Exhibit 10.8
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT made as of this 21 day of December 2001
between eClickMD, Inc., a corporation organized under the laws of the State of
Nevada with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and the undersigned (the "Subscriber" and together with each of the
other subscribers in the Offering (defined below), the "Subscribers").
WHEREAS, the Company desires to issue a minimum (the "Minimum Offering")
of $500,000 aggregate principal amount of convertible notes bearing interest at
the rate of five (5%) percent per annum (the "Notes") and a maximum (the
"Maximum Offering") of $1,000,000 aggregate principal amount of Notes in a
private placement (the "Offering"); and
WHEREAS, the Notes are convertible into shares (the "Conversion Shares")
of the Company's common stock, par value $.001 per share (the "Common Stock");
and
WHEREAS, each Subscriber will receive warrants (the "Warrants") to
purchase shares of Common Stock representing fifteen (15%) percent of the number
of shares of Common Stock issuable upon conversion of the Notes so purchased by
the Subscriber as provided in the Agency Agreement, as defined below (the
"Warrant Shares" and, together with the Conversion Shares, the "Issuable
Shares"); and
WHEREAS, if the Maximum Amount is sold the Company and the Placement Agent
(as defined below) may mutually agree to sell up to an additional $250,000
aggregate principal amount of Notes and Warrants (the "Over-Allotment
Securities"); and
WHEREAS, Gryphon Financial Securities Corp. is acting as placement agent
(the "Placement Agent") in the Offering pursuant to a Placement Agency Agreement
dated As of August 20, 2001 between the Company and the Placement Agent (the
"Agency Agreement"); and
WHEREAS, the Notes are convertible into the Conversion Shares on the terms
set forth in the Notes, the form of which is attached to this Subscription
Agreement as Exhibit A; and
WHEREAS, each Warrant represents the right to purchase one share of Common
Stock on the terms set forth in the Warrant, the form of which is attached to
this Subscription Agreement as Exhibit B; and
WHEREAS, the Conversion Shares and the Warrant Shares are entitled to
registration rights on the terms set forth in this Subscription Agreement and in
the Registration Rights Agreement (the "Registration Rights Agreement"),
attached hereto as Exhibit C and incorporated herein by reference and made a
part hereof; and
WHEREAS, the Subscriber is delivering simultaneously herewith a completed
confidential investor questionnaire (the "Questionnaire").
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR NOTES AND WARRANTS AND REPRESENTATIONS BY AND
COVENANTS OF SUBSCRIBER
1.1 Subscription for Notes and Warrants. Subject to the terms and
conditions hereinafter set forth, the Subscriber hereby subscribes for and
agrees to purchase from the Company such aggregate principal amount of Notes
(and receive the accompanying Warrants) as is set forth upon the signature page
hereof; and the Company agrees to sell such Notes and Warrants to the Subscriber
for said purchase price subject to the Company's right to sell to the Subscriber
such lesser number of Notes and Warrants as the Company may, in its sole
discretion, deem necessary or desirable. The purchase price is payable by
certified or bank check made payable to "eClickMD, Inc." or by wire transfer of
funds, contemporaneously with the execution and delivery of this Subscription
Agreement. The Notes and Warrants shall be delivered by the Company
simultaneously with the Closing (as defined below).
1.2 Reliance on Exemptions. The Subscriber acknowledges that this offering
of Notes and Warrants has not been reviewed by the United States Securities and
Exchange Commission ("SEC") or any state agency because of the Company's
representations that this is intended to be a nonpublic offering exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act") and state securities laws. The Subscriber understands that the Company is
relying in part upon the truth and accuracy of, and the Subscriber's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Subscriber set forth herein in order to determine the
availability of such exemptions and the eligibility of the Subscriber to acquire
the Notes and Warrants.
1.3 Investment Purpose. The Subscriber represents that the Notes and
Warrants are being purchased for its own account, for investment purposes only
and not for distribution or resale to others in contravention of the
registration requirements of the 1933 Act. The Subscriber agrees that it will
not sell or otherwise transfer the Notes or Warrants unless they are registered
under the 1933 Act or unless an exemption from such registration is available.
1.4 Accredited Investor. The Subscriber represents and warrants that it is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act, as indicated by its responses to the
Questionnaire, and that it is able to bear the economic risk of any investment
in the Notes and Warrants. The Subscriber further represents and warrants that
the information furnished in the Questionnaire is accurate and complete in all
material respects.
1.5 Risk of Investment. The Subscriber recognizes that the purchase of the
Notes and Warrants involves a high degree of risk, including, but not limited
to, : (i) the Company has incurred substantial losses from operations; (ii) an
investment in the Company is highly speculative and only investors who can
afford the loss of their entire investment should consider investing in the
Company and the Notes and Warrants; (iii) an investment in the Notes and
Warrants is illiquid and no assurances can be given the Warrant Shares and/or
the Conversion Shares will ever be registered for resale or a market for such
securities will ever develop, or if developed, continue; (iv) transferability of
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the Notes and Warrants (and the underlying securities) is extremely limited; (v)
the Company is wholly dependent on the funds raised in the Offering to continue
its business and will require substantial additional funds in the near future
even if the Maximum Offering is completed to continue its business; (vi) there
can be no assurance that the Maximum Offering will be completed or that any
other funds will be available to the Company; (vii) no assurance can be given
that the Company will ever be able to repay the Notes if not converted prior to
maturity; (viii) no assurance can be given the Company will be able to
successfully execute on its business plan; (viii) conflicts of interest with the
Placement Agent who pursuant to the Agent Consulting Agreement (as defined
below), will receive at the Initial Closing, in addition to the other
compensation due it pursuant to the Agency Agreement, the 1,400,000 Agent Shares
(as defined below); and (ix) the large portion of the net proceeds from the
Offering to be used by the company to repay outstanding receivables, salaries
and indebtedness.
