Document:

fs12012ex10xx_genesisgrp.htm

Exhibit 10.20

 

SUBSCRIPTION AGREEMENT

 

WHEREAS, each of the undersigned desires to subscribe for shares representing, in the aggregate, ______ (_____) shares of Series E Preferred Stock (the “Shares”) in Genesis Group Holdings Inc. (the “Company”) with an accompanying warrant in the form attached hereto as Exhibit A (each, a “Warrant”) in consideration for a total investment of ________________________ ( $________ ) and

 

NOW, THEREFORE, the undersigned hereby offer to purchase and subscribe for Shares in the amount set forth under each of their names on the signature page hereto.  Each of the undersigned makes the offer to purchase the aforesaid Shares, upon the terms set forth below and, in connection therewith, makes the following representations and warranties to the Company:

 

1.   Each of the undersigned understands that the Shares and accompanying Warrants are offered on a negotiated basis for a purchase price per share (with accompanying Warrant) of $1,000 and may be offered to others on the same terms. The Company has agreed to accept $1,000 per Share (with accompanying Warrant) upon acceptance of the subscriptions hereunder, which amount the Company and each of the undersigned agree represents the current fair market value per Share and Warrant after factoring in all of the terms and conditions herein. Each of the undersigned understands and agrees that any Subscription for Shares (and Warrants) is made subject to the following terms and conditions: (a) the Company shall have the right to reject such subscription in whole or in part; (b) the undersigned agrees to comply with the terms of this agreement and the bylaws of the Company, and to execute any and all further documents necessary in connection with becoming a stockholder of the Company.

 

2.   Each of the undersigned understands that this subscription constitutes an offer to purchase Shares in the Company.

 

3.   Each of the undersigned, his advisers, if any, and designated representatives, if any, have the knowledge and experience in financial and business matters necessary to evaluate the merits and risks of its prospective investment in the Company, and have carefully reviewed and understand the risks of, and other considerations relating to, the purchase of Shares and the tax consequences of the investment, and have the ability to bear the economic risks of the investment.

 

4.   Each of the undersigned is acquiring Shares and Warrants for investment for his own account and not with the view to, or for resale in connection with, any distribution thereof and understands and acknowledges that the Shares have not been registered under the Securities Act or any state securities laws, by reason of a specific exemption from the registration provisions of the Securities Act and applicable state securities laws, which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. Each of the undersigned further represents that he does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to any of the Shares.

 

  

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5.   Each of the undersigned is aware that no federal or state agency has made any findings or determination as to the fairness for public or private investment, nor any recommendation or endorsement, of the Shares and Warrants as an investment.

 

GENERAL INFORMATION FROM PURCHASERS

 

6.   The following information must be completed in full before this subscription for Shares and Warrants will be considered by the Company.  The information requested relates to each of the undersigned’s knowledge and experience in financial and business matters and to his ability to bear the economic risks of a proposed investment in the Company.  Such information is required in order to determine whether or not certain suitability standards regarding the proposed investment have been met by the undersigned.

 

7.   Each of the undersigned represents that he either (i) is an “accredited investor” as defined in Rule 501 of Regulation D as promulgated by the Securities and Exchange Commission under the Securities Act or (ii) is not a “U.S. Person” as defined in Regulation S as promulgated by the Securities and Exchange Commission under the Securities Act, and, in each case, shall submit to the Company such further assurances of such status as may be reasonably requested by the Company.

 

CERTIFICATION AS ACCREDITED INVESTOR

 

8.   ACCREDITED INVESTOR CERTIFICATION UNDER FEDERAL SECURITIES LAWS AND MOST STATE SECURITIES LAWS.  Each of the undersigned further represents as follows  (it is requested that at least one of the following categories be initialed by all “accredited investors” as defined in Regulation D under the Securities Act of 1933) (the “Act”) :

 

	
__________

	
a.

	
The undersigned is a natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000, provided that in calculating the undersigned’s net worth: (A) the person's primary residence shall not be included as an asset; (B) indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (C) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;

 

	

__________

	
b.

	
The undersigned is a natural person whose individual income exceeded $200,000 in each of the two most recent calendar years or whose joint income with his spouse exceeded $300,000 in each of those years and who reasonably expects to reach the same income level in the current year;

 

  

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__________

	
c.

