual separately complete Sections A, B and
C.
|
_____
|
Joint
Tenants with Right of Survivorship - Two
or
more Individuals (but not husband and wife)
|
Please
have each individual separately complete Section A, B and C.
|
_____
|
Corporate
Ownership
|
Please
complete Section A, B, D and, if applicable, E and F for the corporation.
If the corporation does not qualify as an “accredited investor” on its
own, please have each person who owns an equity interest in the
corporation separately complete Sections B and, if applicable, C,
D, E and
F.
|
_____
|
Partnership
Ownership
|
Please
complete Sections A, B and D, and have each general partner and limited
partner separately complete Sections B, C, D, E and F, if
applicable.
|
_____
|
Trust
Ownership
|
Please
complete Sections A, B and F, if applicable, and have each beneficiary
and
trustee of the trust separately complete Sections B, C, D, E and
F, if
applicable.
|
FINRA
Affiliation.
Please
state whether you or any of your associates or affiliates (which includes your
spouse, in-laws, children and parents): (i) are a member or a person associated
(including as an employee, officer, director or partner) with a member of the
Financial Industry Regulatory Authority ( “FINRA”),
(ii)
are an owner of stock or other securities of an FINRA member, (iii) have made
a
subordinated loan to any FINRA member, or (iv) are a relative or member of
the
same household of any person meeting the description set forth in clauses (i)
through (iii) above.
______
|
______
|
Yes
|
No
|
If
you
marked yes above, please briefly describe the FINRA relationship
below:
_________________________________________________________________________________________________________ |
_________________________________________________________________________________________________________ |
_________________________________________________________________________________________________________ |
SECTION
B: ACCREDITED INVESTOR STATUS
B1.
|
Please
check one or more of the following definitions of “Accredited
Investor,”
if any, which applies to you. If none of the following applies to
you,
please leave blank.
|
_____
(a)
|
A
“Bank” as defined in Section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in Section 3(a)(5)(A)
of the
Act whether acting in its individual or fiduciary
capacity;
|
_____
(b)
|
Any
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934 (the “Exchange Act”);
|
_____
(c)
|
An
insurance company as defined in Section 2(13) of the
Act;
|
_____
(d)
|
An
investment company registered under the Investment Company Act of
1940
(the “1940 Act”) or a business development company as defined in
Section 2(a)(48) of the 1940 Act;
|
_____
(e)
|
A
“Small Business Investment Company” licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
|
_____
(f)
|
A
plan established and maintained by a state, or its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions
for the benefit of its employees, if such plan has total assets in
excess
of $5,000,000;
|
_____
(g)
|
Any
employee benefit plan within the meaning of the Employee Retirement
Income
Security Act of 1974, as amended, if the investment decision is made
by a
plan fiduciary, as defined in Section 3(21) of such Act, which is
either a
bank, savings and loan association, insurance company, or registered
investment advisor, or if the employee benefit plan has total assets
in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are Accredited
Investors.
|
______
(h)
|
A
“Private Business Development Company” as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.
|
______
(i)
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code,
corporation or similar business trust, or partnership, not formed
for the
specific purpose of acquiring the Securities, with total assets in
excess
of $5,000,000.
|
______
(j)
|
A
natural person whose individual net worth,* or joint net worth with
that
person’s spouse, at the time of purchase exceeds
$1,000,000.
|
______
(k)
|
A
natural person who had an individual income** in excess of $200,000
in
each of the two most recent years or joint income with that person’s
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year.
|
______
(l)
|
A
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation
D promulgated under the Act.
|
______
(m)
|
Any
entity in which all of the equity owners are Accredited
Investors.***
|
________________
*
|
For
purposes hereof net worth shall be deemed to include ALL of your
assets,
liquid or illiquid (including such items as home, furnishings, automobile
and restricted securities) MINUS any liabilities (including such
items as
home mortgages and other debts and liabilities).
|
**
|
For
purposes hereof the term “income” is not limited to “adjusted gross
income” as that term is defined for federal income tax purposes, but
rather includes certain items of income which are deducted in computing
“adjusted gross income.” For Subscribers who are salaried employees, the
gross salary of such Subscribers, minus any significant expenses
personally incurred by such Subscriber in connection with earning
the
salary, plus any income from any other source including unearned
income,
is a fair measure of “income” for purposes hereof. For Subscribers who are
self-employed, “income” is generally construed to mean total revenues
received during the calendar year minus significant expenses incurred
in
connection with earning such revenues.
|
***
|
If
the Subscriber intends to qualify under (m), then all owners of the
entity
must complete a Subscription Agreement as an individual.
|
SECTION
C: INDIVIDUAL INFORMATION
C1.
|
General
Information
|
||
Name:
_____________________________________________________________________________________
|
|||
Age:
______________________________________
|
Social
Security Number: __________________
|
||
Marital
status: _______________________________
|
Spouse’s
name: ________________________
|
If
the
Securities are to be owned by two or more individuals (not husband and wife),
are you related to any other co-owner(s)?
______
|
______
|
Yes
|
No
|
If
Yes,
please explain the relationship(s):
_________________________________________________________________________________________________________ |
_________________________________________________________________________________________________________ |
C2.
|
Principal
Residence
|
|
Address:
|
____________________________________________________ | |
|
Number Street
|
|
____________________________________________________ | ||
City State Zip
Code
|
||
____________________________________________________ | ||
Country
|
Mailing
address (if other than principal residence address
above):
|
____________________________________________________ | |
Number Street
|
|
____________________________________________________ | |
City State Zip
Code
|
|
____________________________________________________ | |
Country
|
Telephone
number: __________________
|
||
Facsimile
number: ___________________
|
||
Email
address: ______________________
|
C3.
|
Current
employment or business activity:
|
Company
name:
__________________________________________________________________________________
|
|
Address:
_______________________________________________________________________________________
|
|
Number Street
|
|
____________________________________________________________________________ | |
City State Zip
Code
|
|
Principal
business:
________________________________________________________________________________
|
|
Position
and title:
_________________________________________________________________________________
|
|
Years
employed at current position:
___________________________________________________________________
|
|
C4.
|
Education:
Please describe your business or professional education or training,
listing any schools you have attended and degrees you have
received.
|
Dates
|
School
|
Degrees
and
Major
(if any)
|
______________ | __________________________________ | ________________________ |
______________ | __________________________________ | ________________________ |
______________ | __________________________________ | ________________________ |
C5.
|
Net
worth, inclusive of the net worth of your spouse and the value
of your
principal residence, furnishings therein and personal automobile
and other
assets (IT IS IMPORTANT THAT YOU CHECK THE HIGHEST APPLICABLE AMOUNT)
exclusive of any liabilities:
|
o
below
$249,999
|
|
o
$250,000
to
$349,999
|
o
$350,000
to
$699,999
|
o
$700,000
to
$799,999
|
o
$800,000
to
$1,000,000
|
o
$1,000,000
to
$1,249,999
|
o
over
$1,250,000
|
C6.
|
Net
worth: Your net worth, inclusive of the net worth of your spouse
and
excluding the value of your principal residence, furnishings therein
and
personal automobiles and exclusive of any
liabilities:
|
o
below
$249,999
|
|
o
$250,000
to
$349,999
|
o
$350,000
to
$699,999
|
o
$700,000
to
$799,999
|
o
$800,000
to
$1,000,000
|
o
$1,000,000
to
$1,249,999
|
o
over
$1,250,000
|
C7.
|
Indicate
(a) your individual income from all sources for the calendar years
2005
and 2006 and estimated income for calender year 2007 or (b) your
joint
income with your spouse from all sources for the calendar years 2005
and
2006 and estimated income for calendar year 2007 (It is important
that you
check the highest applicable amount; for guidance in computing “income”
for purposes of this Subscription Agreement, see the notes at the
end of
“Section B: Accredited Investor
Status.”):
|
(a) |
individual
income:
|
|
$200,000
to
$299,000
|
|
$300,000
to
$399,000
|
|
$400,000
to
$499,000
|
|
$500,000
and
over
|
|
|||||
2005
|
_______________
|
_______________
|
_______________
|
_______________
|
|||||||||
2006
|
_______________
|
_______________
|
_______________
|
_______________
|
|||||||||
|
|||||||||||||
2007
|
_______________
|
_______________
|
_______________
|
_______________
|
(b) |
joint
income:
|
|
$200,000
to
$299,000
|
|
$300,000
to
$399,000
|
|
$400,000
to
$499,000
|
|
$500,000
and
over
|
|
|||||
2005
|
_______________
|
_______________
|
_______________
|
_______________
|
|||||||||
2006
|
_______________
|
_______________
|
_______________
|
_______________
|
|||||||||
|
|||||||||||||
2007
|
_______________
|
_______________
|
_______________
|
_______________
|
C8. |
Investment
experience:
|
(a) |
The
frequency with which you invest in marketable securities
is:
|
ooften
ooccasionally onever
(b)
|
The
frequency with which you invest in unmarketable securities (such
as
private placement offerings) is:
|
ooften
ooccasionally onever
(c)
|
Have
you previously participated in private placement offerings in the
last 5
years?
