FORM OF SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT made as of this _____ day of _______ 2004
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 intends to change its name to SecureCare
Technologies, Inc. on or around February 24, 2004 (the "Name Change"); and
WHEREAS, the Company also intends to effect a 1.5 for 1 forward split
(the "Stock Split") of its shares of common stock, par value $.001 per share
(the "Common Stock"), to become effective on or around February 24, 2004, so
that after the Stock Split the Company will have 15,000,000 shares of Common
Stock, issued and outstanding (prior to the issuance of any shares of Common
Stock in this Offering); and
WHEREAS, unless otherwise specifically provided herein all shares
amounts give effect to the Stock Split; and
WHEREAS, the Company desires to issue a minimum (the "Minimum
Offering") of $200,000 (4 Units) aggregate amount of units (a "Unit" and
collectively, the "Units"), and a maximum (the "Maximum Offering") of $600,000
(12 Units) aggregate amount of Units in a private placement (the "Offering"), at
a purchase price of $50,000 per Unit;
WHEREAS, each Unit shall consist of (i) a $50,000 aggregate principal
amount Senior Subordinated Promissory Note bearing interest at the rate of seven
and one-half (7.5%) percent per annum (each a "Note", and collectively, the
"Notes") in the form set forth on EXHIBIT A hereto, and (ii) fifty thousand
(50,000) shares (the "Shares") of the Company's common stock, par value $.001
per share (the "Common Stock"); and
WHEREAS, Gryphon Financial Securities Corp. is acting as placement
agent (the "Placement Agent") in the Offering and will receive the compensation
set forth in Section 3.2 of this Agreement; and
WHEREAS, the Shares and the Extension Shares (as defined in Section 5
of the Note), are entitled to registration rights on the terms set forth in the
Registration Rights Agreement (the "Registration Rights Agreement"), attached
hereto as EXHIBIT B 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 UNITS AND REPRESENTATIONS BY AND COVENANTS OF
SUBSCRIBER
1.1. Subscription for Units. Subject to the terms and conditions
hereinafter set forth, the Subscriber hereby subscribes for and agrees to
purchase from the Company such aggregate amount of Units as is set forth upon
the signature page hereof; and the Company agrees to sell such Units to the
Subscriber for said purchase price subject to the Company's right to sell to the
Subscriber such lesser number of Units 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 "▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. as Escrow Agent
for eClickMD, Inc." or by wire transfer of funds, contemporaneously with the
execution and delivery of this Subscription Agreement. Wire transfers should be
made to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. - ▇▇▇▇ Account, Account Number 291-500-155-865,
Chase Manhattan Bank, Routing Number ▇▇▇▇▇▇▇▇▇, Branch 291, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Units, Notes, Shares and Extension Shares
(collectively, the "Securities") shall be delivered (except for the Extension
Shares), by the Company no later than the later of (i) ten (10) days after the
Closing (as defined below) or (ii) ten (10) days after the effective date of the
Name Change and Stock Split.
1.2. Reliance on Exemptions. The Subscriber acknowledges that this
Offering 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 Units.
1.3. Investment Purpose. The Subscriber represents that the
Securities 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 Securities 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 Units. 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 UNITS INVOLVES A HIGH DEGREE OF RISK, INCLUDING, BUT NOT LIMITED
TO THE RISKS SET FORTH IN THE SECTION TITLED "RISK FACTORS," IN THE COMPANY'S
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2002 (OF WHICH FORM 10-KSB AND
SPECIFICALLY THE "RISK FACTORS" SECTION THEREIN SUBSCRIBER EXPRESSLY
ACKNOWLEDGES COMPLETE AND FULL REVIEW AND UNDERSTANDING), AS WELL AS THE RISKS
SET FORTH BELOW:
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ALL SHARE AND PER SHARE INFORMATION IN THIS SUBSCRIPTION AGREEMENT
REFLECTS A 1.5 FOR 1 FORWARD STOCK SPLIT OF THE COMMON STOCK EXPECTED TO OCCUR
IN FEBRUARY 2004.
(a) Prior Bankruptcy Proceedings. On May 13, 2003 (the
"Commencement Date"), the Company filed a voluntary petition under Chapter 11 of
Title 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Western District of Texas (the
"Bankruptcy Court"), Case No. 03-12387. During the course of its Chapter 11
proceeding, the Company operated its business and managed its assets as a
debtor-in-possession pursuant to Section 1107(a) and 1108 of the Bankruptcy
Code.