	
The undersigned is a bank as defined in Section 3 (a) (2) of the Act or any savings and loan association or other institution as defined in Section (3) (a) (5) (A) of the Act whether acting in its individual or fiduciary capacity, a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; an insurance company registered under the Investment Company Act of 1940 or a business development company as defined in section 2 (a) (48) of that act; a Small Business Investment Company licensed by the U. S. Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in section 3 (21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

 

	

__________

	
d.

	
The undersigned is any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;

 

	

__________

	
e.

	
The undersigned is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring Shares, whose purchase is directed by a person who has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of the investment;

 

	

__________

	
f.

	
The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

 

	

__________

	
g.

	
The undersigned is a director or executive officer of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer, or

 

	

__________

	
h.

	
The undersigned is an entity in which all of the equity owners are accredited investors.  If a resident of Arizona, California, Florida, Illinois, or Michigan, please complete and sign Annex B to this Subscription Agreement.

 

OTHER CRITERIA AND REPRESENTATIONS

 

9.     The undersigned recognizes the speculative nature and risks of loss associated with investments in intermediate stage companies and that he or she may suffer a complete loss of his or her investment. The Shares and Warrants subscribed for constitute an investment which is suitable and consistent with his investment program and his financial situation enables him to bear the risks of this investment.

 

  

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10.   The undersigned confirms that he understands and has fully considered, for purposes of this investment, that: (i) the Shares and Warrants (and securities issuable upon exercise of the Warrants) are a speculative investment which involves a high degree of risk of loss by the undersigned of his investment therein, and (ii) there are substantial restrictions on the transferability of, and there will be no public market for the Shares and Warrants and, accordingly, it may be difficult for him to liquidate his investment herein in case of emergency, if possible at all.

 

11.   The undersigned confirms that, in making his decision to purchase the Shares and Warrants subscribed for, he has relied upon independent investigations made by him or his representatives, including his own professional tax and other advisors, and that he and such representatives have been given the opportunity to examine all documents and to ask questions of, and to receive answers from, the officers and directors of the Company concerning the terms and conditions of the investment or any other matter, and to obtain any additional information, to the extent that the officer and directors of the Company possess such information or can acquire it, without unreasonable effort or expense, necessary to verify the accuracy of any information, and that no representations have been made to the undersigned concerning the Shares, the Company, its proposed business activities or other matters, except as set forth in the Company’s filings with the Securities and Exchange Commission and the Company’s press releases (collectively, the “Public Information”).  The undersigned is aware of the restrictions imposed by the U.S. securities laws on the purchase or sale of securities from third parties (including in the public market) by any person who has received material, non-public information from the issuer of such securities and on the communication of such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information.  The undersigned agrees that, to the extent he has received or is otherwise in possession of material non-public information regarding the Company, for so long as such information continues to constitute material non-public information regarding the Company, he will not purchase or sell any securities of the Company other than from the Company.

 

12.   The undersigned understands that the Shares and Warrants are being offered and sold under an exemption from registration provided by the Act, and warrants and represents that any Shares and Warrants subscribed for are being acquired by the undersigned solely for his own account, for investment purposes only, and are not being purchased with a view to or for the purpose of resale, distribution, subdivision or fractionalization thereof; the undersigned has no agreement or other arrangement, formal or informal, with any person to sell, transfer or pledge any part of any common stock subscribed for or which would guarantee the undersigned any profit or protect the undersigned against any loss with respect to such Shares and Warrants; the undersigned has no plans to enter into such agreement or arrangement and, consequently, he must bear the economic risk of the investment for an indefinite period of time because the Shares and Warrants cannot be resold or otherwise transferred unless subsequently registered under the Act, or an exemption from such registration is available. Further, the certificate evidencing the ownership of the Shares and of any shares issued upon exercise of the Warrants by subscribers shall bear the following (or substantially similar) legend:

 

  

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER SUCH ACT OR LAWS.

 

California Residents.  The certificate evidencing the ownership of Shares by subscribers who are residents of California shall also bear the following legend:

 

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.

