SUBSCRIPTION AGREEMENT FOR SERIES F CONVERTIBLE PREFERRED STOCK AND WARRANTS
FOR
SERIES
F CONVERTIBLE PREFERRED STOCK AND WARRANTS
Geos
Communications
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Ladies
and Gentlemen:
The
undersigned subscriber (“Subscriber”) hereby tenders
this Subscription Agreement (this “Agreement” or (“Subscription Agreement”) in
accordance with and subject to the terms and conditions set forth
herein:
1. Subscription.
1.1 Subscriber
hereby subscribes for and agrees to purchase from i2 Telecom International,
Inc., a Washington corporation (the “Company”), ______ shares (the
“Shares”) of Series F
Convertible Preferred Stock, no par value per share (the “Series F Preferred Stock”), of
the Company, at a purchase price of $1,000 per Share. For each Share
purchased by Subscriber, the Company will issue to Subscriber, for no additional
consideration, a warrant to purchase ___________ shares (which shares have been
adjusted to reflect the 1:10 reverse stock split effectuated by the Company) of
common stock, no par value, of the Company (the “Common Stock”), which Warrant
will be in substantially the form of Exhibit A attached
hereto (the “Warrants”). The
rights and preferences of the Series F Preferred Stock are set forth in the
Amended Certificate of Designations of Rights and Preferences of Preferred Stock
Series F of the Company, a copy of which is attached hereto as Exhibit B (the “Articles of
Incorporation”).
1.2 This
Agreement is part of an offering of up to $8,000,000 of Series F Preferred Stock
and Warrants being conducted by the Company (the “Offering”). In
addition, the Company may engage one or more placement agents to assist the
Company in selling the Series F Preferred Stock and Warrants in the Offering, in
which event, the Company may compensate any such placement agents in cash (not
to exceed seven percent (7%)) of the dollar amount placed by such placement
agent in the Offering and warrants to purchase up to seven percent (7%) of the
Series F Preferred Stock and Warrants placed by such placement agent in the
Offering.
1.3 Subscriber
understands that it will not earn interest on any funds held by the Company
prior to the date of closing of the Offering. The initial closing of
the Offering (the “Initial
Closing”) was on April 27, 2009 (the “Initial Closing
Date”). The Company may hold additional interim closings after
the Initial Closing provided that the terms of the Offering are the same for
each closing. Any such interim closings are each hereinafter referred
to as an “Additional
Closing” and shall occur on one or more dates each hereinafter referred
to as an “Additional Closing
Date.” The Initial Closing Date and the Additional Closing
Dates are each hereinafter sometimes referred to as a “Closing Date.” The
last Closing is sometimes referred to herein as the “Final Closing.” The
Company held Additional Closings on June 5, 2009 and August 27,
2009. Upon receipt by the Company of the requisite payment for all
shares of Series F Preferred Stock to be purchased by the subscribers whose
subscriptions are accepted at the Initial Closing or any Additional Closing, as
applicable, and subject to the satisfaction of certain conditions, the Series F
Preferred Stock and Warrants so purchased will be issued in the name of each
such subscriber, and the name of such subscriber will be registered on the stock
transfer books of the Company as the record owner of such shares of Series F
Preferred Stock and Warrants. The Company will promptly thereafter
issue to each subscriber participating in such closing a stock certificate for
the shares of Series F Preferred Stock so purchased as well as a Warrant for the
corresponding number of Warrants allocable to such holder.
1.4 Subscriber
hereby agrees to be bound hereby upon (i) execution and delivery to the Company
of the signature page to this Agreement and (ii) written acceptance on the
Initial Closing Date or an Additional Closing Date, as the case may be, by the
Company of Subscriber’s subscription, which shall be confirmed by faxing to the
Subscriber the signature page to this Agreement that has been executed by the
Company (the “Subscription”).
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2. Offering
Material.
2.1 Subscriber
represents and warrants that it is in receipt of and that it has carefully read
the following items:
(a) The
Company’s Form 10-K for the period ended December 31, 2008 (the “Form 10-K”); and
(b) All
other documents filed by the Company with the Securities and Exchange Commission
(the “Commission”)
subsequent to the Company’s Form 10-K and prior to the date of this
Agreement.
The
documents listed in this Section 2.1 shall be referred to herein as the “Disclosure Documents.”
3. Conditions to Subscriber’s
Obligations.
3.1 The
obligation of Subscriber to purchase the Shares and Warrants contemplated by
this Agreement (the “Transaction”) is subject to
the satisfaction on or prior to the Closing Date of such purchase of the
following conditions set forth in Sections 3.2 through 3.6 hereof.
3.2 The
Company shall have executed this Agreement.
3.3 The
Board of Directors of the Company shall have adopted resolutions approving the
Transaction.
3.4 Subscriber
shall have received copies of all documents and information which it may have
reasonably requested in connection with the Offering.
3.5 No
stop order or suspension of trading shall have been imposed by the American
Stock Exchange, the Securities and Exchange Commission (the “SEC”), or any other
governmental regulatory body with respect to public trading in Preferred Shares
of the Company.
3.6 The
representations and warranties of the Company shall be true and correct on and
as of the Closing Date as though made on and as of such date; and Subscriber
shall have received on the Closing Date a certificate to this effect executed by
the Chief Executive Officer of the Company.
4. Representations and
Warranties; Covenants; Survival.
