Exhibit 4.1 Subscription and Investment Representation Agreement between View
Systems, Inc. and ▇▇▇▇▇ Investment Group, dated February 18, 2000
▇▇▇▇▇ INVESTMENT GROUP
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310/407-0100
AMOUNT OF INVESTMENT $400,000
VIEW SYSTEMS, INC.
(A FLORIDA CORPORATION)
SUBSCRIPTION AND INVESTMENT REPRESENTATION AGREEMENT
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February 18, 2000
View Systems, Inc.
Gentlemen:
The undersigned ("Subscriber") subscribes for and agrees to purchase
(a) 800,000 shares of Common Stock (the "Common Stock"), (b) a Common Stock
Purchase Warrant (the "First Purchase Warrant") for up to 1,500,000 shares of
common stock and (c) a Second Common Stock Purchase Warrant (the "Second
Purchase Warrant") for up to 1,000,000 shares of Common Stock (the "Interest")
in View Systems, Inc. (the "Company"), a corporation organized under the laws of
the State of Florida, in the amount indicated above, on the terms and conditions
described herein, relating to the offering (the "Offering") of the Interest. In
accordance with this subscription agreement, Subscriber agrees as follows:
TENDER. Subscriber tenders herewith to the Company cash or a check
made payable to the order of "View Systems, Inc." in the amount of $400,000.
CLOSING AND CLOSING DATE. The transaction contemplated by this
Agreement shall close on or before February 18, 2000. Time is of the essence for
all of the transactions contemplated in this Agreement. The consummation of the
actions described in this section 2 shall constitute the "Closing" and the date
on which the last of such events are consummated shall be deemed the "Closing
Date."
COVENANTS OF THE COMPANY.
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SB-2 REGISTRATION STATEMENT. The Company warrants and represents
that it has filed with the Securities & Exchange Commission (the "SEC"), a
Registration Statement on Form SB-2 (the "Filed SB-2") regarding the proposed
offering of up to one million (1,000,000) shares of Common Stock of the Company.
Promptly after the execution of this Subscription and Investment Representation
Agreement, and the closing hereon, the Company shall amend the Filed SB-2 by (a)
removing all shares of Common Stock proposed to be offered by the Company; and
(b) including in the Registration Statement the offering of all of the Common
Stock and all of the common stock underlying the First Purchase Warrant. The
Company agrees that from the date of this Agreement until the date occurring
ninety (90) days after the effective date of the Filed SB-2 (the "▇▇▇▇▇
Exclusive Period"), that the Company shall not offer, issue, sell or transfer
any shares of its common stock or other capital stock to any person or entity,
provided, however, that the Company may offer or issue not more than one hundred
fifty thousand (150,000) shares of Common Stock to BONA FIDE employees or
consultants of the Company in one or more private placements of securities under
which the securities so sold will be restricted from resale. The Company shall
have the obligation to prepare the amendment to the Filed SB-2 and to take all
other actions necessary for the Filed SB-2 to be declared effective. In order to
facilitate this process, the attorneys for Subscriber will assist in the work on
the Filed SB-2 as reasonably requested by the Company's counsel, and shall be
directed by Subscriber to use their best efforts to assist Company's counsel in
this process. Subscriber will pay the expenses of his attorneys and the Company
shall pay the expenses of its attorneys.
DTC SHEETS. The Company shall send copies of each week's DTC sheet
for its common stock to Subscriber on every Monday (or the next day if a
holiday) as long as Subscriber remains a holder of Company common stock or
warrants.
NO REPRICING OF OUTSTANDING WARRANTS. The Company shall not agree or
consent to any repricing or revision of any of the terms of any currently
outstanding options or warrants to acquire Company common stock.
Remedies. In the event that the Company (a) fails to comply with any
of its covenants or obligations set forth in this Article 3 or elsewhere in this
Agreement; (b) fails to issue certificates representing shares of common stock
to Subscriber within three (3) business days after Subscriber is entitled to
such shares, whether such entitlement arises as a result of share purchase,
warrant exercise, or otherwise; or (c) intentionally prevents the Filed SB-2
from being declared effective by June 30, 2000, then, and in such event, the
Company shall be in default of its obligations hereunder. For each week that the
Company remains in default of any of its obligations hereunder, without cure
thereof, the Company shall issue to Subscriber its common stock purchase warrant
(the "Additional Warrants") for 5,000 number of shares of common stock, upon all
of the other terms and conditions set forth in the First Purchase Warrant and
the Second Purchase Warrant. All of the common stock underlying any Additional
Warrants issued hereunder shall be registered for resale by the Company on the
filed SB-2 or any other replacement suitable registration form and will have all
of the rights of Registerable Shares under the Registration Rights Agreement. In
addition, if there is any default by the Company of its obligations hereunder,
under the Registration Rights Agreement, the First Purchase Warrant or the
Second Purchase Warrant, Subscriber may suspend his performance under all of the
aforementioned Agreements until the Company has cured such default.
COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company, in order to
induce Subscriber to enter into and execute this Agreement, represents and
warrants as follows:
ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. The Company is
duly incorporated, validly existing and in good standing under the laws of
Florida and is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
the business transacted by it or the character of the properties owned or leased
by it requires such licensing or qualification. The Company has the corporate
power and authority to own and hold its properties and to carry on its business
as now conducted and as proposed to be conducted. The Company has the corporate
power and authority to execute, deliver and perform this Agreement, the
Registration Rights Agreement by and between the Company and the Subscriber and
the First Purchase Warrant and the Second Purchase Warrant, to issue, sell and
deliver the Common Stock pursuant to this Agreement, and to issue and deliver
the shares of common stock of the Company issuable upon exercise of the First
Purchase Warrant and the Second Purchase Warrant. The Company does not (i) own
of record or beneficially, directly or indirectly, (a) any shares of capital
stock or securities convertible into capital stock of any other corporation or
(b) any participating interest in any partnership, joint venture or other
non-corporate business enterprise; or (ii) control, directly or indirectly, any
other entity, except for its interest in Media Comm.
AUTHORIZATION OF AGREEMENTS, ETC. The execution and delivery by the
Company of this Agreement, the Registration Rights Agreement, the First Purchase
Warrant and the Second Purchase Warrant, the performance by the Company of its
obligations hereunder and thereunder and the issuance, sale and delivery of the
Common Stock and the common stock underlying the First Purchase Warrant and the
Second Purchase Warrant have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Charter or the By-laws of the Company (the
"By-laws"), or any provision of any indenture, agreement or other instrument to
which the Company is a party, or by which any of its properties or assets is
bound, or conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
AUTHORIZATION OF SHARES. The shares of Common Stock have been duly
authorized and, when held and issued in accordance with this Agreement, will be
validly issued, fully paid and nonassessable shares of Common Stock with no
personal liability attaching to the ownership thereof and will be free and clear
of all liens, charges, restrictions, claims and encumbrances imposed by or
through the Company, except this Agreement. The shares underlying the First
Purchase Warrant and the Second Purchase Warrant have been duly reserved for
issuance and when so issued and held, will be duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock with no personal liability
attaching to the ownership thereof and will be free and clear of all liens,
charges, restrictions, claims and encumbrances imposed by or through the Company
subject to the terms of this Agreement. Neither the issuance, sale or delivery
of the Common Stock, nor the issuance, sale or delivery of the shares underlying
the First Purchase Warrant or the Second Purchase Warrant are subject to any
preemptive right of stockholders of the Company or to any right of first refusal
or other right in favor of any person except such rights as have been waived.
VALIDITY. This Agreement, the Registration Rights Agreement, the
First Purchase Warrant and the Second Purchase Warrant have been duly executed
and delivered by the Company and constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their terms.
Authorized Capital Stock. The authorized capital stock of the
Company consists of fifty million shares of Common Stock. Immediately prior to
the Closing, Seven Million Two Hundred Sixty Two Thousand Five Hundred Eighty
(7,262,580) shares of Common Stock will be validly issued and outstanding, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof. Prior to the closing, no Shares of Preferred Stock shall be issued. The
Company does not have any obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interest therein
or to pay any dividend or make any other distribution in respect thereof. To the
best of the knowledge of the Company, there are no voting trusts or agreements,
stockholders' agreements, pledge agreements, buy-sell agreements, rights of
first refusal, preemptive rights or proxies relating to any securities of the
Company (whether or not the Company is a party thereto).
Financial Statements. The Financial Statements of the Company in the
SB-2 Registration Statement fairly present the financial position of the
Company, in accordance with generally accepted accounting principles
consistently applied. Since the date of the Financial Statements, there has been
no change in the assets, liabilities or financial condition of the Company from
that reflected in the Financial Statements except for changes in the ordinary
course of business which in the aggregate have not been materially adverse, and
(b) none of the business, prospects, financial condition, operations, property
or affairs of the Company has been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether or not
insured against. All of the other information in the Private Placement
Memorandum dated January 10, 2000 is true and accurate as of the date hereof.
