SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of January 16,
2004, by and among Genesis Technology Group, Inc., a Florida corporation (the
"Company"), and the subscribers identified on the signature page hereto (each a
"Subscriber" and collectively "Subscribers").
WHEREAS, the Company and the Subscribers are executing and delivering
this Agreement in reliance upon an exemption from securities registration
afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D
("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers, in the aggregate, shall
purchase $2,000,000 (the "Purchase Price") of principal amount of 6% Series A
Convertible Preferred Stock ("Preferred Stock") convertible into shares of the
Company's common stock, $.001 par value (the "Common Stock") at a per share
conversion price equal to the lesser of $.36, or eighty percent (80%) of the
closing bid prices of the Common Stock as reported by Bloomberg L.P. for the OTC
Bulletin Board ("Bulletin Board") for the trading day preceding, but not
including the Initial Closing Date, as defined in Section 1 of this Agreement
("Conversion Price"); and share purchase warrants (the "Warrants"), in the form
attached hereto as Exhibit A, to purchase shares of Common Stock (the "Warrant
Shares"). One Million Dollars ($1,000,000) of the Purchase Price shall be
payable on the Initial Closing Date ("Initial Closing Purchase Price"). Up to
One Million Dollars ($1,000,000) of the Purchase Price will be payable within
five (5) business days after the actual effectiveness ("Actual Effective Date")
of the Registration Statement as defined in Section 11.1(iv) of this Agreement
("Second Closing Purchase Price"). The Preferred Stock, shares of Common Stock
issuable upon conversion of the Preferred Stock (the "Shares"), the Warrants and
the Warrant Shares are collectively referred to herein as the "Securities"; and
WHEREAS, the aggregate proceeds of the sale of the Preferred Stock and
the Warrants contemplated hereby shall be held in escrow pursuant to the terms
of a Funds Escrow Agreement to be executed by the parties substantially in the
form attached hereto as Exhibit B (the "Escrow Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Subscribers hereby
agree as follows:
1. Initial Closing. Subject to the satisfaction or waiver of
the terms and conditions of this Agreement, on the Initial Closing Date, each
Subscriber shall purchase and the Company shall sell to each Subscriber
Preferred Stock in the Stated Value amount designated on the signature page
hereto ("Initial Closing Preferred Stock"). The aggregate amount of the
Preferred Stock to be purchased by the Subscribers on the Initial Closing Date
shall, in the aggregate, be equal to the Initial Closing Purchase Price. The
Initial Closing Date shall be the date that subscriber funds representing the
net amount due the Company from the Initial Closing Purchase Price is
transmitted by wire transfer or otherwise to or for the benefit of the Company.
2. Second Closing.
(a) Second Closing. The closing date in relation to
the Second Closing Purchase Price shall be the fifth (5th) business day after
the Actual Effective Date (the "Second Closing Date"). Subject to the
satisfaction or waiver of the terms and conditions of this Agreement on the
Second Closing Date, each Subscriber shall purchase and the Company shall sell
to each Subscriber Preferred Stock in the Stated Value amount designated on the
signature page hereto ("Second Closing Preferred Stock".) The aggregate Purchase
Price of the Second Closing Preferred Stock for all Subscribers shall be equal
to the Second Closing Purchase Price.
(b) Conditions to Second Closing. The occurrence of
the Second Closing is expressly contingent on (i) the truth and accuracy, on the
Effective Date, Actual Effective Date and the Second Closing Date of the
representations and warranties of the Company and Subscriber contained in this
Agreement, (ii) continued compliance by the Company with the covenants of the
Company set forth in this Agreement, (iii) the non-occurrence of any Event of
Default, as defined in the Certificate of Designation of the Rights and
Preferences of the Series A 6% Convertible Preferred Stock ("Certificate of
Designation") annexed hereto as Exhibit C, or other default by the Company of
its obligations and undertakings contained in this Agreement, (iv) the delivery
on the Second Closing Date of Second Closing Preferred Stock for which the
Company Shares issuable upon conversion have been included in the Registration
Statement, which must be effective as of the Second Closing Date, and (v) the
delivery on the Second Closing Date of the Second Closing Warrants (as defined
in Section 3 of this Agreement) for which the Warrant Shares have been included
in the Registration Statement, which must be effective as of the Second Closing
Date.
(c) Second Closing Deliveries. On the Second Closing
Date, the Company will deliver the Second Closing Preferred Stock to the Escrow
Agent and each Subscriber will deliver his portion of the respective Purchase
Price to the Escrow Agent. On the Second Closing Date, the Company will deliver
a certificate ("Second Closing Certificate") signed by its chief operating
officer and chief financial officer (i) representing the truth and accuracy of
all the representations and warranties made by the Company contained in this
Agreement, as of the Initial Closing Date, the Actual Effective Date, and the
Second Closing Date, as if such representations and warranties were made and
given on all such dates, (ii) adopting the covenants and conditions set forth in
Sections 9, 10, 11, and 12 of this Agreement in relation to the Second Closing
Preferred Stock, (iii) representing the timely compliance by the Company with
the Company's registration requirements set forth in Section 11 of this
Agreement, and (iv) certifying that an Event of Default has not occurred.A legal
opinion nearly identical to the legal opinion referred to in Section 6 of this
Agreement shall be delivered to the Subscriber at the Second Closing in relation
to the Company and Second Closing Preferred Stock ("Second Closing Legal
Opinion"). The Second Closing Legal Opinion must also state that all of the
Registrable Securities have been included for registration in an effective
registration statement effective as of the Actual Effective Date and Second
Closing Date.
(d) Second Closing Limitation. A Second Closing may
not take place in connection with that amount of Second Closing Preferred Stock
which would be in excess of the sum of (y) the number of shares of Common Stock
beneficially owned by a Subscriber on the Second Closing Date, and (z) the
number of Company Shares issuable upon the conversion of the Second Closing
Preferred Stock with respect to which the determination of this proviso is being
made on a Second Closing Date, which would result in beneficial ownership by the
Subscriber of more than 9.99% of the outstanding shares of Common Stock of the
Company on the on a Subsequent Closing Date. For the purposes of the proviso to
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder. The Subscriber may revoke the
restriction described in this paragraph upon and effective after 61 days prior
notice to the Company. The Subscriber shall have the right to determine which
of the equity of the Company deemed beneficially owned by the Subscriber shall
be included in the 9.99% described above and which shall be allocated to the
excess above 9.99%.
3. Warrants. On the Initial Closing Date and Second Closing
Date, the Company will issue Warrants to the Subscribers ("Initial Closing
Warrants" and "Second Closing Warrants", respectively). Five (5) Warrants will
be issued for each ten Shares of Common Stock which would be issuable upon
conversion of the entire Purchase Price on the Initial Closing Date and Second
Closing Date, as if such Closing Dates were Conversion Dates (as defined in
Section 4(c) of the Certificate of Designation). The per Warrant Share exercise
price to acquire a Warrant Share upon exercise of the Warrants shall be 105% of
the closing trade price of the Common Stock as reported by Bloomberg L.P. for
the Bulletin Board for the trading day preceding but not including the Initial
Closing Date. Collectively, the Initial Closing Warrants and Second Closing
Warrants are referred to herein as Warrants and the Common Stock issuable upon
exercise of the Warrants is referred to as Warrant Shares. The Warrants shall be
exercisable for five years after the issue dates of the Warrants.