 

Further, the undersigned are advised as follows:

 

THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.  TO THE EXTENT THE CALIFORNIA CORPORATIONS CODE IS APPLICABLE TO ANY OF THE TRANSACTIONS HEREUNDER, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

13.   With a view to making available to the undersigned the benefits of Rule 144 and any other rule or regulation of the Securities and Exchange Commission (“SEC”) that may at any time permit a holder to sell securities of the Company to the public without registration, the Company agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, at all times from and after the effective date of the undersigned’s subscription; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act of 1933, as amended (the “Act,” or the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and (iii) furnish to the undersigned, forthwith upon request (A) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Act and the Exchange Act, and (B) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company if such documents are not available on the Company’s website or the SEC’s website.

 

  

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14.   The undersigned is aware that the Company is relying upon the representations and warranties of the undersigned set forth in this Agreement, in part, in determining whether the offering is exempt from registration under the Act and from registration or qualification under any applicable state securities laws .  The Company is relying upon the undersigned’s representations and warranties in determining whether to accept the subscription tendered hereby.

 

15.   The undersigned represents and warrants that the following statements are true: (i) if the undersigned is a partnership or an association, all of its members are at least 21 years of age and are United States citizens; (ii) if the undersigned is (A) an individual retirement account, (B) an individual retirement account that is established as part of a plan described in Section 401 (a) of the Code under which employees are participants, or (C) a trust established as part of a plan described in Section 401 (a) of the Code, all of he beneficiaries of such plan are at least 21 years of age and are U.S. citizens; (iii)  if the undersigned is a corporation, it is incorporated under the laws of the United States and is authorized and otherwise duly qualified to hold an interest in the Company; (iv) if the undersigned is a corporation and any of such corporate partner’s shareholders are not such U.S. citizens or domiciled in the United States, then such shareholders’ countries of domicile permits U.S. citizens to own interest in U.S. corporations.

 

16.   The undersigned agrees that the foregoing representations and warranties shall survive his acquisition of Shares and Warrants pursuant to this Agreement, as well as any rejection by the Company of a subscription for the Shares and Warrants.

 

17.   The undersigned represents, under penalties of perjury, that he is not subject to backup withholding under the provisions of Section 3406 (a) (1) (C) of the Internal Revenue Code of 1986 and that his social security number or taxpayer identification number provided to the Company is true and correct.

 

18.   Market Stand-Off Agreement.  Each of the undersigned hereby agrees that, during the period of duration specified by the Company and an underwriter of common stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act in connection with the first public offering of equity securities by the Company after the date hereof (other than in connection with a Rule 145 transaction or a registration on Form S-8 or otherwise with respect to an employee incentive plan), he shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by him at any time during such period; provided, however, that (i) all then executive officers and directors of the Company enter into similar agreements, and such market stand-off time period shall not exceed one hundred eighty (180) days, subject to extension for no more than an additional 34 days as requested by the underwriters to ensure compliance with applicable FINRA rules related to the publishing of research reports.  To enforce the foregoing covenant, the Company may include an appropriate legend on any securities held by the undersigned and may impose stop transfer instructions with respect to such securities (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

 

  

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The preceding representations do not constitute a waiver of any rights the undersigned may have under applicable U.S. or state securities laws.

 

COMPANY REPRESENTATIONS AND WARRANTIES

 

The Company hereby represents and warrants that:

 

(a)   it has all requisite power and authority to carry on its business as currently conducted;

 

(b)   all action on the part of the Company, its board of directors, officers and existing stockholders necessary for the authorization, execution and delivery of this Agreement, and the performance of all obligations of the Company hereunder and thereunder shall have been taken, and this Agreement, assuming due execution by the parties hereto and thereto, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, in each case at the time of the issuance of the Shares;

 

(c)   the Shares, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, shall be duly and validly issued and will be free of restrictions on transfer directly or indirectly created by the Company other than restrictions on transfer under this Agreement and under applicable federal and state securities laws;

 

(d)   the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the performance by the Company of its obligations hereunder will not conflict with or result in the violation of or default under any provision of the Company’s Certificate of Incorporation, as amended, any agreement or instrument to which either the Company is a party or by which it or any of its property is bound, or any license, permit, franchise, judgment, order, writ, decree, statute, rule or regulation applicable to the Company or its business or properties, and no consent, approval, authorization or order of any court or governmental agency is required in connection with the consummation of the transactions contemplated by this Agreement; and

 

(e)   all information contained in the Public Information is true and accurate in all material respects.