On August 6, 2003, the Company and Gryphon Opportunities Fund, LLC, the
sole secured creditor of the Company at such time and an affiliate of the
Placement Agent (the "Affiliated Fund") filed a proposed Disclosure Statement
and Joint Plan of Reorganization, dated August 5, 2003 (the "Plan") with the
Bankruptcy Court. On October 23, 2003, after notice and a hearing, the
Bankruptcy Court signed the Disclosure Statement Order, approving the Company's
Disclosure Statement. On October 24, 2003, the Company commenced the
solicitation of holders of claims entitled to vote to accept or reject the Plan.
On December 2, 2003, after notice and a hearing, the Bankruptcy Court
entered its Findings of Fact, Conclusions of Law and Order confirming the
Debtor's Joint Plan of Reorganization dated as of August 5, 2003 (the
"Confirmation Order"). The Plan became final and non-appealable on December 13,
2003 and was deemed effective December 15, 2003 (the "Effective Date"). The Plan
and the Confirmation Order are attached as EXHIBIT 2.1 and EXHIBIT 2.2,
respectively, to the Company's Current Report on Form 8-K, dated December 15,
2003 (the "8-K").
The following is a summary of the material features of the Plan and is
qualified in its entirety by reference to the Plan itself. Among other things,
the Plan generally provides that (i) all equity interests and rights in the
Company prior to the Effective Date were canceled, (ii) the Company's sole
secured creditor, the Affiliated Fund, received 13,935,000 shares of Common
Stock (after the Affiliated Fund's transfer of 690,000 shares of Common Stock to
various third parties as required pursuant to the Confirming Order), (iii)(a)
unsecured creditors received 375,000 shares of Common Stock (2.5% of the issued
and outstanding shares of Common Stock as of the Effective Date), (b) a cash
dividend equal to two and one-half percent (2.5%) of the amount of their allowed
claim, and (c) an assignment of the Company's rights under a pre-petition
judgment in the amount of approximately $1 million, entered in favor of the
Company, (iv) equity interest holders in the Company each received 150 shares of
Common Stock, regardless of the size of their pre-petition equity interests, and
(v) post-petition secured loans to the Company continued for one (1) year
following the Confirmation Date in accordance with the terms of the Court's
Order Authorizing Post-Petition Financing.
(b) Risk of Loss of Investment. As detailed in this
Subscription Agreement and in the "Risk Factors" section of the Company's Form
10-KSB, an investment in the Company and the Units offered hereby involve a high
degree of risk. An investment in the Units is suitable only for investors who
can bear a loss of their entire investment.
(c) Control of the Company by the Placement Agent;
Conflict of Interest. As of the date of this Subscription Agreement, the
Affiliated Fund is owed by the Company $544,490 aggregate principal amount from
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loans made by it to the Company, which loans are secured by all of the assets of
the Company and are due at such times as set forth in the Confirmation Order. In
addition, York Avenue Holding Corp., an affiliate of the Placement Agent
("York") has outstanding $107,800 aggregate principal amount of loans, due and
payable on various dates through and until July 31, 2005 ($24,800 of which is to
be paid out of the net proceeds from the Offering at the Initial Closing, (as
defined in Section 3.1 below).
Prior to the sale of any Securities in this Offering, the Placement
Agent beneficially owns 15,935,000 shares of Common Stock. Of such 15,935,000
shares of Common Stock, (i) 2,000,000 shares were issued to the Placement Agent
in February 2004 for consulting services provided in January 2004, and (ii) the
remaining 13,935,000 shares were issued to the Affiliated Fund pursuant to the
Confirmation Order. Such 15,935,000 shares of Common Stock represent 82.35% of
the issued and outstanding shares of Common Stock.
For acting as placement agent for the Offering, the Placement Agent
will receive a cash fee equal to eight (8%) percent of the aggregate purchase
price of all Units sold (up to $48,000) and a non-accountable expense allowance
equal to one (1%) percent of the aggregate purchase price of all Units sold (up
to $12,000), and warrants to purchase shares of Common Stock equal to ten (10%)
percent of the aggregate number of Shares issued in the Offering (up to 60,000
shares) (the "Agent Warrants").
The $544,490 aggregate Principal Amount of outstanding indebtedness of
the Company to affiliates of the Placement Agent, the shares of Common Stock
beneficially owned by the Placement Agent and its affiliates and the fees
payable and warrants issuable to the Placement Agent as compensation for acting
as Placement Agent in connection with the Offering, create conflicts of interest
for the Placement Agent in acting in the best interests of itself as opposed to
investors in this Offering. Moreover, a result of owning such 15,935,000 shares
of Common Stock, the Placement Agent controls the Company, is able to elect the
Board of Directors (which appoints the officers) and generally controls all
Company decisions.
