EXHIBIT 10.47
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT, dated as of October 1, 2001 (the
"Agreement") between View Systems, Inc., a Florida corporation with offices at
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 00, Xxxxxxxxx, Xxxxxxxx 00000 (the "Company") and
the persons and/or entities listed on the Schedule of Investors attached hereto
as Exhibit E (collectively referred to as the "Investors").
RECITALS
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase up to 2,000,000 Units (as defined below) (the
"Units").
WHEREAS, the investment will be made in reliance upon the provisions of
Section 4(2) and Regulation D of the United States Securities Act of 1933, as
amended, and the regulations promulgated thereunder, and/or upon such other
exemptions from the registration requirements of the Securities Act as may be
available with respect to any and all of the investments to be made hereunder.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Section 1.1 "Capital Shares" shall mean the Common Stock and any
shares of any other class of Common Stock whether now or hereafter authorized,
having the right to participate in the distribution of earnings and assets of
the Company.
Section 1.2 "Capital Shares Equivalents" shall mean any
securities, rights, or obligations that are convertible into or exchangeable
for, or giving any right to, subscribe for any Capital Shares of the Company or
any warrants, options or other rights to subscribe for or purchase Capital
Shares or any such convertible or exchangeable securities.
Section 1.3 "Closing" shall mean one of the closings of the
purchase and sale of the Units pursuant to Article 11 below.
Section 1.4 "Closing Date" shall mean the date of the closing of
the purchase and sale of the Units pursuant to Article II below.
Section 1.5 "Common Stock" shall mean the Company's common stock,
$0.001 par value per share.
Section 1.6 "Damages" shall mean any loss, claim, damage,
liability, costs and expenses which shall include, but not be limited to,
reasonable attorney's fees, disbursements, costs and expenses of expert
witnesses and investigation.
Section 1.7 "Effective Date" shall mean the date on which the SEC
first declares effective the Registration Statement.
Section 1.8 "Escrow Aunt" shall mean the law firm of Xxxxxx X.
Xxxxxxx, pursuant to the terms of the Escrow Agreement attached as Exhibit B.
Section 1.9 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
Section 1.10 "Legend" shall have the meaning set forth in Article
VIII below.
Section 1.11 "Material Adverse Effect" shall mean any effect on
the business, operations, properties, earnings, prospects, Bid Price, trading
volume of the Common Stock, or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole, and/or any condition, circumstance, or situation that would prohibit
or otherwise in any material respect interfere with the ability of the Company
to enter into and perform any of its obligations under this Agreement, the
Registration Rights Agreement and the Escrow Agreement.
Section 1.12 "NASD" shall mean the National Association of
Securities Dealers, Inc.
Section 1.13 "Outstanding" when used with reference to shares of
Common Stock, or Capital Shares (collectively the "Shares"), shall mean, at any
date as of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; provided, however, that Outstanding shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.14 "Person" shall mean an individual, a corporation, a
partnership, an association, a limited liability company, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.15 "Principal Market" shall mean the OTC Bulletin Board,
Nasdaq National Market, the Nasdaq Small Cap Stock Market, the American Stock
Exchange, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.16 "Registrable Securities" shall have the definition
set forth in the Registration Rights Agreement.
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Section 1.17 "Registration Rights Agreement" shall mean the
agreement regarding the filing of the Registration Statement for the resale of
the Registrable Securities, entered into between the Company, and the Investors.
Section 1.18 "Registration Statement" shall mean a registration
statement on Form SB-2, for the registration of the resale by the Investors of
the Registrable Securities under the Securities Act.
Section 1.19 "Regulation D" shall have the meaning set forth in
the recitals of this Agreement.
Section 1.20 "SEC" shall mean the Securities and Exchange
Commission.
Section 1.21 "Section 4(2)" shall have the meaning set forth in
the recitals of this Agreement.
Section 1.22 "Securities Act" shall have the meaning set forth in
the recitals of this Agreement.
Section 1.23 "Warrants" shall mean Common Stock Purchase Warrant,
annexed hereto as Exhibit C.
Section 1.24 "Warrant Shares" shall mean all shares of Common
Stock or other securities issued or issuable pursuant to the exercise of the
Warrants.
ARTICLE II
Purchase and Sale of the Preferred Stock and Warrants
Section 2.1 Closings. The Company will sell, and the Investors
will buy, on the Closing Date 2,000,000 Units at a per unit price of $0.50.
Section 2.2 Form of Payment. The Investors shall pay the Purchase
Price by delivering good funds in United States Dollars by check or wire
transfer to the Escrow Agent, against delivery of the original shares of
Warrants. The parties have entered into an Escrow Agreement annexed hereto as
Exhibit B.
Section 2.3 Wire Instructions. Wire instructions for the Escrow
Agent can be arranged by contacting the law office of Xxxxxx X.
Xxxxxxx (000) 000-0000.
Section 2.4 Units. Each Unit is comprised of a share of the
Company's common stock, and one Common Stock Purchase Warrant which shall be
exercisable beginning on the Closing Date and extending for a three month period
thereafter and shall grant to the investor or holder thereof the right to
purchase one additional share of the Company's common stock at a price of $0.70
per share. The common share and warrants shall be delivered by the Company to
the Escrow Agent and delivered to the Investor pursuant to the terms of this
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Agreement and the Escrow Agreement. The common share and the warrant share shall
be registered for resale pursuant to the Registration Rights Agreement.
Section 2.5 Closings. The closings are as follows:
(i) Acceptance by the Investor of this Purchase Agreement
and due execution by all parties of this Agreement and the Exhibits annexed
hereto;
(ii) Delivery into escrow by the Company of the original
Initial Shares, original Warrant as more fully set forth in the Escrow Agreement
attached hereto;
(iii) Delivery into escrow by the Investors of the Purchase
Price as set forth in the Escrow Agreement annexed hereto;
(iv) All representations, covenants, and warranties of the
Company contained herein shall remain true and correct in all material respects
as of Closing Date;
ARTICLE III
Representations and Warranties of the Investors
The Investor represents and warrants to the Company that:
Section 3.1 Intent. The Investor is entering into this Agreement
for its own account and has no present arrangement (whether or not legally
binding) at any time to sell the Common Stock to, or through any person or
entity; provided, however, that by making the representations herein, the
Investor does not agree to hold the Common Stock for any minimum or other
specific term and reserves the right to dispose of the Common Stock at any time
in accordance with federal and state securities laws applicable to such
disposition.
Section 3.2 Sophisticated Investors. The Investors are described
in Rule 506(b)(2)(11) of Regulation D) and a accredited investor (as defined in
Rule 501 of Regulation D), and have such experience in business and financial
matters that they are capable of evaluating the merits and risks of an
investment in the Units. The Investors acknowledge that an investment in the
Common Stock is speculative and involves a high degree of risk.
Section 3.3 Authority. This Agreement has been duly authorized and
validly executed and delivered by the Investors and is a valid and binding
agreement of the Investor enforceable against each of it in accordance with its
terms, subject to applicable bankruptcy, insolvency, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application.
Section 3.4 Not an Affiliate. The Investors are not an officer,
director or "affiliate" (as that term is defined in Rule 405 of the Securities
Act) of the Company.
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Section 3.5 Organization and Standing. The Investors are duly
organized, validly existing, and in good standing under the laws of the
countries and/or states of their incorporation or organization.
Section 3.6 Absence of Conflicts. The execution and delivery of
this Agreement and any other document or instrument executed in connection
herewith, and the consummation of the transactions contemplated thereby, and
compliance with the requirements thereof, will not violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on
Investors, or, to the Investors knowledge, (a) violate any provision of any
indenture, instrument or agreement to which the Investor is a party or is
subject, or by which the Investors or any of their assets is bound; (b) conflict
with or constitute a material default thereunder; (c) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by Investors to
any third party; or (d) require the approval of any third-party (which has not
been obtained) pursuant to any material contract, agreement, instrument,
relationship or legal obligation to which the Investors are subject or to which
any of their assets, operations or management maybe subject.
Section 3.7 Disclosure; Access to Information. The Investors have
received all documents, records, books and other information pertaining to
Investors' investment in the Company that have been requested by Investors,
including the opportunity to ask questions and receive answers. The Investors
have reviewed or received copies of any such reports that have been requested by
it. The Investors represent that they have reviewed the Company Reports.
Section 3.8 Manner of Sale. At no time was the Investors presented
with or solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising.