4. Subscriber's Representations and Warranties. Each
Subscriber hereby represents and warrants to and agrees with the Company as to
such Subscriber that:
(a) Information on Company. The Subscriber has been
furnished with or has obtained from the XXXXX Website of the Securities and
Exchange Commission (the "Commission") the Company's Form 10-KSB for the year
ended September 30, 2002 as filed with the Commission, together with all
subsequently filed Forms 10-QSB, 8-K, and filings made with the Commission
available at the XXXXX website (hereinafter referred to collectively as the
"Reports"). In addition, the Subscriber has received in writing from the Company
such other information concerning its operations, financial condition and other
matters as the Subscriber has requested in writing (such other information is
collectively, the "Other Written Information"), and considered all factors the
Subscriber deems material in deciding on the advisability of investing in the
Securities.
(b) Information on Subscriber. The Subscriber is, and
will be at the time of the conversion of the Preferred Stock and exercise of the
Warrants, an "accredited investor", as such term is defined in Regulation D
promulgated by the Commission under the Securities Act of 1933, as amended (the
"1933 Act"), is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber
is able to bear the risk of such investment for an indefinite period and to
afford a complete loss thereof. The information set forth on the signature page
hereto regarding the Subscriber is accurate.
(c) Purchase of Preferred Stock and Warrants. On each
Closing Date, the Subscriber will purchase the Preferred Stock and Warrants as
principal for its own account and not with a view to any distribution thereof.
(d) Compliance with Securities Act. The Subscriber
understands and agrees that the Securities have not been registered under the
1933 Act or any applicable state securities laws, by reason of their issuance
in a transaction that does not require registration under the 1933 Act (based in
part on the accuracy of the representations and warranties of Subscriber
contained herein), and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any applicable state
securities laws or is exempt from such registration. In any event, and subject
to compliance with applicable securities laws, the Subscriber may enter into
hedging transactions with third parties, which may in turn engage in short sales
of the Securities in the course of hedging the position they assume and the
Subscriber may also enter into short positions or other derivative transactions
relating to the Securities, or interests in the Securities, and deliver the
Securities, or interests in the Securities, to close out their short or other
positions or otherwise settle short sales or other transactions, or loan or
pledge the Securities, or interests in the Securities, to third parties that in
turn may dispose of these Securities.
(e) Shares Legend. The Shares and the Warrant Shares
shall bear the following or similar legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO GENESIS TECHNOLOGY GROUP, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
(f) Warrants Legend. The Warrants shall bear the
following or similar legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO GENESIS TECHNOLOGY GROUP,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
(g) Preferred Stock Legend. The Preferred Stock shall
bear the following legend:
"THIS CERTIFICATE AND THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THIS CERTIFICATE AND
THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS CERTIFICATE
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
CERTIFICATE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO GENESIS TECHNOLOGY GROUP, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
(h) Communication of Offer. The offer to sell the
Securities was directly communicated to the Subscriber by the Company. At no
time was the Subscriber presented with or solicited by any leaflet, newspaper or
magazine article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting
otherwise than in connection and concurrently with such communicated offer.
(i) Authority; Enforceability. This Agreement and
other agreements delivered together with this Agreement or in connection
herewith have been duly authorized, executed and delivered by the Subscriber
and are valid and binding agreements enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity; and Subscriber
has full corporate power and authority necessary to enter into this Agreement
and such other agreements and to perform its obligations hereunder and under all
other agreements entered into by the Subscriber relating hereto.
(j) Correctness of Representations. Each Subscriber
represents as to such Subscriber that the foregoing representations and
warranties are true and correct as of the date hereof and will be true and
correct as of each closing date and unless a Subscriber otherwise notifies the
Company prior to any closing date, shall be true and correct as of such closing
dates. The foregoing representations and warranties shall survive the Second
Closing Date for a period of three years.
5. Company Representations and Warranties. The Company
represents and warrants to and agrees with each Subscriber that:
(a) Due Incorporation. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the respective jurisdictions of their incorporation
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. The Company and each of its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the business, operations or financial condition of the
Company.
(b) Outstanding Stock. All issued and outstanding
shares of capital stock of the Company and each of its subsidiaries has been
duly authorized and validly issued and are fully paid and non-assessable.
(c) Authority; Enforceability. This Agreement, the
Warrant, the Escrow Agreement and any other agreements delivered together with
this Agreement or to be delivered in connection herewith have been and will be
duly authorized, executed and delivered by the Company and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity. The Company has full corporate power and
authority necessary to enter into this Agreement, the Warrant, the Escrow
Agreement and such other agreements and to perform its obligations hereunder and
under all other agreements entered into by the Company relating hereto.
(d) Additional Issuances. There are no outstanding
agreements or preemptive or similar rights affecting the Company's common stock
or equity and no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any shares of common
stock or equity of the Company or other equity interest in any of the
subsidiaries of the Company except as described on Schedule 5(d), or the
Reports.
(e) Consents. No consent, approval, authorization or
order of any court, governmental agency or body or arbitrator having
jurisdiction over the Company, or any of its affiliates, the Amex, the National
Association of Securities Dealers, Inc., Nasdaq, SmallCap Market, the OTC
Bulletin Board nor the Company's Shareholders is required for the execution and
compliance by the Company of its obligations under this Agreement, and all other
agreements entered into or to be entered into by the Company relating hereto,
including, without limitation, the issuance and sale of the Securities, and the
performance of the Company's obligations hereunder and under all such other
agreements.
(f) No Violation or Conflict. Assuming the
representations and warranties of the Subscribers in Section 4 are true and
correct, neither the issuance and sale of the Securities nor the performance of
the Company's obligations under this Agreement and all other agreements entered
into by the Company relating thereto by the Company will:
(i) violate, conflict with, result in a
breach of, or constitute a default (or an event which with the giving of notice
or the lapse of time or both would be reasonably likely to constitute a default)
under (A) the articles of incorporation, charter or bylaws of the Company, (B)
to the Company's knowledge, any decree, judgment, order, law, treaty, rule,
regulation or determination applicable to the Company of any court, governmental
agency or body, or arbitrator having jurisdiction over the Company or any of its
subsidiaries or over the properties or assets of the Company or any of its
affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its affiliates or subsidiaries is a party, by which the Company or any of its
affiliates or subsidiaries is bound, or to which any of the properties of the
Company or any of its affiliates or subsidiaries is subject, or (D) the terms of
any "lock-up" or similar provision of any underwriting or similar agreement to
which the Company, or any of its affiliates or subsidiaries is a party except
the violation, conflict, breach, or default of which would not have a material
adverse effect on the Company; or
(ii) result in the creation or imposition of
any lien, charge or encumbrance upon the Securities or any of the assets of the
Company, its subsidiaries or any of its affiliates; or
(iii) will not result in the activation of
any anti-dilution rights or a reset or repricing of any debt or security
instrument of any other debt or equity holder of the Company.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and any applicable state securities laws;
(ii) have been, or will be, duly and validly
authorized and on the date of conversion of the Preferred Stock, and upon
exercise of the Warrants, the Shares and Warrant Shares will be duly and validly
issued, fully paid and nonassessable (and if registered pursuant to the 1933
Act, and resold pursuant to an effective registration statement will be free
trading and unrestricted, provided that each Subscriber complies with the
prospectus delivery requirements of the 1933 Act);
(iii) will not have been issued or sold in
violation of any preemptive or other similar rights of the holders of any
securities of the Company; and
(iv) will not subject the holders thereof to
personal liability by reason of being such holders.
(h) Litigation. There is no pending or, to the best
knowledge of the Company, threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having
jurisdiction over the Company, or any of its affiliates that would affect the
execution by the Company or the performance by the Company of its obligations
under this Agreement, and all other agreements entered into by the Company
relating hereto. Except as disclosed in the Reports, there is no pending or, to
the best knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company, or any of its affiliates which litigation
if adversely determined could have a material adverse effect on the Company.