(d) Value of Shares is Speculative. In accordance with
the Plan and the Confirmation Order, all of the outstanding shares of the
Company's Common Stock were cancelled effective December 15, 2003, and
15,000,000 new shares of Common Stock will be issued on or around February 13,
2004, in accordance with the Plan and the Confirmation Order. Therefore, from
December 15, 2003 until the date of issuance of such new 15,000,000 shares of
Common Stock, the Company's shares of Common Stock have not traded on the NASD
Bulletin Board. All terms of the Notes, the Shares and the Agent Warrants were
determined by negotiations between the Placement Agent and the Company. There
is, however, no relationship between such items and the Company's assets,
earnings, book value and/or any other objective criteria of value.
(e) Dependence on Net Proceeds. The Company is wholly
dependent upon the net proceeds of this Offering to fund its operations. There
is no commitment by any person to purchase Units and there is no assurance that
the Maximum Offering, or any number of Units will be sold. From the net proceeds
of this Offering, the Company intends to repay approximately $213,000 of
outstanding indebtedness of the Company including, but not limited to, $24,800
to an affiliate of the Placement Agent and approximately $175,000 to be
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distributed to creditors and other priority claimants, on or around February 13,
2004, in accordance with the Plan and Confirmation Order. Furthermore
approximately $25,000 of net proceeds will be used by the Company to pay
outstanding payables and accrued salaries. The Company's use of net proceeds of
the Offering to pay these and other obligations will further reduce funds
available to enable the Company to conduct its operations. There is no assurance
that the Company will sell a sufficient number of Units in this Offering on a
timely basis or that the net proceeds after payment of debts and other
obligations will be adequate for the Company's needs.
(f) Need for Additional Capital The Company believes that
the successful completion of the Maximum Offering will satisfy its operating
capital needs for an estimated approximately four (4) months based upon, among
other items, its currently anticipated business activities. The Company
anticipates incurring substantial losses in the future and will likely require
significant additional financing following the Offering, regardless of the net
proceeds received, in order to satisfy its cash requirements. The Company's need
for additional capital to finance its operations and growth will be greater
should, among other things, its revenue or expense estimates prove to be
incorrect, particularly if the Company does not sell a sufficient number of
Units in the Offering. If less than the Maximum Offering is completed, the
Company may be required to reduce the scope of its business activities until
such time, if ever, as the Company can obtain other financing. The Company
cannot predict the timing or amount of its capital requirements at this time.
The Company may not be able to obtain additional financing in sufficient amounts
or on acceptable terms when needed, which could adversely affect its operating
results and prospects. The Placement Agent has indicated to the Company that
following the final closing of this Offering, the Placement Agent would act as
Placement Agent in connection with a private placement of the Company's equity
securities to raise additional funds in a maximum amount of $2,000,000 (the
"Proposed Offering"). No assurances can be given that the Placement Agent will
be able to raise any funds in the Proposed Offering and/or that the Placement
Agent will be able to raise such funds on terms of that are favorable to the
Company.
(g) Restrictions on Resale. The Units, the Notes and the
Shares are "restricted" securities and may not be resold or otherwise
transferred except pursuant to an effective registration statement or an
exemption under the 1933 Act and applicable state or "blue sky" laws.
(h) Limited and Operating History; History of Losses;
Development Stage Entity. The Company has incurred substantial losses since its
inception in May 1999, and currently is experiencing a substantial cash flow
deficiency from operations. To date and since inception, the Company has not
generated any material revenues. The Company expects to incur substantial
additional losses for the foreseeable future. The Company incurred net losses of
$3,938,685 during 2001, y $2,873,215 during 2002, and $481,012 through September
2003, and has a very limited operating history on which the Company can evaluate
its potential for future success. The Company is a developmental stage entity.
To evaluate the Company, investors should evaluate the Company in light of the
expenses, delays, uncertainties, and complications typically encountered by
early-stage development businesses, many of which are beyond the Company's
control. Early-stage development businesses commonly face risks such as the
following:
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o lack of sufficient capital;
o unanticipated problems, delays, and expenses relating
to product development and implementation;
o lack of intellectual property;
o licensing and marketing difficulties;
o competition;
o technological changes; and
o uncertain market acceptance of products and services.
(i) Capital Structure of the Company. The following sets
forth the capital structure of the Company prior to the sale of any Securities
in the Offering.