Section 3.9 Registration or Exemption Requirements. The Investors
further acknowledges and understands that the Securities may not be transferred,
resold or otherwise disposed of except in a transaction registered under the
Securities Act and any applicable state securities laws, or unless an exemption
from such registration is available. The Investors understand that the
certificate(s) evidencing the Common Shares, and Warrants will be imprinted with
a legend that prohibits the transfer of these securities unless (1) they are
registered or such registration is not required, or (ii) if the transfer is
pursuant to an exemption from registration (with no limitations).
Section 3.10 No Legal, Tax or Investment Advice. The Investors
understand that nothing in this Agreement or any other materials presented to
the Investors in connection with the purchase and sale of the Units constitutes
legal, tax or investment advice. The Investors have relied on, and have
consulted with, such legal, tax and investment advisors as they, in their sole
discretion, have deemed necessary or appropriate in connection with their
purchase of the Units.
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ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to the Investors that:
Section 4.1 Organization of the Company. The Company is a
corporation duly incorporated and existing in good standing under the laws of
the State of Florida and has all requisite corporate authority to own its
properties and to carry on its business as now being conducted except as
described in the Company Documents. The Company is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not reasonably be expected to have a Material Adverse Effect
Section 4.2 Authority. (1) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, and all Exhibits annexed hereto, and to issue the Common Shares,
Warrants, and Warrant Shares, (11) the execution, issuance and delivery of this
Agreement, and all Exhibits annexed hereto, by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors, and (iii) this Agreement, and all Exhibits
annexed hereto, have been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. Upon their issuance and
delivery pursuant to this Agreement, the Common Shares, Warrants and Warrant
Shares, will be validly issued, fully paid and nonassessable and will be free of
any liens or encumbrances other than those created hereunder or by the actions
of the Investor; provided, however, that the Common Shares, Warrants and Warrant
Shares, are subject to restrictions on transfer under state and/or federal
securities laws. The issuance and sale of the Common Shares, Warrants and
Warrant Shares, under will not give rise to any preemptive right or right of
first refusal or right of participation on behalf of any person.
Section 4.3 Capitalization. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock, $0.001 par value per
share, as of June 30, 2001, the Company reported in it's Form 10-QSB filing that
the Company's issued and outstanding was 15,225,620 shares. All of the
outstanding shares of Common Stock of the Company has been duly and validly
authorized and issued and are fully paid and nonassessable. No shares of Common
Stock are entitled to preemptive or similar rights. To the knowledge of the
Company, no Person or group of Persons beneficially owns (as determined pursuant
to Rule 13d-3 promulgated under the Exchange Act) or has the night to acquire by
agreement with or by obligation binding upon the Company beneficial ownership of
in excess of five percent of the Common Stock.
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Section 4.4 Common Stock. The Common Stock has been registered
pursuant to Section 12(g) of the Exchange Act. The Common Stock is currently
listed or quoted on the OTC Bulletin Board under the symbol VYST.
Section 4.5 Company Documents. The Company has delivered or made
available to the Investor true and complete copies of the Company Documents. The
Company has not provided to the Investor any information that, according to
applicable law, rule or regulation, should have been disclosed publicly prior to
the date hereof by the Company, but which has not been so disclosed. None of the
Company Documents contain any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
Company Documents comply as to form in all material respects with applicable
accounting requirements. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended.
Section 4.6 Valid Issuances. When issued and payment has been made
therefor, Common Shares, Warrants and Warrant Shares, sold to the Investors will
be duly and validly issued, fully paid, and nonassessable. Neither the issuance
of the Common Shares, Warrants and Warrant Shares to the Investors, pursuant to,
nor the Company's performance of its obligations under this Agreement, and all
Exhibits annexed hereto will (i) result in the creation or imposition by the
Company of any liens, charges, claims or other encumbrances upon the securities
issued to the Investors, or any of the assets of the Company, or (11) entitle
the holders of Outstanding Capital Shares to preemptive or other rights to
subscribe to or acquire the Capital Shares or other securities of the Company.
Section 4.7 No General Solicitation or Advertising in Regard to
this Transaction. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf (i) has conducted or
will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the Units, or (ii) made any
offers or sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the Units under the
Securities Act.
Section 4.8 Corporate Documents. The Company has furnished or made
available to each of the Investors true and correct copies of. (i) the Company's
Articles of Incorporation, as amended and in effect on the date hereof-, (ii)
the Company's by-laws, as amended and in effect on the date hereof (the
"By-Laws"); (iii) Form 10 Registration Statement; and (iv) Form 10-K and 10Q
report.
Section 4.9 No Conflicts. The execution, delivery and performance
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
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the Common Shares, Warrants and Warrant Shares, do not and will not (i) result
in a violation of the Company's Articles of Incorporation or By-Laws, or (ii)
conflict with, or constitute a material default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (111)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, nor is the Company otherwise in violation of,
conflict with or in default under any of the foregoing as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. The business of the Company is not being conducted in violation of any
law, ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. The Company is not required under
federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement (including all Exhibits annexed hereto) or to
issue and sell the Common Shares, Warrants and Warrant Shares in accordance with
the terms hereof, provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investors herein.
Section 4.10 No Material Adverse Change. Since September 28, 2001,
no Material Adverse Effect has occurred or exists with respect to the Company,
except as publicly announced.
Section 4.11 No Undisclosed Liabilities. The Company has no
liabilities or obligations which are material, individually or in the aggregate,
that are not disclosed in the Company Documents or otherwise publicly announced,
other than those set forth in the Company's financial statements or as incurred
in the ordinary course of the Company's businesses since May 1993, and which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
Section 4.12 No Undisclosed Events or Circumstances. Since
September 28, 2001, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, prospects, 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 Company Documents.
Section 4.13 No Integrated Offering. To the Company's knowledge,
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, other than pursuant to
this Agreement or pursuant to the Company's existing employee benefit plan,
under circumstances that would cause the offering of the Units pursuant to this
Agreement to be integrated with prior or future offerings by the Company for
purposes of the Securities Act or any applicable stockholder approval
provisions.
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Section 4.14 Litigation and Other Proceedings. There are no
lawsuits or proceedings pending or to the knowledge of the Company threatened,
against the Company, nor has the Company received any written or oral notice of
any such action, suit, proceeding or investigation, which would reasonably be
expected to have a Material Adverse Effect. Except as set forth in the Company
Documents, no judgment, order, whit, injunction or decree or award has been
issued by or, so far as is known by the Company, requested of any court,
arbitrator or governmental agency which would be reasonably expected to result
in a Material Adverse Effect.
Section 4.15 Acknowledgment of Dilution. The Company is aware and
acknowledges that issuance of Common Shares, and/or Warrant Shares, may result
in dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue the Common Shares, and Warrant Shares is
unconditional and absolute regardless of the effect of any such dilution.
Section 4.16 Employee Relations. The Company is not involved in
any labor dispute, nor, to the knowledge of the Company, is any such dispute
threatened which could reasonably be expected to have a Material Adverse Effect.
None of the Company's employees is a member of a union and the Company believes
that its relations with its employees are good.
Section 4.17 Environmental Laws. The Company is (1) in compliance
with any and all foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants and which the Company
know is applicable to them ("Environmental Laws"), (ii) has received all
permits, licenses or other approvals required under applicable Environmental
Laws to conduct its business, and (iii) is in compliance with all terms and
conditions of any such permit, license or approval.
Section 4.18 Insurance. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company is engaged. The Company has no notice to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires, or obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operation, of the Company.
Section 4.19 Board Approval. The board of directors of the Company
has concluded, in its good faith business judgment, that the issuances of the
securities of the Company in connection with this Agreement are in the best
interests of the Company.
Section 4.20 Integration. The Company shall not and shall use its
best efforts to ensure that no affiliate shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security of the Company
that would be integrated with the offer or sale of the Units, in a manner that
would require the registration under the Securities Act of the issue, offer or
sale of the Units to the Investors. The Units are being offered and sold
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pursuant to the terms hereunder, are not being offered and sold as part of a
previously commenced private placement of securities.
Section 4.21 Use of Proceeds. The Company represents that the net
proceeds from this offering will be used for working capital purposes, and not
for the repayment of any outstanding judgments against the Company (including
any affiliate or subsidiary) or any officer, director or employee of the
Company.