 

 [Signatures Appear On The Following Page]

 

  

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IN WITNESS WHEREOF, each of the undersigned has executed this Subscription Agreement this __________ day of September, 2012

 

SUBSCRIBER:

 

	
By_____________________________________________

	 	 
	
Name:

	  
	 	 
	
No. of Shares:

	
 

	

Price Per Share:

	
$1,000

	
Purchase Price:

	
$

	
 

	
 

	
Place of Execution:

	

________________

	
Address:

	
________________

	 	
________________

	 	
________________

	
Telephone:

	

________________

 

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ACT AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR AN EXEMPTION THEREFROM IS AVAILABLE.

 

Accepted by the Company this            day September, 2012.

 

	 	
GENESIS GROUP HOLDINGS, INC.

	 
	 	 	 	 
	 	By: 	 	 
	 	Name: 	Lawrence Sands	 
	 	 	Corporate Secretary	 

 

  

  

  

 

Exhibit A

 

Form of Warrantfs12012ex10xxi_genesisgrp.htm

Exhibit 10.21

 

NEITHER THE SECURITIES REPRESENTED BY THIS INSTRUMENT NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), 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, OR (B) AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

 

GENESIS GROUP HOLDINGS, INC.

 

COMMON STOCK PURCHASE WARRANT

 

	
Warrant No. E-2012-___ 

	Dated: September __, 2012

 

Genesis Group Holdings, Inc., a Delaware corporation, trading on the OTC Bulletin Board under the symbol “GGHO” (the “Company”), hereby certifies that, for value received, __________, a ______________, or its registered assigns (the “Holder”), is entitled to purchase from the Company a number of shares of the Company’s common stock, par value $.0001 per share (the “Common Stock”) equal to the result obtained by multiplying (A) the number of shares of Common Stock outstanding on the day of exercise of this Warrant (calculated on a fully diluted basis assuming conversion and exercise of all then outstanding convertible or exercisable securities of the Company) by (B) a fraction, the numerator of which is the number of shares of Series E Preferred Stock of the Company issued to the original Holder hereof by the Company (as adjusted in the event of a partial exercise or transfer of this Warrant) and the denominator of which is the total number of shares of Series E Preferred Stock authorized by the Corporation and by (C) the Aggregate Share Value (as defined below), (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at an exercise price equal to $1.00 per Warrant Share (“Exercise Price”), at any time from the date hereof and through and including the date that is the earlier of (i) the date that is two years from the date of this Warrant and (ii) the consummation of a Sale (as defined in the Certificate of Designation for the Series E Preferred Stock, or the date of a liquidation, winding up or dissolution of the Company (the “Expiration Date”), and subject to the following terms and conditions.  The “Aggregate Share Value” is 4.99%; provided that, in the event the Company elects to delay any redemption of Series E Preferred Stock pursuant to the terms and conditions of the Certificate of Designation for the Series E Preferred Stock after receiving a Redemption Notice (as defined in the Certificate of Designation), the Aggregate Share Value shall be 9.98%.

 

1.             Definitions.  In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.

 

2.             Registration of Warrant.  The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

  

  

  

 

3.             Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto as Annex A duly completed and signed, to the transfer agent or to the Company at its address specified herein.  Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

4.             Exercise and Duration of Warrants.

 

(a)             This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the date hereof up to and including the Expiration Date.  At 6:30 P.M., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

 

(b)             A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto as Annex B (the “Exercise Notice”), appropriately completed and duly signed along with the Warrant, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised, and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.”  Execution and delivery of the Exercise Notice for a portion of the Warrant Shares then issuable upon exercise of this Warrant shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

(c)             Insufficient Authorized Shares.  If at any time while this Warrant is outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to issue upon exercise of this Warrant and Warrants of this series at least a number of shares of Common Stock equal to 120% (the “Required Reserve Amount”) of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants of this series then outstanding (an “Authorized Share Failure”), then the Company shall use its commercially reasonable efforts to take all action necessary (including seeking stockholder approval of an amendment to the Company’s Certificate of Incorporation, if necessary) to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the shares of Common Stock then issuable upon exercise of the Warrants of this series then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement (to the extent legally required) and shall use its commercially reasonable efforts to solicit its stockholders’ approval of such increase in the authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

 

  

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5.             Delivery of Warrant Shares.