|
______
|
______
|
Yes
|
No
|
(d)
|
If
you answered “yes” to (c) above, state the private placements in which you
participated in the last 5 years.
|
Year
|
Amount
Invested
|
Name
of Entity
|
|||||
2002
|
$ |
____________________
|
______________________________
|
||||
2003
|
$ |
____________________
|
______________________________
|
||||
2004
|
$ |
____________________
|
______________________________
|
||||
2005
|
$ |
____________________
|
______________________________
|
||||
2006
|
$ |
____________________
|
______________________________
|
||||
2007
|
$ |
____________________
|
______________________________
|
C9.
|
(a)
|
Have
you been afforded an opportunity to investigate the Company and review
relevant factors and documents pertaining to the officers, managers
and
the Company and its business and to ask questions of a qualified
representative of the Company regarding this investment and the assets,
operations, and methods of doing business of the
Company?
|
______
|
______
|
Yes
|
No
|
(b)
|
Do
you understand the nature of an investment in the Company and the
risk
associated with such an investment?
|
______
|
______
|
Yes
|
No
|
(c)
|
Do
you understand that there is no guarantee of any financial return
on this
investment?
|
______
|
______
|
Yes
|
No
|
(d)
|
Do
you understand that this investment is not
liquid?
|
______
|
______
|
Yes
|
No
|
(e) |
Do
you have adequate means of providing for your current needs and personal
contingencies in view of the fact that this is not a liquid
investment?
|
______
|
______
|
Yes
|
No
|
(f)
|
Are
you aware of the Company’s business affairs and financial condition, and
have you acquired all such information about the Company as you deem
necessary and appropriate to enable you to reach an informed and
knowledgeable decision to acquire the
Securities?
|
______
|
______
|
Yes
|
No
|
(g)
|
Do
you have a “pre-existing relationship” with the Company or any of its
officers, managers or members?
|
______
|
______
|
Yes
|
No
|
(For
purposes hereof, “Pre-existing relationship” means any relationship consisting
of personal or business contacts of a nature and duration such as would enable
a
reasonably prudent Subscriber to be aware of the character, business acumen,
and
general business and financial circumstances of the person with whom such
relationship exists.)
If
so,
please indicate whether the relationship is with the Company, and/or name the
individual(s) with whom you have a pre-existing relationship and describe the
relationship:
C10.
|
In
order for the Company to comply with applicable anti-money laundering/U.S.
Treasury Department Office of Foreign Assets Control (“OFAC”)
rules and regulations, Subscriber is required to provide the following
information:
|
(a) Payment
Information
(i)
Name
and address (including country) of the bank from which Subscriber’s payment to
the Company is being wired (the “Wiring
Bank”):
-
11 -
(ii) Subscriber’s
wiring instructions at the Wiring Bank:
(iii)
Is
the Wiring Bank located in the U.S. or another “FATF
Country”* ?
______
|
______
|
Yes
|
No
|
(iv)
Is
Subscriber a customer of the Wiring Bank?
______
|
______
|
Yes
|
No
|
(b) Additional
Information
Investors
wishing to subscribe must provide the following additional information or
documents unless you have previously delivered such information to the Placement
Agent as part of the establishment of your account at the Placement
Agent.
For
Individual Investors:
____
|
A
government issued form of picture identification (e.g., passport
or
drivers license).
|
||
____
|
Proof
of the individual’s current address (e.g., current utility xxxx), if not
included in the form of picture identification.
|
||
____
|
One
or more of the above documentations has previously provided to
Placement
Agent.
|
For
Funds of Funds or Entities that Invest on Behalf of Third
Parties:
_____
|
A
certificate of due formation and organization and continued authorization
to conduct business in the jurisdiction of its organization (e.g.,
certificate of good standing).
|
||
_____
|
An
“incumbency certificate” attesting to the title of the individual
executing these subscription materials on behalf of the prospective
investor.
|
||
_____
|
A
completed copy of a certification that the entity has adequate
anti-money
laundering policies and procedures (“AML Policies and Procedures”) in
place that are consistent with the USA PATRIOT Act, OFAC and other
relevant federal, state or non-U.S. anti-money laundering laws
and
regulations (with a copy of the entity’s current AML Policies and
Procedures to which such certification
relates).
|
*
As of
the
date hereof, countries that are members of the Financial Action Task Force
on
Money Laundering (“FATF
Country”)
are:
Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland,
France, Germany, Greece, Hong Kong, Iceland, Ireland, Italy, Japan, Luxembourg,
Mexico, Kingdom of the Netherlands, New Zealand, Norway, Portugal, Russian
Federation, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United
Kingdom and the United States of America.
-
12 -
_____
|
A
letter of reference any entity not located in the U.S. or other FATF
country, from the entity’s local office of a reputable bank or brokerage
firm that is incorporated, or has its principal place of business
located,
in the U.S. or other FATF Country certifying that the prospective
investor
maintains an account at such bank/brokerage firm for a length of
time and
containing a statement affirming the prospective investor’s
integrity.
|
||
_____
|
One
or more of the above documentations has previously provided to Placement
Agent.
|
For
all other Entity Investors:
_____
|
A
certificate of due formation and organization and continued authorization
to conduct business in the jurisdiction of its organization (e.g.,
certificate of good standing).
|
||
|
|||
_____
|
An
“incumbency certificate” attesting to the title of the individual
executing these subscription materials on behalf of the prospective
investor.
|
||
_____
|
A
letter of reference from the entity’s local office of a reputable bank or
brokerage firm that is incorporated, or has its principal place of
business located, in the U.S. or other FATF Country certifying that
the
prospective investor maintains an account at such bank/brokerage
firm for
a length of time and containing a statement affirming the prospective
investor’s integrity.
|
||
_____
|
If
the prospective investor is a privately-held entity, a certified
list of
the names of every person or entity who is directly or indirectly
the
beneficial owner of 25% or more of any voting or non-voting class
of
equity interests of the Subscriber, including (i) country of citizenship
(for individuals) or principal place of business (for entities) and,
(ii)
for individuals, such individual’s principal employer and
position.
|
||
_____
|
If
the prospective investor is a trust, a certified list of (i) the
names of
the current beneficiaries of the trust that have, directly or indirectly,
25% or more of any interest in the trust, (ii) the name of the settlor
of
the trust, (iii) the name(s) of the trustee(s) of the trust, and
(iv) the
country of citizenship (for individuals) or principal place of business
(for entities).
|
||
_____
|
One
or more of the above documentations has previously provided to Placement
Agent.
|
-
13 -
SECTION
D: CORPORATE OFFEREES OR PARTNERSHIP OFFEREES
D1.
|
General
Information
|
Legal
name of corporation or
partnership:_____________________________________________________________
|
|
Fictitious
name
(d/b/a):___________________________________________________________________________
|
|
State
or place of incorporation or
formation:___________________________________________________________
|
|
Date
of incorporation or
formation:__________________________________________________________________
|
|
If
partnership,
type:
______
general ______
limited
|
|
Federal
I.D.
number:_____________________________________________________________________________
|
|
Fiscal
year
ends:________________________________________________________________________________
|
|
Number
of equity owners or
partners:________________________________________________________________
|
|
If
Subscriber is a partnership, list names of each partner is the
partnership:
|
|
_________________________________________________________________________________ | |
Name
and title of authorized person executing Subscription
Agreement:
|
|
_________________________________________________________________________________ | |
Business
address:_______________________________________________________________________________
|
|
Mailing
address (if
different):_______________________________________________________________________
|
|
Telephone
number: (
)__________
Facsimile
number: (
)__________
|
|
Email
address:____________________________
|
|
D2.
|
Bank
Information
|
Name
of primary
bank:____________________________________________________________________________
|
|
Address:______________________________________________________________________________________
|
|
Telephone
number: (
)__________
|
|
Account
type and
number:_________________________________________________________________________
|
|
Person
familiar with corporation’s or partnership’s
account:________________________________________________
|
-
14 -
Was
the
corporation or partnership formed for the specific purpose of purchasing the
Securities?