ARTICLE V
Covenants of the Investors
Section 5.1 4.99% Limitation. The number of shares of Common Stock
which may be acquired by any of the Investors pursuant to the terms of this
Agreement shall not exceed the number of such shares which, when aggregated with
all other shares of Common Stock then owned by any of the Investors, would
result in any of the Investors owning more than 4.99% of the then issued and
outstanding Common Stock.
ARTICLE VI
Covenants of the Company
Section 6.1 Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect so long as any
Registrable Securities remain outstanding and the Company shall comply in all
material respects with the terms thereof
Section 6.2 Reservation of Common Stock. As of the date hereof,
the Company has authorized and reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights, shares of
Common Stock for the purpose of enabling the Company to satisfy any obligation
to issue the Common Shares, Warrants and Warrant Shares. The number of shares so
reserved shall be increased or decreased to reflect potential increases or
decreases in the Common Stock that the Company may thereafter be so obligated to
issue by reason of adjustments to the Warrants.
Section 6.3 Legends. The Common Shares, Warrants and Warrant
Shares, to be issued by the Company pursuant to this Agreement shall be free of
legends, except as set forth in Article VIII.
Section 6.4 Corporate Existence. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.5 Notice of Certain Events Affecting Registration. The
Company will immediately notify each of the Investors within three Business Days
after the occurrence of any of the following events in respect of a registration
statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to the
Registration Statement or related prospectus; (ii) the issuance by the SEC or
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any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (the Company shall not
be required to notify the Investors in this case in the event such notification
would be deemed the release of nonpublic information); and (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate. The Company will, within five Business Days of
when filed with the SEC make available to the Investors any such supplement or
amendment to the related prospectus.
Section 6.6 Consolidation; Merger. The Company shall not, at any
time after the date hereof, effect any merger or consolidation of the Company
with or into, or a transfer of all or substantially all of the assets of the
Company to, another entity (a "Consolidation Event") unless the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
the obligation to deliver to the Investors such shares of stock and/or
securities as the Investors are entitled to receive pursuant to this Agreement.
Section 6.7 Issuance of Common Shares and Warrant Shares. The
issuance of the Common Shares and Warrant Shares shall be made in accordance
with the provisions and requirements of Section 4(2) of the Securities Act, or
Regulation D and any applicable state securities law.
Section 6.8 Exercise of Warrants. The Company will pen-nit the
Investors to exercise their night to exercise the Warrants, by telecopying an
executed and completed Notice of Exercise (along with payment of the applicable
Exercise Price) to the Company as is set forth in the Warrant.
Section 6.9 Increase in Authorized Shares. At such time as the
Company would be, if a notice of exercise were to be delivered on such date,
precluded from honoring (i) the exercise in full of the Warrants, due to the
unavailability of a sufficient number of shares of authorized but unissued or
re-acquired Common Stock, the Board of Directors of the Company shall promptly
(and in any case within forty five (45) calendar days from such date) hold a
shareholders meeting in which the shareholders would vote for authorization to
amend the Company's certificate of incorporation to increase the number of
shares of Common Stock which the Company is authorized to issue to at least a
number of shares equal to the sum of (i) all shares of Common Stock then
outstanding, (ii) the number of shares of Common Stock issuable on account of
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all outstanding warrants, options and convertible securities (other than the
Warrants) and on account of all shares reserved under any stock option, stock
purchase, warrant or similar plan, and (iv) such number of Warrant Shares as
would then be issuable upon the exercise in full of the Warrants, as would be
issuable on such date. In connection therewith, the Board of Directors shall
promptly (x) adopt proper resolutions authorizing such increase, (y) recommend
to and otherwise use its best efforts to promptly and duly obtain shareholder
approval to carry out such resolutions and (z) within three Business Days of
obtaining such shareholder authorization, file an appropriate amendment to the
Company's certificate of incorporation to evidence such increase. In no way
shall the aforementioned be deemed a waiver of the Company's obligations
contained in Section 6.2 above.
Section 6.10 Notice of Breaches. Each of the Company on the one
hand, and the Investors on the other, shall give prompt written notice to the
other of any breach by it of any representation, covenant, warranty or other
agreement contained in this Agreement or any Exhibit annexed hereto, as well as
any events or occurrences arising after the date hereof, which would reasonably
be likely to cause any representation, covenant, or warranty or other agreement
of such party, as the case may be, contained in this Agreement or any Exhibit
annexed hereto, to be incorrect or breached as of such date. However, no
disclosure by either party pursuant to this Section shall be deemed to cure any
breach of any representation, warranty or other agreement contained in this
Agreement or any Exhibit annexed hereto. Notwithstanding the generality of the
foregoing, the Company shall promptly notify each Investor of any notice or
claim (written or oral) that it receives from any lender of the Company to the
effect that the consummation of the transactions contemplated by this Agreement
or any Exhibit annexed hereto, violates or would violate any written agreement
or understanding between such lender and the Company, and the Company shall
promptly furnish by facsimile to each Investor a copy of any written statement
in support of or relating to such claim or notice.
ARTICLE VII
Due Diligence Review, Non-Disclosure of Non-Public Information
Section 7.1 Due Diligence Review. The Company shall make available
for inspection and review by the Investors, advisors to and representatives of
the Investors (who may or may not be affiliated with the Investors), any
underwriter participating in any disposition of the Registrable Securities on
behalf of the Investors pursuant to the Registration Statement, any such
registration statement or amendment or supplement thereto or any blue sky, NASD
or other filing, all financial and other records, all Company Documents, and all
other corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company's officers,
directors and employees to supply all such information reasonably requested by
any of the Investors or any such representative, advisor or underwriter in
connection with such Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made or submitted by
any of them), prior to and from time to time after the filing and effectiveness
of the Registration Statement for the sole purpose of enabling the Investors and
such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
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Section 7.2 Non-Disclosure of Non-Public Information
(a) The Company has not disclosed, and hereafter shall not
disclose nonpublic information to the Investors, advisors to, or representatives
of, the Investors unless prior to disclosure of such information the Company
identifies such information as being non-public information and provides each
Investor, and its advisors and representatives with the opportunity to accept or
refuse to accept such non-public information for review. The Company may, as a
condition to disclosing any non-public information hereunder, require each of
the Investors advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Investors.
(b) Nothing herein shall require the Company to disclose
non-public information to any of the Investors or their advisors or
representatives, and the Company represents that it does not disseminate
non-public information to any investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts, provided, however,
that notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives of the
Investors and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting non-public information
(whether or not requested of the Company specifically or generally during the
course of due diligence by such persons or entities), which, if not disclosed in
the prospectus included in the Registration Statement would cause such
prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Section shall be construed to mean that such persons or entities other
than the Investors (without the written consent of the Investors prior to
disclosure of such information) may not obtain non-public information in the
course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue
statement of a material fact or omits a material fact required to be stated in
the Registration Statement or necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
ARTICLE VIII
Legends
Section 8.1 Legends. The Investors agree to the imprinting, so
long as is required by this Section, of the following legend (or such
substantially similar legend as is acceptable to the Investors and their
counsel, the parties agreeing that any unacceptable legended securities shall be
replaced promptly by and at the Company's cost) on the securities:
[FOR WARRANTS AND COMMON SHARES] NEITHER THESE SECURITIES NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF
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ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
[ONLY FOR WARRANT SHARES TO THE EXTENT THE RESALE THEREOF IS NOT
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT AT THE TIME OF ISSUANCE
OR EXERCISE] THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The Warrant Shares shall not contain the legend set forth above or any other
restrictive legend if the issuance of such occurs at any time while a
Registration Statement is effective under the Securities Act in connection with
the resale of the shares of Common Stock or, in the event there is not an
effective Registration Statement at such time, if in the opinion of counsel to
the Company such legend is not required under applicable requirements of the
Securities Act (including Judicial interpretations and pronouncements issued by
the staff of the Commission). The Company agrees that it will provide the
Investors, upon request, with a certificate or certificates representing the
Warrant Shares, free from such legend at such time as such legend is no longer
required hereunder. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company which enlarge the restrictions
of transfer set forth in this Section.