 

(a)             The Holder shall not be required to physically surrender this Warrant unless this Warrant is being exercised in full.  To effect exercises hereunder, the Holder shall duly execute and deliver to the Company at its address for notice set forth herein, an Exercise Notice in the form of Annex B hereto, along with the Warrant Share Exercise Log in the form of Annex C hereto, and shall pay the Exercise Price, if applicable, multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder.  The Company shall promptly (but in no event later than three (3) Trading Days after the date of exercise) instruct its transfer agent to issue, in accordance with its normal procedures, and cause to be delivered to or upon the written order of the Holder a certificate for the Warrant Shares issuable upon such exercise.  The Company shall, upon request of the Holder and if then available for the Warrant Shares, deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions.

 

(b)             Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.

 

(c)             The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing sharesc of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

6.             Charges, Taxes and Expenses.  Initial issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

  

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7.             Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a new Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested.  Applicants for a new Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.

 

8.             Reservation of Warrant Shares.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved shares of Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares that are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any).  The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.  The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.  The Company will notify its transfer agent for the reservation of shares of Common Stock as required under this provision.

 

9.             Certain Adjustments.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

(a)             Adjustment of Exercise Price and Number of Shares.  In the event of any change in the outstanding Common Stock by reason of a stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares, separation, reorganization, liquidation or the like (each, an “Adjustment Event”), the securities purchasable upon exercise of this Warrant and the Exercise Price shall be correspondingly adjusted to give the Holder, upon exercise of this Warrant for the same aggregate Exercise Price (after adjustment in the aggregate Exercise Price resulting from changes in the number of Warrant Shares issuable upon exercise of this Warrant other than as a result of an Adjustment Event) the aggregate number, class and kind of shares or other securities that the Holder would have owned had the Holder exercised the Warrant prior to such Adjustment Event and continued to hold the shares so received until after such Adjustment Event; provided that if any such change is already reflected in the Warrant Shares and Exercise Price, no further adjustment shall be made pursuant to this Section 9(a).  Any adjustment pursuant to this Section 9(a) shall become effective at the close of business on the effective date of such Adjustment Event; provided, however, that if a record date is fixed for such Adjustment Event, then the effective date of such adjustment shall be such record date.  The form of this Warrant need not be changed because of any adjustment pursuant to this Section 9.

 

  

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(b)             Treasury Shares.  In making any adjustment in the Exercise Price and number of Warrant Shares purchasable hereinbefore provided in this Section 9, the number of shares of Common Stock at any time outstanding shall not include any shares thereof then directly or indirectly owned or held by or for the account of the Company.

 

(c)             Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities, cash or property issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.

 

(d)             Notice of Corporate Events.  If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any subsidiary of the Company, (ii) authorizes or approves, enters into any agreement contemplating or solicits shareholder approval for (x) any sale of all or substantially all of its assets in one or a series of related transactions, (y) any tender offer or exchange offer (whether by the Company or another person) pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (z) any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least ten business days prior to the applicable record or effective date on which a person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

 

10.           Payment of Exercise Price.  The Holder shall pay the Exercise Price in immediately available funds in cash or by check or wire transfer.

 

11.           Representations and Warranties.  The Holder hereby represents and warrants to the Company that:

 

(a)             the Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D of the Securities Act of 1933.

 

(b)             the Holder is acquiring this Warrant and any securities acquired upon exercise or exchange hereof for the Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and Investor has no present intention of selling, granting any participation or otherwise distributing the same.

 

  

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(c)             the Holder understands that this Warrant and any securities acquired upon exercise or exchange hereof are “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations, such securities may be resold without registration only in certain limited circumstances.

