Document:

Unassociated Document

	

 

EXHIBIT 10.3

 

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (the “Agreement”), is entered into and made effective as of August 27, 2004, by and between MOBILEPRO CORP.
 (the “Company”), and CORNELL CAPITAL PARTNERS, LP (the “Secured Party”).

 

WHEREAS, the Secured Party has loaned to the Company the sum of Eight Million Five Hundred Thousand Dollars ($8,500,000), as evidenced by that certain secured promissory note of even date herewith entered into by the Company in favor of the Secured Party (the “Note”); 

 

WHEREAS, as a material inducement for the Secured Party to make the loan to the Company and to accept the Note, the Company hereby grants to the Secured Party a security interest in and to the pledged property identified on Exhibit “A” hereto (collectively referred to as the “Pledged Property”) pursuant to the terms and conditions of this Agreement. 

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1.

DEFINITIONS AND INTERPRETATIONS

 

Section 1.1. Recitals. 

 

The above recitals are true and correct and are incorporated herein, in their entirety, by this reference.

 

Section 1.1. Interpretations. 

 

Nothing herein expressed or implied is intended or shall be construed to confer upon any person other than the Secured Party any right, remedy or claim under or by reason hereof.

 

Section 1.2. Obligations Secured.

 

The obligations secured hereby are any and all obligations of the Company to the Secured Party under the Note, in the principal amounts thereof outstanding from time to time, and any other amounts payable by or chargeable to the Company thereunder or hereunder (collectively, the “Obligations”).

	 
	 	 	 
	

	 

ARTICLE 2.

PLEDGED OLLATERAL AND ADMINISTRATION OF COLLATERAL

 

Section 2.1. Pledged Property.

 

(a)     Company hereby pledges to the Secured Party, and creates in the Secured Party for its benefit, a security interest, for such time as the Obligations shall remain outstanding, in and to all of the property of the Company as set forth in Exhibit “A” attached hereto (collectively, the “Pledged Property”):

 

The Pledged Property, as set forth in Exhibit “A” attached hereto, and the products thereof and the proceeds of all such items are hereinafter collectively referred to as the “Pledged Collateral.”

 

(b)     Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute, acknowledge, file, record and deliver to the Secured Party any documents reasonably requested by the Secured Party to perfect its security interest in the Pledged Property. Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute, acknowledge and deliver to the Secured Party such documents and instruments, including, without limitation, financing statements, certificates, affidavits and forms as may, in the Secured Party’s reasonable judgment, be
necessary to effectuate, complete or perfect, or to continue and preserve, the security interest of the Secured Party in the Pledged Property, and the Secured Party shall hold such documents and instruments as secured party, subject to the terms and conditions contained herein.

 

Section 2.2. Rights; Interests; Etc.

 

(a)     So long as no Event of Default (as hereinafter defined) shall have occurred and be continuing:

 

(i)     the Company shall be entitled to exercise any and all rights pertaining to the Pledged Property or any part thereof for any purpose not inconsistent with the terms hereof; and

 

(ii)     the Company shall be entitled to receive and retain any and all payments paid or made in respect of the Pledged Property.

 

(b)     Upon the occurrence and during the continuance of an Event of Default:

 

(i)     All rights of the Company to exercise the rights which it would otherwise be entitled to exercise pursuant to Section 2.2(a)(i) hereof and to receive payments which it would otherwise be authorized to receive and retain pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole right to exercise such rights and to receive and hold as Pledged Collateral such payments; provided, however, that
if the Secured Party shall become entitled and shall elect to exercise its right to realize on the Pledged Collateral pursuant to Article V hereof, then all cash sums received by the Secured Party, or held by Company for the benefit of the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof, shall be applied against any outstanding Obligations; and

	 
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(ii)     All interest, dividends, income and other payments and distributions which are received by the Company contrary to the provisions of Section 2.2(b)(i) hereof shall be received in trust for the benefit of the Secured Party, shall be segregated from other property of the Company and shall be forthwith paid over to the Secured Party; or 

 

(iii)     The Secured Party in its sole discretion shall be authorized to sell any or all of the Pledged Property at public or private sale in order to recoup all of the outstanding principal plus accrued interest owed pursuant to the Convertible Debenture as described herein

 

(c)     Each of the following events shall constitute a default under this Agreement (each an “Event of Default”):