(i) Reporting Company. The Company is a publicly-held
company subject to reporting obligations pursuant to Sections 15(d) and 13 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") and has a class
of common shares registered pursuant to Section 12(g) of the 1934 Act. Pursuant
to the provisions of the 1934 Act, the Company has timely filed all reports and
other materials required to be filed thereunder with the Commission during the
preceding twelve months.
(j) No Market Manipulation. The Company has not
taken, and will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock of the Company to facilitate the
sale or resale of the Securities or affect the price at which the Securities may
be issued or resold.
(k) Information Concerning Company. The Reports
contain all material information relating to the Company and its operations and
financial condition as of their respective dates which information is required
to be disclosed therein. Since the date of the financial statements included in
the Reports, and except as modified in the Other Written Information or in the
Schedules hereto, there has been no material adverse change in the Company's
business, financial condition or affairs not disclosed in the Reports. The
Reports do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made.
(l) Stop Transfer. The Securities, when issued, will
be restricted securities. The Company will not issue any stop transfer order or
other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the Subscriber.
(m) Defaults. The Company is not in violation of its
Articles of Incorporation or ByLaws. The Company is (i) not in default under or
in violation of any other material agreement or instrument to which it is a
party or by which it or any of its properties are bound or affected, which
default or violation would have a material adverse effect on the Company, (ii)
not in default with respect to any order of any court, arbitrator or
governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) to its knowledge in violation of any
statute, rule or regulation of any governmental authority which violation would
have a material adverse effect on the Company.
(n) No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the offer and/or
sale of the Securities pursuant to this Agreement to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the Bulletin Board. Nor will the Company or any of its
affiliates or subsidiaries take any action or steps that would cause the offer
and/or sale of the Securities to be integrated with other offerings. The Company
will not conduct any offering other than the transactions contemplated hereby
that will be integrated with the offer or issuance of the Securities.
(o) No General Solicitation. Neither the Company, nor
any of its affiliates, nor to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 0000 Xxx) in connection with the
offer or sale of the Securities.
(p) Listing. The Company's common stock is quoted on
the Bulletin Board. The Company has not received any oral or written notice that
its common stock will be delisted from the Bulletin Board nor that its common
stock does not meet all requirements for the continuation of such quotation and
the Company satisfies the requirements for the continued listing of its common
stock on the Bulletin Board.
(q) No Undisclosed Liabilities. The Company has no
liabilities or obligations which are material, individually or in the aggregate,
which are not disclosed in the Reports and Other Written Information, other than
those incurred in the ordinary course of the Company's businesses since
September 30, 2002 and which, individually or in the aggregate, would reasonably
be expected to have a material adverse effect on the Company's financial
condition, other than as set forth in Schedule 5(q).
(r) No Undisclosed Events or Circumstances. Since
September 30, 2002, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, operations or financial condition,
that, under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports. (s) Capitalization. The
authorized and outstanding capital stock of the Company as of the date of this
Agreement and the Closing Date are set forth on Schedule 5
(s). Except as set forth in the Reports and Other
Written Information and Schedule 5(d), there are no options, warrants, or rights
to subscribe to, securities, rights or obligations convertible into or
exchangeable for or giving any right to subscribe for any shares of capital
stock of the Company. All of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are fully paid and
nonassessable.
(t) Dilution. The Company's executive officers and
directors have studied and fully understand the nature of the Securities being
sold hereby and recognize that they have a potential dilutive effect on the
equity holdings of other holders of the Company's equity or rights to receive
equity of the Company. The board of directors of the Company has concluded, in
its good faith business judgment, that such issuance is in the best interests of
the Company. The Company specifically acknowledges that its obligation to issue
the Shares upon conversion of the Preferred Stock and exercise of the Warrants
is binding upon the Company and enforceable, except as otherwise described in
this Subscription Agreement or the Certificate of Designation, regardless of the
dilution such issuance may have on the ownership interests of other shareholders
of the Company or parties entitled to receive equity of the Company.
(u) No Disagreements with Accountants and Lawyers. There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants and lawyers formerly or
presently employed by the Company, including but not limited to disputes or
conflicts over payment owed to such accountants and lawyers.
(v) Investment Company. The Company is not, and is not
an Affiliate (as defined in Rule 405 under the 0000 Xxx) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(w) Correctness of Representations. The Company
represents that the foregoing representations and warranties are true and
correct as of the date hereof and will be true and correct as of each closing
date, and unless the Company otherwise notifies the Subscribers prior to any
closing date, shall be true and correct as of such closing dates. The foregoing
representations and warranties shall survive the Second Closing Date for a
period of three years.
6. Regulation D Offering. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6)
of the 1933 Act and/or Rule 506 of Regulation D promulgated thereunder. On each
closing date, the Company will provide an opinion reasonably acceptable to
Subscriber from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities. A form of the legal opinion is annexed hereto as
Exhibit D. The Company will provide, at the Company's expense, such other legal
opinions in the future as are reasonably necessary for the conversion of the
Preferred Stock and exercise of the Warrants and resale of the Shares and
Warrant Shares.
7.1. Conversion of Preferred Stock.
(a) The Preferred Stock will be convertible according
to the procedures and terms set forth in the Certificate of Designation.
(b) Upon the conversion of the Preferred Stock or
part thereof, the Company shall,
at its own cost and expense, take all necessary action, including obtaining and
delivering, an opinion of counsel to assure that the Company's transfer agent
shall issue stock certificates in the name of Subscriber (or its nominee) or
such other persons as designated by Subscriber and in such denominations to be
specified at conversion representing the number of shares of common stock
issuable upon such conversion. The Company warrants that no instructions other
than these instructions have been or will be given to the transfer agent of the
Company's Common Stock and that, unless waived by the Subscriber, the Shares
will be free-trading, and freely transferable, and will not contain a legend
restricting the resale or transferability of the Shares provided the Shares are
being sold pursuant to an effective registration statement covering the Shares
or are otherwise exempt from registration.
(c) The Company understands that a delay in the
delivery of the Company Shares after Conversion, and delivery of Preferred
Stock certificates representing the unconverted balance of a Preferred Stock
certificate tendered for conversion, beyond the date described for such delivery
set forth in the Certificate of Designation or Mandatory Conversion Date (as
that term is employed in the Certificate of Designation), or late delivery of a
Mandatory Redemption Payment (as defined herein), as the case may be, (each of
the foregoing a "Delivery Date") could result in economic loss to the
Subscriber. As compensation to the Subscriber for such loss, the Company agrees
to pay late payments to the Subscriber for late delivery of Shares upon
Conversion and late delivery of a Preferred Stock certificate for the
unconverted portion of a Preferred Stock or late delivery of a Mandatory
Redemption Payment, in the amount of $100 per business day after the Delivery
Date for each $10,000 of Stated Value of Preferred Stock being converted and
Preferred Stock certificate remaining undelivered or Mandatory Redemption
Payment not paid. The Company shall pay any payments incurred under this Section
in immediately available funds upon demand. Furthermore, in addition to any
other remedies which may be available to the Subscriber, in the event that the
Company fails for any reason to effect delivery of the Shares within three
business days after the Delivery Date, the Subscriber will be entitled to revoke
the relevant Notice of Conversion by delivery of a notice of revocation to the
Company whereupon the Company and the Subscriber shall each be restored to their
respective positions immediately prior to the delivery of such notice of
revocation, except that late payment charges described above shall be payable
through the date notice of revocation is given to the Company.
(d) Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest or dividends required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Company to the Subscriber and thus refunded
to the Company.