1.6 Information. The Subscriber acknowledges receipt and careful review
of: (a) the Annual Report of the Company for the fiscal year ended December 31,
2000 filed with the SEC on Form 10-KSB and Form 10KSB/A on April 2, 2001 and
April 3, 2001, respectively, (b) the Quarterly Reports of the Company for the
fiscal quarters ended March 31, 2001 and June 30, 2001 filed with the SEC on
Forms 10-QSB on May 15, 2001 and August __, 2001, respectively, (c) the
Definitive Proxy Statement filed on Schedule 14 filed with the SEC on Form 14A
on August , 2001, (d) the Agent Consulting Agreement annexed hereto as Exhibit
D, (e) the Agent Registration Rights Agreement (as defined), annexed hereto as
Exhibit E, (f) the Agency Agreement annexed hereto as Exhibit F, (f) the Note,
(g) this Subscription Agreement, (h) the Registration Rights Agreement, (i) the
Warrant, and (j) all exhibits, schedules and appendices which are part of the
aforementioned documents (collectively, the "Offering Documents"), and hereby
represents that: (i) it has been furnished by the Company during the course of
this transaction with all information regarding the Company which it has
requested; and (ii) that it has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers of the Company concerning
the terms and conditions of the Offering, and any additional information which
it has requested.
1.7 No Representations. The Subscriber hereby represents that, except as
expressly set forth in the Offering Documents, no representations or warranties
have been made to the Subscriber by the Company or any agent, employee or
affiliate of the Company, including the Placement Agent, and in entering into
this transaction the Subscriber is not relying on any information other than
that contained in the Offering Documents and the results of independent
investigation by the Subscriber.
1.8 Tax Consequences. The Subscriber acknowledges that this offering of
the Notes and Warrants may involve tax consequences and that the contents of the
Offering Documents do not contain tax advice or information. The Subscriber
acknowledges that he must retain his own professional advisors to evaluate the
tax and other consequences of an investment in the Notes and Warrants.
1.9 Transfer or Resale. The Subscriber understands that, except as set
forth in the Registration Rights Agreement: (a) the Notes, Warrants, the
Convertible Shares and the Warrant Shares (the "Securities") have not been and
are not being registered under the 1933 Act or any state securities laws; (b)
the Securities may not be offered for sale, sold, assigned, pledged, transferred
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or otherwise disposed of (each a "Disposition") unless, prior to effecting any
such Disposition (other than any transfer not involving a change in beneficial
ownership) (i) there is in effect a registration statement under the 1933 Act
covering the Disposition and the Disposition is made in accordance with such
registration statement, or (ii) the Subscriber gives written notice to the
Company of such Subscriber's intention to effect a Disposition and such notice
shall describe the manner and circumstances of the proposed Disposition, and
shall be accompanied by either (A) a written opinion of a legal counsel that a
Disposition of the Securities may be made pursuant to an exemption from such
registration, or (B) any other evidence reasonably satisfactory to counsel to
the Company; and (C) the Company is under no obligation to register the
Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any registration exemption thereunder.
1.10 Placement Agent. The Subscriber agrees that neither the Placement
Agent or any of its directors, officers, employees or agents shall be liable to
any Subscriber for any action taken or omitted to be taken by it in connection
therewith, except for willful misconduct.
1.11 Legends. The Subscriber understands that the certificates or other
instruments representing the Securities, until such time as they have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such certificates
or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A
REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a
certificate or other instrument without such legend to the holder of the
Securities upon which it is stamped, if (a) there is in effect a registration
statement under the 1933 Act covering the Disposition and the Disposition is
made in accordance with such registration statement or (b) if the Disposition of
the Securities is completed in satisfaction of the requirements of Rule 144 of
the 1933 Act.
1.12 Validity; Enforcement. If the Subscriber is a corporation,
partnership, trust or other entity, the Subscriber represents and warrants that:
(a) it is authorized and otherwise duly qualified to purchase and hold the Notes
and Warrants; and (b) that this Subscription Agreement has been duly and validly
authorized, executed and delivered and constitutes the legal, binding and
enforceable obligation of the undersigned.
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1.13 Residency. The Subscriber represents that its principal address is
furnished at the end of this Subscription Agreement.