(1) 19,350,000 shares of Common Stock issued and
outstanding as follows:
(A) 13,935,000 shares by the Affiliated Fund;
(B) 2.000,000 shares by the Placement Agent
pursuant to a Consulting Agreement;
(C) 1,065,000 shares by six (6) non-affiliated
creditors of the Company and to the shareholders of the Company, prior
to the filing of the Plan;
(D) 1,600,000 shares to the executive officers
and/or directors of the Company, up to 800,000 shares of which will be
subject to forfeiture, in the event that any such executive officer or
director does not maintain a relationship with the Company for at least
twelve (12) months after the issuance of such shares; and.
(E) 750,000 shares to be issued at a future date
to employees of the Company.
1.6 Information. The Subscriber acknowledges receipt and full and
careful review and understanding of: (a) the Current Report of Form 8-K filed by
the Company with the SEC on December 15, 2003; (b) "The Order Confirming Plan"
by the United States Bankruptcy Court for the Western District of Texas, Austin
Division, dated December 2, 2003, approving the Joint Plan under Chapter 11 of
the United States Bankruptcy Code filed by the Company and Gryphon Opportunities
Fund, L.P., dated August 3, 2003; (c) the Joint Plan of Reorganization dated
August 5, 2003, and amended by the Bankruptcy Court's Confirmation Order dated
December 2, 2003; (d) the Quarterly Report of the Company for the fiscal quarter
ended September 30, 2003 filed with the SEC on Form 10-QSB on November 26, 2003,
(e) this Subscription Agreement, (f) the Annual Report of the Company for the
fiscal year ended December 31, 2002 filed with the SEC on Form 10-KSB on April
23, 2002, (g) the Note, (h) the Registration Rights Agreement, and (i) 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
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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 Units 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 Units.
1.9 Transfer or Resale. The Subscriber understands that, except as
expressly set forth in the Registration Rights Agreement: (a) none of the
Securities have 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 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 nor 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.
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
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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
Units; 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.
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 Units or any use of this Subscription Agreement,
including: (a) the legal requirements within its jurisdiction for the purchase
of the Units; (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
Units. Such Subscriber's subscription and payment for, and his or her continued
beneficial ownership of the Units, 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 an 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.
1.16 Escrow Agent; Escrow Agreement. Pursuant to the terms of an
escrow agreement (the "Escrow Agreement") by and between the Company, the
Placement Agent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., as escrow agent (the "Escrow Agent")
for the Offering, all proceeds from the sale of the Units shall be sent directly
to and held in escrow by the Escrow Agent pending each Closing (as defined
below).
1.17 Certain Supplemented Information.
(a) Directors and officers of the Company. The executive
officers and directors of the Company as of the date of this Subscription
Agreement are listed below:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and Chief Medical
Officer. ▇▇. ▇▇▇▇▇▇, 62, has been a Director of the Company since September
2000. He is a gastroenterologist in private practice in Santa Monica, California
and was President of the American Medical Association ("AMA") from July 2001 to
July 2002. Prior to becoming President, ▇▇. ▇▇▇▇▇▇ served as Speaker of the
AMA's House of Delegates for five years. He has been active in the affairs of
the AMA for the past twenty years, having served for nine years as a member and
then Chair of the AMA Council on Long Range Planning and Development. From 1994
to 1998, ▇▇. ▇▇▇▇▇▇ served as a member of the Advisory Committee to the Director
of the National Institute of Health. ▇▇. ▇▇▇▇▇▇ served as President of the
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California Medical Association (CMA) from 1992 to 1993, was Vice Speaker and
Speaker of the CMA House of Delegates for nine years, and a member of its Board
of Trustees for twelve years and chaired numerous committees of the CMA
including the Finance Committee, the Liaison Committee to State Hospital medical
staffs, and was an active member of the CMA Speakers Bureau on Tort Reform. ▇▇.