Upon the execution and delivery hereof, the Company is issuing to the
transfer agent for its Common Stock (and to any substitute or replacement
transfer agent for its Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent) instructions in substantially the form
of Exhibit H hereto. Such shall be irrevocable by the Company from and after the
date hereof or from and after the issuance thereof to any such substitute or
replacement transfer agent, as the case may be, except as otherwise expressly
provided in the Registration Rights Agreement. It is the intent and purpose of
such instructions, as provided therein, to require the transfer agent for the
Common Stock from time to time upon transfer of Registrable Securities by the
Investors to issue certificates evidencing such Registrable Securities free of
the Legend during the following periods and under the following circumstances
and except as provided below, without consultation by the transfer agent with
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the Company or its counsel and without the need for any further advice or
instruction or documentation to the transfer agent by or from the Company or its
counsel or the Investors:
(a) at any time after the Effective Date, upon surrender of one or
more certificates evidencing the Warrants or Warrant Shares that bear the
aforementioned Legend, to the extent accompanied by a notice requesting the
issuance of new certificates free of the aforementioned legend to replace those
surrendered; provided that (i) the Registration Statement shall then be
effective; (ii) the Investor(s) confirm to the transfer agent that it has sold,
pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer
such Common Stock in a bona fide transaction to a third party that is not an
affiliate of the Company; and (iii) the Investor(s) confirm to the transfer
agent that the Investor(s) have complied with the prospectus delivery
requirement.
(b) at any time upon any surrender of one or more certificates
evidencing Registrable Securities, that bear the aforementioned legend, to the
extent accompanied by a notice requesting the issuance of new certificates free
of such legend to replace those surrendered and containing representations that
(i) the Investor(s) is permitted to dispose of such Registrable Securities,
without limitation as to amount or manner of sale pursuant to Rule 144(k) under
the Securities Act or (ii) the Investor(s) has sold, pledged or otherwise
transferred or agreed to sell, pledge or otherwise transfer such Registrable
Securities, in a manner other than pursuant to an effective registration
statement, to a transferee who will upon such transfer be entitled to freely
tradeable securities. The Company shall have counsel provide any and all
opinions necessary for the sale under Rule 144, as permitted under applicable
law.
Any of the notices referred to above in this Section may be sent by
facsimile to the Company's transfer agent.
Section 8.2 No Other Legend or Stock Transfer Restrictions. No
legend other than the one specified in this Article has been or shall be placed
on the share certificates representing the Common Stock, and no instructions or
"stop transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article.
Section 8.3 Investor's Compliance. Nothing in this Article shall
affect in any way any of the Investors obligations under any agreement to comply
with all applicable securities laws upon resale of the Common Stock.
ARTICLE IX
Choice of Law
Section 9.1 Choice of Law, Venue, Jurisdiction. This Agreement
will be construed and enforced in accordance with and governed by the laws of
the State of Colorado, except for matters arising under the Securities Act,
without reference to principles of conflicts of law. Each of the parties
consents to the exclusive jurisdiction of the United States District Court for
the District of Colorado in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
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objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. Each party hereby agrees
that if another party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce same by summary
judgment in the courts of any country having jurisdiction over the party against
whom such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the night of any party to serve process in any other
manner permitted by law. Each party waives its night to a trial by jury.
ARTICLE X
Assignment; Entire Agreement, Amendment, Termination
Section 10.1 Assignment. The Investor's interest in this Agreement
and its ownership of Common Stock and Warrants may be assigned or transferred at
any time, in whole or in part, to any other person or entity (including any
affiliate of the Investors) who agrees to, and truthfully can, make the
representations and warranties contained in Article III, and who agrees to be
bound by the covenants of Article V. The provisions of this Agreement shall
inure to the benefit of, and be enforceable by, any transferee of any of the
shares of Common Stock and/or Warrants purchased or acquired by the Investors
hereunder with respect to the Common Stock held by such person.
Section 10.2 Termination. This Agreement shall terminate upon the
earliest of (i) the date that all the Registrable Securities have been sold by
the Investors pursuant to the Registration Statement; (ii) the date the
Investors receive an opinion from counsel to the Company that all of the
Registrable Securities may be sold under the provisions of Rule 144, without
volume limitation; or (iii) five years after the Closing Date; provided,
however, that the provisions of Articles III, IV, V, VI, VII, VII, IX, X, XI,
and II herein, and the registration rights provisions for the Registrable
Securities held by the Investors set forth in this Agreement, and the
Registration Rights Agreement, shall survive the termination of this Agreement.
ARTICLE XI
Notices
Section 11.1 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
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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 reputable 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:
If to the Company:
View Systems, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 00
Xxxxxxxxx, Xxxxxxxx 00000
If to the Investors:
See attached Exhibit E
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 11. 1 by giving at least ten
calendar days' prior written notice of such changed address or facsimile number
to the other party hereto.
Section 11.2 Indemnification. The Company agrees to indemnify and
hold harmless each of the Investors and each officer, director of the Investors
or person, if any, who controls the Investors within the meaning of the
Securities Act against any losses, claims, damages or liabilities, Joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Investors may become subject, under the Securities Act or otherwise,
insofar as such losses, claims. damages or liabilities (or actions in respect
thereof) anise out of or are based upon the breach of any ten-n of this
Agreement by the Company. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
Each Investor agrees that it will indemnify and hold harmless the
Company, and each officer, director of the Company or person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof) anise out of or are based upon the breach of any term of this
Agreement by the Investor. This indemnity agreement will be in addition to any
liability which the Investors or any subsequent assignee may otherwise have.
Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve the indemnifying
-17-
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification is then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
one of the Investors, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (11) the named
parties to any such action (including any impleaded parties) include both the
Investors and the indemnifying party and the Investors shall have been advised
by such counsel that there may be one or more legal defenses available to the
indemnifying party in conflict with any legal defenses which may be available to
the Investors (in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of the Investors, it being
understood, however, that the indemnifying party shall, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable only for the reasonable fees and expenses of one separate firm of
attorneys for the Investor(s), which firm shall be designated in writing by the
Investor(s)). No settlement of any action against an indemnified party shall be
made without the prior written consent of the indemnified party, which consent
shall not be unreasonably withheld.
Section 11.3 Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which (1) the
indemnified party makes a claim for indemnification pursuant to Section 11.2
hereof but 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 the express provisions of
Section 11.2 hereof provide for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any
indemnified party, then the Company and the applicable Investor shall contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), in
either such case (after contribution from others) on the basis of relative fault
as well as any other relevant equitable considerations. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in Section 11.2
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
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meaning of Section 11 (F) of the Securities Act) shall be entitled to
contributions from any person who was not guilty of such fraudulent
misrepresentation.
ARTICLE XII
Miscellaneous
Section 12.1 Counterparts; Facsimile; Amendments. This Agreement
may be executed in multiple counterparts, each of which may be executed by less
than all of the parties and shall be deemed to be an original instrument which
shall be enforceable against the parties actually executing such counterparts
and all of which together shall constitute one and the same instrument. Except
as otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by the Company on the one hand, and the Investors, on the other hand.
Section 12.2 Entire Agreement. This Agreement, the Exhibits or
attachments hereto, which include, but are not limited to the Warrant, the
Certificate of Designation, the Escrow Agreement, and the Registration Rights
Agreement, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as if fully set forth
herein.
Section 12.3 Survival; Severability. The representations,
warranties, covenants and agreements of the parties hereto shall survive each
Closing hereunder. In the event that any provisions of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes the economic benefit of this Agreement to any party.
Section 12.4 Title and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 12.5 Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
and all Exhibits shall be Yahoo Finance or Bloomberg, or any successor thereto.
The written mutual consent of the Investors and the Company shall be required to
employ any other reporting entity.
Section 12.6 Replacement of Certificates. Upon (i) receipts of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of a certificate representing the Initial Shares, Secondary
Shares, Reset Shares, Warrants, Warrant Shares, or Additional Shares, and (ii)
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in the case of any such loss, theft or destruction of such certificate, upon
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company at is expense will
execute and deliver, in lieu thereof, a new certificate of like tenor.
Section 12.7 Fees and Expenses. Each of the parties shall pay its
own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Agreement
and the transactions contemplated hereby, except that the Company shall pay (i)
on the Closing Date the Escrow Agent will distribute the following: $50,000 to
be paid in commissions and up to $30,000 to be paid for legal, administrative,
and escrow fees.
Section 12.8 Publicity. The Company and the Investors shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such public statement
without the prior written consent of the other parties, which consent shall not
be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other parties with prior notice of such
public statement. Notwithstanding the foregoing, the Company shall not publicly
disclose the names of the Investors without the prior written consent of the
Investors, except to the extent required by law or in response to a written SEC
request, in which case the Company shall provide the Investors with prior
written notice of such public disclosure.
Exhibits:
--------
Escrow Agreement
Registration Statement
Warrant
Instructions to Transfer Agent
List of Investors
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IN WITNESS WHEREOF, the parties hereto have caused this Unit Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
VIEW SYSTEMS, INC.