1.14 Foreign Subscriber. If the Subscriber is not a United States person,
such Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Notes and Warrants or any use of this Subscription Agreement,
including: (a) the legal requirements within its jurisdiction for the purchase
of the Notes and Warrants; (b) any foreign exchange restrictions applicable to
such purchase; (c) any governmental or other consents that may need to be
obtained; and (d) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale or transfer of the
securities comprising the Notes and Warrants. Such Subscriber's subscription and
payment for, and his or her continued beneficial ownership of the Notes and
Warrants, will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
1.15 NASD Member. The Subscriber acknowledges that if it is a Registered
Representative of a NASD member firm, the Subscriber must give such firm notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm on the signature page hereof.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber, except as set forth
in the disclosure schedules attached hereto:
2.1 Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Subscription Agreement means any entity in which the
Company, directly or indirectly, owns capital stock and holds a majority or
similar interest) are duly organized and validly existing in good standing under
the laws of the jurisdiction in which they were organized, and have the
requisite power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Subscription Agreement, "Material
Adverse Effect" means any material adverse effect on the business, properties,
assets, operations, results of operations or financial condition of the Company
and its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby, or by the other Offering Documents or the agreements and
instruments to be entered into in connection herewith or therewith, or on the
authority or ability of the Company to perform its obligations under the
Offering Documents. A complete list of all Subsidiaries of the Company with
substantive business activities is set forth in Schedule 2.1.
2.2 Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Subscription Agreement and other Offering Documents and perform its
obligations under the Offering Documents, and to issue the Securities in
accordance with the terms of the Offering Documents. The execution and delivery
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of the Offering Documents by the Company and the consummation by the Company of
the transactions contemplated by the Offering Documents, including without
limitation the issuance of the Securities, have been duly authorized by the
Company's board of directors and no further consent or authorization is required
by the Company, its board of directors or its stockholders. The Offering
Documents 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
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
2.3 Capitalization. Prior to the Initial Closing, the authorized, issued
and outstanding securities of the Company will be set forth in Schedule 2.3 (and
at each subsequent Closing will remain the same except for securities issued in
any Closing). All of such outstanding shares have been and are, or upon issuance
will be duly authorized, validly issued, fully paid and non-assessable. Except
as disclosed in Schedule 2.3, (i) no shares of the Company's capital stock are
subject to preemptive rights under Nevada law or any other similar rights or any
liens or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding debt securities issued by the Company; (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the Company
or any of its Subsidiaries; (iv) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the 1933 Act; (v) there are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in the Offering Documents; and (vii) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement. All prior sales of securities of
the Company were either registered under the 1933 Act and applicable state
securities laws or exempt from such registration, and no security holder has any
rescission rights with respect thereto.
2.4 Issuance of Securities; Reservation. The issuance, sale and delivery
of the Securities have been duly authorized by all requisite corporate action by
the Company and, upon issuance in accordance with the Offering Documents, shall
be (a) duly authorized, validly issued, fully paid and non-assessable, (b) free
from all taxes, liens and charges with respect to the issue thereof except that
may be created by the Subscriber, and (c) entitled to the rights and preferences
set forth in the Notes and the Warrants. At the Initial Closing and at each
subsequent Closing such number of shares of Common Stock as the Placement Agent
shall so indicate will be duly authorized and reserved for issuance upon
conversion of the Notes and exercise of the Warrants. In the event the number of
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shares of Common Stock issuable upon conversion or exercise of the Notes or the
Warrants exceed the number of authorized shares of Common Stock as a result of
the conversion price or exercise price reset terms of the Notes or Warrants, the
Company shall use its best efforts to seek stockholder approval of and file a
Certificate of Incorporation to increase the authorized number of shares of
Common Stock accordingly. Upon conversion of the Notes or exercise of the
Warrants, the Conversion Shares and the Warrant Shares will be duly authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. Assuming (i) the accuracy of
the information provided by the respective Subscribers in the Subscription
Agreement and Questionnaire, (ii) that all of the offerees and Subscribers are
"accredited investors" as such term is defined in Rule 501 of Regulation D, and
(iii) that the Placement Agent has not engaged, nor will engage, in connection
with the Offering, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D, the offer and sale of the
Notes and the Warrants pursuant to the terms of this Subscription Agreement are
and will be exempt from the registration requirements of the 1933 Act and the
rules and regulations promulgated thereunder. The Company is not disqualified
from the exemption under Regulation D by virtue of the disqualification
contained in Rule 507 thereof or otherwise.
2.5 No Conflicts. Except as set forth in Schedule 2.5, the execution,
delivery and performance of the Offering Documents by the Company, the
consummation by the Company of the transactions contemplated by the Offering
Documents, and the performance by the Company of its obligations under the Notes
and the Warrants, including without limitation, the reservation for issuance and
the issuance of the Securities, will not (a) result in a violation of the
Company's Certificate of Incorporation, any certificate of designations,
preferences and rights of any outstanding series of preferred stock of the
Company, or the Company's bylaws, (b) conflict with, or constitute a default or
an event which with notice or lapse of time or both would become a default
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, lease, license or instrument (including
without limitation, any document filed as an exhibit to any of the Company's SEC
Documents (as defined below)), or (c) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the NASD) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected.
2.6 Consents. Except as contemplated by the Agency Agreement, and except
for the filing of the Registration Statement (as defined in the Registration
Rights Agreement) with the SEC, prior to the Initial Closing and filings
required pursuant to applicable federal and state securities laws and blue sky
laws, which filings the Company covenants to complete within the required
statutory period, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Offering Documents. Except as otherwise provided in the Offering Documents,
all consents, authorizations, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and its
Subsidiaries are unaware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the foregoing.