7.2. Mandatory Redemption at Subscriber's Election. In the
event the Company fails to timely deliver Shares on a Delivery Date, or upon the
occurrence of any other Event of Default (as defined in the Certificate of
Designation) within the control of the Company, or for any reason other than
pursuant to the limitations set forth in Section 4(c) of the Certificate of
Designation, then at the Subscriber's election, the Company must pay to the
Subscriber ten (10) business days after request by the Subscriber or on the
Delivery Date (if requested by the Subscriber) a sum of money determined by (i)
multiplying the Stated Value of the Preferred Stock designated by the Subscriber
by 130%, or (ii) multiplying the number of Shares otherwise deliverable upon
conversion of the Stated Value of the Preferred Stock designated by the
Subscriber (with the date of giving of such designation being a Deemed
Conversion Date) at the Conversion Price by the highest closing price of the
Common Stock on the principal market from the Deemed Conversion Date until the
day prior to the receipt of the Mandatory Redemption Payment, whichever is
greater ("Mandatory Redemption Payment"). The Mandatory Redemption Payment must
be received by the Subscriber on the same date as the Shares otherwise
deliverable or within ten (10) business days after request, whichever is sooner
("Mandatory Redemption Payment Date"). Upon receipt of the Mandatory Redemption
Payment, the corresponding Preferred Stock Stated Value will be deemed paid and
no longer outstanding.
7.3 Adjustments. The Conversion Price and amount of Shares
issuable upon conversion of the Preferred Stock shall be adjusted to offset the
effect of stock splits, stock dividends, pro rata distributions of property or
equity interests to the Company's shareholders.
7.4. Redemption. The Company may not redeem the Preferred
Stock without the consent of the holder of the Preferred Stock.
8. Legal Fee/Escrow Agent and Broker's Fee.
(a) Legal Fee. The Company shall pay to Grushko &
Xxxxxxx, P.C., a fee of $10,000 ("Legal Fees") as reimbursement for
services rendered to Alpha Capital Aktiengesellschaft in connection with this
Agreement and the purchase and sale of the Preferred Stock and Warrants (the
"Offering") and acting as Escrow Agent for the Offering. The Legal Fees will be
payable out of funds held pursuant to the Escrow Agreement.
(b) Broker's Fee. The Company on the one hand, and
each Subscriber on the other hand, agree to indemnify the other against and
hold the other harmless from any and all liabilities to any persons claiming
brokerage commissions or finder's fees other than Coastline Capital Partners
("Broker") on account of services purported to have been rendered on behalf of
the indemnifying party in connection with this Agreement or the transactions
contemplated hereby and arising out of such party's actions. The Company agrees
that it will pay Broker a cash fee equal to five percent (5%) of the Initial
Purchase Price and four percent (4%) of the Second Closing Purchase Price on
each Closing Date, respectively, directly out of the funds held pursuant to the
Escrow Agreement ("Broker's Commissions"). The Company represents that there are
no other parties entitled to receive fees, commissions, or similar payments in
connection with the offering described in this Agreement except the Broker.
(c) Broker's Warrants. On each Closing Date, the
Company will issue to or for the benefit of the Broker (pro rata) 150,000
Warrants for each $1,000,000 of Purchase Price ("Broker's Warrants"). The
Broker's Warrants will be identical to the Warrants issuable to the Subscribers.
All the representations, covenants, warranties, undertakings, remedies,
liquidated damages, indemnification, and other rights including but not limited
to registration rights made or granted to or for the benefit of the Subscribers
are hereby also made and granted to the Broker in respect of the Broker's
Warrants.
9. Covenants of the Company. The Company covenants
-------------------------
and agrees with the Subscribers as follows:
(a) Stop Orders. The Company will advise the
Subscribers, promptly after it receives notice of issuance by the
Commission, any state securities commission or any other regulatory authority of
any stop order or of any order preventing or suspending any offering of any
securities of the Company, or of the suspension of the qualification of the
Common Stock of the Company for offering or sale in any jurisdiction, or the
initiation of any proceeding for any such purpose.
(b) Listing. The Company shall promptly secure the
listing of the shares of Common Stock issuable upon conversion of the
Preferred Stock and the Warrant Shares upon each national securities exchange,
or quotation system, if any, upon which shares of common stock are then listed
(subject to official notice of issuance) and shall maintain such listing so long
as any Securities are outstanding. The Company will maintain the listing of its
Common Stock on the American Stock Exchange, Nasdaq SmallCap Market, Nasdaq
National Market System, OTC Bulletin Board, or New York Stock Exchange
(whichever of the foregoing is at the time the principal trading exchange or
market for the Common Stock [the "Principal Market"]), and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market, as applicable. The Company will provide
the Subscribers copies of all notices it receives notifying the Company of the
threatened and actual delisting of the Common Stock from any Principal Market.
As of the date of this Agreement and the Initial Closing Date, the Bulletin
Board is and will be the Principal Market.
(c) Market Regulations. The Company shall notify the
Commission, the Principal Market and applicable state authorities, in
accordance with their requirements, of the transactions contemplated by this
Agreement, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Subscribers and promptly provide copies
thereof to Subscriber.
(d) Reporting Requirements. From the date of this
Agreement and until at least two (2) years after the Actual Effective Date,
the Company will (i) cause its Common Stock to continue to be registered under
Section 12(b) or 12(g) of the 1934 Act, (ii) comply in all respects with its
reporting and filing obligations under the 1934 Act, (iii) comply with all
reporting requirements that are applicable to an issuer with a class of shares
registered pursuant to Section 12(b) or 12(g) of the 1934 Act, as applicable,
and (iv) comply with all requirements related to any registration statement
filed pursuant to this Agreement. The Company will use its best efforts not to
take any action or file any document (whether or not permitted by the 1933 Act
or the 1934 Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said acts until the later of two (2) years after the Actual Effective
Date. Until the earlier of the resale of the Shares and the Warrant Shares by
each Subscriber or at least two (2) years after the Warrants have been
exercised, the Company will use its best efforts to continue the listing or
quotation of the Common Stock on the Principal Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Subscriber promptly after such filing.
(e) Use of Proceeds. The Company undertakes to use
the proceeds of the Subscribers' funds for the purposes set forth on
Schedule 9(e) hereto. A deviation from the use of proceeds set forth on Schedule
9(e) of more than 10% per item or more than 20% in the aggregate shall be deemed
a material breach of the Company's obligations hereunder. Except as set forth on
Schedule 9(e), the Purchase Price may not and will not be used for accrued and
unpaid officer and director salaries, payment of financing related debt,
redemption of outstanding redeemable notes or equity instruments of the Company
nor non-trade obligations outstanding on the Initial Closing Date.
(f) Reservation. The Company undertakes to reserve,
pro rata on behalf of each holder of Preferred Stock or Warrant, from its
authorized but unissued common stock, at all times that Preferred Stock or
Warrants remain outstanding, a number of common shares equal to not less than
200% of the amount of common shares necessary to allow each such holder at all
times to be able to convert all such outstanding Preferred Stock, and one common
share for each Warrant Share. Failure to have sufficient shares reserved
pursuant to this Section 9(f) for three consecutive business days or ten days in
the aggregate shall be an Event of Default under the Preferred Stock.
(g) Taxes. From the date of this Agreement until two
(2) years after the Closing Date (or Second Closing Date if the Second
Closing Preferred Stock is issued), the Company will promptly pay and discharge,
or cause to be paid and discharged, when due and payable, all lawful taxes,
assessments and governmental charges or levies imposed upon the income, profits,
property or business of the Company; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefore.