By /s/ Xxxxxxx Than
-----------------------------
Name: Xxxxxxx Than
--------------------------
Title: CEO
-------------------------
LIBERTY PARTNERS, LLC
By /s/
---------------------------------
Its Managing Member
--------------------------------
EMPIRE FUND MANAGER
By /s/
---------------------------------
Its Member
--------------------------------
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EXHIBIT A
ESCROW AGREEMENT
THIS AGREEMENT is made as of the 1st day of October, 2001 by and
between VIEW SYSTEMS, INC., a Florida corporation with its principal office at
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 00, Xxxxxxxxx, Xxxxxxxx, 00000 (hereinafter the
"Company"), LIBERTY PARTNERS LLC, and EMPIRE FUND MANAGERS, collectively
referred to as the "Investors", and Xxxxxx X. Xxxxxxx, Esq. 000 Xxxxx 000 Xxxx,
Xxxx Xxxx Xxxx, Xxxx 00000 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Unit Purchase Agreement dated as of October 1,
2001 (the "Purchase Agreement"), the Investors will be purchasing Common Stock
and Warrants of the Company (the "Securities") at the purchase price sets forth
in the Purchase Agreement; and
WHEREAS, the Company has requested that the Escrow Agent hold the funds
of the Investors in escrow until the Escrow Agent has received the original
Securities. The Escrow Agent will then immediately wire transfer or otherwise
deliver at the Company's direction immediately available funds to the Company or
the Company's account and arrange for delivery of the Securities to each
Investor per each Investor's written instructions, and delivery of the Warrants.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
TERMS OF THE ESCROW FOR THE PURCHASE
OF THE INITIAL SHARES AND WARRANTS
Section 1.1 Upon Escrow Agent's receipt of the Purchase Price from
the Investors, into his attorney account, it shall notify the Company, or the
Company's designated attorney or agent, of the amount of funds it has received
into its account.
Section 1.2 The Company, upon receipt of said notice and
acceptance of the Purchase Agreement (including all Exhibits annexed thereto) by
all parties, as evidenced by the Company, and all of the Investor's execution
thereof, shall deliver to the Escrow Agent the original Securities being
purchased by the Investors. Escrow Agent shall then communicate with the Company
to confirm such receipt.
Section 1.3 Once Escrow Agent confirms receipt of the Securities
and receives all other documentations precedent to the applicable Closing, he
shall immediately wire that amount of funds necessary to purchase the Securities
per the written instructions of the Company net of all the fees. The Company
will furnish Escrow Agent with a "Net Letter" directing payment of the legal,
administrative, and escrow costs as per the terms of the Purchase Agreement to
the Escrow Agent. Such fees are to be remitted in accordance with wire
instructions that will be sent to Escrow Agent from the Company, with the net
balance payable to the Company. Once the funds (as set forth above) have been
received per the Company's instructions, the Escrow Agent shall then arrange to
have (i) the Securities delivered as per instructions from the Investors.
ARTICLE II
MISCELLANEOUS
Section 2.1 This Agreement maybe altered or amended only with the
consent of all of the parties hereto. Should any party attempt to change this
Agreement in a manner which, in the Escrow Agent's discretion, shall be
undesirable, the Escrow Agent may resign as Escrow Agent by notifying the
Company and the Investors in writing. The parties may remove the Escrow Agent as
escrow agent in writing signed by each of the parties, which writing must be
delivered to the Escrow Agent via reputable overnight courier and shall be
effective upon receipt by the Escrow Agent. In the case of the Escrow Agent's
resignation or removal pursuant to the foregoing, his only duty, until receipt
of notice from the Company and the Investors or their agent that a successor
escrow agent, the name of a successor escrow account and a direction to transfer
the Securities and/or funds, the Escrow Agent shall promptly thereafter transfer
all of the Securities and/or funds held in escrow to said successor escrow
agent. Immediately after said transfer of securities, the Escrow Agent shall
furnish the Company and the Investors with proof of such transfer. The Escrow
Agent is authorized to disregard any notices, requests, instructions or demands
received by it from the Company or the Investors after notice of resignation or
removal shall have been given, unless the same be the aforementioned notice from
the Company and the Investors to transfer the Securities and funds to a
successor escrow agent or to return same to the respective parties.
Section 2.2 The Escrow Agent shall be reimbursed by the Company
and the Investors for any reasonable expenses incurred in the event there is a
conflict between the parties and the Escrow Agent shall deem it necessary to
retain counsel.
Section 2.3 The Escrow Agent shall not be liable for any action
taken or omitted by him in good faith in accordance with the advice of the
Escrow Agent's counsel; and in no event shall the Escrow Agent be liable or
responsible except for the Escrow Agent's own gross negligence or willful
misconduct.
Section 2.4 The Company and each of the Investors warrant to and
agree with the Escrow Agent that, unless otherwise expressly set forth in this
Agreement:
(i) there is no security interest in the Securities or any
part thereof;
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(ii) no financing statement under Uniform Commercial Code is
on file in any jurisdiction claiming a security interest or in describing
(whether specifically or generally) the Securities or any part thereof; and
(iii) the Escrow Agent shall have no responsibility at any time
to ascertain whether or not any security interest exist in the Securities or any
part thereof or to file any financing statement under the Uniform Commercial
Code with respect to Securities or any part thereof.
Section 2.5 The Escrow Agent has no liability hereunder to either
party other than to hold the Securities and funds and to deliver them under the
terms hereof. Each party hereto agrees to indemnify and hold harmless the Escrow
Agent from and with respect to any suits, claims, actions or liabilities arising
in any way out of this transaction including the obligation to defend any legal
action brought which in any way arises out of or is related to this Escrow.
Section 2.6 No waiver or any breach of any covenant or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed any extension of
the time for performance of any other obligation or act.
Section 2.7 All notices or other communications required or
permitted hereunder shall be in writing, and shall be sent by fax, overnight
courier, registered or certified mail, postage prepaid, return receipt
requested, and shall be deemed received upon receipt thereof, as follows, or as
set forth on Schedule A.
(i) View Systems
000 Xxxx Xxxxxx Xxxxxx Xxxxx 00
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) Xxxxxx X. Xxxxxxx
000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) Investors
(See attached Exhibit E)
Section 2.8 This Agreement shall be binding upon and shall inure
to the benefit of the permitted successors and assigns of the parties hereto.
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Section 2.9 This Agreement is the final expression of, and
contains the entire Agreement between, the parties with respect to the subject
matter hereof and supersedes all prior understandings with respect thereto. This
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
Section 2.10 Whenever required by the context of this Agreement,
the singular shall include the plural and masculine shall include the feminine.
This Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
Section 2.11 The parties hereto expressly agree that this
Agreement shall be governed by, interpreted under and construed and enforced in
accordance with the laws of the State of Utah. Each of the parties consents to
the exclusive jurisdictions of the federal courts for the District of the Utah,
in connection with any dispute arising under this Agreement and hereby waives,
to the maximum extent permitted by law, and objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. Each party hereby agrees that if another party to this Agreement
obtains a judgment against it in such a proceeding, the party which obtained
such judgment may enforce same by summary judgment in the courts of any state or
country having jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to it under local
law and agrees to the enforcement of such a judgment. Each party to this
Agreement irrevocably consents to the service of process in any such proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at is address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
[Remainder of Page Intentionally Left Blank]
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
VIEW SYSTEMS, INC.
By______________________________
Name:___________________________
Title:__________________________
LIBERTY PARTNERS, LLC
By__________________________________
Its ________________________________
EMPIRE FUND MANAGER
By__________________________________
Its ________________________________
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 1st day of October, 2001,
between LIBERTY PARTNERS, LLC., and EMPIRE FUND MANAGERS, (referred to as the
"Investors"), COLUMBIA FINANCIAL GROUP, INC. (the "Placement Agent") and VIEW
SYSTEMS, INC. a corporation incorporated under the laws of the State of Florida,
and having its principle place of business at 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 00,
Xxxxxxxxx, Xxxxxxxx, 00000 (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement and from time to time thereafter, the Investors are purchasing from
the Company, pursuant to the Unit Purchase Agreement dated the date hereof (the
"Purchase Agreement"), shares of Common Stock and Warrants (hereinafter
collectively referred to as the "Securities" of the Company); All capitalized
terms not hereinafter defined shall have the meaning assigned to them in the
Purchase Agreement; and
WHEREAS, prior to the execution and delivery of this Agreement,
the Company has issued Warrants to Columbia, in return for services rendered,
from time to time as provided in a separate Consulting Agreement dated September
10, 2001 (the "Consulting Agreement"); and
WHEREAS, the Company desires to grant to the Holders the
registration rights set forth herein.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means the Common Stock of the Company issued under the
Purchase Agreement or as the result of the execution of warrants issued under
that Agreement or the Consulting Agreement; provided, however, that with respect
to any particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act of 1933, as amended (the "1933
Act") and disposed of pursuant thereto, (ii) registration under the 1933 Act is
no longer required for the immediate public distribution of such security as a
result of the provisions of Rule 144 promulgated under the 1933 Act, or (iii) it
has ceased to be outstanding. The term "Registrable Securities" means any and/or
all of the securities falling within the foregoing definition of a Registrable
Security. In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in definition of Registrable Security as is
appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Section.