▇▇▇▇▇▇ is a graduate of Rutgers University, and received his M.D. degree from
Hahnemann Medical College. Following residency training at Hahnemann, ▇▇. ▇▇▇▇▇▇
served as a Lt. Commander in the United States Public Health Service, Heart
Disease and Stroke Control Program from 1968 to 1970, and then took a
gastroenterology fellowship at UCLA. He is a fellow of the American College of
Physicians, is a member of both the American Gastroenterology Association and
the American Society of Internal Medicine, and is a Past President of the
Southern California Society of Gastrointestinal Endoscopy. He is also the
Chairman of the Audio Digest Foundation, a provider of continuing medical
education to healthcare professionals, a member of the Board of Governors of
Marathon Multimedia, a subsidiary of Audio Digest Foundation that provides
information management solutions to medical societies, Chairman of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Group, a subsidiary of Audio Digest Foundation that records sound and video of
professional association meetings, and an assistant clinical professor at the
University of California-Los Angeles School of Medicine. ▇▇. ▇▇▇▇▇▇ was Vice
Chairman of American Sound and Video in 2000 when it filed a petition for
reorganization pursuant to Chapter 11 under the U.S. Bankruptcy Code. The
proceeding was converted to Chapter 7 under the U.S. Bankruptcy Code and the
company was liquidated.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director, President and Chief
Operating Officer. ▇▇. ▇▇▇▇▇▇▇, 60, joined the Board of Directors of the Company
in May 2002 and became Chief Operating Officer in September 2002. He has been an
advisor and member of the Board of Directors of numerous early stage information
technology companies during the past 15 years, including , from 1991 to 1999,
Voice Technology Group, a manufacturer and distributor of telecommunications
components that has been acquired by Intel Corporation. He served as President
and CEO of Viewfacts ▇▇▇▇▇▇▇ Inc., a private learning systems and market
research company, from 1990 to 1994. He has also been CFO and COO of Compuware,
a global software and professional services firm. He has also held chief
technology positions at Continental Information Systems, a leasing and financial
services company, from 1994 to 1996 and Agway, Inc., an agricultural
cooperative, from 1964 to 1984. He has been a visiting Professor at Syracuse
University's Graduate School of Management and was Chairman of the Curriculum
Board while he completed his Ph.D. curriculum requirements. ▇▇. ▇▇▇▇▇▇▇ also is
currently a Director of MicroLanguage Inc., a software development company
specializing in internet data security, and Vice Chairman and a Director of
XGear Technologies, Inc., an internet-based medical services billing company. He
holds a B.S. from Bentley College and an M.B.A. from Cornell University.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Director. ▇▇. ▇▇▇▇▇ joined the Board
of Directors of the Company in August 2002. From February 1996 to the present,
▇▇. ▇▇▇▇▇, 61, has served as the President and Chief Operating Officer and more
recently Chief Executive Officer of Audio-Digest Foundation. He also provides
management oversight to its subsidiary, Marathon Multimedia, and to CME
Unlimited, a medical conference capture and e-commerce business. Prior to
joining Audio-Digest Foundation, ▇▇. ▇▇▇▇▇ worked in education and technology
industries where he has had experience in sales, product management, marketing
and general management. He previously worked for National Computer Systems from
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1990 to 1995, Science Research Associates from 1988 to 1990, and IBM Corporation
from 1967 to 1988. At IBM, he managed a full product line including new product
development and distributed products through a national direct sales force,
direct response marketing and complementary third-party distribution channels.
He specialized in opening the Pacific Rim markets for IBM's small computers and
peripherals and managed the small system product portfolio.
▇▇. ▇▇▇▇▇ earned a Bachelor of Business
Administration from the University of Iowa and a Master's of Business
Administration from the University of Chicago. He is a director of MedePass
Inc., which provides secure transmission of medical information, a member of the
Board of Governors of Marathon Multimedia, and a Director of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Group. ▇▇. ▇▇▇▇▇ also was a Director of American Sound and Video from 1998 to
2000, when it filed a petition for reorganization under the U.S. Bankruptcy Code
and later was liquidated, as described above.
▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer. ▇▇. ▇▇▇▇▇▇, 43,
is primarily responsible for the development of the Company's financial model,
optimization of cash flow and all aspects of finance and accounting. He joined
the Company in 2001 and is a financial executive with over 20 years experience.
▇▇. ▇▇▇▇▇▇ was employed by Pennzoil Company from 1982 to 1996 where he held a
variety of accounting and finance positions, including responsibility for all
internal and external (SEC) financial reporting for the Manufacturing and
Marketing Division. He was employed by Compaq Computer Corporation from 1996 to
2000, and served as Director of Corporate Financial Planning and Analysis. In
this role he functioned as a senior financial advisor to the Chief Financial
Officer and Corporate Controller of this Fortune 500 company. He led a
professional team in the development and preparation of consolidated financial
reports, board presentations, speech materials, quarterly budgets, earnings
targets and financial forecasts for all company regions and business units. In
May 2000 he left Compaq to accept equity participation and a senior management
role as VP Finance and Controller in the start-up of a managed data storage
services company, StorageProvider, Inc. In this role he assumed financial
leadership responsibility for the strategic planning, staffing, budgeting, and
management of the entire finance and accounting infrastructure. ▇▇. ▇▇▇▇▇▇
earned a BS, Accounting from Louisiana State University and is a Texas Certified
Public Accountant.
▇▇▇▇▇▇ ▇▇▇, Vice President-Strategic Alliances. ▇▇.