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2.7 No General Solicitation. None of the Company, its Subsidiaries, any of
their affiliates, and any person acting on their behalf, has engaged in any form
of general solicitation or general advertising (within the meaning of Regulation
D under the ▇▇▇▇ ▇▇▇) in connection with the offer or sale of the Securities.
2.8 No Integrated Offering. None of the Company, its Subsidiaries, any of
their affiliates, and any person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates and any person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other offerings.
2.9 Application of Takeover Protections; Rights Agreement. The Company and
its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the state of its incorporation which is or could become applicable to the
Subscriber as a result of the transactions contemplated by this Subscription
Agreement, including without limitation, the Company's issuance of the
Securities and the Subscriber's ownership of the Securities. The Company has not
adopted a shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.
2.10 SEC Documents; Financial Statements. Since December 31, 2000, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). All SEC
documents are available on the SEC's website. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
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consistently applied, during the periods involved (except (a) as may be
otherwise indicated in such financial statements or the notes thereto, or (b) in
the case of unaudited interim statements, to the extent they may exclude
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 its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that will not be material).
2.11 Conduct of Business; Regulatory Permits. Except as set forth on
Schedule 2.11, since December 31, 2000, the Company has not (a) incurred any
debts, obligations or liabilities, absolute, accrued, contingent or otherwise,
whether due or to become due, except current liabilities incurred in the usual
and ordinary course of business, having a Material Adverse Effect, (b) made or
suffered any changes in its contingent obligations by way of guaranty,
endorsement (other than the endorsement of checks for deposit in the usual and
ordinary course of business), indemnity, warranty or otherwise, (c) discharged
or satisfied any liens other than those securing, or paid any obligation or
liability other than, current liabilities shown on the balance sheet dated as at
December 31, 2000 and forming part of the SEC Documents, and current liabilities
incurred since December 31, 2000, in each case in the usual and ordinary course
of business, (d) mortgaged, pledged or subjected to lien any of its assets,
tangible or intangible, (e) sold, transferred or leased any of its assets except
in the usual and ordinary course of business, (f) cancelled or compromised any
debt or claim, or waived or released any right, of material value, (g) suffered
any physical damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties or business of the Company, (h) entered into
any transaction other than in the usual and ordinary course of business except
for this Subscription Agreement and the related agreements referred to herein,
(i) encountered any labor difficulties or labor union organizing activities, (j)
made or granted any wage or salary increase or entered into any employment
agreement, (k) issued or sold any shares of capital stock or other securities or
granted any options with respect thereto, or modified any equity security of the
Company, (l) declared or paid any dividends on or made any other distributions
with respect to, or purchased or redeemed, any of its outstanding equity
securities, (m) suffered or experienced any change in, or condition affecting,
its condition (financial or otherwise), properties, assets, liabilities,
business operations or results of operations other than changes, events or
conditions in the usual and ordinary course of its business, having (either by
itself or in conjunction with all such other changes, events and conditions) a
Material Adverse Effect, (n) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization policies or
rates theretofore adopted, or (o) entered into any agreement, or otherwise
obligated itself, to do any of the foregoing. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing, except for possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect. The
Common Stock is quoted on the NASD Bulletin Board, trading in the Common Stock
has not been suspended by the SEC or the NASD and the Company has received no
communication, written or oral, from the SEC or the NASD regarding the
suspension or delisting of the Common Stock from the NASD Bulletin Board. The
Company and its Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, except where the
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failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
2.12 Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, (a) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, (b)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or (c) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
2.13 Absence of Litigation. Except as set forth in Schedule 2.13, there is
no action, suit, proceeding, inquiry or investigation before or by the NASD, any
court, public board, government agency, self-regulatory organization or body, or
arbitrator pending or, to the knowledge of the Company, threatened against the
Company, the Common Stock or any of the Company's Subsidiaries or any of the
Company's or the Company's Subsidiaries' officers or directors in their
capacities as such.
2.14 Tax Status. Except as set forth in Schedule 2.14, the Company and
each of its Subsidiaries has made or filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject, except when the failure to do so would not have a Material
Adverse Effect, and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations or to the Company's knowledge otherwise due
and payable, except those being contested in good faith and has set aside on its
books reserves in accordance with GAAP reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
2.15 Securities Law Compliance. The offer, offer for sale, and sale of the
Notes and Warrants has not been registered with the SEC. The Notes and Warrants
are to be offered, offered for sale and sold in reliance upon the exemptions
from the registration requirements of Section 5 of the 1933 Act. The Company
will conduct the Offering in compliance with the requirements of Regulation D
under the 1933 Act, and the Company will file all appropriate notices of
offering with the SEC.
2.16 Title. Except as set forth in or contemplated by Schedule 2.16, the
Company has good and marketable title to all material properties and tangible
assets owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except as such as are not significant or important in relation to
the Company's business; all of the material leases and subleases under which the
Company is the lessor or sublessor of properties or assets or under which the
Company holds properties or assets as lessee or sublessee are in full force and
effect, and the Company is not in default in any material respect with respect
-10-
to any of the terms or provisions of any of such leases or subleases, and to the
Company's knowledge no material claim has been asserted by anyone adverse to
rights of the Company as lessor, sublessor, lessee or sublessee under any of the
leases or subleases mentioned above, or affecting or questioning the right of
the Company to continued possession of the leased or subleased premises or
assets under any such lease or sublease. The Company owns, leases or licenses
all such properties as are necessary to its operations as described in the
Offering Documents.