 

(i)     any default, whether in whole or in part, shall occur in the payment to the Secured Party of principal, interest or other item comprising the Obligations as and when due or with respect to any other debt or obligation of the Company to the Secured Party or any other party;

 

(ii)     any default, whether in whole or in part, shall occur in the due observance or performance of any obligations or other covenants, terms or provisions to be performed under this Agreement or the Note; 

 

(iii)     the Company shall: (1) make a general assignment for the benefit of its creditors; (2) apply for or consent to the appointment of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets and properties; (3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code; (4) file with or otherwise submit to any governmental authority any petition, answer or other document seeking: (A) reorganization, (B) an arrangement with creditors or (C) to take advantage of any other
present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation; (5) file or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any proceeding under any such applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction; or

 

(iv)     any case, proceeding or other action shall be commenced against the Company for the purpose of effecting, or an order, judgment or decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in Section 2.2(c)(iii) hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect to the Company, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of the assets and properties of the Company, and any of the foregoing shall continue unstayed and in effect for any period of thirty (30) days.

	 
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ARTICLE 3.

ATTORNEY-IN-FACT; PERFORMANCE

 

Section 3.1.     Secured Party Appointed Attorney-In-Fact.

 

Upon the occurrence of an Event of Default, the Company hereby appoints the Secured Party as its attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company or otherwise, from time to time in the Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may reasonably deem necessary to accomplish the purposes of this Agreement, including, without limitation, to receive and collect all instruments made payable to the Company representing any payments in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. The Secured Party may demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose, or realize on the Pledged Property as and when the Secured Party may determine. To facilitate collection, the Secured Party may notify account debtors and obligors on any Pledged Property or Pledged Collateral to make payments directly to the Secured Party.

 

Section 3.2.     Secured Party May Perform.

 

If the Company fails to perform any agreement contained herein, the Secured Party, at its option, may itself perform, or cause performance of, such agreement, and the expenses of the Secured Party incurred in connection therewith shall be included in the Obligations secured hereby and payable by the Company under Section 8.3.

 

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.     Authorization; Enforceability.

 

Each of the parties hereto represents and warrants that it has taken all action necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and binding obligation of the respective party, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights or by the principles governing the availability of equitable remedies.

 

Section 4.2.      Ownership of Pledged Property.

 

The Company warrants and represents that it is the legal and beneficial owner of the Pledged Property free and clear of any lien, security interest, option or other charge or encumbrance except for the security interests identified on Exhibit A hereto and the security interest created by this Agreement.

	 
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ARTICLE 5.

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

 

Section 5.1.     Default and Remedies.

 

(a)     If an Event of Default described in Section 2.2(c)(i) and (ii) occurs, then in each such case the Secured Party may declare the Obligations to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration, the Obligations shall become immediately due and payable. If an Event of Default described in Sections 2.2(c)(iii) or (iv) occurs and is continuing for the period set forth therein, then the Obligations shall automatically become immediately due and payable without declaration or other act on the part of the Secured Party.

 

(b)     Upon the occurrence of an Event of Default, the Secured Party shall,: (i) be entitled to receive all distributions with respect to the Pledged Collateral, (ii) to cause the Pledged Property to be transferred into the name of the Secured Party or its nominee, (iii) to dispose of the Pledged Property, and (iv) to realize upon any and all rights in the Pledged Property then held by the Secured Party.

 

Section 5.2.     Method of Realizing Upon the Pledged Property : Other Remedies.

 

Upon the occurrence of an Event of Default, in addition to any rights and remedies available at law or in equity, the following provisions shall govern the Secured Party’s right to realize upon the Pledged Property:

 

(a)     Any item of the Pledged Property may be sold for cash or other value in any number of lots at brokers board, public auction or private sale and may be sold without demand, advertisement or notice (except that the Secured Party shall give the Company ten (10) days’ prior written notice of the time and place or of the time after which a private sale may be made (the “Sale Notice”)), which notice period shall in any event
is hereby agreed to be commercially reasonable. At any sale or sales of the Pledged Property, the Company may bid for and purchase the whole or any part of the Pledged Property and, upon compliance with the terms of such sale, may hold, exploit and dispose of the same without further accountability to the Secured Party. The Company will execute and deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers, certificates, and affidavits and supply or cause to be supplied such further information and take such further action as the Secured Party reasonably shall require in connection with any such sale.