Undisclosed Liabilities, Etc. The Company has no liabilities or
obligations of any nature, whether known, unknown, absolute, accrued, contingent
or otherwise and whether due or to become due except (i) as and to the extent
disclosed or reserved against in the Financial Statements, or (ii) for
liabilities and obligations incurred after the date of the Financial Statements
in the ordinary course of business consistent with past practices and not
prohibited by this Agreement. Since January 10, 2000, there has not occurred or
come to exist any event, occurrence, fact, condition, change, development or
effect that, individually or in the aggregate, should reasonably be expected to
materially and adversely affect the Company, or its
business.
INVESTMENT REPRESENTATION. Subscriber represents and warrants:
In General. Subscriber represents and warrants that it is acquiring
the Common Stock, the First Purchase Warrant and Second Purchase Warrant for its
own account, for investment purposes only, and not with a view to or for the
resale, distribution or fractional-ization thereof, in whole or in part, and no
other person has a direct or indirect beneficial interest in the Common Stock,
the First Purchase Warrant and Second Purchase Warrant.
Illiquidity/Ability to Bear Risk of Loss. Subscriber hereby
acknowledges Subscriber's understanding of the speculative nature of its
investment, that the Company's business and Subscriber's investment in the
Company involve a high degree of risk and may result in the loss of his, her or
its entire investment, and that no Federal or state securities agency has made
any finding or determination, or has passed upon, the terms or fairness of the
Offering. Subscriber understands and agrees that Subscriber must bear the
economic risk of Subscriber's investment for an indefinite period of time
because, among other reasons, the Common Stock, the First Purchase Warrant and
Second Purchase Warrant have not been registered under the Securities Act of
1933, as amended (the "Act") or under the Securities Laws of certain states and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
it is subsequently registered under the Act and under applicable securities laws
of such states or an exemption from such registration is available. Subscriber
represents and warrants that it has the financial ability to bear the economic
risk of its investment in the Company (including the possible loss of
Subscriber's entire investment).
Private Placement Memorandum. Subscriber has received and read the
confidential Private Placement Memorandum, dated January 10, 2000, for this
offering.
Accredited Investor. Subscriber is a qualified institutional buyer
for purposes of Rule 144A or an institutional accredited investor (as defined in
Rule 501(a)(1)-(3), 501(a)(7)-(8) of the Securities Act of 1933).
Residency. Subscriber is a California entity, duly organized and
validly existing, whose principal place of business is Los Angeles, California.
Subscriber is in the business of investment banking transactions, with
sufficient knowledge and experience in investment transactions to evaluate the
merits of this investment.
Pre-existing Arrangement. Subscriber has no contract, undertaking,
agreement or arrangement with any person or entity to sell, hypothecate, pledge,
donate or otherwise transfer (with or without consideration) to any such person
or entity any shares, and has no present plans or intention to enter into any
such contract, undertaking, agreement or arrangement.
Subscriber Covenants. Subscriber covenants that:
5.7.1 Subscriber covenants not to transfer, assign, hypothecate,
pledge or sell the Warrants to third parties and agrees that it can only
transfer, assign, hypothecate, pledge or sell the shares underlying the
Warrants. Further, Subscriber acknowledges that its registration rights run only
to the shares underlying the Warrants.
5.7.2 Subscriber covenants to promptly and fully disclose to Company
its position on all of Subscriber's accounts while there is a long position on
either stock or warrants.
Short Selling. For so long as Subscriber holds Company securities,
Subscriber and its affiliates shall not engage in any short selling or selling
against the box in the Company's securities.
SECURITIES LAWS COMPLIANCE.
PRIVATE PLACEMENT. Subscriber acknowledges that the Offering is
intended to be exempt from registration under the Act by virtue of the
provisions of Regulation D or Section 4(b) promulgated under the Act.
RESTRICTIONS ON RESALES. Subscriber agrees that Subscriber will not
sell or otherwise transfer the Common Stock, First Purchase Warrant and Second
Purchase Warrant without registration under the Act (and applicable state law)
or an exemption therefrom. Subscriber also understands that sales or transfers
of the Common Stock, First Purchase Warrant and Second Purchase Warrant are
restricted by the provisions of state securities laws. Subscriber also
understands that the certificate for the Common Stock, First Purchase Warrant
and Second Purchase Warrant will bear a restrictive legend describing the
foregoing restrictions.