______
|
______
|
Yes
|
No
|
Check
if
applicable to the corporation:
Subchapter
S________
Professional_______
D3. The
undersigned represents and warrants as follows:
(a)
|
The
corporation or partnership, as the case may be, has been duly organized
(if a partnership) is validly existing as a corporation or partnership
in
good standing under the laws of the jurisdiction of its incorporation
or
formation with full power and authority to enter into the transactions
contemplated by the Subscription
Agreement;
|
(b)
|
(i)
|
The
officers or partners of the undersigned who, on behalf of the undersigned,
have considered the purchase of the Securities and the advisers,
if any,
of the corporation or the partnership, as the case may be, in connection
with such consideration are named below in this Subscription Agreement,
and such officers and partners or advisers, if any, were duly authorized
to act for the corporation or the partnership in reviewing such
investment;
|
(ii)
|
The
names and positions of the officers or partners, of the undersigned
who,
on its behalf, have reviewed the purchase of the Securities are as
follows:
|
(iii)
|
In
evaluating the merits and risks of the purchase of the Securities,
the
corporation or the partnership, as the case may be, intends to rely
upon
the advice of, or will consult with, the following
persons:
|
(c)
|
The
officers of the corporation (if not Accredited Investors) or the
partners
of the partnership who, on its behalf, have considered the purchase
of the
Securities and the advisers, if any, of the corporation or the partnership
who, in connection with such consideration, together have such knowledge
and experience in financial and business matters that such officer(s),
partner(s) and such adviser(s), if any, together are capable of evaluating
the merits and risks of the purchase of the Securities and of making
an
informed investment decision;
|
-
15 -
(e) |
The
total assets of the corporation or the partnership are in excess
of
$___________________.
|
(g) |
The
undersigned expects the corporation or the partnership to have
during the
current and the next tax year, gross income from all sources of
at least
$_______ and $__________.
|
(h) |
The
undersigned knows of no pending or threatened litigation, the outcome
of
which could adversely affect the answer to any question
hereunder.
|
-
16 -
SECTION
E: TRUST OFFEREES
E1.
|
General Information
_____________________________________________________________________
|
Legal name:
___________________________________________________________________________
|
|
State or place of formation:
_______________________________________________________________
|
|
Date of formation:
______________________________________________________________________
|
|
Federal I.D. number: Fiscal year ends:
|
|
Number of beneficiaries:
_________________________________________________________________
|
|
Principal purpose:
______________________________________________________________________
|
|
Was
the trust formed for the specific purpose of purchasing the
Securities?
_____ _____
|
|
Yes No
|
|
Business address:
______________________________________________________________________
|
|
Mailing address (if different):
_____________________________________________________________
|
|
____________________________________________________________________________________ | |
Telephone number:
(
)
|
|
Facsimile number:
(
)
|
|
Email address:
__________________________________________________
|
E2.
|
Authorization: |
If
the trust was established in connection with a deferred compensation
plan,
please attach a copy of the trust’s organizational documents and a
properly certified copy of the resolutions adopted by the trust’s board of
directors authorizing the trust to purchase the Securities and
authorizing
the trustee named below to execute on behalf of the trust all relevant
documents necessary to subscribe for and purchase the Securities.
In all
cases, please attach a properly certified copy of the resolutions
adopted
by the trustees of the trust authorizing the trust to purchase
the
Securities and authorizing the trustee named below to execute on
behalf of
the trust all relevant documents necessary to subscribe for and
purchase
the Securities.
|
Name of trustee authorized to execute the Subscription Agreement:
_________________________________
|
|
E3.
|
Name of primary bank:
___________________________________________________________________
|
-
17 -
Address:
_____________________________________________________________________________
|
|
____________________________________________________________________________________ | |
Telephone number: (
)
|
|
Facsimile number: (
)
|
|
Account type and number:
________________________________________
|
|
Person familiar with trust’s account:
_________________________________
|
E4. |
Additional
Information
|
(a).
Certain
trusts generally may not qualify as accredited investors except under special
circumstances. Therefore, if you intend to purchase the shares of the Company’s
securities in whole or in part through a trust, please answer each of the
following questions.
Is
the
trustee of the trust a national or state bank that is acting in its fiduciary
capacity in making the investment on behalf of the trust?
Yes
o
No
o
Does
this
investment in the Company exceed 10% of the trust assets?
Yes
o
No
o
(b).
If
the trust is a revocable trust, please complete Question 1 below. If the
trust
is an irrevocable trust, please complete Question 2
below.
1. |
REVOCABLE
TRUSTS
|
Can
the
trust be amended or revoked at any time by its grantors:
Yes
o
No
o
If
yes,
please answer the following questions relating to each
grantor
(please add sheets if necessary):
Grantor
Name: _________________________
Net
worth
of grantor (including spouse, if applicable), including home, home furnishings
and automobiles exceeds $1,000,000?
Yes
o
No
o
-
18 -
OR
Income
(exclusive of any income attributable to spouse) was in excess of $200,000
for
2005 and 2006 and is reasonably expected to be in excess of $200,000 for
2007?
Yes
o
No
o
OR
Income
(including income attributable to spouse) was in excess of $300,000 for 2005
and
2006 and is reasonably expected to be in excess of $300,000 for
2007?
Yes
o
No
o
2. |
IRREVOCABLE
TRUSTS
|
If
the
trust is an irrevocable trust, please answer the following
questions:
Please
provide the name of each
trustee:
Trustee
Name: ________________________________________
Trustee
Name: ________________________________________
Does
the
trust have assets greater than $5 million?
Yes
o
No
o
Do
you
have such knowledge and experience in financial and business matters as to
be
capable of evaluating the merits and risks of an investment in the
Company?
Yes
o
No
o
-
19 -
Indicate
how often you invest in:
Marketable
Securities
Often
o Occasionally
o Seldom
o Never
o
Restricted
Securities
Often
o Occasionally
o Seldom
o Never
o
Venture
Capital Companies
Often
o Occasionally
o Seldom
o Never
o
-
20 -
SECTION
F: QUALIFIED PENSION PLAN (“PLAN”)
OFFEREES
F1. |
Please
check one:
|
_________a. |
The
Plan requires the investment of each beneficiary or participant
to be held
in a segregated account and the Plan allows each beneficiary or
participant to make his own investment decisions and, the decision
to
purchase the Securities has been made by the beneficiary or the
participant and such beneficiary or participant is an Accredited
Investor
(Please have each such beneficiary or participant execute a separate
Subscription Agreement).
|
OR
_________b. |
The
investment decisions made for the Plan are made by a plan fiduciary,
whether a bank, an insurance company, or a registered investment
adviser.
|
OR
_________c. |
The
Plan has total assets exceeding
$5,000,000.
|
F2.
|
General Information
|
Legal name:
_________________________________________________________________________________________
|
|
State or place of formation:
______________________________________________________________________________
|
|
Date of formation:
____________________________________________________________________________________
|
|
Federal I.D. number:____________ Fiscal year ends:
|
|
Number of beneficiaries:
________________________________________________________________________________
|
|
Principal purpose:
_____________________________________________________________________________________
|
|
Business address:
____________________________________________________________________________________
|
|
Telephone number: ( )
|
|
Facsimile number: ( )
|
|
Email address:
__________________________________________________
|
|
Mailing address:
_____________________________________________________________________________________
|
|
__________________________________________________________________________________________________ |
-
21 -
F3.
|
Authorization: |
If
the investment decision is being made by a beneficiary or participant
of a
Plan, please attach applicable trust documents which permit each
beneficiary or participant to make his own investment decisions.
In all
other cases, please attach a properly certified copy of the resolutions
adopted by the trustees of the Plan trust authorizing the Plan
to purchase
the Securities and authorizing the fiduciary named below to execute
on
behalf of the Plan all relevant documents necessary to subscribe
for and
purchase the Securities.
|
Name of trustee authorized to execute the Subscription Agreement:
|
|
__________________________________________________________________________________________________ | |
F4.
|
Name of primary bank:
_________________________________________________________________________________
|
Address:
___________________________________________________________________________________________
|
|
Telephone number: ( )
|
|
Facsimile number: ( )
|
|
Account type and number:
________________________________________
|
|
Person familiar with your account:
___________________________________
|
-
22 -
SECTION G:
REPRESENTATIONS AND WARRANTIES BY ALL SUBSCRIBERS
By
signing this Subscription Agreement, the undersigned hereby confirms the
following statements:
(a) I
have
read the Memorandum and this Subscription Agreement and other accompanying
documents of the Company, and am aware of and understand the risk factors
disclosed therein related to the Company and an investment in the
Company.