 

(b)     Any cash being held by the Secured Party as Pledged Collateral and all cash proceeds received by the Secured Party in respect of, sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied as follows:

 

(i)     to the payment of all amounts due the Secured Party for the expenses reimbursable to it hereunder or owed to it pursuant to Section 8.3 hereof;

 

(ii)     to the payment of the Obligations then due and unpaid.

	 
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(iii)     the balance, if any, to the person or persons entitled thereto, including, without limitation, the Company.

 

(c)     In addition to all of the rights and remedies which the Secured Party may have pursuant to this Agreement, the Secured Party shall have all of the rights and remedies provided by law, including, without limitation, those under the Uniform Commercial Code.

 

(d)     If the Company fails to pay such amounts due upon the occurrence of an Event of Default which is continuing, then the Secured Party may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of Company, wherever situated.

 

(d)     The Company agrees that it shall be liable for any reasonable fees, expenses and costs incurred by the Secured Party in connection with enforcement, collection and preservation of the Note, including, without limitation, reasonable legal fees and expenses, and such amounts shall be deemed included as Obligations secured hereby and payable as set forth in Section 8.3 hereof.

 

Section 5.3.     Proofs of Claim.

 

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the Company or the property of the Company or of such other obligor or its creditors, the Secured Party (irrespective of whether the Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Secured Party shall have made any demand on the Company for the payment of the Obligations), subject to the rights of Previous Security Holders, shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(i)     to file and prove a claim for the whole amount of the Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Secured Party (including any claim for the reasonable legal fees and expenses and other expenses paid or incurred by the Secured Party) permitted hereunder and of the Secured Party allowed in such judicial proceeding, and

 

(ii)     to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by the Secured Party to make such payments to the Secured Party and, in the event that the Secured Party shall consent to the making of such payments directed to the Secured Party, to pay to the Secured Party any amounts for expenses due it hereunder.

	 
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Section 5.4.     Duties Regarding Pledged Collateral.

 

The Secured Party shall have no duty as to the collection or protection of the Pledged Property or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody and reasonable care of any of the Pledged Property actually in the Secured Party’s possession.

 

ARTICLE 6.

AFFIRMATIVE COVENANTS

 

The Company covenants and agrees that, from the date hereof and until the Obligations have been fully paid and satisfied, unless the Secured Party shall consent otherwise in writing (as provided in Section 8.4 hereof):

 

Section 6.1.     Existence, Properties, Etc.

 

(a)     The Company shall do, or cause to be done, all things, or proceed with due diligence with any actions or courses of action, that may be reasonably necessary (i) to maintain Company’s due organization, valid existence and good standing under the laws of its state of incorporation, and (ii) to preserve and keep in full force and effect all qualifications, licenses and registrations in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as defined below); and (b) the Company shall not do, or cause to be done, any act impairing the Company’s corporate power or authority (i) to carry on
the Company’s business as now conducted, and (ii) to execute or deliver this Agreement or any other document delivered in connection herewith, including, without limitation, any UCC-1 Financing Statements required by the Secured Party (which other loan instruments collectively shall be referred to as the “Loan Instruments”) to which it is or will be a party, or perform any of its obligations hereunder or thereunder. For purpose of this Agreement, the term “Material Adverse Effect” shall mean any material and adverse affect as determined by Secured Party in its sole discretion,
whether individually or in the aggregate, upon (a) the Company’s assets, business, operations, properties or condition, financial or otherwise; (b) the Company’s to make payment as and when due of all or any part of the Obligations; or (c) the Pledged Property.

 

Section 6.2.     Financial Statements and Reports.