▇▇▇ is primarily responsible for developing strategic and mutually beneficial
relationships for the Company, including the development of marketing
partnerships and technology alliances. He joined the Company in 2002 and has
over fifteen (15) years of information technology experience spanning across
system analysis/engineering, sales, field service and operations. From 1996 to
1999 ▇▇. ▇▇▇ was employed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇, a major engineering firm,
where he was responsible for designing and upgrading new technology and ensuring
that implementation was coordinated and successful throughout the organization's
multiple offices. Prior to that, from 1994 to 1996 he was employed by Pacific
Atlantic Group SA in Buenos Aires, Argentina, where he created an infrastructure
for a U.S. affiliate to distribute, market, and manufacture a vending machine
product in Argentina and other Latin American companies. ▇▇. ▇▇▇ holds various
technical certifications and expertise in various protocols, operating systems,
and software. He holds a B. S. in Computer Science from ▇▇▇▇▇▇ University and
College.
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▇▇▇▇▇▇ ▇▇▇▇▇, Vice President Sales, Marketing, and
Customer Support. ▇▇. ▇▇▇▇▇ has been employed with the Company since August 2003
and has over twenty (20) years of executive experience in sales and marketing in
the healthcare industry. Prior to joining the Company, ▇▇. ▇▇▇▇▇, from 2001 to
2002, was Director of Sales at ResMed Corporation, a leading home health
respiratory equipment manufacturer. ▇▇. ▇▇▇▇▇ has been successful, during the
past eighteen (18) years in building high-energy sales teams at both small and
large companies including ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Professional Healthcare, a major
medical/surgical supply manufacturer, where he was employed as District Sales
Manager from 1983 to 1991, and from STERIS Corporation, a leading medical device
company, where he held positions as Vice President of Sales-Americas, Vice
President National Accounts and Vice President of Sterilization Services from
1991 to 1998. From 2000 to 2001, ▇▇. ▇▇▇▇▇ also served as President of X10NET, a
start up venture that was focused on bringing Web-based workflow solutions to
the physician marketplace. Since joining the Company, ▇▇. ▇▇▇▇▇ has engaged over
forty (40) independent sales representatives, on behalf of the Company, along
with two (2) regional sales managers, significantly adding to the Company's
sales force, and making it, the Company believes, one of the largest sales
forces in the home health care software business.
(b) Change of Corporate Name. On January 19, 2004, the
Board of Directors determined to change the name of the Company to SecureCare
Technologies, Inc. (the "Name Change"). As a result of the Name Change, there
will also be a change in the Company's trading symbol to an available symbol on
the Over the Counter Bulletin Board which more closely reflects the Company's
new name. The purpose of the Name Change is to more accurately reflect the
Company's present business and its activities as well as facilitate the future
development of its business. The Company has obtained the required consent of
its shareholders to effect the Name Change, and expects the Name Change to
become effective on or around February 24, 2004.
(c) Stock Split. On January 19, 2004, the Board of
Directors approved a 1.5 for 1 forward split of the Common Stock (the "Stock
Split"). The Board of Directors believes that this Stock Split is necessary to
increase the marketability of the Common Stock to prospective purchasers and to
enhance the liquidity of the Common Stock so the Company can have better access
to the capital markets. The Stock Split will increase the number of issued and
outstanding shares from 10,000,000 to 15,000,000 (prior to the issuance of any
shares of Common Stock in this Offering). The number of shares of capital stock
authorized by the Articles of Incorporation will not change as a result of the
Stock Split. The Common Stock issued pursuant to the Stock Split will be fully
paid and non-assessable. The voting and other rights that presently characterize
the Common Stock will not be altered by the Stock Split. The Company has
obtained the required consent of its shareholders to effect the Stock Split, and
expects the Stock Split to become effective on or around February 24, 2004.
The number of Shares being issued to the Subscribers in this
Offering and all other references to the Common Stock in this Subscription
Agreement reflect shares of Common Stock after giving effect to the Stock Split.
Although the Company does not anticipate any difficulties in its effecting the
Stock Split, in the event that the Stock Split is not effected, for any reason,
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and is abandoned by the Company, the number of shares issuable to all
Subscribers in the Offering, with respect to each Unit subscribed for, will be
reduced from 50,000 shares of Common Stock to 33,333 shares of Common Stock.
This will have no effect on the percentage of the Company's issued and
outstanding shares of Common Stock being issued to Subscribers in the Offering.