Section 2. Restrictions on Transfer. The Holders acknowledge and
understand that prior to the registration of the Registrable Securities as
provided herein, the Registrable Securities and the Securities are "restricted
securities" as defined in Rule 144 promulgated under the Act. The Holders
understand that no disposition or transfer of the Registrable Securities or the
Securities may be made by the Holders in the absence of (i) an opinion of
counsel to the Holders that such transfer may be made without registration under
the 1933 Act, or (ii) such registration.
Section 3. Registration Rights.
(a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission ("SEC"), on or prior to December 15, 2001, a
registration statement (on Form SB-2, or other appropriate registration
statement) under the 1933 Act (the "Registration Statement"), at the sole
expense of the Company (except as provided in Section 3(c) hereof), in respect
of all holders of Registrable Securities, so as to permit a public offering and
sale of the Registrable Securities under the Act. The Company shall use its best
efforts to cause the Registration Statement to become effective on or before
January 15, 2001. The number of shares of Common Stock designated in the
Registration Statement to be registered shall be not less than (i) 100% of the
number of Common Shares acquired under the Purchase Agreement, plus (ii) 100% of
the number of Warrant Shares issuable assuming all of the Warrants had been
issued pursuant to the Purchase Agreement and Consulting Agreement.
(b) The Company will maintain the Registration Statement, or
post-effective amendment filed under this Section 3 hereof current under the
1933 Act until the earlier of (i) the date that all of the Registrable
securities have been sold pursuant to the applicable Registration Statement,
(ii) the date the holders thereof receive an opinion of counsel that the
Registrable Securities may be sold under the provisions of Rule 144 (without
limitation) or (III) five years after the Subscription Date.
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
the Registration Statement under subparagraph 3(a) and in complying with
applicable securities and blue sky laws (including, without limitation, all
attorneys' fees) shall be borne by the Company. The Holders shall bear the cost,
pro rata, of underwriting discounts and commissions, if any, applicable to the
Registrable Securities being registered and the fees and expenses of its
counsel. The Company shall qualify any of the securities for sale in such states
as such Holder reasonably designates and shall furnish indemnification in the
manner provided in Section 6 hereof. The Company at its expense will supply the
Holders with copies of the Registration Statement and the prospectus or offering
circular included therein and other related documents in such quantities as may
be reasonably requested by the Holders.
(d) The Company shall not be required by this Section 3 to
include a Holder's Registrable Securities in any Registration Statement which is
to be filed if, in the opinion of counsel for both the Holder and the Company
(or, should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
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all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the 1933 Act.
(e) In the event the Registration Statement to be filed by
the Company pursuant to Section 3(a) above is not filed with the SEC on or
before December 31, 2001 and/or the Registration Statement is not declared
effective by the SEC on or before January 31, 2002, then the Company will pay
the Holders (pro rated on a daily basis), as liquidated damages for such failure
and not as a penalty, five percent of the purchase price of the then outstanding
Securities for every 30 calendar day period until the Registration Statement has
be filed and/or declared effective. Such payment of the liquidated damages shall
be made to the Holders in cash, immediately upon demand, provided, however, that
the payment of such liquidated damages shall not relieve the Company from its
obligations to register the Registrable Securities. If the Company does not
remit the damages to the Holder as set forth above, the Company will pay the
Holders reasonable costs of collection, including attorneys fees, in addition to
the liquidated damages. The registration of the Securities pursuant to this
provision shall not affect or limit Holder' other rights or remedies as set
forth in this Agreement.
(f) The Company agrees that it shall declare the Registration
Statement effective within three Business Days after being informed by the SEC
that it may do so. The Company also agrees that it shall respond to any
questions and/or comments from the SEC which relate to the Registration
Statement within five Business Days of receipt of such question or comment.
Section 4. Cooperation with Company. Each of the Holders will
cooperate with the Company in all respects in connection with this Agreement,
including timely supplying all information reasonably requested by the Company
and executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities.
Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Holder shall desire to sell or otherwise dispose of the same (including
prospectus supplements with respect to the sales of securities from time to time
in connection with a registration statement pursuant to Rule 415 promulgated
under the Act);
(b) furnish to each Holder such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the Act, and such other documents, as such Holder may reasonably
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request in order to facilitate the public sale or other disposition of the
securities owned by such Holder;
(c) register and qualify the securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Holders shall reasonably request, and do any and all other
acts and things which may be necessary or advisable to enable each Holder to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) list such securities on the Principal Market on which any
securities of the Company are then listed, if the listing of such securities is
then permitted under the rules of such Principal Market;
(e) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(f) notify each Holder of Registrable Securities covered by
the Registration Statement any time when a prospectus relating thereto covered
by the Registration Statement is required to be delivered under the Act, and of
the happening of any event of which it has knowledge as a result of which the
prospectus included in the 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 the light of the circumstances then existing.
Section 6. Information by Holder. Each Holder of Registrable
Securities included in any registration statement shall furnish to the Company
such information regarding such Holder and the distribution proposed by such
Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section.
Section 7. Assignment. The rights granted the Holders under this
Agreement shall not be assigned without the written consent of the Company,
which consent shall not be unreasonably withheld. This Agreement is binding upon
and inures to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
Section 8. Termination of Registration Rights. The rights granted
pursuant to this Agreement shall terminate as to each Holder (and permitted
transferee under Section 7 above) upon the occurrence of any of the following:
(a) all such Holder's securities subject to this Agreement
have been registered;
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(b) all of such Holder's securities subject to this Agreement
may be sold without such registration pursuant to Rule 144 promulgated by the
SEC pursuant to the Securities Act;
(c) all of such Holder's securities subject to this Agreement
can be sold pursuant to Rule 144(k) without volume limitation; or five years
from the issuance of the Registrable Securities.
Section 9. Indemnification.
(a) In the event of the filing of any Registration Statement
with respect to Registrable Securities pursuant to Section 3 hereof, the Company
agrees to indemnify and hold harmless the Holders, and each officer, director of
the Holders or person, if any, who controls the Holders within the meaning of
the Securities Act ("Distributing Holders") against any losses, claims, damages
or liabilities, joint or several (which shall, for the purposes of this
Agreement, include, but not be limited to, all costs of defense, and
investigation and all attorneys' fees), to which the Distributing Holders may
become subject, under the Securities 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 such Registration Statement or any related preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto, 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; provided, however, that
the Company will not be liable in any such case 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
such Registration Statement, preliminary prospectus, final prospectus, offering
circular, notification or amendment or supplement thereto in reliance upon, and
in conformity with, written information furnished to the Company by the
Distributing Holders, specifically for use in the preparation thereof. this
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) In the event of the filing of any Registration Statement
with respect to Registrable Securities pursuant to Section 3 hereof, each
Distributing Holder agrees that it will indemnify and hold harmless the Company,
and each officer, director of the Company or person, if any, who controls the
Company within the meaning of the Securities Act, against any losses, claims,
damages or liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees) to which the Company or any such officer, director or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement, requested
by such Distributing Holder, or any related preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
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statements therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in such Registration Statement, preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
such Distributing Holder, specifically for use in the preparation thereof and,
provided further, that the indemnity agreement contained in this Section 9(b)
shall not inure to the benefit of the Company with respect to any person
asserting such loss, claim, damage or liability who purchased the Registrable
Securities which are the subject thereof if the Company failed to send or give
(in violation of the Securities Act or the rules and regulations promulgated
thereunder) a copy of the prospectus contained in such Registration Statement to
such person at or prior to the written confirmation to such person of the sale
of such Registrable Securities, where the Company was obligated to do so under
the Securities Act or the rules and regulations promulgated thereunder. This
indemnity agreement will be in addition to any liability which the Distributing
Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is made against the indemnifying party under
this Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from any liability which it may have to any indemnified party otherwise
than as to the particular item as to which indemnification s then being sought
solely pursuant to this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
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fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 10. Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
Distributing Holder makes a claim for indemnification pursuant to Section 9
hereof but 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 the express provisions of
Section 9 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any Distributing Holder,
then the Company and the applicable Distributing Holder shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), in either
such case (after contribution from others) on the basis of relative fault as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the applicable Distributing Holder, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Distributing Holder
agree that it would not be just and equitable if contribution pursuant to this
Section were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Section 11. Notices. Any notice pursuant to this Agreement by the
Company or by the Holders shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery or (iii) if mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to the Company:
View Systems, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 00
Xxxxxxxxx, Xxxxxxxx 00000
(b) If to the Placement Agent:
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Columbia Financial Group, Inc.