 

The Company shall furnish to the Secured Party such financial data as the Secured Party may reasonably request. Without limiting the foregoing, the Company shall furnish to the Secured Party (or cause to be furnished to the Secured Party) the following:

 

(a)     as soon as practicable and in any event within ninety (90) days after the end of each fiscal year of the Company, the balance sheet of the Company as of the close of such fiscal year, the statement of earnings and retained earnings of the Company as of the close of such fiscal year, and statement of cash flows for the Company for such fiscal year, all in reasonable detail, prepared in accordance with generally accepted accounting principles consistently applied,
certified by the chief executive and chief financial officers of the Company as being true and correct and accompanied by a certificate of the chief executive and chief financial officers of the Company, stating that the Company has kept, observed, performed and fulfilled each covenant, term and condition of this Agreement during such fiscal year and that no Event of Default hereunder has occurred and is continuing, or if an Event of Default has occurred and is continuing, specifying the nature of same, the period of existence of same and the action the Company proposes to take in connection therewith;

	
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(b)     within thirty (30) days of the end of each calendar month, a balance sheet of the Company as of the close of such month, and statement of earnings and retained earnings of the Company as of the close of such month, all in reasonable detail, and prepared substantially in accordance with generally accepted accounting principles consistently applied, certified by the chief executive and chief financial officers of the Company as being true and correct; and

 

(c)     promptly upon receipt thereof, copies of all accountants' reports and accompanying financial reports submitted to the Company by independent accountants in connection with each annual examination of the Company.

 

Section 6.3.     Accounts and Reports.

 

The Company shall maintain a standard system of accounting in accordance with generally accepted accounting principles consistently applied and provide, at its sole expense, to the Secured Party the following:

 

(a)     as soon as available, a copy of any notice or other communication alleging any nonpayment or other material breach or default, or any foreclosure or other action respecting any material portion of its assets and properties, received respecting any of the indebtedness of the Company in excess of $15,000 (other than the Obligations), or any demand or other request for payment under any guaranty, assumption, purchase agreement or similar agreement or arrangement respecting the indebtedness or obligations of others in excess of $15,000, including any received from any person acting on behalf of the Secured Party or beneficiary thereof; and

 

(b)     within fifteen (15) days after the making of each submission or filing, a copy of any report, financial statement, notice or other document, whether periodic or otherwise, submitted to the shareholders of the Company, or submitted to or filed by the Company with any governmental authority involving or affecting (i) the Company that could have a Material Adverse Effect; (ii) the Obligations; (iii) any part of the Pledged Collateral; or (iv) any of the transactions contemplated in this Agreement or the Loan Instruments.

 

Section 6.4.     Maintenance of Books and Records; Inspection.

 

The Company shall maintain its books, accounts and records in accordance with generally accepted accounting principles consistently applied, and permit the Secured Party, its officers and employees and any professionals designated by the Secured Party in writing, at any time to visit and inspect any of its properties (including but not limited to the collateral security described in the Loan Instruments), corporate books and financial records, and to discuss its accounts, affairs and finances with any employee, officer or director thereof.

	 
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Section 6.5.     Maintenance and Insurance.

 

(a)     The Company shall maintain or cause to be maintained, at its own expense, all of its assets and properties in good working order and condition, making all necessary repairs thereto and renewals and replacements thereof.

 

(b)     The Company shall maintain or cause to be maintained, at its own expense, insurance in form, substance and amounts (including deductibles), which the Company deems reasonably necessary to the Company’s business, (i) adequate to insure all assets and properties of the Company, which assets and properties are of a character usually insured by persons engaged in the same or similar business against loss or damage resulting from fire or other risks included in an extended coverage policy; (ii) against public liability and other tort claims that may be incurred by the Company; (iii) as
may be required by applicable law and (iv) as may be reasonably requested by Secured Party, all with adequate, financially sound and reputable insurers.

 

Section 6.6.     Contracts and Other Collateral.

 

The Company shall perform all of its obligations under or with respect to each instrument, receivable, contract and other intangible included in the Pledged Property to which the Company is now or hereafter will be party on a timely basis and in the manner therein required, including, without limitation, this Agreement.

 

Section 6.7.     Defense of Collateral, Etc.

 

The Company shall defend and enforce its right, title and interest in and to any part of: (a) the Pledged Property; and (b) if not included within the Pledged Property, those assets and properties whose loss could have a Material Adverse Effect, the Company shall defend the Secured Party’s right, title and interest in and to each and every part of the Pledged Property, each against all manner of claims and demands on a timely basis to the full extent permitted by applicable law.

 

Section 6.8.     Payment of Debts, Taxes, Etc.

 

The Company shall pay, or cause to be paid, all of its indebtedness and other liabilities and perform, or cause to be performed, all of its obligations in accordance with the respective terms thereof, and pay and discharge, or cause to be paid or discharged, all taxes, assessments and other governmental charges and levies imposed upon it, upon any of its assets and properties on or before the last day on which the same may be paid without penalty, as well as pay all other lawful claims (whether for services, labor, materials, supplies or otherwise) as and when due.