(h) Insurance. From the date of this Agreement until
two (2) years after the Closing Date (or Second Closing Date if the Second
Closing Preferred Stock is issued), the Company will keep its assets which are
of an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, explosion and other risks customarily insured
against by companies in the Company's line of business, in amounts sufficient to
prevent the Company from becoming a co-insurer and not in any event less than
100% of the insurable value of the property insured; and the Company will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated and to
the extent available on commercially reasonable terms.
(i) Books and Records. From the date of this
Agreement until two (2) years after the Closing Date (or Second Closing
Date if the Second Closing Preferred Stock is issued), the Company will keep
true records and books of account in which full, true and correct entries will
be made of all dealings or transactions in relation to its business and affairs
in accordance with generally accepted accounting principles applied on a
consistent basis.
(j) Governmental Authorities. From the date of this
Agreement until two (2) years after the Closing Date (or Second Closing
Date if the Second Closing Preferred Stock is issued), the Company shall duly
observe and conform in all material respects to all valid requirements of
governmental authorities relating to the conduct of its business or to its
properties or assets.
(k) Intellectual Property. From the date of this
Agreement until two (2) years after the Closing Date (or Second Closing
Date if the Second Closing Preferred Stock is issued), the Company shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights to use intellectual property owned or
possessed by it and reasonably deemed to be necessary to the conduct of its
business.
(l) Properties. From the date of this Agreement
until two (2) years after the Closing Date (or Second Closing Date if the
Second Closing Preferred Stock is issued), the Company will keep its properties
in good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases to which it is a party or under
which it occupies property if the breach of such provision could reasonably be
expected to have a material adverse effect. (m) Confidentiality. From the date
of this Agreement until two (2) years after the Closing Date (or Second Closing
Date if the Second Closing Preferred Stock is issued), the Company agrees that
it will not disclose publicly or privately the identity of the Subscribers
unless expressly agreed to in writing by a Subscriber or only to the extent
required by law and then only upon ten days prior notice to Subscriber.
(n) S-8. The Company will not file a Form S-8 with
the Commission during the Exclusion Period (as defined in Section 12(a) of the
Agreement) without the consent of the Subscriber, except to regular employees of
the Company which shall not include consultants.
10. Covenants of the Company and Subscriber Regarding
Indemnification.
(a) The Company agrees to indemnify, hold harmless,
reimburse and defend the Subscribers, the Subscribers' officers, directors,
agents, affiliates, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the Subscriber
or any such person which results, arises out of or is based upon (i) any
material misrepresentation by Company or breach of any warranty by Company in
this Agreement or in any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by the Company of any
covenant or undertaking to be performed by the Company hereunder, or any other
agreement entered into by the Company and Subscriber relating hereto.
(b) Each Subscriber agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's
officers, directors, agents, affiliates, control persons against any claim,
cost, expense, liability, obligation, loss or damage (including reasonable legal
fees) of any nature, incurred by or imposed upon the Company or any such person
which results, arises out of or is based upon (i) any material misrepresentation
by such Subscriber in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
such Subscriber of any covenant or undertaking to be performed by such
Subscriber hereunder, or any other agreement entered into by the Company and
Subscribes relating hereto.
(c) In no event shall the liability of any Subscriber
or permitted successor hereunder or under any other agreement delivered in
connection herewith be greater in amount than the dollar amount of the net
proceeds received by such Subscriber upon the sale of Registrable Securities (as
defined herein) giving rise to such indemnification obligation.
(d) The procedures set forth in Section 11.6 shall
apply to the indemnifications set forth in Sections 10(a) and 10(b) above.
11.1. Registration Rights. The Company hereby grants the
following registration rights to holders of the Securities.
(i) On one occasion, for a period commencing 91 days
after the Initial Closing Date, but not later than three years after the
Second Closing Date ("Request Date"), the Company, upon a written request
therefor from any record holder or holders of more than 50% of the Shares issued
and issuable upon conversion of the issued Initial Closing Preferred Stock,
Second Closing Preferred Stock, and Warrant Shares actually issued upon exercise
of the Warrants and Broker's Warrants shall prepare and file with the Commission
a registration statement under the 1933 Act covering the Shares and Warrant
Shares (collectively "Registrable Securities"), which are the subject of such
request. For purposes of Sections 11.1(i) and 11.1(ii), Registrable Securities
shall not include Securities which are registered for resale in an effective
registration statement or included for registration in a pending registration
statement, or which have been issued without further transfer restrictions after
a sale or transfer pursuant to Rule 144 under the 1933 Act. In addition, upon
the receipt of such request, the Company shall promptly give written notice to
all other record holders of the Registrable Securities that such registration
statement is to be filed and shall include in such registration statement
Registrable Securities for which it has received written requests within 10 days
after the Company gives such written notice. Such other requesting record
holders shall be deemed to have exercised their demand registration right under
this Section 11.1(i).
(ii) If the Company at any time proposes to register
any of its securities under the 1933 Act for sale to the public, whether
for its own account or for the account of other security holders or both, except
with respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Registrable Securities for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Subscribers or Holder pursuant to an effective registration statement, each
such time it will give at least 15 days' prior written notice to the record
holder of the Registrable Securities of its intention so to do. Upon the written
request of the holder, received by the Company within 10 days after the giving
of any such notice by the Company, to register any of the Registrable Securities
not previously registered, the Company will cause such Registrable Securities as
to which registration shall have been so requested to be included with the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent required to permit the sale or other disposition
of the Registrable Securities so registered by the holder of such Registrable
Securities (the "Seller"). In the event that any registration pursuant to this
Section 11.1(ii) shall be, in whole or in part, an underwritten public offering
of common stock of the Company, the number of shares of Registrable Securities
to be included in such an underwriting may be reduced by the managing
underwriter if and to the extent that the Company and the underwriter shall
reasonably be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold by the Company therein; provided,
however, that the Company shall notify the Seller in writing of any such
reduction. Notwithstanding the foregoing provisions, or Section 11.4 hereof, the
Company may withdraw or delay or suffer a delay of any registration statement
referred to in this Section 11.1(ii) without thereby incurring any liability to
the Seller.
(iii) If, at the time any written request for
registration is received by the Company pursuant to Section 11.1(i), the
Company has determined to proceed with the actual preparation and filing of a
registration statement under the 1933 Act in connection with the proposed offer
and sale for cash of any of its securities for the Company's own account and the
Company actually does file such other registration statement, such written
request shall be deemed to have been given pursuant to Section 11.1(ii) rather
than Section 11.1(i), and the rights of the holders of Registrable Securities
covered by such written request shall be governed by Section 11.1(ii).
(iv) The Company shall file with the Commission not
later than forty-five (45) days after the Initial Closing Date (the "Filing
Date"), and cause to be declared effective within one hundred and twenty (120)
days after the Initial Closing Date (the "Effective Date"), a Form SB-2
registration statement (the "Registration Statement") (or such other form that
it is eligible to use) in order to register the Registrable Securities for
resale and distribution under the 1933 Act. The Company will register not less
than a number of shares of common stock in the aforedescribed registration
statement that is equal to 200% of the Shares issuable upon conversion of the
Preferred Stock and 100% of the Warrant Shares issuable upon exercise of the
Warrants and Broker's Warrants. The Registrable Securities shall be reserved and
set aside exclusively for the benefit of each Subscriber, and not issued,
employed or reserved for anyone other than each Subscriber. Such Registration
Statement will immediately be amended or additional registration statements will
be immediately filed by the Company as necessary to register additional shares
of Common Stock to allow the public resale of all Common Stock included in and
issuable by virtue of the Registrable Securities. No securities of the Company
other than the Registrable Securities will be included in the registration
statement described in this Section 11.1(iv) except as disclosed on Schedule
11.1, without the written consent of Subscriber.