(b) I
am
aware that the Offering involves Securities for which no market exists, thereby
requiring any investment to be maintained for an indefinite period of time.
The
Company is not a reporting company under the Exchange Act, and therefore
does
not file periodic reports with the SEC.
(c) I
acknowledge that any delivery to me of the Memorandum relating to the Securities
prior to the determination by the Company or the Placement Agent of my
suitability as a Subscriber shall not constitute an offer of the Securities
until such determination of suitability shall be made, and I agree that I
shall
promptly return the Memorandum and the other Offering documents to the Company
or the Placement Agent upon request.
(d) I
also
understand and agree that, although the Company and the Placement Agent will
use
their respective best efforts to keep the information provided in answers
to
this Subscription Agreement strictly confidential, the Company and the Placement
Agent or their respective counsel may present this Subscription Agreement
and
the information provided in answer to it to such parties as they may deem
advisable if called upon to establish the availability under any federal
or
state securities laws of an exemption from registration of the Offering or
if
the contents thereof are relevant to any issue in any action, suit or proceeding
to which the Company, the Placement Agent or their respective affiliates
is a
party, or by which they are or may be bound or as otherwise required by law
or
regulatory authority.
(e) I
realize
that this Subscription Agreement does not constitute an offer to sell or
a
solicitation of an offer to buy the Securities or any other security of the
Company but is merely a request for information.
(f) I
understand that the Securities are being offered without registration under
the
Act in reliance upon the private offering exemption contained therein, and
that
such reliance is based in part on the information herein supplied. For the
foregoing reasons and to induce the Company to issue and deliver the Securities
to me, I represent and warrant that the information stated herein is true,
accurate and complete, and I agree to notify and supply corrective information
promptly to the Company as provided above if any of such information becomes
inaccurate or incomplete.
(g) The
individual signing below on behalf of any entity hereby warrants and represents
that he/she is authorized to execute this Subscription Agreement on behalf
of
such entity.
(h) The
undersigned is able to bear the economic risk of the investment in the
Securities and can afford a complete loss of such investment.
-
23 -
(i) Subject
to the terms and conditions hereof and on the basis of the representations
and
warranties hereinafter set forth, the Company hereby agrees to issue and
sell to
the Subscriber and the Subscriber agrees to purchase from the Company, upon
closing of the Offering, the Unit as described in the Memorandum at a price
per
Unit of $10,000. The Company or the Placement Agent may reject any subscription
in whole or in part.
(j) The
Subscriber acknowledges and agrees that there is a Minimum Offering Amount
of
$3,000,000 in aggregate gross proceeds of subscriptions prior to release
of
funds to the Company and that pending acceptance of the Minimum Offering
the
funds shall be held in a non-interest bearing escrow account.
(k) In
entering into this Subscription Agreement and in purchasing the Units, the
Subscriber further acknowledges that:
(i)
|
The
Company has informed the Subscriber that the Securities have not
been
offered for sale by means of general advertising or
solicitation.
|
(ii)
|
The
Securities may not be resold by the Subscriber in the absence of
a
registration under the Act or exemption from registration. In particular,
the Subscriber is aware that the Securities will be “restricted
securities”, as such term is defined in Rule 144 promulgated under the Act
(“Rule
144”),
and they may not be sold pursuant to Rule 144, unless the conditions
thereof are met.
|
(iii)
|
In
the event the Company determines to issue certificates evidencing
the
Securities, the following legends (or similar language) shall be
placed on
such certificate(s):
|
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933 (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER
SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR
(2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT
SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE
MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
(iv)
|
The
Company may at any time place a stop transfer order on its transfer
books
against the Securities. Such stop order will be removed, and further
transfer of the Securities will be permitted upon an effective
registration of the respective Securities, or the receipt by the
Company
of an opinion of counsel satisfactory to the Company that such
further
transfer may be effected pursuant to an applicable exemption from
registration.
|
-
24 -
(v)
|
The
purchase of the Units involves risks which the Subscriber has evaluated,
and the Subscriber is able to bear the economic risk of the purchase
of
such securities and the loss of its entire
investment.
|
(l) The
Subscriber agrees to indemnify and hold harmless the Company and the Placement
Agent , their respective officers, managers, members, employees, agents,
counsel
and affiliates and each other person, if any, who controls the Company or
the
Placement Agent, within the meaning of Section 15 of the Act or Section 20
of
the Exchange Act, against any and all losses, liabilities, claims, damages
and
all expenses reasonably incurred in investigating, preparing or defending
against any litigation commenced or threatened or any claim whatsoever arising
out of or based upon any false representation or warranty or breach or failure
by the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any other document furnished by the Subscriber to
any of
the foregoing in connection with this transaction.
(m) The
Subscriber hereby acknowledges and agrees, subject to any applicable state
securities laws that the subscription and application hereunder are irrevocable,
that the Subscriber is not entitled to cancel, terminate or revoke this
Subscription Agreement and that this Subscription Agreement shall survive
the
death or disability of the Subscriber and shall be binding upon and inure
to the
benefit of the Subscriber and his heirs, executors, administrators, successors,
legal representatives, and assigns. If the Subscriber is more than one person,
the obligations of the Subscriber hereunder shall be joint and several, and
the
agreements, representations, warranties, and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his
heirs, executors, administrators, successors, legal representatives, and
assigns.
(n) The
Company and the Placement Agent have each employed its own legal counsel
in
connection with the Offering. The Subscribers have not been represented by
independent counsel in connection with the preparation of the Memorandum
or the
terms of the Offering and no investigation of the merits or fairness of the
Offering has been conducted on behalf of the Subscribers. Prospective
Subscribers should consult with their own legal, tax and financial advisors
with
respect to the Offering made pursuant to the Memorandum.
(o) The
undersigned hereby acknowledges that officers, managers, members, employees
and
affiliates of the Company and/or the Placement Agent may purchase Units in
the
Offering, which purchases may count towards the Minimum Offering
Amount.
(p) My
answers to the foregoing questions are true and complete to the best of my
information and belief and I will promptly notify the Company or the Placement
Agent of any changes in the information I have provided.
(q) Notwithstanding
anything else contained in this Subscription Agreement or the Memorandum,
each
prospective investor (and its employees, representatives or other agents)
and
the Company may disclose to any and all persons, without limitation of any
kind,
the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the Code and the Treasury Regulations
promulgated thereunder) of the undersigned subscribers investment in the
Company
and any transactions entered into by the Company and all materials of any
kind
(including opinions or other tax analyses) that are provided to such prospective
investor relating to such tax treatment and tax structure; provided
that no
prospective investor or its employees, representatives or agents shall disclose
any information for which nondisclosure is reasonably necessary in order
to
comply with U.S. securities laws; and provided further
that
this authorization is not intended to permit disclosure of any term or detail
not relevant to the tax treatment or the tax structure of the Company, the
Offering or transactions entered into by the parties hereto.
-
25 -
The
undersigned understands and agrees that this authorization to disclose such
tax
treatment and tax structure is not intended to permit disclosure of any other
information including (without limitation) (i) any portion of any materials
to the extent not related to the tax treatment or tax structure of the Company,
the Offering or transactions entered into by the undersigned and the Company,
(ii) the identities of any investors in the Offering or (iii) any
other term or detail not relevant to the tax treatment or the tax structure
of
the Partnership or transactions entered into by it.
H. COVENANTS,
REPRESENTATIONS AND WARRANTS OF THE COMPANY
(a)
The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State
of Delaware and has the corporate power to conduct the business which it
conducts and proposes to conduct.
(b) The execution, delivery and performance
of this Subscription Agreement by the Company have been duly authorized by
the
Company and all other corporate action required to authorize and consummate
the
offer and sate of the Units has been duly taken and approved.
(c) The Units, Common Stock and Warrants to
be issued and sold to the undersigned as provided in the Memorandum have
been
duly authorized and when issued and delivered against payment therefor, will
be
validly issued, fully paid and non-assessable and will conform to the
description thereof in the Memorandum. There are no preemptive or other rights
to subscribe for or to purchase, nor any restriction upon the voting or transfer
of, any shares of the Common Stock issuable upon exercise of the Warrants
pursuant to the Company's certificate of incorporation or bylaws or any
agreement or other outstanding instrument to which the Company is a party
or is
otherwise known to the Company. The Company has reserved sufficient shares
of
Common Stock to be issued upon exercise of the Warrants.