4.1 The
Company represents and warrants to Subscriber that, at the date of this
Agreement and at the Closing of the purchase of the Shares and Warrant by
Subscriber (the “Subscriber
Closing”):
(a) The Company has the full power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with its
terms. The Company need not give any notice to, make any filings
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement.
(b) The
Company and each of its subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of their states of incorporation,
with all requisite corporate power and authority to carry on the business in
which they are engaged and to own the properties they own, and the Company has
all requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The Company and each
of its subsidiaries are duly qualified and licensed to do business and are in
good standing in all jurisdictions where the nature of their business makes such
qualification necessary, except where the failure to be qualified or licensed
would not have a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole.
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(c) Except
as set forth in the Company’s filings with the SEC, there are no legal actions
or administrative proceedings or investigations instituted, or to the best
knowledge of the Company threatened, against the Company, that could reasonably
be expected to have a material adverse effect on the Company or any subsidiary,
any of the Preferred Shares, or the business of the Company and its
subsidiaries, or which concerns the transactions contemplated by this
Agreement.
(d) The
Company’s audited consolidated financial statements as of December 31, 2007 and
2008, contained in the Form 10-K, including the notes contained therein, fairly
present the consolidated financial position of the Company at the respective
dates thereof and the results of its consolidated operations for the periods
purported to be covered thereby. Such financial statements have been
prepared in conformity with generally accepted accounting principles
consistently applied with prior periods subject to any comments and notes
contained therein. Since December 31, 2008, there has been no
material adverse change in the financial condition of the Company from the
financial condition stated in such financial statements. The
capitalization of the Company, including the authorized capital stock, the
number of shares issued and outstanding, the number of shares issuable and
reserved for issuance pursuant to the Company’s stock option plans, the number
of shares issuable and reserved for issuance pursuant to securities exercisable
for, or convertible into or exchangeable for any shares of capital stock as of
November 16, 2009, is as described in Schedule 4.1(d)
attached to this Agreement.
(e) The
Company owns the patents and patents pending and trademarks and
trademarks pending listed in Schedule 4.1(e)
attached hereto (collectively, the “Intellectual
Property”). To the Company’s knowledge, the Company has the
sole and exclusive right to use the Intellectual Property without infringing or
violating the rights of any third parties. No claim has been asserted
by any person to the ownership of or right to use any of the Intellectual
Property or challenging or questioning the validity or effectiveness of any of
the Intellectual Property. None of the Intellectual Property
has been cancelled, abandoned or otherwise terminated and has been duly issued
or filed, as applicable. The Company has no knowledge of any claim
that, or inquiry as to whether, any product, activity or operation of the
Company infringes upon or involves, or has resulted in the infringement of, any
proprietary right of any other person, corporation or other entity; and no
proceedings have been instituted, are pending or are threatened that challenge
the rights of the Company with respect thereto.
(f) The
Company, by appropriate and required corporate action, has, or will have prior
to the Subscriber Closing, duly authorized the execution of this Agreement and
the issuance and delivery of the Shares and Warrants to
Subscriber. The Shares are not subject to preemptive or other rights
of any stockholders of the Company and when issued in accordance with the terms
of this Agreement and the Articles of Incorporation, the Shares will be validly
issued, fully paid and nonassessable and free and clear of all pledges, liens
and encumbrances. Neither the issuance of the Shares or Warrants
issued hereunder, nor the shares of Common Stock, underlying the Shares and the
Warrants (the “Underlying
Shares”), will trigger any outstanding antidilution rights.
(g) Performance
of this Agreement and compliance with the provisions hereof will not violate any
provision of any applicable law or of the Articles of Incorporation or Bylaws of
the Company, or of any of its subsidiaries, and, will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon, any of the properties or assets of the Company, or
of any of its subsidiaries, pursuant to the terms of any indenture, mortgage,
deed of trust or other agreement or instrument binding upon the Company, or any
of its subsidiaries, other than such breaches, defaults or liens which would not
have a material adverse effect on the Company and its subsidiaries taken as a
whole. The Company is not in default under any provision of its
Articles of Incorporation or Bylaws or other organizational documents or under
any provision of any agreement or other instrument to which it is a party or by
which it is bound or of any law, governmental order, rule or regulation so as to
affect adversely in any material manner its business or assets or its condition,
financial or otherwise.
(h) The
Disclosure Documents, taken together, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein to
make the statements contained therein not misleading.
(i) The
Company has provided Subscriber with all material public information in
connection with the business of the Company and the transactions contemplated by
this Agreement, and no representation or warranty made, nor any document,
statement, or financial statement prepared or furnished by the Company in
connection herewith contains any untrue statement of material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading.
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(j) This
Agreement, including the Exhibits attached hereto, has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.
(k) No
registration, authorization, approval, qualification or consent of any court or
governmental authority or agency is necessary in connection with the execution
and delivery of this Agreement or the offering, issuance or sale of the Shares
and Warrants under this Agreement.
(l) The
Company has timely filed with the SEC all documents required to be filed by the
Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (collectively,
the “SEC
Filings”). On their respective dates of filing, the SEC
Filings complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC.
(m) The
Company is not now, and after the sale of the Shares and Warrants under this
Agreement and under all other agreements and the application of the net proceeds
from the sale of the Preferred Shares will not be, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.
(n) The Company has filed all material tax returns required
to be filed, which returns are true and correct in all material respects, and
the Company is not in default in the payment of any taxes, including penalties
and interest, assessments, fees and other charges, shown thereon due or
otherwise assessed, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without interest
which were payable pursuant to said returns or any assessments with respect
thereto.