0000 Xxxx Xxxx, #000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Rieu
(c) If to the Investors:
See attached Exhibit "E"
Notices shall be deemed given at the time they are delivered personally
or five calendar days after they are mailed in the manner set forth above. If
notice is delivered by facsimile to the Company and followed by mail, delivery
shall be deemed given two calendar days after such facsimile is sent.
Section 12. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14. Choice of Law; Venue; Jurisdiction. This Agreement
will be construed and enforced in accordance with and governed by the laws of
the State of Colorado, except for matters arising under the Securities Act,
without reference to principles of conflicts of law. Each of the parties
consents to the jurisdiction of the U.S. District Court sitting in the State of
Colorado, for the Central District of Colorado in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. Each party hereby
agrees that if another party to this Agreement obtains a judgment against it in
such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set forth herein.
Nothing herein shall affect the right of any party to serve process in any other
manner permitted by law. Each party waives its right to a trail by jury.
Section 15. Severability. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
-8-
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on the day and year first above written.
VIEW SYSTEMS, INC.
Attest:
By:____________________________________ By:_________________________________
Name: Name:
Title: Title:
COLUMBIA FINANCIAL GROUP, INC.
By:__________________________________
Name:
Title:
LIBERTY PARTNERS, LLC
By:__________________________________
Name:
Title:
EMPIRE FUND MANAGERS
By:__________________________________
Name:
Title:
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EXHIBIT C
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
No.
To Purchase 1,000,000 Shares of Common Stock of
VIEW SYSTEMS, INC.
THIS CERTIFIES that, for value received, Empire Fund Managers or its
assigns, (the "Investor"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after the date hereof and on
or prior to 5:00 p.m. Eastern Time 90 days after the effective date of the
Company's registration statement (the "Termination Date"), but not thereafter,
to subscribe for and purchase from VIEW SYSTEMS, INC., a Florida corporation
(the "Company"), One Million (1,000,000) shares of Common Stock (the "Warrant
Shares"). The purchase price of one share of Common Stock (the "Exercise Price")
under this Warrant shall be $0.70. The Exercise Price and the number of shares
for which this Warrant is exercisable shall be subject to adjustment as provided
herein. This Warrant is being issued in connection with the Unit Purchase
Agreement dated October 1, 2001 (the "Agreement") entered into between the
Company and the Investor.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of rights represented by this Warrant
will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof.
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3. Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made at any time or times, in whole or in part, after the date
hereof and before the close of business on the Termination Date, or such earlier
date on which this Warrant may terminate as provided in paragraph 11 below, by
the surrender on any business day of this `Warrant and the Notice of Exercise
annexed hereto duly completed and executed, at the principal office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered holder hereof at the address of such holder
appearing on the books of the Company), and upon payment of the Exercise Price
of the Warrant Shares thereby purchased (the "Exercise Date"); whereupon the
holder of this Warrant shall be entitled to receive a Common Stock certificate
for the number of Warrant Shares so purchased. Certificates for Warrant Shares
purchased hereunder shall be delivered to the holder hereof within five Business
Days after the date on which this Warrant shall have been exercised as
aforesaid. Payment of the Exercise Price shall be by certified check or
cashier's check or by wire transfer (of same day funds) to an account designated
by the Company in an amount equal to the Exercise Price multiplied by the number
of Warrant Shares being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue, transfer, or other incidental expense in respect of the
issuance of such certificate, all of which expenses shall be paid by the
Company, and such certificates shall be issued in the name of the holder of this
xxxxxx or in such name or names as may be directed by the holder of this
Warrant; provided, however, that in the event certificates for shares of Common
Stock are to be issued in a name other than the name of the holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof; and provided
further, that upon any transfer involved in the issuance or delivery of any
certificates for shares of Common Stock, the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer
expenses incidental thereto.
6. Closing of Books. The Company will at no time close its shareholder books
or records in any manner which interferes with the timely exercise of this
Warrant.
7. No Rights as Shareholder until Exercise. This Warrant does not entitle
the holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise thereof. If, however, at the time of the surrender
of this Warrant and purchase the holder hereof shall be entitled to exercise
this Warrant, the shares so purchased shall be and be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be assigned by the
surrender of this Warrant and the Assignment Form annexed hereto duly executed
at the office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the registered holder hereof at the
address of such holder appearing on the books of the Company); provided,
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however, that this Warrant may not be resold or otherwise transferred except (i)
in a transaction registered under the Securities Act of 1933, as amended, or
(ii) in a transaction pursuant to an exemption, if available, from such
registration and whereby, if requested by the Company, an opinion of counsel
reasonably satisfactory to the Company is obtained by the holder of this Warrant
to the effect that the transaction is so exempt.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company represents
and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a legal holiday.
11. Effect of Certain Events. If at any time the Company proposes (i) to
sell or otherwise convey all or substantially all of its assets or (ii) to
effect a transaction (by merger or otherwise) in which more than 50% of the
voting power of the Company is disposed of (collectively, a "Sale or Merger
Transaction"), in which the consideration to be received by the Company or its
shareholders consists solely of cash, and in case the Company shall at any time
effect a Sale or Merger Transaction in which the consideration to be received by
the Company or its shareholders consists in part of consideration other than
cash, the holder of this Warrant shall have the right thereafter to purchase, by
exercise of this Warrant and payment of the aggregate Exercise Price in effect
immediately prior to such action, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such transaction had this Warrant been exercised
immediately prior thereto. In the event the holder chooses to exercise its
purchase rights, at the holder's option, the holder may elect to waive Section
16 below in its entirety.
12. Adjustments of Exercise Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following: in case the Company shall (i) declare or pay
a dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, the number of Warrant
Shares purchasable upon exercise of this Warrant immediately prior thereto shall
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be adjusted so that the holder of this Warrant shall be entitled to (in the
event the holder so chooses) receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been entitled
to receive had such Warrant been exercised in advance thereof. Any adjustment
made pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event. In such event the holder, at its option may elect to waive Section 16
below in its entirety.
13. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant, or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail or registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustments and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that is issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the securities
exchange and/or market upon which the Common Stock may be listed.
16. 4.99% Limitation. The number of shares of Common Stock which may be
acquired by the Investor upon exercise pursuant to the terms herein shall not
exceed the number of such shares which, when aggregated with all other shares of
Common Stock then owned by the holder, not including all securities convertible
or exercisable into Common Stock, would result in the Investor owning more than
4.99% of the Company's then issued and outstanding shares of Common Stock. The
preceding sentence shall not interfere with the Investor's right to exercise
this Warrant or convert other securities over time which in the aggregate totals
more than 4.99% of the then outstanding shares of Common Stock so long as such
Investor does not own more than 4.99% of the then outstanding Common Stock at
any given time.
17. Call. In the event, at any time one month after the date hereof, the
closing bid price of the Common Stock is greater than US$2.00 (the "Strike
-4-
Price") per share for ten consecutive trading days (the "Call Period"), the
Company shall have the right to "Cal" this Warrant, in whole or in part, thereby
forcing exercise by the Investor. The Strike Price shall be adjusted
proportionately to reflect any adjustments due to the payment of a stock
dividend, stock split, combination of shares or any other similar event as
provided herein. The Company may exercise its right to Call by telecopying
written notice (the "Call Notice") to the Investor within ten (10) trading days
after the expiration of the Call Period.