(d) The Company has obtained, or is in the
process of obtaining, all licenses, permits and other governmental
authorizations necessary for the conduct of its business, except where the
failure to so obtain such licenses, permits and authorizations would not
have a
material adverse effect on the Company. Such licenses, permits and other
governmental authorizations which have been obtained are in full force and
effect, except where the failure to be so would not have a material adverse
effect on the Company, and the Company is in all material respects complying
therewith.
(e) The Company knows of no pending or
threatened legal or governmental proceedings to which the Company is a party
which would materially adversely affect the business, financial condition
or
operations of the Company.
(f) The Company is not in violation
of or default under, nor will the execution and delivery of this Subscription
Agreement or the issuance of the Common Stock, or the consummation of the
transactions herein contemplated, result in a violation of, or constitute
a
default under, the Company’s Certificate of Incorporation or By-laws, any
material obligations, agreements, covenants or conditions contained in any
bond,
debenture, note or other evidence of indebtedness or in any material contract,
indenture, mortgage, loan agreement, lease, joint venture or other agreement
or
instrument to which the Company is a party or by which it or any of its
properties may be bound or any material order, rule, regulation, writ,
injunction, or decree of any government, governmental instrumentality or
court,
domestic or foreign.
-
26 -
(g) The
information
provided in the Memorandum regarding Geeks on Call Amercia, Inc. does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(h) As
of the
date hereof there is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending or to the Company's
knowledge threatened, with respect to Geeks On Call Amercia, Inc., or its
respective operations, businesses, properties, or assets, except as properly
described in the Memorandum or such as individually or in the aggregate do
not
now have and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of Geeks On Call Amercia, Inc.
(i) To
the
best of its knowledge, Geeks
On
Call Amercia, Inc
has not
infringed, is not infringing, and has not received notice of infringement
with
respect to asserted intangibles of others. To the best knowledge of Geeks
On
Call Amercia, Inc
, none
of the patents, patent applications, trademarks, service marks, trade names
and
copyrights, and licenses and rights to the foregoing presently owned or held
by
the Company, materially infringe upon any like right of any other person
or
entity. Geeks
On
Call Amercia, Inc
(i) owns
or has the right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions
of any
kind whatsoever, sufficient patents, trademarks, service marks, trade names,
copyrights, licenses and right with respect to the foregoing, to conduct
its
business as presently conducted except as set forth in the Memorandum, and
(ii)
except as set forth in the Memorandum, is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to
any
owner or licensee of, or other claimant to, any patent, trademark, service
xxxx,
trade name, copyright, know-how, technology or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business
as
now conducted or otherwise. Geeks
On
Call Amercia, Inc
has
direct ownership of title to all its intellectual property (including all
United
States and foreign patent applications and patents), other proprietary rights,
confidential information and know-how; owns all the rights to its Intangibles
as
are currently used in or have potential for use in its business.
(j) The
Company shall provide for the transfer, upon request of the Subscriber, or
removal of any legends upon the Securities, all as may be allowed in accordance
with SEC Rule 144, and provide any required opinions of counsel to the Company’s
transfer agents, at no cost to the Subscriber. The Company shall make generally
available such information as may be necessary under SEC Rule 144 to allow
for
the resale of Securities by the Subscriber for at least three (3) years after
the final Closing of the Offering.
(k) Prior
to
the Initial Closing, the Subscriber has received a supplement to the Memorandum
which includes the following information: (i) the material terms of the
Company’s acquisition, by way of merger (“Merger”), with Geeks On Call America,
Inc.; (ii) the total consideration being issued in connection with the Merger,
including the issuance of shares of Common Stock, options and warrants or
debt
securities; (iii) the terms of any employment or consulting agreements being
entered into by the Company (iv) a capitalization chart reflecting and
disclosing in reasonable detail the capitalization of the Company reflective
of
the Merger and the Offering; and (v) the issuance of any cash consideration
or
securities to any placement agents, finders or consultants.
-
27 -
(l) The
Subscribers shall be entitled to the registration rights with respect to
the
Securities as described on Exhibit A annexed hereto and incorporated
herein.
(m)
For
a
period commencing on the Initial Closing and terminating on a date which
is
twelve (12) months following the date that the registration statement referred
to in Exhibit A annexed hereto, n the Offering is declared effective by the
SEC
(the “Adjustment Period”), in the event the Company issues or grants any shares
of Common Stock or any warrants or other securities convertible, exchangeable
or
exercisable for shares of Common Stock pursuant to which shares of Common
Stock
may be acquired at a price less than $2.00 per share (subject to certain
customary exceptions, including, outstanding options and other obligations
as of
the date of the Initial Closing, issuances pursuant to employment arrangements
or business combinations in which a portion of the consideration may be payable
in shares or convertible securities with a business in substantially the
same
line of business as the Company), then the Company shall promptly issue
additional shares of Common Stock to the investors in the Offering in an
amount
sufficient that the subscription price paid hereunder, when divided by the
total
number of shares issued (shares included in the purchased Unit plus the
additional shares issued under this provision), will result in an actual
price
paid by the Subscriber per share of Common Stock equal to such lower price
(this
is intended to be a “full ratchet” adjustment). For example, if an investor
purchased one Unit in the Offering (comprised of 5,000 shares of Common Stock
and Warrants to purchase 2,500 shares of Common Stock) for a purchase price
of
$10,000 (equals $2.00 per share of Common Stock) and then the Company issues
additional shares of Common Stock at $1.00 per share during such twelve-month
period, the Company will issue an additional 5,000 shares of Common Stock
to the
investor. In addition, the exercise price of all unexercised Warrants shall
be
reduced by the same amount. Such adjustments shall be made successively whenever
such an issuance is made during the Adjustment Period. This clause (m) shall
not
apply to an “Exempt Issuance” which for purposes hereof shall mean the issuance
of (a) shares of Common Stock or options to employees, officers or directors
of
the Company pursuant to any stock or option plan duly adopted by a majority
of
the non-employee members of the Board of Directors of the Company or a majority
of the members of a committee of non-employee directors established for such
purpose, (b) securities upon the exercise of or conversion of any Securities
issued in the Offering, convertible securities, options or warrants issued
and
outstanding on the date of this Agreement, provided that such securities
have
not been amended since the date of this Agreement to increase the number
of such
securities or to decrease the exercise or conversion price of any such
securities, (c) securities issued pursuant to acquisitions or strategic
transactions (including, without limitation, equipment leases or the purchase
of
equipment in the ordinary course of business), provided any such issuance
shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in
which
the Company receives benefits in addition to the investment of funds, but
shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business
is
investing in securities, and (d) issuances of securities issued by the Company
in connection with a public offering which is underwritten on a firm commitment
basis.
(n) For
a
period commencing upon the date of the Initial Closing until the date that
is 12
months after the registration statement referred to in Exhibit A is declared
of
effective by the SEC, the Subscribers shall will have the right to participate
on any future financings contemplated by the Company as described in Exhibit
B
annexed hereto and incorporated herein.
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28 -
SECTION
J: MISCELLANEOUS
(a) All
notices or other communications required under this Subscription Agreement
shall
be deemed given upon (i) hand delivery; (ii) receipt of confirmation of delivery
via overnight courier to a Subscriber or to the Company at the respective
addresses set forth herein, or such other addresses as a Subscriber or the
Company shall designate to the other by notice in writing; (iii) receipt
of
confirmation of transmission via facsimile at the facsimile number set forth
herein, or such other facsimile number as a Subscriber or the Company shall
designate to the other by notice in writing; (iv) three days after mailing,
postage prepaid, to a Subscriber or to the Company at the respective addresses
set forth herein, or such other addresses as a Subscriber or the Company
shall
designate to the other by notice in writing; or (v) one business day after
transmission via electronic mail to the electronic mail address set forth
herein, or such other electronic mail addresses as a Subscriber or the Company
shall designate to the other by notice in writing.
(b) Each
undersigned Subscriber agrees that neither this Subscription Agreement, nor
any
of the Subscriber’s rights or interest herein or hereunder, is transferable or
assignable by the Subscriber, and further agrees that the transfer or assignment
of any Securities acquired pursuant hereto shall be made only in accordance
with
the provisions hereof and all applicable laws.