(o) The Company has not taken any action outside the
ordinary course of business designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Underlying Stock in any
manner in contravention of applicable securities laws.
(p) Subject
to the accuracy of the Subscriber’s representations and warranties in Section 9
below, the offer, sale, and issuance of the Shares and Warrants in conformity
with the terms of this Agreement constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the “Securities Act”)
and from the registration or qualification requirements of the laws of any
applicable state or United States jurisdiction.
(q) Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in any security or
solicited any offers to buy any security under circumstances that would require
registration under the Securities Act of the issuance of the Shares and Warrants
to the Subscriber. The issuance of the Series F Preferred Stock and
Warrants under the offering will not be integrated with any other issuance of
the Company’s securities (past, current or future) for purposes of the
Securities Act or any applicable rules of the American Stock
Exchange. The Company will not make any offers or sales of any
security (other than the Series F Preferred Stock and Warrants in the Offering)
that would cause the offering of the Shares and Warrants to be integrated with
any other offering of securities by the Company for purposes of any registration
requirement under the Securities Act.
(r) The
Company is in material compliance with all applicable securities (or “Blue Sky”) laws of the states
of the United States in connection with the issuance and sale of the Shares and
Warrants to Subscriber and the issuance of the other shares of Series F
Preferred Stock and Warrants to other subscribers in the Offering.
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5. Transfer
Rights.
5.1 Subscriber
acknowledges that it is acquiring the Shares and Warrants for its own account
and for the purpose of investment and not with a view to any distribution or
resale thereof within the meaning of the Securities Act and any applicable state
or other securities laws (“State
Acts”). Subscriber further agrees that it will not sell,
assign, transfer or otherwise dispose of any of the Shares, Warrants or
Underlying Shares (collectively, the “Securities”) in violation of
the Securities Act or State Acts and acknowledges that, in taking unregistered
securities, it must continue to bear economic risk in regard to its investment
for an indefinite period of time because of the fact that none of the Securities
have been registered under the Securities Act or State Acts and further realizes
that the Securities cannot be sold unless subsequently registered under the
Securities Act and State Acts or an exemption from such registration is
available. Subscriber further recognizes that the Company is not assuming any
obligation to register the Securities. Subscriber also acknowledges that
appropriate legends reflecting the status of the Securities under the Securities
Act and State Acts may be placed on the face of the certificates for the
Securities at the time of their transfer and delivery to the holder
thereof. This Agreement is made with Subscriber in reliance upon
Subscriber’s above representations.
5.2 The
Securities may not be transferred except in a transaction which is in compliance
with the Securities Act and State Acts. It shall be a condition to any transfer
of the Securities that the Company shall be furnished with an opinion of
counsel, which counsel and opinion shall be reasonably satisfactory to the
Company, to the effect that the proposed transfer would be in compliance with
the Securities Act and State Acts. Notwithstanding the foregoing,
furnishing such opinion of counsel shall not be a condition to any transfer of
the Securities to an affiliate of Subscriber, including for this purpose if
Subscriber is an investment company, any fund or account advised by Subscriber’s
investment adviser or any affiliate thereof.
6. Registration
Rights.
6.1 See
Exhibit C
attached hereto.
7. Pre-emptive
Rights.
7.1 The
Company will not issue or sell any New Securities (as defined below) in a
Financing Transaction (as defined below) without first offering to Subscriber,
by delivery of written notice, the right to buy Subscriber’s Pro Rata Part (as
defined below) of such New Securities at the price and upon the conditions at
which the Company proposes to issue and sell such New
Securities. Subscriber shall have the right, for a period of five (5)
days after receipt of such written notice, to notify the Company in writing of
Subscriber’s intention to so purchase such offered New Securities and the
Company shall then sell to such Subscriber the amount of such Offered Securities
specified by Subscriber (which amount shall not be greater than Subscriber’s
Pro Rata Part (as such is determined in the preceding
sentence)).
7.2 After
giving the notice and opportunity for the Stockholders to participate as
required under subsection (a) above, the Company shall have one hundred eighty
(180) days thereafter to issue and sell the New Securities not elected nor
eligible to be purchased by Subscriber at the price and upon the terms no more
favorable to the purchasers of such New Securities than specified in the
Company’s notice under subsection (a) above. In the event the Company
has not sold such New Securities within said one hundred eighty (180) day
period, the Company shall not hereafter issue or sell any New Securities without
first offering such securities in the manner provided above.
7.3 The
following terms shall have the following meanings:
(a) “Financing Transaction” shall
mean the raising of equity or debt in a private transaction for the sole purpose
of financing the Company, but excluding: (i) any debt financing by a bank or
financial institution; and (ii) securities offered by the Company to the public
in a transaction or transactions required to be registered under the Securities
Act
(b) “New Securities” shall mean any
shares of capital stock of the Company (“Capital Stock”) whether now or
hereafter authorized, and all rights, options or warrants to purchase shares of
Capital Stock, and securities or indebtedness of any type whatsoever that are,
or may become, convertible into or exchangeable for Capital Stock and any units
consisting of securities or indebtedness and Capital Stock or rights, options or
warrants therefore.