2.17 Intellectual Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service ▇▇▇▇ registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted, the lack of which could reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.17, to the Company's
knowledge, none of the Company's trademarks, trade names, service marks, service
▇▇▇▇ registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights have expired or terminated, or are expected
to expire or terminate within two years from the date of this Subscription
Agreement, except where such expiration or termination would not have either
individually or in the aggregate a Material Adverse Effect. The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of trademarks, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service ▇▇▇▇
registrations, trade secrets or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on Schedule 2.17, no claim, action or proceeding
has been made or brought against, or to the Company's knowledge, has been
threatened against, the Company or its Subsidiaries regarding trademarks, trade
name rights, patents, patent rights, inventions, copyrights, licenses, service
names, service marks, service ▇▇▇▇ registrations, trade secrets or other
infringement, except where such infringement, claim, action or proceeding would
not reasonably be expected to have either individually or in the aggregate a
Material Adverse Effect. Except as set forth on Schedule 2.17, the Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties except where the failure to do so would not have
either individually or in the aggregate a Material Adverse Effect.
2.18 Registration Rights. Except with respect to holders of the Notes and
Warrants, and except as set forth in Schedule 2.18, no person has any right to
cause the Company to effect the registration under the 1933 Act of any
securities of the Company.
2.19 Brokers. Neither the Company nor any of its officers, directors,
employees or stockholders has employed any broker or finder in connection with
the transactions contemplated by the Agency Agreement other than the Placement
Agent.
2.20 Right of First Refusal. No person, firm or other business entity is a
party to any agreement, contract or understanding, written or oral entitling
such party to a right of first refusal with respect to offerings of securities
by the Company.
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2.21 Disclosure. None of the representations and warranties of the Company
appearing in this Subscription Agreement or any information appearing in any
Exhibit or Schedule hereto or in any of the Offering Documents (other than
information received in writing by the Company from third-party sources or
statements which are described as a "belief" or "expectation" of the Company or
similarly qualified, which statements the Company believes to the best of its
knowledge as of the date hereof and at each Closing Date to be true and accurate
in all material respects and not misleading), when considered together as a
whole, contains, or on any Closing Date will contain, any untrue statement of a
material fact or omits, or on any Closing Date will omit, to state any material
fact required to be stated herein or therein in order for the statements herein
or therein, in light of the circumstances under which they were made, not to be
misleading.
2.22 Certain Officers. As of the date hereof, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Key
Executives") are employed by the Company on a full-time basis, and, to the
Company's knowledge, none of the Key Executives is planning to cease being
employed by the Company on a full-time basis in their current capacity and the
Company is not aware of any circumstances related to the employment of the Key
Executives, apart from circumstances related to the operations of the Company as
a whole, that could result in cessation of full-time employment of any of the
Key Executives in their current capacities.
III. TERMS OF SUBSCRIPTION
3.1 Closing and Termination of Offering. Provided the Minimum Offering
shall have been subscribed for, all conditions to closing set forth in Section 3
of the Agency Agreement and Article V and Article VI hereof have been satisfied
or waived and neither the Company nor the Placement Agent have notified the
other that they do not intend to effect the closing of the Minimum Offering, a
closing (the "Initial Closing") shall take place at the offices of counsel to
the Placement Agent, Gusrae, ▇▇▇▇▇▇ & Bruno, PLLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ within five (5) business days thereafter (but in no event later
than five (5) business days following the Termination Date), which closing date
may be accelerated or adjourned by agreement between the Company and the
Placement Agent. At the Initial Closing, payment for the Notes and Warrants
issued and sold by the Company shall be made against delivery of the Notes and
Warrants. The Company and the Placement Agent may consummate subsequent closings
of the Offering, upon mutual agreement only, each of which shall be subject to
satisfaction or waiver of the conditions to closing set forth in Article V and
Article VI hereof and in Section 3 of the Agency Agreement, and each of which
shall be deemed a "Closing" hereunder. The date of the last closing of the
Offering is hereinafter referred to as the "Final Closing" and the date of any
Closing hereunder is hereinafter referred to as a "Closing Date." The offering
period for the Offering shall commence on the day the Transaction Documents (as
defined in the Agency Agreement) relating thereto are first made available to
the Placement Agent by the Company for delivery in connection with the offering
for sale of the Notes and Warrants and shall continue until the earlier to occur
of: (i) the sale of the Maximum Offering (including the Over-Allotment
Securities); and (ii) 5:00 p.m. (New York time), September 25, 2001; provided,
however, that if the Minimum Offering closes by September 25, 2001, the Offering
Period shall automatically be extended until November 30, 2001. The day that the
Offering Period terminates is hereinafter referred to as the "Termination Date."