(c) Each
undersigned Subscriber agrees that, except as permitted by applicable law
and
subject to receipt of the supplement described in Section H (i) above and
confirmation of the subscriber’s subscription at such time, it may not cancel,
terminate or revoke this Subscription Agreement or any agreement of the
Subscriber made hereunder, and that this Subscription Agreement shall survive
the death or legal disability of the Subscriber and shall be binding upon
the
Subscriber’s heirs, executors, administrators, successors and permitted
assigns.
(d) All
of
the representations, warranties, covenants, agreements and confirmations
set out
above shall survive the acceptance of the subscription made herein and the
issuance of the Securities in the Offering.
(e) This
Subscription Agreement constitutes the complete and exclusive statement of
agreement among the parties hereto with respect to the subject matter herein
and
therein and replace and supersede all prior written and oral agreements or
statements by and among parties hereto or any of them.
(f) All
headings herein are inserted only for convenience and ease of reference and
are
not to be considered in the construction or interpretation of any provision
of
this Subscription Agreement.
(g) All
exhibits attached to this Agreement are incorporated and shall be treated
as if
set forth herein.
(h) If
any
provision of this Agreement or the application of such provision to any person
or circumstance shall be held invalid, the remainder of this Subscription
Agreement or the application of such provision to persons or circumstances
other
than those to which it is held invalid shall not be affected
thereby.
(i) The
parties agree to execute and deliver such additional documents and instruments
and to perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions, and conditions
of this Subscription Agreement and the transactions contemplated
hereby.
(j) This
Subscription Agreement may be executed in two or more counterparts, each
of
which shall be deemed an original, but all of which shall constitute one
and the
same instrument.
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29 -
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement
and Investor Questionnaire and agrees to the terms hereof.
Dated:
_____________ __, 200_
|
FOR
INDIVIDUALS:
|
(including
Subscriber Representative)
|
|
(Print
Name)
|
|
(Signature)
|
|
Dated:
_____________ __, 200_
|
FOR
INDIVIDUALS:
|
(including
Subscriber Representative)
|
|
(Print
Name)
|
|
(Signature)
|
|
Principal
Amount of Units
Subscribed
for hereby:
|
|
$
___________________
|
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30 -
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement
and Investor Questionnaire and agrees to the terms hereof.
Dated:
_____________ __, 200_
|
FOR
CORPORATIONS:
|
Name
of Corporation
|
|
Name
of Authorized Executive Officer of Corporation
|
|
Signature
of Authorized Executive Officer
|
|
Dated:
_____________ __, 200_
|
FOR
PARTNERSHIPS:
|
Name
of Partnership
|
|
Name
of Authorized Partner
|
|
Signature
of Authorized Partner
|
|
Principal
Amount of Units
|
|
Subscribed
for hereby:
|
|
$___________________
|
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31 -
IN
WITNESS WHEREOF, the undersigned has duly executed this Subscription Agreement
and Investor Questionnaire and agrees to the terms hereof.
Dated:
_____________ __, 200_
|
FOR
TRUSTS:
|
Name
of Trust
|
|
Name
of Authorized Trustee
|
|
Signature
of Authorized Trustee
|
|
Principal
Amount of Units
|
|
Subscribed
for hereby:
|
|
$___________________
|
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32 -
ACCEPTANCE
OF SUBSCRIPTION BY THE COMPANY
The
undersigned, Geeks On Call Holdings, Inc. hereby accepts the Subscription
Agreement of
__________________________________________________ as of the date stated
below.
By:
|
||
Name:
|
||
Title:
|
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33 -
EXHIBIT
A
REGISTRATION
RIGHTS
1. Definitions.
Capitalized
terms used herein without definition shall have the respective meanings given
such terms as set forth in the Subscription Agreement between Geeks on Call
Holdings, Inc. and the Subscriber signatory thereto (the “Subscription
Agreement”)
or in
the Company’s Confidential Private Placement Memorandum, dated as of October 22,
2007 (as amended or supplemented, and together with all exhibits attached
thereto, the “Memorandum”).
As
used herein, the following terms shall have the following meanings:
Business
Day:
Any day
other than a day on which banks are authorized or required to be closed in
the
State of New York.
Commission:
The
United States Securities and Exchange Commission.
Common
Stock:
The
common stock, no par value, of the Company.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended, and the rules and regulations
of
the Commission promulgated thereunder.
Holder
or
Holders:
Any
holder of the Registrable Securities.
Person:
Any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Prospectus:
The
prospectus included in any registration statement (including, without
limitation, a prospectus that discloses information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such registration statement,
and all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.
Registrable
Securities:
The (i)
Shares, (ii) Warrant Shares and (iii) any Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security that
is
issued as) a dividend or other distribution with respect to, or in exchange
for,
or in replacement of the Warrant Shares or pursuant to the anti-dilution
provisions of the Subscription Agreement and/or Warrants until such time as
(1)
a Registration Statement covering such Registrable Securities has been declared
effective by the Commission and such Registrable Securities have been disposed
of pursuant to such effective Registration Statement or (2) such Registrable
Securities are saleable pursuant to Rule 144 or Rule 144A (or any similar
provision then in force) promulgated under the Securities Act, without any
restriction, whichever is earlier.
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34 -
Securities
Act:
The
Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder.
SEC:
Securities Exchange Commission
Warrants:
Warrants
to purchase shares of Common Stock of the Company.
Warrant
Shares:
Shares
of Common Stock issuable upon the exercise of the Warrants.
2.
Registration
Rights.
(a) Within
60
calendar days following the Final Closing Date of the Offering (the
“Filing
Deadline”),
the
Company shall file with the SEC a registration statement (the "Registration
Statement")
to
register for resale by the Holders the Registrable Securities. The Company
shall
use its good faith best efforts to cause such Registration Statement to be
declared effective as soon as practicable following filing. The Company agrees
to take all actions as are necessary to keep the Registration Statement
effective until the date on which all Common Stock and Warrant Shares may be
sold without any restrictions during any 90 day period in accordance with Rule
144(k) promulgated under the Act.
(b) (i)
If
the Registration Statement covering the Registrable Securities required to
be
filed by the Company pursuant to Section 2(a) hereof is not filed by the Filing
Deadline, or declared effective by the date which is 150 calendar days after
the
Final Closing, then in either such event the Company shall pay the Holder in
cash the sum of 1% for each 30 days, pro rata for partial periods, of the
Subscription Amount (not to exceed 9% of the Subscription Amount in the
aggregate) as liquidated damages and not as a penalty until such time as filed
with the SEC. Notwithstanding the foregoing, the amounts payable by the Company
pursuant to this Section shall not be payable to the extent any delay in the
filing of the Registration Statement occurs because of an act of, or a failure
to act or to act timely by the Holder or is otherwise attributable to the
Holder.
(ii)
The
liquidated damages set forth in this Section shall continue until the obligation
is fulfilled and shall be paid within five (5) business days after each 30
day
period, or portion thereof, until the Registration Statement is filed. Failure
by the Company to make payment within said three (3) business days shall be
considered a breach of this Agreement, and the Holder may elect to pursue
remedies as outlined in this Exhibit A.
(iii)
The
Company acknowledges that its failure to have the Registration Statement filed
within said 60 calendar day period or effective within such 150 day period
will
cause the Holder to suffer irreparable harm, and, that damages will be difficult
to ascertain. Accordingly, the parties agree that it is appropriate to include
in this Agreement a provision for liquidated damages. The parties acknowledge
and agree that the liquidated damages provision set forth in this section
represents the parties’ good faith effort to quantify such damages and, as such,
agree that the form and amount of such liquidated damages are reasonable and
will not constitute a penalty. The payment of liquidated damages shall not
relieve the Company from its obligations to register the Common Stock and
Warrant Shares and deliver the Common Stock and Warrant Shares pursuant to
the
terms of the Subscription Agreement and the Memorandum.
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35 -
(iv)
Notwithstanding the provisions of Section 2(a) or (b) hereof, in the event
that
the SEC issues on more comments stating the under SEC Rule 415 the amount of
Registrable Securities being registered on behalf of Holders exceeds the amount
of securities that can be resold under Rule 415, then (i) the Company shall
be
entitled to reduce, on a pro rata amount, the Registrable Securities being
registered on behalf of Holders (“Excluded Securities”) and (ii) the Company
shall not be penalized under Section 2(b) to the extent that any Registrable
Securities are not included in the Registration Statement and the resale of
such
Excluded Securities is not included in a registration statement declared
effective by the 150 calendar day. The Company shall also not be penalized
under
Section 2(b) to the extent that any Registerable Securities may be sold by
Holders pursuant to Rule 144(k).