(c) “Pro Rata Part” shall mean, in
any particular instance, the proportion which the number of shares of Common
Stock owned by Subscriber (assuming for this purpose that all securities
exercisable, exchangeable or convertible for shares of Common Stock (“Common Stock Equivalents”)
owned by such Stockholder have been fully exercised, exchanged, or converted)
bears to the aggregate number of shares of Common Stock owned by all security
holders of the Company (assuming for this purpose that all Common Stock
Equivalents have been fully exercised, exchanged or converted).
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8. Closing.
8.1 The
closing of the sale of the Shares and Warrants to Subscriber shall take place at
the offices of the Company at such time as the Company shall specify, but no
later than ten days after the date that this Agreement is tendered to the
Company by Subscriber. Subscriber may terminate this Agreement by
giving written notice to the Company if such closing has not occurred within
such timeframe.
9. Subscriber
Representations. Subscriber hereby represents, warrants and acknowledges
and agrees with the Company and Placement Agent as follows:
9.1 Subscriber
has been furnished with and has carefully read the Disclosure Documents and is
familiar with the terms of the Offering. With respect to individual
or partnership tax and other economic considerations involved in this
investment, Subscriber is not relying on the Company or any agent or
representative of the Company. Subscriber has carefully considered
and has, to the extent Subscriber believes such discussion necessary, discussed
with Subscriber’s legal, tax, accounting and financial advisers the suitability
of an investment in the Shares and Warrants for Subscriber’s particular tax and
financial situation.
9.2 Subscriber
has had an opportunity to inspect relevant documents relating to the
organization and operations of the Company. Subscriber acknowledges
that all documents, records and books pertaining to this investment which
Subscriber has requested have been made available for inspection by Subscriber
and Subscriber’s attorney, accountant or other adviser(s).
9.3 Subscriber
and/or Subscriber’s advisor(s) has/have had a reasonable opportunity to ask
questions of and receive answers and to request additional relevant information
from a person or persons acting on behalf of the Company concerning the
Offering.
9.4 Subscriber
is not subscribing for the Shares and Warrants as a result of or subsequent to
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar.
9.5 Subscriber
is an “accredited investor,” within the meaning of Rule 501(a) of
Regulation D under the Securities Act (“Regulation
D”). Subscriber, by reason of Subscriber’s business or
financial experience or the business or financial experience of Subscriber’s
professional advisers who are unaffiliated with and who are not compensated by
the Company or any affiliate thereof, directly or indirectly, can be reasonably
assumed to have the capacity to protect Subscriber’s own interests in connection
with the transaction. Subscriber further acknowledges that he has
read the written materials provided by the Company.
9.6 Subscriber
has adequate means of providing for Subscriber’s current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares and Warrants for an indefinite period of time, has no need for
liquidity in such investment and, at the present time, could afford a complete
loss of such investment.
9.7 Subscriber
has such knowledge and experience in financial, tax and business matters so as
to enable Subscriber to use the information made available to Subscriber in
connection with the Offering to evaluate the merits and risks of an investment
in the Shares and Warrants and to make an informed investment decision with
respect thereto.
9.8 Subscriber
acknowledges that the Securities have not been registered under the Securities
Act or under any State Act. Subscriber understands further that in
absence of an effective registration statement, the Securities can only be sold
pursuant to some exemption from registration.
9.9 Subscriber
recognizes that investment in the Shares and Warrants involves substantial
risks. Subscriber acknowledges that he has reviewed the risk factors
identified within the Disclosure Documents. Subscriber further
recognizes that no Federal or state agencies have passed upon this offering of
the Preferred Shares or made any finding or determination as to the fairness of
this investment.
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9.10 Subscriber
acknowledges that each certificate representing the Securities shall contain a
legend substantially in the following form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN
OPINION OF COUNSEL (WHICH OPINION AND COUNSEL ARE REASONABLY SATISFACTORY TO THE
COMPANY) CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
9.11
If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust or estate: (i) such partnership, corporation,
trust or estate has the full legal right and power and all authority and
approval required (a) to execute and deliver, or authorize execution and
delivery of, this Agreement and all other instruments executed and delivered by
or on behalf of such partnership, corporation, trust or estate in connection
with the purchase of the Shares and Warrants, (b) to delegate authority pursuant
to a power of attorney and (c) to purchase and hold such Shares and Warrants;
(ii) the signature of the party signing on behalf of such partnership,
corporation, trust or estate is binding upon such partnership, corporation,
trust or estate; and (iii) such partnership, corporation or trust has not been
formed for the specific purpose of acquiring the Shares and Warrants, unless
each beneficial owner of such entity is qualified as an “accredited investor”
within the meaning of Regulation D and has submitted information substantiating
such individual qualification.
9.12
If Subscriber is a retirement plan or is investing
on behalf of a retirement plan, Subscriber acknowledges that investment in the
Shares and Warrants poses risks in addition to those associated with other
investments, including the inability to use losses generated by an investment in
the Shares and Warrants to offset taxable income.
10. Understandings.
Subscriber
understands, acknowledges and agrees with the Company as follows:
10.1
The
parties hereby acknowledge and agree that, except
as otherwise noted herein, upon acceptance from the Company, and in the case of
Subscriber, upon notice of acceptance from the Company pursuant to
Section 1.4, the Subscription hereunder is
irrevocable by the parties, that, except as
required by law the parties are not
entitled to cancel, terminate or revoke this Agreement or any agreements of
the parties hereunder and that this
Subscription Agreement and such other agreements shall survive the death or
disability of the parties and shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors, legal representatives and
permitted assigns. If Subscriber is more than one person, the
obligations of Subscriber hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his or
her heirs, executors, administrators, successors, legal representatives and
permitted assigns.