-12-
3.2 Expenses; Fees. Simultaneously with payment for and delivery of the
Notes and Warrants at each Closing, the Company shall: (A) pay to the Placement
Agent a cash fee equal to eight (8%) percent of the aggregate purchase price of
the Notes and Warrants sold (the "Cash Fee"), payment of which shall be made
directly from the Subscribers at each Closing; (B) reimburse the Placement Agent
for its actual out-of-pocket expenses incurred in connection with the Offering,
including, without limitation, the reasonable fees and expenses of its counsel
including, without limitation, due diligence investigation expenses, travel and
mailing expenses, up to a maximum of $20,000, payment of which shall be made
directly from the Subscribers at each Closing; (C) pay all expenses in
connection with the qualification of the Notes and Warrants under the blue sky
laws of the states which the Placement Agent shall designate, including legal
fees, filing fees and disbursements of Placement Agent's counsel in connection
with such blue sky matters, payment of which shall be made directly from the
Subscribers at each Closing; and (D) issue to the Placement Agent seven-year
warrants to purchase twelve (12%) percent of the shares of Common Stock issuable
upon conversion of the Notes and exercise of the Warrants issued in the Offering
at the exercise price of the Warrants (the "Agent Warrants").
3.3 Certificates. The Subscriber hereby authorizes and directs the
Company, upon each closing in the Offering, to deliver certificates representing
the securities to be issued to such Subscriber pursuant to this Subscription
Agreement either (a) to the Subscriber's address indicated in the Questionnaire,
or (b) directly to the Subscriber's account maintained with the Placement Agent,
if any.
IV. COVENANTS
4.1 Registration Rights Agreement. The Company shall provide for the
registration of the Conversion Shares and the Warrant Shares for resale under
the 1933 Act, as provided in the Registration Rights Agreement. The Company and
the Subscriber agree to the terms and provisions of Registration Rights
Agreement, which terms and provisions are incorporated herein by reference in
their entirety and made a part hereof.
4.2 Best Efforts. Each party shall use its best efforts timely to satisfy
each of the conditions to be satisfied by it as provided in Article V and
Article VI of this Subscription Agreement.
4.3 Form D and Blue Sky. The Company shall file a Form D with respect to
the Preferred Shares and Preferred Warrants as required under Regulation D under
the 1933 Act and, upon written request, provide a copy thereof to the Subscriber
promptly after such filing. The Company shall, on or before the Closing, take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for or to qualify the Notes and Warrants for sale to the
Subscriber pursuant to this Subscription Agreement under applicable securities
or "Blue Sky" laws of the states of the United States, and shall provide
evidence of any such action so taken to the Subscriber on or prior to the
Closing. The Company shall make all filings and reports relating to the offer
and sale of the Securities required under applicable securities or "Blue Sky"
laws of the states of the United States following the Closing.
-13-
4.4 No Redemption or Repurchase. Unless approved by the holders owning no
less than 51% of the then outstanding aggregate principal amount of Notes or (B)
the Placement Agent, and except as may be provided in the Notes, the Company
shall not purchase or redeem any capital stock of the Company or any Subsidiary
or any indebtedness of the Company or any Subsidiary convertible into or
exchangeable for its capital stock or any option, warrant or right to purchase
any such capital stock or convertible security. Notwithstanding the foregoing,
the Company may repurchase from its employees shares of Common Stock purchased
by its employees pursuant to early exercises of stock options or restricted
stock purchases if such employees terminated their employment with the Company
prior to the vesting of ownership of such shares and if the Company pays no more
per share of Common Stock than the purchase price per share paid by such
employees.
4.5 Use of Proceeds. The Company shall only use the proceeds of the sale
of the Notes and Warrants for the purpose set forth in Schedule 4.5 hereto.
V. CONDITIONS TO CLOSING IN FAVOR OF THE COMPANY
The obligation of the Company hereunder to issue and sell Notes and
Warrants to the Subscriber at the Closing is subject to the satisfaction, at or
before the Closing, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing the Subscriber with prior
written notice thereof:
5.1 Offering Documents. The Subscriber shall have executed a
Questionnaire, a Subscription Agreement and delivered the same to the Company.
5.2 Purchase Price. The Subscriber shall have delivered to the Company the
purchase price for the Notes and Warrants being purchased by the Subscriber at
the Closing in the manner set forth in Section 1.1, less its proportionate
shares of the fees and expenses as set forth in Section 3.2 hereof, which fees
and expenses shall be paid directly by Subscriber as set forth in Section 3.2.
5.3 Representations and Warranties. The representations and warranties of
the Subscriber shall be true and correct in all material respects as of the date
when made and as of the Closing as though made at that time, and the Subscriber
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Subscription Agreement to
be performed, satisfied or complied with by the Subscriber at or prior to the
Closing.
5.4 Other Matters. All opinions, certificates and documents and all
proceedings related to this Offering shall be in form and content reasonably
satisfactory to the Company and its legal counsel
VI. CONDITIONS TO CLOSING IN FAVOR OF THE SUBSCRIBER
The obligation of the Subscriber hereunder to purchase the Notes and
Warrants is subject to the satisfaction, at or before the Closing, of each of
the following conditions, provided that these conditions are for the
Subscriber's sole benefit and may be waived by the Subscriber at any time in its
sole discretion by providing the Company with prior written notice thereof:
-14-
6.1 Offering Documents. The Company shall have executed and delivered to
the Subscriber each of the Offering Documents to which its signature is
required.
6.2 Lock-Up Agreements. The Company shall have delivered to the Placement
Agent a Lock-Up Agreement on such terms and conditions as agreed to by the
Company and the Placement Agent executed by each of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Small and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
6.3 Legal Opinion. The Subscriber shall have received the opinion of the
Company's counsel dated as of the Closing, in substantially the form provided
for in Section 3(b)(v) of the Agency Agreement.