(c) In
the
event that there are Excluded Securities, if allowed by the SEC, the Company
shall use its best efforts to file a second registration statement within 9
months after the effectiveness of the Registration Statement to provided for
the
resale by the Holders of the Excluded Securities and to have such second
registration statement declared effective as promptly as possible; provided,
however, if Excluded Securities may be sold by Holders pursuant to Rule 144(k)
then the Company shall not be obligated to file an additional registration
statement under this clause (c).
3. Registration
Procedures.
In
connection with the registration obligations of the Company pursuant to the
terms and conditions of this Agreement, the Company shall:
(a) prior
to
filing a Registration Statement or any Prospectus or any amendments or
supplements thereto, including documents incorporated by reference therein,
the
Company will furnish to the Holders and Holders’ counsel (which shall be
Ellenoff, Xxxxxxxx & Schole LLP) draft copies of all such documents proposed
to be filed with the SEC at least three (3) Business Days prior thereto, which
documents will be subject to the review of such Holders’ Counsel.
(b)
The
Company will notify each Holder of any stop order issued or threatened by the
Commission in connection therewith and take all reasonable actions required
to
prevent the entry of such stop order or to remove it if entered;
(c) as
promptly as practicable, prepare and file with the Commission such amendment
and
post-effective amendment and supplement to the Registration Statement as may
be
necessary to keep such Registration Statement effective for the period required
pursuant to Section 2; cause the Prospectus to be supplemented by any required
Prospectus supplement, and, as so supplemented, to be filed pursuant to Rule
424
promulgated under the Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition by
the
Holders set forth in such Registration Statement or supplement to the
Prospectus;
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36 -
(d) as
promptly as practicable, furnish to any Holder without charge, such number
or
conformed copies of such Registration Statement and any post-effective amendment
thereto and such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto, and any documents
incorporated by reference therein, as such Holder may reasonably request, in
writing, in order to facilitate the disposition of the Registrable Securities
being sold by such Holder (it being understood that the Company consents to
the
use of the Prospectus and any amendment or supplement thereto by each Holder
and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto);
(e) on
or
prior to the date on which the Registration Statement is declared effective,
register or qualify such Registrable Securities under such other securities
or
“blue sky” laws of such jurisdictions as any Holder or Holders’ counsel
reasonably requests, in writing, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to consummate
the
disposition in such jurisdictions of such Registrable Securities owned by such
Holder; keep each such registration or qualification (or exemption therefrom)
effective during the period which the Registration Statement is required to
be
kept effective; and do any and all other acts or things reasonably necessary
or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable Registration Statement; provided
that the
Company shall not be required to (i) qualify to do business as a foreign
corporation or as a broker-dealer in any jurisdiction where it is not then
so
qualified or (ii) take any action which would subject it to general service
of
process or to taxation in any jurisdiction where it is not then so
subject;
(f) cause
the
Registrable Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be
necessary by virtue of the business and operations of the Company to the extent
legally required to enable the Holders to consummate the disposition of such
Registrable Securities;
(g) as
promptly as practicable notify each Holder and Holders’ Counsel (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
Commission or any other federal or state governmental authority for amendments
or supplements to a Registration Statement or related Prospectus or for
additional information to be included in any Registration Statement or
Prospectus or otherwise, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement or the initiation
or threatening of any proceedings for that purpose, (iv) of the issuance by
any
state securities commission or other regulatory authority of any order
suspending the qualification or exemption from qualification of any of the
Registrable Securities under state securities or “blue sky” laws or the
initiation of any proceedings for that purpose and (v) of the happening of
any
event which makes any statement made in a Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated by
reference therein untrue or which requires the making of any changes in such
Registration Statement, Prospectus or documents so that they will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; and, as promptly as practicable thereafter, prepare and file with
the Commission and furnish a supplement or amendment to such Prospectus so
that,
as thereafter deliverable to the purchasers of such Registrable Securities,
such
Prospectus will not contain any untrue statement of a material fact or omit
to
state a material fact necessary to make the statements therein, in light of
the
circumstances under which they were made, not misleading;
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37 -
(h) use
its
reasonable efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement, and, if one is issued, to obtain
the
withdrawal of any order suspending the effectiveness of a Registration Statement
at the earliest possible moment;
(i) as
promptly as practicable after filing with the Commission of any document which
is incorporated by reference into a Registration Statement, deliver a copy
of
such document to Holders’ counsel, to the extent that such documentation has not
previously been provided by the Company;
(j)
cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates (which shall not bear any restrictive legends and shall be in
a
form eligible for deposit with the Depository Trust Company) representing
securities sold under such Registration Statement, and enable such securities
to
be in such denominations and registered in such names as such Holders may
request in writing and make available prior to the effectiveness of such
Registration Statement a supply of such certificates.
(k) cooperate
with Holder’s counsel to provide information to FINRA as may be required under
FINRA rule 2710 and to make such changes to the Registration Statement (whether
in the Registration Statement or in a prospectus supplement) as may be requested
by FINRA.
(l) The
Registration Statement shall not include for issuance or resale any securities
of the Company or any other holder of the Company’s securities other than the
Registrable Securities of the holders in the Offering and the Placement Agent.
Each
Holder, upon receipt of any notice from the Company of the happening of any
event of the kind described in subsection (f) of this Section 3, shall forthwith
discontinue disposition of the Registrable Securities until such Holder’s
receipt of the copies of the supplemented or amended Prospectus contemplated
by
subsection (f) of this Section 3 or until it is advised in writing (the
“Advice”)
by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference
in
the Prospectus, and, if so directed by the Company, such Holder will deliver
to
the Company (at the Company’s expense) all copies, other than permanent file
copies then in such Holder’s possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event that the Company shall give any such notice, the time periods for which
a
Registration Statement is required to be kept effective pursuant to Section
2
hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each Holder shall have received (i) the copies of the supplemented or amended
Prospectus contemplated by Section 2(f) or (ii) the Advice.
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4. Registration
Expenses.
(a) All
expenses incident to the Company’s performance of, or compliance with, the
provisions hereof, including without limitation, (i) all Commission and
securities exchange or FINRA registration and filing fees, compliance with
securities or “blue sky” laws (including fees and disbursements of counsel in
connection with “blue sky” qualifications of the Registrable Securities), (ii)
printing expenses, messenger and delivery expenses, (iii) internal expenses
(including, without limitation, all salaries and expenses of the Company’s
officers and employees performing legal or accounting duties), (iv) fees and
expenses incurred in connection with the listing of the securities to be
registered, if any, on each securities exchange on which similar securities
issued by the Company are then listed, (v) fees and disbursements of counsel
for
the Company and its independent certified public accountants, (vi) Securities
Act liability insurance (if the Company elects to obtain or maintain such
insurance), (vii) reasonable fees and expenses of any special experts retained
by the Company and fees and expenses of other Persons retained by the Company
in
connection with the preparation and filing of the registration statement
required to be filed pursuant to Section 2 hereof (but not including any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities by Holder) are herein called “Registration Expenses.”
(b)
In
addition to the expenses set forth above, the Company shall pay the fees and
expenses of Ellenoff Xxxxxxxx & Schole LLP, as counsel to the Holders and
Placement Agent, which fees and expenses shall equal $10,000, for the review
of
the Registration Statement on the Holder’s behalf and the making of any filings
under the Rule 2710 of FINRA.
5. Indemnification;
Contribution.
(a) Indemnification
by the Company.
The
Company agrees to indemnity and hold harmless, to the full extent permitted
by
law, each Holder and its respective officers, directors, counsel and each Person
who controls such Holder (within the meaning of the Securities Act), and any
agent or investment adviser thereof, against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys’ fees and costs of
investigation) arising out of or based upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement, any
amendment or supplement thereto, any Prospectus or preliminary Prospectus or
any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same arise out of or are based upon any such untrue
statement or omission based upon information with respect to such Holder
furnished in writing to the Company by or on behalf of such Holder expressly
for
use therein; provided
however,
that, in the event that the Prospectus shall have been amended or supplemented
and copies thereof as so amended or supplemented, shall have been furnished
to a
Holder prior to the confirmation of any sales of Registrable Securities, such
indemnity with respect to the Prospectus shall not inure to the benefit of
such
Holder if the Person asserting such loss, claim, damage or liability and who
purchased the Registrable Securities from such Holder did not, at or prior
to
the confirmation of the sale of the Registrable Securities to such Person,
receive a copy of the Prospectus as so amended or supplemented and the untrue
statement or omission of a material fact contained in the Prospectus was
corrected in the Prospectus as so amended or supplemented; provided further,
however, that the Company shall not be liable to any indemnified party in any
such case to the extent that any such loss arises out of or is based upon an
untrue statement or alleged untrue statement or omission made in any such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by a Holder expressly for use in connection
with such Registration Statement.