10.2
No federal or state agency has made
any findings or determination as to the fairness of the terms of this Offering
for investment nor any recommendations or endorsement of the Shares and
Warrants.
10.3
The Offering is intended to be exempt from registration under
the Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Rule 506 of Regulation D thereunder, which is in part dependent
upon the truth, completeness and accuracy of the statements made by Subscriber
herein.
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10.4 It
is understood that in order not to jeopardize the Offering’s exempt status under
Section 4(2) of the Securities Act and Regulation D, any transferee may, at a
minimum, be required to fulfill the investor suitability requirements
thereunder.
10.5 No
person or entity acting on behalf, or under the authority, of Subscriber is or
will be entitled to any broker’s, finder’s or similar fee or commission in
connection with this Subscription.
10.6 Subscriber
acknowledges that the information furnished in this Agreement by the Company or
its advisers in connection with the Offering, is confidential and nonpublic and
agrees that all such written information which is material and not yet publicly
disseminated by the Company shall be kept in confidence by Subscriber and
neither used by Subscriber for Subscriber’s personal benefit (other than in
connection with this Subscription), nor disclosed to any third party, except
Subscriber’s legal and other advisers who shall be advised of the confidential
nature of such information, for any reason; provided, however, that this
obligation shall not apply to any such information that (i) is part of the
public knowledge or literature and readily accessible at the date hereof, (ii)
becomes a part of the public knowledge or literature and readily accessible by
publication (except as a result of a breach of this provision) or (iii) is
received from third parties (except third parties who disclose such information
in violation of any confidentiality agreements or obligations, including,
without limitation, any subscription agreement entered into with the
Company). The representations, warranties and agreements of
Subscriber and the Company contained herein and in any other writing delivered
in connection with the Offering shall be true and correct in all material
respects on and as of the Closing Date of such Subscription as if made on and as
of the date the Company executes this Agreement and shall survive the execution
and delivery of this Agreement and the purchase of the Shares and
Warrants.
10.7 IN
MAKING AN INVESTMENT DECISION, SUBSCRIBER MUST RELY ON ITS OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THE SHARES AND WARRANTS HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
10.8 Subscriber
agrees that, as long as Subscriber owns any of the Shares of Warrants,
Subscriber will not hold a net-short position in the Common Stock.
11. Miscellaneous.
11.1 Except
as set forth elsewhere herein, any notice or demand to be given or served in
connection herewith shall be deemed to be sufficiently given or served for all
purposes by being sent as registered or certified mail, return receipt
requested, postage prepaid, in the case of the Company, addressed to it at the
address set forth below:
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Facsimile:
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Attention:
Chief Executive Officer
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; and in
the case of Subscriber to the address for correspondence set forth on the
Signature Page to this Agreement.
11.2 This
Agreement shall be enforced, governed and construed in all respects in
accordance with the laws of the State of Washington, and shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed to be modified to conform with such statute or rule of
law. Any provision hereof that may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision hereof.
8
11.3 In
any action, proceeding or counterclaim brought to enforce any of the provisions
of this Agreement or to recover damages, costs and expenses in connection with
any breach of the Agreement, the prevailing party shall be entitled to be
reimbursed by the opposing party for all of the prevailing party’s reasonable
outside attorneys’ fees, costs and other out-of-pocket expenses incurred in
connection with such action, proceeding or counterclaim.
11.4 This
Agreement (including the Exhibits and Schedules attached hereto) constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth herein. The Company acknowledges that
all material facts upon which it has relied in forming its decision to enter
into this Agreement are expressly set forth herein and further acknowledges that
the Subscriber has not made any representations, express or implied, which are
not set expressly set forth herein. This Agreement supercedes all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof.
11.5 The
Company shall indemnify, defend and hold harmless Subscriber and each of its
agents, partners, members, officers, directors, representatives, or affiliates
(collectively, the “Subscriber
Indemnities”) against any and all losses, liabilities, claims and
expenses, including reasonable attorneys’ fees (“Losses”), sustained by
Subscriber Indemnities resulting from, arising out of, or connected with any
material inaccuracy in, breach of, or nonfulfillment of any representation,
warranty, covenant or agreement made by or other obligation of the Company
contained in this Agreement (including the Exhibits and Schedules attached
hereto) or in any document delivered in connection herewith.
11.6 The
Company shall not issue any public statement or press release, or otherwise
disclose in any manner the identity of the Subscriber or that Subscriber has
purchased the Preferred Shares, without the prior written consent of the
Subscriber, except as may be required by applicable law.
12. Signature. The
signature page of this Agreement is contained as part of the applicable
Subscription Package, entitled “Signature Page.”
9
SUBSCRIPTION AGREEMENT
GENERAL INSTRUCTIONS
General
Instructions
These
Subscription Documents contain all documents necessary to subscribe for the
Shares and Warrants in the Offering.
You may
subscribe for Shares and Warrants in the Offering by completing the Subscription
Agreement in the following manner:
1. On
line (a) of the signature page state the number of Shares you wish to
purchase.
2. On
line (b) of the signature page state the total cost of the Shares you wish to
purchase. To obtain the cost, multiply the number of Shares you
desire to purchase by $1,000.