(d) Lock-Up Agreements. Each of the directors and executive
officers of the Company has signed a Lock-Up Agreement, pursuant to which he has
agreed not to sell or otherwise transfer any capital stock of the Company owned
by him, for a period of twelve (12) months from the date of the Initial Closing
(as such term is defined in Section 3.1 hereafter) unless the Placement Agent
agrees to terminate or otherwise modify such restriction. The Placement Agent
has agreed to a similar lock-up with respect to the shares of the Company's
capital stock it owns, but the Affiliated Fund, which owns 13,935,000 shares of
Common Stock is not subject to any such restriction, and may therefore sell its
shares of Common Stock, subject to any restrictions on transfer imposed by
federal or state securities laws. The Placement Agent may not terminate or
reduce the restrictions under its Lock-Up Agreement unless it provides the same
benefit to the other persons who have signed Lock-Up Agreements.
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.
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, the Escrow 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 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
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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 (including, but not limited to,
all and/or other securities convertible into equity securities of the Company
and all options and warrants, of which such Schedule 2.3 shall list such
securities and shall provide the type and amount of underlying securities such
securities are convertible and/or exercise into to) 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 the issued and outstanding securities
of the Company have been and are, or upon issuance will be duly authorized,
validly issued, fully paid and non-assessable. Except as disclosed in Offering
Documents, (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 Securities. At the Initial Closing
and at each subsequent Closing such number of Shares as the Placement Agent
shall so indicate will be duly authorized and reserved for issuance. Assuming
(i) the accuracy of the information provided by the respective Subscribers in
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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 Units 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 the Offering Documents,
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 issuance of the Securities and performance by the
Company of its obligations under the Notes, will not (a) result in a violation
of the Company's Certificate of Incorporation, any other certificate of
designations, preferences and rights of any outstanding series of preferred
stock of the Company, or the Company's By-Laws, (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, note and/or other
indebtedness, 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. 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.
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 by causing 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,
-14-
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, or
otherwise. 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 by causing the Offering of the Securities to be integrated
with other offerings, or otherwise.
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, 2002,
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, 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, Trading of Common
Stock, Etc. Except as set forth herein and/or in the SEC Documents, since
December 31, 2002, 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
-15-
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, 2002 and forming
part of the SEC Documents, and current liabilities incurred since December 31,
2002, 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
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.
-16-
2.13 Absence of Litigation. Except as set forth in the Offering
Documents and the SEC Documents, 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 the Offering Documents and
the SEC Documents, 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 Units has not been registered with the SEC. The Units 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 the Offering
Documents and the SEC Documents, 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 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 in the Offering Documents,
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,
-17-
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 in the Offering Documents, 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 in the Offering Documents, 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 as set forth in the Offering
Documents, 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 herein other than the Placement
Agent.
2.20 Right of First Refusal. Other than the Placement Agent, 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.
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 best of the Company's knowledge,
none of the Key Executives is planning to cease being employed by the Company on
-18-
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, any conditions to closing set forth in
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 from the Escrow Account for the Units sold by the
Company shall be made. 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 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 Offering Documents relating thereto are
first made available to the Placement Agent by the Company for delivery in
connection with the offering for sale of the Units and shall continue until the
earlier to occur of: (i) the sale of the Maximum Offering; and (ii) 5:00 p.m.
(New York time), March 1, 2004 ; provided, however, that if the Minimum Offering
closes by March 1, 2004, the Offering Period shall automatically be extended
until April 15, 2004. The day that the Offering Period terminates is hereinafter
referred to as the "Termination Date."
3.2 Expenses; Fees. Simultaneously with payment for and delivery
of the A Preferred Shares 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 Units sold (the "Cash Fee"); payment of which
shall be made directly from the Escrow Account at each Closing; (B) pay to the
Placement Agent a cash non-accountable expense allowance equal to one (1%)
percent of the aggregate purchase price of the Units sold (the "Non-Accountable
Fee"), payment of which shall be made directly from the Escrow Account at each
Closing; (C) reimburse the Placement Agent for its actual out-of-pocket expenses
incurred in connection with the Offering, including, without limitation, the
fees and expenses of its counsel, the Placement Agent's due diligence
investigation expenses, travel and mailing expenses, payment of which shall be
made directly from the Escrow Account at each Closing; (D) pay all expenses in
connection with the qualification of the Units 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 Escrow Account at
each Closing; (E) issue to the Placement Agent (i) seven (7) year warrants (the
"Agent Warrants") to purchase at an exercise price of $1.00 per Share, ten (10%)
percent of the aggregate number of Shares included in the Units sold at each
Closing; and (F) pay to the Placement Agent a non-refundable $10,000 payment
which will be used by the Placement Agent to pay certain expenses in connection
with the Proposed Offering.