Once the Company has exercised its right to Call by giving written
notice to the Investor it shall be deemed irrevocable. The Investor will
transmit the Exercise Price to the Company for that number of Warrant Shares
which are the subject to the Call Notice within three business days after
receipt of the Call Notice. The Company will transmit the certificates
representing Warrant Shares issuable pursuant to the Call (together with the
certificates representing the remainder of the Warrant not Called, if any) to
the Investor via express courier, by electronic transfer or otherwise within
five business days after the Exercise Price was received by the Company (the
"Call Date"). The Call Notice shall set forth (i) the number of Warrant Shares
being Called, and (ii) a calculation referencing the aggregate Exercise Price
due to the Company.
All rights of this Warrant, including the right to exercise, shall be
canceled upon the completion of the exercise of this Warrant upon a Call for the
Warrant Shares that were subject to such Call. Immediately following the Call
Date, the Investor shall surrender their original Warrant being called to the
Company, and the Company shall issue to the Investor a new Warrant Certificate
for the Warrant Shares that remain outstanding, if any. The number of shares of
Warrant Shares issuable upon the Call of this Warrant shall be adjusted in
accordance with the provisions set forth herein.
Any Call pursuant to this Section shall not be deemed to affect or
otherwise reduce the Investor's exercise rights set forth in this Warrant,
except for the portion of the Warrant Shares being Called. The Company shall not
have the right to Call this Warrant if the Company exercises its redemption
rights in connection with shares of Stock held by the Investor. In the event the
Company fails to comply with the Call provisions set forth herein in any manner
whatsoever, it shall waive its right to perform a call in the future.
18. Miscellaneous.
(a) Issue Date; Choice of Law; Venue; Jurisdiction. The provisions of
this Warrant shall be construed and shall be given effect in all respects as if
it had been issued and delivered by the Company on the date hereof. This Warrant
shall be binding upon any successors or assigns of the Company. This Warrant
will be construed and enforced in accordance with and governed by the laws of
the State of Colorado, except for matters arising under the Act, without
reference to principles of conflicts of law. Each of the parties consents to the
exclusive jurisdiction of the U.S. District Court for the Central District of
Colorado in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
-5-
in such jurisdiction. Each party hereby agrees that if the other party to this
Warrant obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the courts of any
country having jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to it under local
law and agrees to the enforcement of such a judgment. Each party to this Warrant
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall affect the
right of any party to serve process in any other manner permitted by law. Each
party waives its right to a trial by jury.
(b) Modification and Waiver. This Warrant and any provisions hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought. Any
amendment effected in accordance with this paragraph shall be binding upon the
Investor, each future holder of the Warrants and the Company. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
(c) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Investor or future holders hereof or
the Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Investor or each such holder at its
address as shown on the books of the Company or to the Company at the address
set forth in the Agreement. All notices under this Warrant shall be deemed to
have been given (i) in the case of personal delivery, on the date of such
delivery and (ii) in the case of mailing, on the fifth business day following
the date of such mailing. A party may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice in
accordance with the provisions of this Section 18(c).
(d) Severability. Whenever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision in any other
jurisdiction or affect the validity, legality or enforceability of any provision
in any other jurisdiction, but this Warrant shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officers thereunto duly authorized.
Dated: October 1, 2001
VIEW SYSTEMS, INC.
By ________________________________
Name ________________________
Title _______________________
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NOTICE OF EXERCISE
To: VIEW SYSTEMS, INC.
(1) The undersigned hereby elects to purchase __________ shares of Common Stock
of VIEW SYSTEMS, INC., pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_________________________
(Name)
_________________________
(Address)
_________________________
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
____________________________________
(Name)
_______________________________________ ____________________________________
(Date) (Signature)
____________________________________
(Address)
Dated:
_______________________________________
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
__________________________________________________________ whose address is
___________________________________________________________________________.
___________________________________________________________________________
Dated:__________
Holder's Signature:___________________________
Holder's Address:_____________________________
Signature Guaranteed: ____________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
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EXHIBIT D
INSTRUCTIONS TO TRANSFER AGENT
View Systems, Inc.
October 1, 2001
Interwest Transfer Co.
1981 East 0000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Dear Sirs:
Reference is made to the Unit Purchase Agreement and all Exhibits and
Attachments thereto (the "Agreement") dated as of October 1, 2001, between
Liberty Partners, LLC, Empire Fund Managers, and Columbia Financial Group, Inc.
(the "Investors"), and View Systems, Inc., (the {Company"). Pursuant to the
Agreement, and subject to the terms and conditions set forth in the Agreement,
the Investors have agreed to purchase from the Company and the Company has
agreed to issue to the Investors, Common Stock and Warrants to purchase Common
Stock (the "Warrant"). As a condition to the effectiveness of the Agreement, the
Company has agreed to issue to you, as the transfer agent for the Common Stock
(the "Transfer Agent"), these instructions relating to the Common Stock, and
Warrants to be issued to the Investors pursuant to the Agreement, and Common
Stock upon exercise of the Warrants. All terms used herein and not otherwise
defined shall have the meaning set forth in the Agreement.
1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
Pursuant to the Agreement, the Company is required to prepare and file with
the Commission, and maintain the effectiveness of, a registration statement or
registration statements and (ii) upon exercise of the Warrants. The Company will
advise the Transfer Agent in writing of the effectiveness of any such
registration statement promptly upon its being declared effective. The Transfer
Agent shall be entitled to rely on such advice and shall assume that the
effectiveness of such registration statement remains in effect unless the
Transfer Agent is otherwise advised in writing by the Company and shall not be
required to independently confirm the continued effectiveness of such
registration statement. In the circumstances set forth in the following two
paragraphs, the Transfer Agent shall deliver to the Investors certificates
representing Common Stock not bearing the Legend without requiring further
advice or instruction or additional documentation from the Company or its
counsel or the Investors or its counsel or any other party (other than as
described in such paragraphs).
At any time after the effective date of the applicable registration
statement (provided that the Company has not informed the Transfer Agent in
writing that such registration statement is not effective) upon any surrender of
one or more certificates which bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the Legend to replace
those surrendered, the Transfer Agent shall deliver to the Investors
certificates representing the Common Stock not bearing the Legend, in such names
and denominations as the Investors shall request.
In the event a registration statement is not filed by the Company, or for
any reason the registration statement which is filed by the Company is not
declared effective by the Commission the Investors or its permitted assignee, or
their legal counsel confirms to the Transfer Agent that (i) the Investors have
held the shares of Common Stock (or the Warrants) for at least one year, (ii)
counting the shares surrendered as being sold upon the date the unlegended
Certificates would be delivered to the Investors (or the Trading Day immediately
following if such date is not a Trading Day), the Investors will not have sold
more than the greater of (a) one percent of the total number of outstanding
shares of Common Stock or (b) the average weekly trading volume of the Common
Stock for the preceding four weeks during the three months ending upon such
delivery date (or the Trading Day immediately following if such date is not a
Trading Day), and (iii) the Investors has complied with the manner of sale and
notice requirements of Rule 144 under the Securities Act, and the Company shall
give an opinion to the extent available, authorizing the removal of the Legend.
Any advise, notice, or instructions to the Transfer Agent required or
permitted to be given hereunder may be transmitted via facsimile to the Transfer
Agent's facsimile number of:
(000) 000-0000.
2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK
In connection with any Closing pursuant to which the Investors acquires
Common Stock under the Agreement, the Transfer Agent shall deliver to the
Investors as defined in the Agreement certificates representing Common Stock
(with the Legend) immediately.
3. FEES OF TRANSFER AGENT; INDEMNIFICATION
The Company agrees to pay the Transfer Agent for all fees incurred in
connection with these Irrevocable Instructions. The Company agrees to indemnify
the Transfer Agent and its offices, employees and agents, against any losses,
claims, damages or liabilities, joint or several, to which it or they become
subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.
4. THIRD PARTY BENEFICIARY
The Company and the Transfer Agent acknowledge and agree that the Investors
is an express third party beneficiary of these Irrevocable Instructions and
shall be entitled to rely upon, and enforce, the provisions thereof.
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VIEW SYSTEMS, INC.
By: /s/ Xxxxxxx Than
-------------------------------------
Name:
------------------------------------
Title: CEO
----------------------------------
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EXHIBIT E
SCHEDULE OF INVESTORS
Investor Number of Units Purchase Price
-------- --------------- --------------
Liberty Partners, LLC 1,000,000 $500,000
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx X. Xxxxxx
Empire Fund Managers, LLC 1,000,000 $500,000
000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