3. Sign
and state your address, telephone number and social security or other taxpayer
identification number on the lines provided on the signature page to the
Subscription Agreement and deliver the completed Subscription Agreement with
payment of the entire purchase price of the Shares subscribed for as set forth
below. Payment should be made in United States Dollars by wire
transfer to:
|
▇▇▇▇▇
Fargo Bank, NA
ABA
# ▇▇▇▇▇▇▇▇▇
Acct
# 4121974232
Acct
Name: Geos Communications,
Inc.
|
The
completed and signed Subscription Agreement should be sent to:
|
▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Chief Executive Officer
|
Acceptance
of Delivery
All
questions as to the validity, form, eligibility (including time of receipt) and
acceptance of the completed Subscription Agreement will be reasonably determined
by the Company. The Company reserves the absolute right to reject any
completed Subscription Agreement, in its sole and absolute
discretion. The Company also reserves the right to waive any
irregularities in, or conditions of, the submission of completed Subscription
Agreements. The Company shall be under no duty to give any
notification of irregularities in connection with any attempted subscription for
shares of Series F Preferred Stock or Warrants or incur any liability for
failure to give such notification. Until such irregularities have
been cured or waived, no subscription for shares of Series F Preferred Stock or
Warrants shall be deemed to have been made. Any Subscription
Agreement that is not properly completed and as to which defects have not been
cured or waived will be returned by the Company to the subscriber as soon as
practicable.
10
SUBSCRIPTION
AGREEMENT SIGNATURE PAGE
The
undersigned investor hereby certifies that he or she (i) has received and relied
solely upon information provided by the Company, (ii) agrees to all the terms
and conditions of this Subscription Agreement, (iii) meets the suitability
standards set forth in this Subscription Agreement and (iv) is a resident of the
state or foreign jurisdiction indicated below.
The
undersigned subscribes for___________ shares of Series F Preferred
Stock.
The total
cost of the shares of Series F Preferred Stock subscribed for, at $1,000 per
Share, is $______________.
|
|
If other than Individual check one and indicate capacity of
|
|
|
Name of Subscriber (Print)
|
signatory under the signature:
|
|
|
¨ Trust
|
||
|
|
¨ Estate
|
|
|
Name of Joint Subscriber (if any) (Print)
|
¨ Uniform
Gifts to Minors Act of State of _________
|
|
|
¨ Attorney-in-fact
|
||
|
¨ Corporation
|
||
|
|
¨ Other
___________________________
|
|
|
Signature of Subscriber
|
||
|
|
If Joint Ownership, check one:
|
|
|
Signature of Joint Subscriber (if any)
|
||
|
¨ Joint Tenants with Right of Survivorship
|
||
|
|
¨ Tenants in Preferred
|
|
|
Capacity of Signatory (if applicable)
|
¨ Tenants by Entirety
|
|
|
¨ Community Property
|
||
|
|
Backup Withholding Statement:
|
|
|
Social Security or Taxpayer Identification Number
|
Please check this box only if the investor is subject to:
|
|
|
¨ backup withholding.
|
||
|
Residence Address
|
Foreign Person:
|
|
|
|
Please check this box only if the investor is a:
|
|
|
__________ _______
__________
|
¨ nonresident alien, foreign corporation, foreign partnership,
|
|
|
City
State
Zip Code
|
foreign
trust or foreign estate.
|
|
|
Telephone _________________________
|
||
|
Telecopy No. ________________________
|
The
investor agrees to the terms of this Subscription Agreement and, as required by
the Regulations pursuant to the Internal Revenue Code, certifies under penalty
of perjury that (1) the Social Security Number or Taxpayer Identification Number
and address provided above is correct, (2) the investor is not subject to backup
withholding (unless the Backup Withholding Statement box is checked) either
because he has not been notified that he is subject to backup withholding as a
result of a failure to report all interest or dividends or because the Internal
Revenue Service has notified him that he is no longer subject to backup
withholding and (3) the investor (unless the Foreign Person box above is
checked) is not a nonresident alien, foreign partnership, foreign trust or
foreign estate.
THE
SUBSCRIPTION FOR ________ SHARES OF SERIES F PREFERRED STOCK OF GEOS
COMMUNICATIONS, INC. BY THE ABOVE NAMED SUBSCRIBER(S) IS ACCEPTED AS OF
_________________, 20__.
|
By:
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Chief Executive
Officer
|
|
11
EXHIBIT
A
Form of
Warrant
[See
attached document]
A-1
EXHIBIT
B
Amended
Certificate of Designations of Rights and
Preferences of Preferred
Stock Series F of the Company
[See
attached document]
B-1
EXHIBIT
C
Registration
Rights
1. Definitions.
1.1 As
used in this Exhibit
C, the following terms shall have the meanings:
(a) “Investor” means Subscriber and
any permitted transferee or assignee of Registrable Securities who agrees to
become bound by all of the terms and provisions of this Exhibit C and this
Subscription Agreement.
(b) “Person” means any individual,
partnership, corporation, limited liability company, joint stock company,
association, trust, unincorporated organization, or a government agency or
political subdivision thereof.
(c) “Prospectus” means the
prospectus (including any preliminary prospectus and/or any final prospectus
filed pursuant to Rule 424(b) under the Securities Act and any prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance on Rule 430A under the Securities
Act) included in the Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
(d) “Public Offering” means an
offer registered with the Commission and the appropriate state securities
commissions by the Company of its Common Stock and made pursuant to the
Securities Act.
(e) “Registrable Securities” means
the Underlying Shares; provided, however, that an Underlying Share shall cease
to be a Registrable Security for purposes of this Exhibit C when it no
longer is a Restricted Security.