INFORMATION MADE AVAILABLE/RELIANCE.
INFORMATION. Subscriber has been provided an opportunity to obtain
additional information concerning the Offering and the Company to the extent
that the Company possesses such information or can acquire it without
unreasonable effort or expense and has, further, been given the opportunity to
ask questions of and receive answers from the Company concerning the terms and
conditions of the Offering and other matters pertaining to the investment in the
Common Stock, First Purchase Warrant and Second Purchase Warrant. Subscriber is
satisfied with the scope of information he, she or it has received and confirms
that Subscriber's questions have been dealt with in a satisfactory manner.
RELIANCE ON INDEPENDENT INVESTIGATION AND PROFESSIONAL ADVICE. In
making Subscriber's decision to purchase the Common Stock, First Purchase
Warrant and Second Purchase Warrant, Subscriber has relied solely upon
independent investigations made by Subscriber, directly or indirectly, and has
not relied on the Company with respect to any investment, tax, legal,
accounting, financial or other advice. Subscriber has carefully considered, and,
to the extent Subscriber believes it necessary, appropriate or advisable, has
discussed with his, her or its investment, tax, legal, accounting, financial and
other advisers, the suitability of making an investment in the Company on the
terms set forth in this agreement.
AFFIRMATION OF OTHER INFORMATION. Any information which Subscriber
has heretofore, or simultaneously herewith, furnished to the Company is correct
and complete as of the date of this agreement and if there should be any
material change in such information prior to the Closing Date, Subscriber agrees
to promptly furnish such revised or corrected information to the Company.
INDEMNITY BY SUBSCRIBER. Subscriber agrees to indemnify and hold
harmless the Company, and each other person, if any, who controls or is
controlled by any of them, within the meaning of section 15 of the Act, against
any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of or
based upon any false representation or warranty or breach of covenant or
agreement by Subscriber herein or in any other document furnished by Subscriber
to Company in connection with this transaction, including all agreements
executed contemporaneously herewith.
INDEMNITY BY COMPANY. The Company agrees to indemnify and hold
harmless Subscriber against any and all loss, liability, claim, damage and
expense whatsoever (including but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever,) arising out of
or based upon any false representation or warranty or any breach of covenant or
agreement by the Company herein or in any other document furnished to Subscriber
in connection with this transaction, including the Registration Rights Agreement
of even date herewith and the First Purchase Warrant and the Second Purchase
Warrant of even date herewith.
MODIFICATION. Neither this agreement nor any provision of this
agreement shall be waived, modified, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, modification,
discharge or termination is sought.
NOTICES. Any notice, demand or other communication which any party
may be required, or may elect, to give to anyone interested in this agreement
shall be sufficiently given if (a) deposited, postage prepaid, in a United
States mail letter box, registered or certified mail, return receipt requested,
addressed to such address as may be given in this agreement (or the last known
address) or (b) delivered personally at such address. Either party may change
his, her or its address for notice by notice to the other party.
BINDING EFFECT. Except as otherwise provided herein, this agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns (collectively "Successors"). If Subscriber is more than one person, the
obligations of Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments contained in this agreement
shall be deemed to be made by and be binding upon each such person and each such
person's Successors.
ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties, and there are no representations, warranties, covenants or other
agreements except as stated or referred to in this agreement.
APPLICABLE LAW. This agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within such state.
COUNTERPARTS. This agreement may be executed through the use of
separate signature pages in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwithstanding that all parties are not signatories to the same
counterpart.
CAPTIONS. Headings contained in this agreement have been asserted
for reference purposes only and shall not be construed as part of this
agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the _______ day of February, 2000.
VIEW SYSTEMS, INC.
By:___________________________
Duly Authorized Agent
SUBSCRIBER:
▇▇▇▇▇ Investment Group
By:____________________________
▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇▇▇ Than, Chief Executive Officer of the Company, hereby agrees
that he shall not sell, transfer or assign in any manner any of his shares of
Common Stock of the Company (excluding up to 100,000 shares) for a period of
eighteen (18) months from the date of this Agreement, provided that this
restriction shall terminate ninety (90) days after the effective date of the
Company's first effective SB-2, if earlier.
▇▇▇▇▇▇▇ Than shall also take a one (1) day media course.
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▇▇▇▇▇▇▇ Than