6.4 Representations and Warranties. The representations and warranties of
the Company shall be true and correct as of the date when made and as of the
Closing as though made at that time (except for representations and warranties
that reference a specific date which shall have been true and correct in all
material respects as of such date), and the Company shall have performed,
satisfied and complied in all respects with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing, except where the
failure of such representations and warranties to be true and correct as stated
above and except for such nonperformance, failure to satisfy or comply as would
not, individually or in the aggregate, have a Material Adverse Effect.
6.5 Certain Placement Agent Documents. The Company shall have executed and
delivered to the Placement Agent the Agent Consulting Agreement, the Agent
Registration Rights Agreement and the Agent Shares all as defined in the Agency
Agreement.
6.6 Due Diligence. The Placement Agent shall have completed its due
diligence investigation of the Company, including without limitation, its review
of the Company's financial statements, projections, business prospects, capital
structure, and contractual arrangements, to the Placement Agent's reasonable
satisfaction.
6.7 Closing Documents. At the Closing, the Company shall have delivered to
the Placement Agent the following: (A) a certificate of the Chief Executive
Officer stating that (i) the condition set forth in Section 6.4 and Section 6.8
have been satisfied, (ii) except as set forth in the any Schedule or Exhibit to
this Subscription Agreement or the Agency Agreement, since December 30, 2000,
there has been no event, condition or circumstance that has had or could
reasonably be expected to have a Material Adverse Effect, and (iii) the Company
has complied with its covenants and agreements set forth in the Transaction
Documents, and (B) a certificate of the Secretary of the Company containing: (i)
true and complete copies, as of the Closing Date, of the Certificate of
Incorporation and By-laws of the Company and of the certificates of designations
of all series of preferred stock of the Company, (ii) true and complete copies
of the resolutions of the Board of Directors of the Company approving the
Transaction Documents, the form of Notes and Warrants, the form of this
Subscription Agreement, this Offering and all documents and matters incident
thereto, and (iii) a certification of authenticity of the signatures of the
officers of the Company who have executed and delivered the documentation for
this Offering.
-15-
6.8 Conditions of Agency Agreement. All of the conditions to closing set
forth in Section 3 of the Agency Agreement shall have been satisfied.
6.9 Other Matters. All opinions, certificates and documents and all
proceedings related to this Offering shall be in form and content satisfactory
to the Placement Agent and its counsel.
VII. RIGHTS OF TERMINATION
7.1 Termination by Subscriber or Company. This Subscription Agreement may
be terminated at any time prior to the Closing: (a) by mutual written consent of
the parties hereto; (b) by either the Company or (b) by the Company or the
Subscriber upon written notice to the other party if any court or governmental
authority of competent jurisdiction shall have issued a final, non-appealable
order restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Subscription Agreement. Termination of this
Subscription Agreement under this Section 7.1 shall result in this Subscription
Agreement becoming void and of no further force and effect, except that a
termination shall not release, or be construed as so releasing, any party hereto
from any liability or damage to the other party hereto arising out of the
breaching party's willful and material breach of the warranties and
representations made by it, or willful and material failure in performance of
any of its covenants, agreements, duties or obligations provided hereunder, and
the obligations under Section 8.8 shall survive such termination.
7.2 Termination by the Placement Agent. In the event the Placement Agent
decides for any reason prior to the Closing not to proceed with the Offering,
upon notice to the Company and the Subscriber, this Subscription Agreement shall
be terminated and become void and of no further force and effect, and none of
the Company, the Placement Agent, or the Subscriber shall have any further
obligations pursuant to this Subscription Agreement, including without
limitation, the obligation to consummate the Offering; provided, however, that
the obligations under Section 8.8 and Section 8.12 shall survive such
termination.
VIII. MISCELLANEOUS
8.1 Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Subscription Agreement
must be in writing and will be deemed to have been delivered: (a) upon receipt,
when delivered personally, (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party), or (c) one (1) business day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:
-16-
If to the Company:
eClickMD, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇, CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Subscriber, to its address and facsimile number set forth at the
end of this Subscription Agreement, or to such other address and/or facsimile
number and/or to the attention of such other person as specified by written
notice given to the Company five (5) days prior to the effectiveness of such
change. Written confirmation of receipt (a) given by the recipient of such
notice, consent, waiver or other communication, (b) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission, or (c) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an
overnight courier service in accordance with clauses (a), (b) or (c) above,
respectively.
8.2 Entire Agreement; Amendment. This Subscription Agreement supersedes
all other prior oral or written agreements between the Subscriber, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Subscription Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Subscriber makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Subscription Agreement may be amended or waived other than by an instrument
in writing signed by the Company and the holders of at least a majority of the
aggregate principal amount of Notes then outstanding (or if prior to the
Closing, the Subscribers purchasing at least a majority of the aggregate the
principal amount of the Notes to be purchased at the Closing). No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the principal amount of Notes then outstanding.
8.3 Severability. If any provision of this Subscription Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Subscription Agreement in that jurisdiction or the validity or
enforceability of any provision of this Subscription Agreement in any other
jurisdiction.