(f) “Registration Statement” means
a registration statement of the Company filed on Form S-3 under the Securities
Act providing for the registration of, and the sale on a continuous or delayed
basis by the holders of, all of the Registrable Securities pursuant to Rule 415
under the Securities Act, including the Prospectus contained therein and forming
a part thereof, any amendments to such registration statement and supplements to
such Prospectus, and all exhibits and other material incorporated by reference
in such registration statement and Prospectus. In the event that Form
S-3 is unavailable for such a registration, the Company shall use such other
form as is available for such a registration.
(g) “Restricted Security” means any
Underlying Share except any that (i) have been registered pursuant to an
effective registration statement under the Securities Act and sold in a manner
contemplated by the prospectus included in such registration statement, (ii)
have been transferred in compliance with the resale provisions of Rule 144 under
the Securities Act (or any successor provision thereto) or is transferable
pursuant to paragraph (k) of Rule 144 under the Securities Act (or any successor
provision thereto), or (iii) otherwise has been transferred and are not subject
to transfer restrictions under the Securities Act.
1.2 All
capitalized terms used and not defined herein have the respective meaning
assigned to them in the Subscription Agreement.
C-1
2. Registration.
2.1 Piggyback Registration
Rights.
(a) If
the Company proposes to register any shares of Common Stock (other than a
registration (A) on Form S-8 or S-4 or any successor or similar forms, (B)
relating to Common Stock issuable upon exercise of employee or consultant share
options or in connection with any employee benefit or similar plan of the
Company or (C) in connection with a direct or indirect acquisition by the
Company of another Person or any transaction with respect to which Rule 145 (or
any successor provision) under the Securities Act applies), whether or not for
sale for its own account, it will each such time, give prompt written notice at
least 20 days prior to the anticipated filing date of the registration statement
relating to such registration to the Investors, which notice shall set forth
such Investors’ rights under this Section 2.1 and shall offer the Investors the
opportunity to include in such registration statement such number of Registrable
Securities as the Investors may request. Upon the written request of
an Investor made within 10 days after the receipt of notice from the Company
(which request shall specify the number of Registrable Securities intended to be
disposed of by such Investors), the Company will use its best efforts to effect
the registration under the Securities Act of all Registrable Securities that the
Company has been so requested to register by the Investors, to the extent
requisite to permit the disposition of the Registrable Securities to be so
registered; provided, however, that (A) if such registration involves a Public
Offering, the Investors must sell their Registrable Securities to the
underwriters on the same terms and conditions as apply to the Company and (B)
if, at any time after giving written notice of its intention to register any
Registrable Securities pursuant to this Section 2.1 and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such Registrable
Securities, the Company shall give written notice to the Investors and,
thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration.
(b) If
a registration pursuant to this Section 2.1 involves a Public Offering and the
managing underwriter thereof advises the Company that, in its view, the number
of Common Stock, if any, or other Common Stock that the Company and the
Investors intend to include in such registration exceeds the largest number of
Common Stock (including any other Common Stock or warrants of the Company) that
can be sold without having an adverse effect on such Public Offering (the “Maximum Offering Size”), the
Company will include in such registration only that number of Common Stock which
does not exceed the Maximum Offering Size, in the following order of priorities:
(1) first, all securities the Company proposes to sell for its own account, (2)
second, up to the full number of securities proposed to be registered for the
account of the holders of securities entitled to inclusion of their securities
in the Registration Statement by reason of demand registration rights, and (3)
third, the securities requested to be registered by other holders of securities
entitled to participate in the registration, drawn from them pro-rata based on
the number of shares each has requested to be included in such
registration.
(c) If
as a result of the proration provisions of this Section 2.1(b), the Investors
are not entitled to include all such Registrable Securities in such
registration, such Investors may elect to withdraw their request to include any
Registrable Securities in such registration.
(d) Notwithstanding
the foregoing, the Company shall have no obligations under this Section 2.1
hereof at any time that such Registrable Securities are the subject of an
effective registration statement.
3. Obligations of the
Investors. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations,
which obligations shall be several and not joint:
3.1 Prior
to the first anticipated filing date of the Registration Statement under Section
2.1 hereof, the Company shall provide the Investors with a draft of the
Registration Statement, including such information about the Investor as has
been provided in the Questionnaire completed by the Investor, together with
whatever confirmations, certificates or consents as may be reasonably requested
by the Company. In connection with any other Registration Statement
including the Investors, it shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Exhibit C with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request. At least ten business days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such Investor (the
“Requested Information”)
if such Investor elects to have any of its Registrable Securities included in
the Registration Statement. If at least four business days prior to
the anticipated filing date the Company has not received the Requested
Information from an Investor (a “Non-Responsive Investor”),
then the Company shall send such Non-Responsive Investor a reminder of such
information request. If at least two business days prior to the
anticipated filing date the Company still has not received the Requested
Information from such Non-Responsive Investor, then the Company may file the
Registration Statement without including Registrable Securities of such
Non-Responsive Investor. However, promptly upon receipt of the
Requested Information, and at the expense of the Non-Responsive Investor, the
Company shall file such amendment(s) to the Registration Statement as may be
necessary to include therein the Registrable Securities of the Non-Responsive
Investor.
C-2
3.2 Each
Investor by its acceptance of the Registrable Securities agrees to cooperate
with the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from the
Registration Statement.