11.2. Registration Procedures. If and whenever the Company is
required by the provisions of Section 11.1(i), 11.1(ii), or (iv) to effect the
registration of any shares of Registrable Securities under the 1933 Act, the
Company will, as expeditiously as possible:
(a) subject to the timelines provided in this
Agreement, prepare and file with the Commission a registration statement
required by Section 11, with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as herein provided),
and promptly provide to the holders of Registrable Securities (the "Sellers")
copies of all filings and Commission letters of comment;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective until such registration statement has been
effective for a period of two (2) years, and comply with the provisions of the
1933 Act with respect to the disposition of all of the Registrable Securities
covered by such registration statement in accordance with the Seller's intended
method of disposition set forth in such registration statement for such period;
(c) furnish to the Seller, at the Company's expense,
such number of copies of the registration statement and the prospectus
included therein (including each preliminary prospectus) as such persons
reasonably may request in order to facilitate the public sale or their
disposition of the securities covered by such registration statement;
(d) use its best efforts to register or qualify the
Seller's Registrable Securities covered by such registration statement
under the securities or "blue sky" laws of such jurisdictions as the Seller,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) if applicable, list the Registrable Securities
covered by such registration statement with any securities exchange on
which the Common Stock of the Company is then listed;
(f) immediately notify the Seller when a prospectus
relating thereto is required to be delivered under the 1933 Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and
(g) provided same would not be in violation of the
provision of Regulation FD under the 1934 Act, make available for
inspection by the Seller, and any attorney, accountant or other agent retained
by the Seller or underwriter, all publicly available, non-confidential financial
and other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.
11.3. Provision of Documents. In connection with each
registration described in this Section 11, the Seller will furnish to the
Company in writing such information and representation letters with respect to
itself and the proposed distribution by it as reasonably shall be necessary in
order to assure compliance with federal and applicable state securities laws.
11.4. Non-Registration Events. The Company and the Subscribers
agree that the Seller will suffer damages if any registration statement required
under Section 11.1(iv) above is not filed by the Filing Date and not declared
effective by the Commission by the Effective Date, and any registration
statement required under Section 11.1(i) or 11.1(ii) is not filed within 60 days
after written request and declared effective by the Commission within 120 days
after such request, and maintained in the manner and within the time periods
contemplated by Section 11 hereof, and it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, if (i) the registration
statement on Form SB-2 or such other form described in Section 11.1(iv) is not
filed on or before the Filing Date or is not declared effective on or before the
sooner of the Effective Date, or within ten (10) business days of receipt by the
Company of a written or oral communication from the Commission that the
registration statement described in Section 11.1(iv) will not be reviewed, (ii)
if the registration statement described in Sections 11.1(i) or 11.1(ii) is not
filed within 60 days after such written request, or is not declared effective
within 120 days after such written request, or (iii) any registration statement
described in Sections 11.1(i), 11.1(ii) or 11.1(iv) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate per
year or more than 20 consecutive days (defined as a period of 365 days
commencing on the date the Registration Statement is declared effective) (each
such event referred to in clauses (i), (ii) and (iii) of this Section 11.4 is
referred to herein as a "Non-Registration Event"), then the Company shall
deliver to the holder of Registrable Securities, as Liquidated Damages, an
amount equal to one percent (1%) for the first thirty days or part thereof, and
two percent (2%) for each thirty days or part thereof thereafter, of the
Purchase Price of the Preferred Stock remaining unconverted and purchase price
of Shares issued upon conversion of the Preferred Stock and actually paid
"Purchase Price" (as defined in the Warrants) of Warrant Shares issued or
issuable upon actual exercise of the Warrants, for the Registrable Securities
owned of record by such holder as of and during the pendency of such
Non-Registration Event which are subject to such Non-Registration Event.
Payments to be made pursuant to this Section 11.4 shall be payable in cash and
due and payable within ten (10) business days after the end of each thirty (30)
day period or part thereof. In connection with a Non-Registration Event
occurring after the effective date arising exclusively as a result of a
transaction described in Section 12(a)(ii) of this Agreement, then in lieu of
the cash Liquidated Damages above the "Purchase Price" (as defined in the
Warrant) shall be reduced by ten percent (10%) of such initial "Purchase Price"
for each thirty days or part thereof during such Non-Registration Event. Such
"Purchase Price" shall not, however, be reduced below the par value of the
Warrant Shares. A registration that is filed but withdrawn prior to being
declared effective shall be deemed not to have been filed for purposes of this
Section 11.4.
11.5. Expenses. All expenses incurred by the Company in
complying with Section 11, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance and fee of one counsel for all Sellers are called "Registration
Expenses". All underwriting discounts and selling commissions applicable to the
sale of Registrable Securities, including any fees and disbursements of any
additional counsel to the Seller, are called "Selling Expenses". The Company
will pay all Registration Expenses in connection with the registration statement
under Section 11. Selling Expenses in connection with each registration
statement under Section 11 shall be borne by the Seller and may be apportioned
among the Sellers in proportion to the number of shares sold by the Seller
relative to the number of shares sold under such registration statement or as
all Sellers thereunder may agree.
11.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable
Securities under the 1933 Act pursuant to Section 11, the Company will, to
the extent permitted by law, indemnify and hold harmless the Seller, each
officer of the Seller, each director of the Seller, each underwriter of such
Registrable Securities thereunder and each other person, if any, who controls
such Seller or underwriter within the meaning of the 1933 Act, against any
losses, claims, damages or liabilities, joint or several, to which the Seller,
or such underwriter or controlling person may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such Registrable Securities was registered under the 1933
Act pursuant to Section 11, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances when made, and will subject to the
provisions of Section 11.6(c) reimburse the Seller, each such underwriter and
each such controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable to the Seller to the extent that any such damages arise out of or are
based upon an untrue statement or omission made in any preliminary prospectus if
(i) the Seller failed to send or deliver a copy of the final prospectus
delivered by the Company to the Seller with or prior to the delivery of written
confirmation of the sale by the Seller to the person asserting the claim from
which such damages arise, (ii) the final prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, or (iii) to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by any such Seller, or any such controlling person in writing specifically for
use in such registration statement or prospectus.
(b) In the event of a registration of any of the
Registrable Securities under the 1933 Act pursuant to Section 11, each
Seller severally but not jointly will, to the extent permitted by law, indemnify
and hold harmless the Company, and each person, if any, who controls the Company
within the meaning of the 1933 Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the 1933 Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Securities were
registered under the 1933 Act pursuant to Section 11, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the gross proceeds received by the Seller from the sale of Registrable
Securities covered by such registration statement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Section 11.6(c) and shall only relieve it from any liability which it may have
to such indemnified party under this Section 11.6(c), except and only if and to
the extent the indemnifying party is prejudiced by such omission. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 11.6(c)
for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
and of liaison with counsel so selected, provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified parties, as a group, shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable
contribution in the event of joint liability under the 1933 Act in any case
in which either (i) a Seller, or any controlling person of a Seller, makes a
claim for indemnification pursuant to this Section 11.6 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 11.6 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of the Seller or controlling person of the Seller in circumstances for which
indemnification is not provided under this Section 11.6; then, and in each such
case, the Company and the Seller will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that the Seller is responsible only for the
portion represented by the percentage that the public offering price of its
securities offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, provided,
however, that, in any such case, (y) the Seller will not be required to
contribute any amount in excess of the public offering price of all such
securities offered by it pursuant to such registration statement; and (z) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the 0000 Xxx) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
11.7. Delivery of Unlegended Shares.
(a) Within three (3) business days (such third
business day, the "Unlegended Shares Delivery Date") after the business day
on which the Company has received (i) a notice that Registrable Securities have
been sold either pursuant to the Registration Statement or Rule 144 under the
1933 Act, (ii) a representation that the prospectus delivery requirements, or
the requirements of Rule 144, as applicable, have been satisfied, and (iii) the
original share certificates representing the shares of Common Stock that have
been sold, the Company at its expense, (y) shall deliver, and shall cause legal
counsel selected by the Company to deliver, to its transfer agent (with copies
to Subscriber) an appropriate instruction and opinion of such counsel, for the
delivery of shares of Common Stock without any legends including the legends set
forth in Sections 4(e) and 4(g) above, issuable pursuant to any effective and
current registration statement described in Section 11 of this Agreement or
pursuant to Rule 144 under the 1933 Act (the "Unlegended Shares"); and (z) cause
the transmission of the certificates representing the Unlegended Shares together
with a legended certificate representing the balance of the unsold shares of
Common Stock, if any, to the Subscriber at the address specified in the notice
of sale, via express courier, by electronic transfer or otherwise on or before
the Unlegended Shares Delivery Date.