8.4 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed solely in accordance with the internal laws of the State of New York
with respect to contracts made and to be fully performed therein, without regard
to the conflicts of laws principles thereof. The parties hereto hereby expressly
and irrevocably agree that any suit or proceeding arising under this Agreement
or the consummation of the transactions contemplated hereby, shall be brought
solely in a federal or state court located in the City, County and State of New
York. By its execution hereof, Company hereby expressly and irrevocably submits
-17-
to the in personam jurisdiction of the federal and state courts located in the
City, County and State of New York and agrees that any process in any such
action may be served upon it personally, or by certified mail or registered mail
upon Company or such agent, return receipt requested, with the same full force
and effect as if personally served upon Company in New York City. The parties
hereto each waive any claim that any such jurisdiction is not a convenient forum
for any such suit or proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other party hereto of its reasonable counsel fees and disbursements.
8.5 Headings. The headings of this Subscription Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Subscription Agreement.
8.6 Successors And Assigns. This Subscription Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Notes and the Warrants. The Company
shall not assign this Subscription Agreement or any rights or obligations
hereunder. Subscriber may assign some or all of its rights hereunder without the
consent of the Company, provided, however, that any such assignment shall not
release the Subscriber from its obligations hereunder unless such obligations
are assumed by such assignee and the Company has consented to such assignment
and assumption, which consent shall not be unreasonably withheld.
8.7 No Third Party Beneficiaries. This Subscription Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
8.8 Survival. The representations and warranties of the Company and the
Subscriber contained in Article I and Article II and the agreements set forth
this Article VIII shall survive the Closing for a period of two years.
8.9 Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Subscription Agreement and the consummation of
the transactions contemplated hereby.
8.10 No Strict Construction. The language used in this Subscription
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
8.11 Legal Representation. The Subscriber acknowledges that: (a) it has
read this Subscription Agreement and the exhibits hereto; (b) it understands
that the Company has been represented in the preparation, negotiation, and
execution of this Subscription Agreement by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq., counsel to
the Company; (c) it understands that the Placement Agent has been represented by
its own counsel, and that such counsel has not represented and is not
representing the Subscriber; (d) it has either been represented in the
preparation, negotiation, and execution of this Subscription Agreement by legal
counsel of its own choice, or has chosen to forego such representation by legal
counsel after being advised to seek such legal representation; and (e) it
understands the terms and consequences of this Subscription Agreement and is
fully aware of its legal and binding effect.
-18-
8.12 Expenses of Enforcement. The Company shall pay all fees and expenses
(including reasonable fees and expenses of counsel and other professionals)
incurred by the Subscriber or any successor holder of Notes or Warrants or
Conversion Shares or Warrant Shares in enforcing any of its rights and remedies
under this Subscription Agreement, the Notes, the Warrants or the Registration
Rights Agreement.
8.13 Confidentiality. The Subscriber agrees that, at all times during the
period ending five (5) business days after the filing by the Company with the
SEC of its next Annual Report on Form 10-KSB following the date hereof, it shall
keep confidential and not divulge, furnish or make accessible to anyone, the
confidential information concerning or relating to the business or financial
affairs of the Company contained in the Offering Documents to which it has
become privy by reason of this Subscription Agreement.
8.14 Counterparts. This Subscription Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
8.15 Registration Rights Agreement. By execution of this Agreement,
Subscriber hereby agrees to all terms and conditions set forth in the
Registration Rights Agreement as if Subscriber executed such Registration Rights
Agreement directly.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Subscription Agreement
as of the date first written above.
SUBSCRIBER **: CO-SUBSCRIBER **:
Younis Zubchevich
---------------------------------- ------------------------------------
Signature of Subscriber Signature of Co-Subscriber
Gryphon Opportunities Fund I LLC
By: YA Management I LLC
---------------------------------- ------------------------------------
Name of Subscriber [please print] Name of Co-Subscriber [please print]
---------------------------------- ------------------------------------
Address of Subscriber Address of Co-Subscriber
---------------------------------- ------------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Identification Number of
Subscriber Co-Subscriber
Name of Holder(s) as it should appear on the security certificates* [please
print]
* Please provide the exact names that you wish to see on the certificates
(1) For individuals, print full name of subscriber.
(2) For joint, print full name of subscriber and all co-subscribers.
(3) For corporations, partnerships, LLC, print full name of entity, including
"&," "Co.," "Inc.," "etc," "LLC," "LP,"etc.
(4) For Trusts, print trust name (please contact your trustee for the exact
name that should appear on the certificates.)
(5) For ▇▇▇ account maintained at Gryphon, print "_______________as C/F FBO
[client name]."
Subscriber's Account Number at Commonwealth Associates, if applicable:
------------------------------------------------
Dollar Amount of Notes and Warrants Subscribed For: $ 217,391
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Dollar Amount of Notes and Warrants
Subscription Accepted: $ 217,391
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**If Subscriber is a Registered SUBSCRIPTION ACCEPTED BY THE COMPANY
Representative with an NASD member
firm or an affiliated person of an ECLICK MD, INC.
NASD member firm, have the
acknowledgment to the right signed
by the appropriate party: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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The undersigned NASD member firm
acknowledges receipt of the notice
required by Rule 3040 of the NASD
Conduct Rules.
Name of NASD Member Firm
By:
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Authorized Officer
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