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39 -
(b) Indemnification
by Holders of Registrable Securities.
In
connection with any Registration Statement in which a Holder is participating,
each such Holder will furnish to the Company in writing such information with
respect to the name and address of such Holder and such other information as
may
be reasonably required for use in connection with any such Registration
Statement or Prospectus and each Holder agrees to indemnity, to the full extent
permitted by law, the Company, its directors, officers and counsel and each
Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from
any
untrue statement of a material fact in the Registration Statement or Prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue or alleged untrue statement relates to any information with respect
to such Holder so furnished in writing by such Holder specifically for inclusion
in any Prospectus or Registration Statement (including any omissions with
respect thereto); provided,
however,
that
such Holder shall not be liable in any such case to the extent that prior to
the
filing of any such Registration Statement or Prospectus or amendment thereof
or
supplement thereto, such Holder has furnished in writing to the Company
information expressly for use in such Registration Statement or Prospectus
or
any amendment thereof or supplement thereto which corrected or made not
misleading information previously furnished to the Company. In no event shall
the liability of any Holder hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
Any
Person entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such Person of any written
notice of the commencement of any action, suit, proceeding or investigation
or
threat thereof made in writing for which such Person will claim indemnification
or contribution pursuant to the provisions hereof and, unless in the judgment
of
counsel of such indemnified party, a conflict of interest may exist between
such
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim. Whether or not
such
defense is assumed by the indemnifying party, the indemnifying party will not
be
subject to any liability for any settlement made without its written consent
(but such consent will not be unreasonably withheld). No indemnifying party
will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation. If the indemnifying party is not entitled to, or elects
not
to, assume the defense of a claim, it will not be obligated to pay the fees
and
expenses of more than one counsel (plus such local counsel, if any, as may
be
reasonably required in other jurisdictions) with respect to such claim, unless
in the judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the reasonable fees and expenses of such additional counsel or counsels.
For the purposes of this Section 5(c), the term “conflict of interest” shall
mean that there are one or more legal defenses available to the indemnified
party that are different from or additional to those available to the
indemnifying party or such other indemnified parties, as applicable, which
different or additional defenses make joint representation
inappropriate.
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(d) Contribution.
If the
indemnification from the indemnifying party provided for in this Section 5
is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to
the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to
reflect the relative fault of the indemnifying party and indemnified parties
in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall
be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties intent, knowledge, access to information
and opportunity to correct or prevent such action. The amount paid or payable
by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 5(c), any reasonable legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
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.
(e) If
indemnification is available under this Section 5, the indemnifying parties
shall indemnity each indemnified party to the full extent provided in Sections
5(a) and (b) without regard to the relative fault of said indemnifying party
or
indemnified party or any other equitable consideration provided for in this
Section 5.
6. Transfer
of Rights.
The
rights to cause the Company to register Registrable Securities granted pursuant
to the provisions hereof may be transferred or assigned by any Holder to a
transferee or assignee who acquires both at least 25,000 Shares and Warrants
to
acquire at least 12,500 Shares (all subject to appropriate adjustment for stock
splits, stock dividends and combinations); provided;
however,
that
the transferee or assignee of such rights assumes the obligations of such
transferor or assignor, as the case may be, hereunder by delivery to the Company
of a written instrument of assignment.
7. Amendment
Except
as
otherwise provided herein, the provisions hereof may not be amended, modified
or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of at least a majority of the aggregate number of the Registrable Securities
then outstanding and, to the extent that the Company is to be bound thereby,
such consent is in writing and signed by the Company.
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8. Inconsistencies
To
the
extent that there is any inconsistency between the terms of this Annex A and
the
terms of the Memorandum or the Subscription Agreement, the terms of this Annex
A
shall govern and be controlling.
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EXHIBIT
B
RIGHT
OF
PARTICIPATION
(a) From
the
date hereof until the 12 month anniversary of the Effective Date, upon any
financing by the Company of Common Stock or Common Stock Equivalents (a
“Subsequent Financing”), each Subscriber shall have the right to participate in
the Subsequent Financing (the “Participation Maximum”).
(b) At
least
5 Trading Days prior to the closing of the Subsequent Financing, the Company
shall deliver to each Subscriber a written notice of its intention to effect
a
Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Subscriber
if it wants to review the details of such financing (such additional notice,
a
“Subsequent Financing Notice”). Upon the request of a Subscriber, and only upon
a request by such Subscriber, for a Subsequent Financing Notice, the Company
shall promptly, but no later than 2 Trading Days after such request, deliver
a
Subsequent Financing Notice to such Subscriber. The Subsequent Financing Notice
shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the amount of proceeds intended to be raised thereunder, the
person(s) with whom such Subsequent Financing is proposed to be effected, and
attached to which shall be a term sheet or similar document relating thereto.
(c) Any
Subscriber desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time)
on the 5th Trading Day (the “Subsequent Financing Notice Deadline”) after the
Company has sent to all of the Subscribers Subsequent Financing Notice that
the
Subscriber is willing to participate in the Subsequent Financing, the amount
of
the Subscriber’s participation, and that the Subscriber has such funds ready,
willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no notice from a Subscriber as of
Subsequent Financing Notice Deadline , such Subscriber shall be deemed to have
notified the Company that it does not elect to participate.
(d) If
by
5:30 p.m. (New York City time) on the Subsequent Financing Notice Deadline
, the
Company receives responses to a Subsequent Financing Notice from Subscribers
seeking to purchase more than the aggregate amount of the Participation Maximum,
each such Subscriber shall have the right to purchase the greater of (a) their
Pro Rata Portion (as defined below) of the Participation Maximum and (b) the
difference between the Participation Maximum and the aggregate amount of
participation by all other Subscribers. “Pro Rata Portion” is the ratio of (x)
the Subscription Amount of Securities purchased by a participating Subscriber
and (y) the sum of the aggregate Subscription Amount of all participating
Subscribers in this Offering.
(e) If
by
5:30 p.m. (New York City time) on the Subsequent Financing Notice Deadline,
notifications by the Subscribers of their willingness to participate in the
Subsequent Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing, then the
Company may effect the remaining portion of such Subsequent Financing on the
terms and to the Persons set forth in the Subsequent Financing Notice.
(f) The
Company must provide the Subscribers with a second Subsequent Financing Notice,
and the Subscribers will again have the right of participation set forth above
in this Exhibit B, if the Subsequent Financing subject to the initial Subsequent
Financing Notice is not consummated for any reason on the terms set forth in
such Subsequent Financing Notice within 60 Trading Days after the date of the
initial Subsequent Financing Notice.
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(g) Notwithstanding
the foregoing, this Exhibit B shall not apply in respect of an Exempt
Issuance.
(h) Capitalized
terms used herein without definition shall have the respective meanings given
such terms as set forth in the Subscription Agreement between Geeks on Call
Holdings, Inc. and the Subscriber signatory thereto (the “Subscription
Agreement”)
or in
the Company’s Confidential Private Placement Memorandum, dated as of October 22,
2007 (as amended or supplemented, and together with all exhibits attached
thereto, the “Memorandum”).
As
used herein, the following terms shall have the following meanings:
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock shall hereinafter have been reclassified
into.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including without limitation,
any
debt, preferred stock, rights, options, warrants or other instrument that is
at
any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“Effective
Date”
means
the date that the registration statement required to be filed by the Company
under the terms of Exhibit A is declared effective by the SEC.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to employees, officers
or
directors of the Company pursuant to any stock or option plan duly adopted
by a
majority of the non-employee members of the Board of Directors of the Company
or
a majority of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise of or conversion of any
Securities issued in the Offering, convertible securities, options or warrants
issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise or conversion price
of
any such securities, (c) securities issued pursuant to acquisitions or strategic
transactions (including, without limitation, equipment leases or the purchase
of
equipment in the ordinary course of business), provided any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities, and (d) issuances of securities issued by the Company
in connection with a public offering which is underwritten on a firm commitment
basis.
“SEC”
means
the Securities and Exchange Commission.
“Trading
Day”
means
a
day on which the Company’s shares of Common Stock is traded on a Trading
Market.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Stock Market, the American
Stock
Exchange, the New York Stock Exchange, or the OTC Bulletin Board.
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