4. Assignment. Subject
to the last sentence of this paragraph, in the event there is not an effective
Registration Statement covering the Registrable Securities, the rights to have
the Company register Registrable Securities pursuant to this Exhibit C may be
assigned or transferred without the prior written consent of the
Company. Additionally, subject to the last sentence of this
paragraph, consent of the Company shall not be required with respect to any
assignment or transfer of Registrable Securities to an affiliate of Investor,
including for this purpose if Investor is an investment company, any fund or
account advised by Investor’s investment adviser or any affiliate thereof and if
the Investor is a partnership, any partner thereof. In the event of
any such assignment or transfer by the Investors to any permitted transferee of
all or any portion of such Registrable Securities such transfer will be allowed
only if: (a) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee and (ii) the
securities with respect to which such registration rights are being transferred
or assigned, (c) immediately following such transfer or assignment, the
securities so transferred or assigned to the transferee or assignee constitute
Restricted Securities, and (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein.
C-3
SCHEDULE
4.1(d)
Common
Stock
- 31,672,842
shares are issued and outstanding
Warrants
- 14,019,339
underlying shares of Common Stock
Incentive Stock
Options
- 6,651,438
underlying shares of Common Stock
Preferred
Stock
- 11,300,000
shares of Common Stock underlying the Series F Preferred Stock
Convertible
Debt
▇▇▇▇▇ $50,000 Convertible
Notes @$1.20 = 41,667
underlying shares
*Note: The
underlying shares of the Convertible Debt have been included in the above
referenced number of issued and outstanding shares of Common
Stock.
S-4.1(d)
- 1
SCHEDULE
4.1(e)
Patents and Patents
Pending
|
File No.
|
Ctry
|
Short Title
|
Application / Patent No.
|
Ap Date
|
Issue Date
|
|||||
|
1970-0001
|
US
|
DMTR
|
11/078059
/ 7,460,480
|
3/11/05
|
12/2/08
|
|||||
|
▇▇▇▇-▇▇▇▇-▇▇
|
▇▇
|
DMTR
|
2,559,891
|
3/11/05
|
||||||
|
1970-0001-EP
|
EP
|
DMTR
|
5725432.8
/ ▇▇▇▇▇▇▇▇▇
|
3/11/05
|
12/2/08
|
|||||
|
1970-0001-C
|
US
|
MGT
|
12/262/892
|
10/31/08
|
||||||
|
1970-0001-WO
|
WO
|
COM
|
PCT/US2005/08244
|
3/11/05
|
||||||
|
1970-0002
|
US
|
IP
Share
|
11/202,050
|
8/11/05
|
||||||
|
1970-0002-CA
|
CA
|
IP
Share
|
2,577,806
|
8/16/05
|
||||||
|
1970-0002-EP
|
EP
|
IP
Share
|
5805070.9
/ ▇▇▇▇▇▇▇▇▇
|
8/16/05
|
||||||
|
1970-0002-WO
|
WO
|
IP
Share
|
PCT/US200529324
|
8/16/05
|
||||||
|
1970-0003
|
US
|
Client
Server
|
11/043,680
|
1/26/05
|
||||||
|
1970-0003-WO
|
WO
|
Client
Server
|
PCT/US2005/03557
|
1/26/05
|
||||||
|
1970-0005-C
|
US
|
MEM
LTD PRO
|
10/613,656
|
7/03/03
|
||||||
|
1970-0005-CA
|
CA
|
MEM
LTD PRO
|
2,494,980
|
7/03/03
|
||||||
|
1970-0005-EP
|
EP
|
MEM
LTD PRO
|
3763277.5
/ EP1527561
|
7/03/03
|
||||||
|
1970-0005-WO
|
WO
|
MEM
LTD PRO
|
PCT/US2003/21190
|
7/03/03
|
||||||
|
▇▇▇▇-▇▇▇▇
|
US
|
Cellular
Bridge
|
10/624,433
|
7/22/03
|
||||||
|
1970-0006-WO
|
WO
|
Cellular
Bridge
|
PCT/US2004/21463
|
7/02/07
|
||||||
|
1970-010P
|
US
|
MGT
|
61/014,324
|
12/17/07
|
||||||
|
1970-010-WO
|
WO
|
MGT
|
PCT/US2008/012317
|
10/30/08
|
||||||
|
▇▇▇▇-▇▇▇
|
▇▇
|
MGT
|
12/098,947
|
4/07/08
|
||||||
|
▇▇▇▇-▇▇▇▇
|
|
▇▇
|
|
IP&SMS
Calls
|
|
61/089,097
|
|
8/15/08
|
|
S-4.1(e)
- 1
Licensed Patents -
Worldwide
|
File No.
|
Ctry
|
Short Title
|
Application / Patent No.
|
Ap Date
|
Issue Date
|
|||||
|
US
|
VSAM
|
10/972,726
/ 7,336,654
|
10/25/04
|
2/26/08
|
||||||
|
US
|
E-Funds
TSF
|
09/501,874
/ 7,120,606
|
2/10/00
|
10/10/06
|
||||||
|
|
US
|
|
DRM
Packets
|
|
09/981,358
/ 7,343,349
|
|
10/15/01
|
|
3/11/08
|
Registered
Trademarks
i2Telecom®
GlobalTalk®
VoiceStick®
InternetTalker®
Trademarks
Pending
MyGlobalTalk™
LeadTray™
U-Wireless™
YourWireless™
MyMobileBridge™
ThirdNetwork™
LiveWidget™
S-4.1(e)
- 2