 

12.           Market Stand-Off Agreement.  The Holder (including any transferee or assignee of the Holder as a condition to receiving this Warrant or any Warrant Shares) hereby agrees that, during the period of duration specified by the Company and an underwriter of common stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Securities Act of 1933 in connection with the first public offering of equity securities by the Company after the date hereof (other than in connection with a Rule 145 transaction or a registration on Form S-8 or otherwise with respect to an employee incentive plan), the Holder shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by him at any time during such period; provided, however, that (i) all then executive officers and directors of the Company enter into similar agreements, and such market stand-off time period shall not exceed one hundred eighty (180) days, subject to extension for no more than an additional 34 days as requested by the underwriters to ensure compliance with applicable FINRA rules related to the publishing of research reports.  To enforce the foregoing covenant, the Company may include an appropriate legend on any securities held by the Holder and may impose stop transfer instructions with respect to such securities (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

 

13.           Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

 

14.           Notices.  Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified on the signature page hereto or as otherwise notified to the Company in writing in accordance with this Section 12 prior to 6:30 p.m. (New York City time) on a trading day, (ii) the next trading day after the date of transmission, if such notice or communication is delivered via facsimile at such facsimile number on a day that is not a trading day or later than 6:30 p.m. (New York City time) on any trading day, (iii) the trading day following the date of mailing, if sent by nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices or communications shall be as set forth on the signature page hereto or as otherwise notified to the other party pursuant to this Section 12.

 

  

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15.           Miscellaneous.

 

(a)             Subject to the restrictions on transfer set forth herein, this Warrant may be assigned by the Holder in not less than the lesser of the total number of shares issuable pursuant to this Warrant at the time of such assignment and 0.5% of the Company’s then outstanding Common Stock (on a fully diluted calculated in the same fashion as determining the number of Warrant Shares).  This Warrant may not be assigned by the Company except to a successor in the event of a sale of all or substantially all of the Company’s assets or a merger or acquisition of the Company.  This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.  Subject to the preceding sentences, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

 

(b)             The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant (other than with the consent of the Holder), but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be reasonably necessary or appropriate in order to protect the rights of the Holder against impairment.  Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the Exercise Price, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its shareholder books or records in any manner which interferes with the timely exercise of this Warrant.

 

(C)             GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING REGARD TO ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

 

  

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(c)             The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

 

(d)             In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

 

SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

	 	
GENESIS GROUP HOLDINGS, INC.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	
Name: Lawrence M Sands

	 
	 	
Title:   Corporate Secretary

	 

 

  

9

  

 

ANNEX A

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Warrant to purchase  shares of Common Stock of Genesis Group Holdings, Inc., to which the within Warrant relates and appoints ________________ attorney to transfer said right on the books of Genesis Group Holdings, Inc. with full power of substitution in the premises.

 

	
Dated: _______________,

	  
	  	  
	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	  	  
	  	
Address of Transferee

	  	  

 

The transferee hereby agrees, for the express benefit of the Company, to the terms and conditions of the Warrant (including Section 12 thereof), and does hereby represent and warrant to the Company that all of the statement in Section 11 of the Warrant are true and correct with respect to such transferee as of the date indicated below.

 

	
TRANSFEREE:

	 	 
	 	 	 	 
	By:	 	 	 
	Name:	 	 	 
	Title:	 	 	 

 

  

10

  

ANNEX B

 

FORM OF EXERCISE NOTICE

 

[To be executed by the Holder to exercise the right to purchase Common Stock under the foregoing Warrant]

 

TO:  GENESIS GROUP HOLDINGS, INC.

 

The undersigned is the Holder of Warrant No. E-2012-_______ (the “Warrant”) issued by Genesis Group Holdings, Inc., a Delaware corporation (the “Company”).  Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

	
1.

	
The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

 

	
2.

	
The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

 

	
3.

	
The holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

 

	
4.

	
Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.

 

	
5.

	
Following this exercise, the Warrant shall be exercisable to purchase a total of ______________ Warrant Shares (calculated as of the date hereof).

 

	
Dated: _______________,

	  	
Name of Holder:

	  	  	  
	  	  	
(Print)

	  	  	  
	  	  	
By:

	  	  	
Name:

	  	  	
Title:

	  	  	  
	  	  	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 

  

11

  

 

ANNEX C

 

WARRANT SHARES EXERCISE LOG

	
DATE

	
PERCENTAGE OF 

COMPANY SHARES 

FOR WHICH THE 

WARRANT IS 

EXERCISABLE

	
PERCENTAGE OF 

COMPANY SHARES 

FOR WHICH THE 

WARRANT IS 

EXERCISED

	
PERCENTAGE OF 

COMPANY SHARES FOR 

WHICH THE WARRANT 

REMAINS EXERCISABLE

	  	  	  	  
	  	  	  	  
	  	  	  	  

 

 

12

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