(b) In lieu of delivering physical certificates
representing the Unlegended Shares, if the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of a Subscriber, so long as the certificates
therefore do not bear a legend and the Subscriber is not obligated to return
such certificate for the placement of a legend thereon, the Company shall cause
its transfer agent to electronically transmit the Unlegended Shares by crediting
the account of Subscriber's prime Broker with DTC through its Deposit Withdrawal
Agent Commission system. Such delivery must be made on or before the Unlegended
Shares Delivery Date.
(c) The Company understands that a delay in the
delivery of the Unlegended Shares pursuant to Section 11 hereof beyond the
Unlegended Shares Delivery Date could result in economic loss to a Subscriber.
As compensation to a Subscriber for such loss, the Company agrees to pay late
payment fees (as liquidated damages and not as a penalty) to the Subscriber for
late delivery of Unlegended Shares in the amount of $100 per business day after
the Delivery Date for each $10,000 of purchase price of the Unlegended Shares
subject to the delivery default. If during any 360 day period, the Company fails
to deliver Unlegended Shares as required by this Section 11.7 for an aggregate
of thirty (30) days, then each Subscriber or assignee holding Securities subject
to such default may, at its option, require the Company to purchase all or any
portion of the Shares and Warrant Shares subject to such default at a price per
share equal to 130% of the Purchase Price of such Shares and Warrant Shares. The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand.
(d) In addition to any other rights available to a
Subscriber, if the Company fails to deliver to a Subscriber Unlegended
Shares within ten (10) calendar days after the Unlegended Shares Delivery Date
and the Subscriber purchases (in an open market transaction or otherwise) shares
of common stock to deliver in satisfaction of a sale by such Subscriber of the
shares of Common Stock which the Subscriber anticipated receiving from the
Company (a "Buy-In"), then the Company shall pay in cash to the Subscriber (in
addition to any remedies available to or elected by the Subscriber) the amount
by which (A) the Subscriber's total purchase price (including brokerage
commissions, if any) for the shares of common stock so purchased exceeds (B) the
aggregate purchase price of the shares of Common Stock delivered to the Company
for reissuance as Unlegended Shares, together with interest thereon at a rate of
15% per annum, accruing until such amount and any accrued interest thereon is
paid in full (which amount shall be paid as liquidated damages and not as a
penalty). For example, if a Subscriber purchases shares of Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of
purchase price of shares of Common Stock delivered to the Company for reissuance
as Unlegended Shares, the Company shall be required to pay the Subscriber
$1,000, plus interest. The Subscriber shall provide the Company written notice
indicating the amounts payable to the Subscriber in respect of the Buy-In.
12. (a) Right of First Refusal. Until 180 days after the
Actual Effective Date of the Registration Statement (the "Exclusion Period"),
the Subscribers shall be given not less than fourteen (14) business days prior
written notice of any proposed sale by the Company of its common stock or other
securities or debt obligations, except in connection with (i) employee stock
options or compensation plans, (ii) as full or partial consideration in
connection with any merger, consolidation or purchase of substantially all of
the securities or assets of any corporation or other entity, provided that the
recipient and assigns of such consideration are not granted any registration
rights and such consideration remains restricted from transfer until after the
Exclusion Period, or (iii) as has been described in the Reports or Other Written
Information filed or delivered prior to the Initial Closing Date (collectively
"Excepted Issuances"). The Subscribers shall have the right during the fourteen
(14) business days following the notice to purchase such offered common stock,
debt or other securities in accordance with the terms and conditions set forth
in the notice of sale in the same proportion to each other as their purchase of
Preferred Stock in the Offering. In the event such terms and conditions are
modified during the notice period, the Subscribers shall be given prompt notice
of such modification and shall have the right during the original notice period
or for a period of fourteen (14) business days following the notice of
modification, whichever is longer, to exercise such right.
(b) Offering Restrictions. Except as disclosed in the
Reports or Other Written Information filed with the Commission or made
available to the Subscriber prior to the Initial Closing Date, or in connection
with Excepted Issuances, the Company will not issue any equity, convertible debt
or other securities convertible into common stock on any terms more favorable to
such other investor than any of the terms of the Offering, until after the
Exclusion Period without the prior written consent of the Subscriber, which
consent may be withheld for any reason.
(c) Favored Nations Provision. If, at any time
Preferred Stock or Warrants are outstanding or Registrable Securities are
not then registered in an effective Registration Statement for unrestricted
resale as required by Section 11 hereof ("Outstanding Period"), except for the
Excepted Issuances, the Company shall offer, issue or agree to issue any Common
Stock or securities convertible into or exercisable for shares of Common Stock
to any person, firm or corporation at a price per share or conversion or
exercise price per share which shall be less than the per share purchase price
of the Shares, or upon any other term more favorable to such other investor,
without the consent of a Subscriber still holding Securities, then the
Subscriber is granted the right to modify any term or condition of the Offering
to be the same as any term of the subsequent offering that Subscriber deems more
favorable than the term or condition of the Offering including but not limited
to the Conversion Price or other price at which Common Stock may be purchased
upon conversion of the Preferred Stock and exercise of the Warrants. The rights
of the Subscriber set forth in this Section 12(c) are in addition to any other
rights the Subscriber has pursuant to this Agreement and any other agreement
referred to or entered into in connection herewith.
(d) Maximum Exercise of Rights. In the event the
exercise of the rights described in Sections 12(a) or 12(c) would result in
the issuance of an amount of common stock of the Company that would exceed the
maximum amount that may be issued to a Subscriber as described in Section 7.3 of
this Agreement, then the purchase and/or issuance of such other Common Stock or
Common Stock equivalents of the Company to such Subscriber will be deferred in
whole or in part until such time as such Subscriber is able to beneficially own
such Common Stock or Common Stock equivalents without exceeding the maximum
amount set forth in Section 7.3. The determination of when such Common Stock or
Common Stock equivalents may be issued shall be made by each Subscriber as to
only such Subscriber.
13. Miscellaneous.
(a) Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: (i) if to the
Company, to: Genesis Technology Group, Inc., 000 Xxxxxx Xxxx, Xxxxx 000, Xxxx
Xxxxx, XX 00000, Attn: Xxxxxxx Xxxxxxx, COO, telecopier: (000) 000-0000, with a
copy by telecopier only to: Xxxxx Xxxxxxxxx, Esq., 0000 Xxxxxx Xxxx, Xxxxx 000,
Xxxx Xxxxx, XX 00000-0000, telecopier: (000) 000-0000, (ii) if to the
Subscribers, to: the address and telecopier number indicated on the signature
page hereto, with a copy by telecopier only to: Grushko & Xxxxxxx, P.C., 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (212)
697-3575, and (iii) if to the Broker, to: Coastline Capital Partners, 0000 Xxxxx
Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000, Attn: Xxxxx X. Xxxxxxxxx,
telecopier: (000) 000-0000.