-19-
3.3 Certificates. The Subscriber hereby authorizes and directs the
Company, upon each closing in the Offering, to (i) deliver the Notes and
certificates representing the Shares (the "Stock Certificates") to be issued to
such Subscriber pursuant to this Subscription Agreement to the Subscriber's
address indicated in the Questionnaire, by the later of (i) ten (10) days after
the applicable Closing Date or (ii) ten (10) days after the effective date of
the Name Change and the Stock Split. In the event that the Stock Split is not
effected by the Company, for any reason, and is abandoned by the Company, Stock
Certificates for a reduced number of shares of Common Stock (based on the
issuance of 33,333 shares of Common Stock for each Unit subscribed for) will be
delivered to the Subscriber within ten(10) days after the Company's abandoning
the Stock Split.
IV. COVENANTS
4.1 Registration Rights Agreement. The Company shall provide for
the registration of the 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 Units 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 Units 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.
4.4 Use of Proceeds. The Company shall only use the net proceeds
from the sale of the Units for the purpose set forth in Schedule 4.4 hereto.
V. CONDITIONS TO CLOSING IN FAVOR OF THE COMPANY
The obligation of the Company hereunder to issue and sell Units 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:
-20-
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 paid the purchase
price for the Units being purchased by the Subscriber at the Closing in the
manner set forth in Section 1.1.
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 Units 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:
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 Legal Opinion. The Subscriber shall have received the opinion
of the Company's counsel dated as of the Closing, in substantially the form
approved by the Placement Agent.
6.3 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.
6.4 Certain Placement Agent Documents. The Company shall have
executed and delivered to the Placement Agent, the Agent Warrant and the Agent
Registration Rights Agreement.
6.5 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.
-21-
6.6 Closing Documents. At each Closing, the Company shall have
delivered to the Placement Agent (i) a Certificate of the Chief Financial
Officer in the form attached as Exhibit C and (ii) a Certificate of the
Secretary in the form attached as Exhibit D.
6.7 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.
6.8 Lock-Up Agreements. The Company shall have delivered to the
Placement Agent a Lock-Up Agreement executed by each of ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and the
Placement Agent.
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.
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:
-22-
If to the Company:
eClickMD, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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, together with a copy to:
Gryphon Financial Securities Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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 each
Noteholder.
-23-
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 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 Units. 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 twelve (12)
months.
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.
-24-
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.
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 the Notes
and Shares in enforcing any of its rights and remedies under this Subscription
Agreement, the Notes 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.
-25-
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the date first written above.
SUBSCRIBER ** CO-SUBSCRIBER **
------------------------------------- --------------------------------------
Signature of Subscriber Signature of Co-Subscriber
------------------------------------- --------------------------------------
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 Subscriber Identification Number of 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.)
Dollar Amount of Units Subscribed For: $
----------------------
Dollar Amount of Units
Subscription Accepted: $
--------------
SUBSCRIPTION ACCEPTED BY THE COMPANY
ECLICKMD, INC.
By:
-----------------------------------
**If Subscriber is a Registered Representative with an NASD member firm or an
affiliated person of an NASD member firm, have the acknowledgment to the right
signed by the appropriate party:
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:
---------------------------------
Authorized Officer
-26-
INDEX OF EXHIBITS
-----------------
Exhibit A Form of Note
Exhibit B Form of Registration Rights Agreement
INDEX OF SCHEDULES
------------------
Schedule 2.3 Capital Structure; Outstanding Securities
Schedule 2.18 Registration Rights
Schedule 4.4 Use of Proceeds
EXHIBIT A
---------
Form of Notes
EXHIBIT B
---------
Form of Registration Rights Agreement
EXHIBIT C
---------
Form of Officer's Certificate
EXHIBIT D
---------
Form of Secretary's Certificate
SCHEDULE 2.3
------------
Capital Structure; Outstanding Securities
See Schedule attached.
SCHEDULE 2.18
-------------
Registration Rights
No persons have registration rights from eClickMD, Inc. (the "Company") except
for the following:
None.
SCHEDULE 4.4
------------
Use of Proceeds
See Schedule attached.
Summary of Subscription Transactions:
February 13, 2004:
▇▇▇▇▇▇ ▇▇▇▇▇ Subscribed $100,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ Subscribed $100,000
▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ Subscribed $20,000
March 2, 2004:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Subscribed $50,000
Suffolk Life Trust Company Limited, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ being the
current trustees of the Marldene Directors Pension Scheme Subscribed $100,000
March 9, 2004:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Subscribed $100,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ $50,000