(b) Closing. The consummation of the transactions
contemplated herein shall take place at the offices of Grushko & Xxxxxxx,
P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, upon the
satisfaction of all conditions to Closing set forth in this Agreement.
(c) Entire Agreement; Assignment. This Agreement and
other documents delivered in connection herewith represent the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by both parties. Neither the
Company nor the Subscribers have relied on any representations not contained or
referred to in this Agreement and the documents delivered herewith. No right or
obligation of either party shall be assigned by that party without prior notice
to and the written consent of the other party.
(d) Counterparts/Execution. This Agreement may be
executed in any number of counterparts and by the different signatories
hereto on separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but one and the
same instrument. This Agreement may be executed by facsimile signature and
delivered by facsimile transmission.
(e) Law Governing this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the State
of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York. The parties and
the individuals executing this Agreement and other agreements referred to herein
or delivered in connection herewith on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
(f) Specific Enforcement, Consent to Jurisdiction.
The Company and Subscriber acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 13(e) hereof, each of the Company and Subscriber
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
(g) Independent Nature of Subscribers' Obligations
and Rights. The obligations of each Subscriber hereunder are several and
not joint with the obligations of any other Subscriber hereunder, and no such
Subscriber shall be responsible in any way for the performance of the
obligations of any other hereunder.
[THIS SPACE INTENTIONALLY LEFT BLANK]
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (A)
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
GENESIS TECHNOLOGY GROUP, INC.
A Florida Corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: CEO
Dated: January 16, 2004
----------------- -------------------- ------------- -------------- -----------
SUBSCRIBER INITIAL CLOSING WARRANTS SECOND WARRANTS
PURCHASE PRICE ISSUABLE ON CLOSING ISSUABLE
AND STATED INITIAL PURCHASE ON SECOND
VALUE OF CLOSING DATE PRICE AND CLOSING
PREFERRED STOCK STATED VALUE DATE
OF PREFERRED
STOCK
----------------- -------------------- ------------- -------------- -----------
$200,000.00 TBD $200,000.00 TBD
-----------------
(Signature)
ALPHA CAPITAL
AKTIENGESELLSCHAFT
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Vaduz, Lichtenstein
Fax: 000-00-00000000
----------------- -------------------- ------------- -------------- -----------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (B)
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
GENESIS TECHNOLOGY GROUP, INC.
A Florida Corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: CEO
Dated: January 16, 2004
----------------- -------------------- ------------- -------------- -----------
SUBSCRIBER INITIAL CLOSING WARRANTS SECOND WARRANTS
PURCHASE PRICE ISSUABLE ON CLOSING ISSUABLE
AND STATED INITIAL PURCHASE ON SECOND
VALUE OF CLOSING DATE PRICE AND CLOSING
PREFERRED STOCK STATED VALUE DATE
OF PREFERRED
STOCK
----------------- -------------------- ------------- -------------- -----------
$150,000.00 TBD $150,000.00 TBD
-----------------
(Signature)
GAMMA OPPORTUNITY
CAPITAL PARTNERS, LP
British Colonial
Centre of Commerce
One Bay Street, Suite 401
Nassau (NP), The Bahamas
Fax: (000) 000-0000
----------------- -------------------- ------------- -------------- -----------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (C)
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
GENESIS TECHNOLOGY GROUP, INC.
A Florida Corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: CEO
Dated: January 16, 2004
----------------- -------------------- ------------- -------------- -----------
SUBSCRIBER INITIAL CLOSING WARRANTS SECOND WARRANTS
PURCHASE PRICE ISSUABLE ON CLOSING ISSUABLE
AND STATED INITIAL PURCHASE ON SECOND
VALUE OF CLOSING DATE PRICE AND CLOSING
PREFERRED STOCK STATED VALUE DATE
OF PREFERRED
STOCK
----------------- -------------------- ------------- -------------- -----------
$325,000.00 TBD $325,000.00 TBD
-----------------
(Signature)
BRISTOL INVESTMENT
FUND, LTD.
Caledonia House
Xxxxxxx Street
Xxxxxx Town,
Grand Cayman
Cayman Islands
Fax: (000) 000-0000
----------------- -------------------- ------------- -------------- -----------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (D)
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
GENESIS TECHNOLOGY GROUP, INC.
A Florida Corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: CEO
Dated: January 16, 2004
----------------- -------------------- ------------- -------------- -----------
SUBSCRIBER INITIAL CLOSING WARRANTS SECOND WARRANTS
PURCHASE PRICE ISSUABLE ON CLOSING ISSUABLE
AND STATED INITIAL PURCHASE ON SECOND
VALUE OF CLOSING DATE PRICE AND CLOSING
PREFERRED STOCK STATED VALUE DATE
OF PREFERRED
STOCK
----------------- -------------------- ------------- -------------- -----------
$150,000.00 TBD $150,000.00 TBD
-----------------
(Signature)
LONGVIEW FUND, L.P.
Attn: S. Xxxxxxx Xxxxxxx
0000 Xxxxxx Xxxxxx,#000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
----------------- -------------------- ------------- -------------- -----------
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (E)
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
GENESIS TECHNOLOGY GROUP, INC.
A Florida Corporation
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: CEO
Dated: January 16, 2004
----------------- -------------------- ------------- -------------- -----------
SUBSCRIBER INITIAL CLOSING WARRANTS SECOND WARRANTS
PURCHASE PRICE ISSUABLE ON CLOSING ISSUABLE
AND STATED INITIAL PURCHASE ON SECOND
VALUE OF CLOSING DATE PRICE AND CLOSING
PREFERRED STOCK STATED VALUE DATE
OF PREFERRED
STOCK
----------------- -------------------- ------------- -------------- -----------
$175,000.00 TBD $175,000.00 TBD
-----------------
(Signature)
PALISADES MASTER FUND, LP
C/o Beacon Fund Advisors
Xxxxxxx Xxxxx
Xxxxxxxxxx Xxxxx
Xxxx Xxxx,
Xxxxxxx, B.V.I
Fax: (000) 000-0000
----------------- -------------------- ------------- -------------- -----------
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Warrant
Exhibit B Escrow Agreement
Exhibit C Certificate of Designation
Exhibit D Form of Legal Opinion
Schedule 5(d) Additional Issuances
Schedule 5(q) Undisclosed Liabilities
Schedule 5(s) Capitalization
Schedule 9(e) Use of Proceeds
Schedule 11.1 Other Securities to be Registered
EXHIBIT A to the SUBSCRIPTION AGREEMENT - FORM OF WARRANT
EXHIBIT B to the SUBSCRIPTION AGREEMENT - ESCROW AGREEMENT
EXHIBIT C to the SUBSCRIPTION AGREEMENT - CERTIFICATE OF DESIGNATION
EXHIBIT C to the SUBSCRIPTION AGREEMENT - FORM OF LEGAL OPINION
SCHEDULE 5(d) to the SUBSCRIPTION AGREEMENT - ADDITIONAL ISSUANCES
SCHEDULE 5(q) to the SUBSCRIPTION AGREEMENT - UNDISCLOSED LIABILITIES
SCHEDULE 5(s) to the SUBSCRIPTION AGREEMENT - CAPITALIZATION
SCHEDULE 9(e) to the SUBSCRIPTION AGREEMENT - USE OF PROCEEDS
SCHEDULE 11.1 to the SUBSCRIPTION AGREEMENT - OTHER SECURITIES TO BE REGISTERED