 

Section 6.9.     Taxes and Assessments; Tax Indemnity.

 

The Company shall (a) file all tax returns and appropriate schedules thereto that are required to be filed under applicable law, prior to the date of delinquency, (b) pay and discharge all taxes, assessments and governmental charges or levies imposed upon the Company, upon its income and profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and (c) pay all taxes, assessments and governmental charges or levies that, if unpaid, might become a lien or charge upon any of its properties; provided, however, that the
Company in good faith may contest any such tax, assessment, governmental charge or levy described in the foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto. 

	 
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Section 6.10.     Compliance with Law and Other Agreements. 

 

The Company shall maintain its business operations and property owned or used in connection therewith in compliance with (a) all applicable federal, state and local laws, regulations and ordinances governing such business operations and the use and ownership of such property, and (b) all agreements, licenses, franchises, indentures and mortgages to which the Company is a party or by which the Company or any of its properties is bound. Without limiting the foregoing, the Company shall pay all of its indebtedness promptly in accordance with the terms thereof.

 

Section 6.11.     Notice of Default. 

 

The Company shall give written notice to the Secured Party of the occurrence of any default or Event of Default under this Agreement, the Note or any other agreement of Company for the payment of money, promptly upon the occurrence thereof.

 

Section 6.12.     Notice of Litigation.

 

The Company shall give notice, in writing, to the Secured Party of (a) any actions, suits or proceedings wherein the amount at issue is in excess of $15,000, instituted by any persons against the Company, or affecting any of the assets of the Company, and (b) any dispute, not resolved within fifteen (15) days of the commencement thereof, between the Company on the one hand and any governmental or regulatory body on the other hand, which might reasonably be expected to have a Material Adverse Effect on the business operations or financial condition of the Company.

 

ARTICLE 7.

NEGATIVE COVENANTS

 

The Company covenants and agrees that, from the date hereof until the Obligations have been fully paid and satisfied, the Company shall not, unless the Secured Party shall consent otherwise in writing:

 

Section 7.1.     Indebtedness.

 

The Company shall not directly or indirectly permit, create, incur, assume, permit to exist, increase, renew or extend on or after the date hereof any indebtedness on its part, including commitments, contingencies and credit availabilities, or apply for or offer or agree to do any of the foregoing.

	 
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Section 7.2.     Liens and Encumbrances.

 

The Company shall not directly or indirectly make, create, incur, assume or permit to exist any assignment, transfer, pledge, mortgage, security interest or other lien or encumbrance of any nature in, to or against any part of the Pledged Property or of the Company’s capital stock, or offer or agree to do so, or own or acquire or agree to acquire any asset or property of any character subject to any of the foregoing encumbrances (including any conditional sale contract or other title retention agreement), or assign, pledge or in any way transfer or encumber its right to receive any income or other distribution or proceeds from any part of the Pledged Property or the Company’s capital stock; or enter into any sale-leaseback financing
respecting any part of the Pledged Property as lessee, or cause or assist the inception or continuation of any of the foregoing.

 

Section 7.3.     Certificates, By-Laws, Mergers, Consolidations, Acquisitions and Sales.

 

Without the prior express written consent of the Secured Party, the Company shall not: (a) Amend its Certificate of Incorporation or By-Laws; (b) issue or sell its stock, stock options, bonds, notes or other corporate securities or obligations; (c) be a party to any merger, consolidation or corporate reorganization, (d) purchase or otherwise acquire all or substantially all of the assets or stock of, or any partnership or joint venture interest in, any other person, firm or entity, (e) sell, transfer, convey, grant a security interest in or lease all or any substantial part of its assets, nor (f) create any subsidiaries nor convey any of its assets to any subsidiary.

 

Section 7.4.     Management, Ownership.

 

The Company shall not change its ownership, executive staff or management without the prior written consent of the Secured Party. The ownership, executive staff and management of the Company are material factors in the Secured Party's willingness to institute and maintain a lending relationship with the Company.

 

Section 7.5.     Dividends, Etc.

 

The Company shall not declare or pay any dividend of any kind, in cash or in property, on any class of its capital stock, nor purchase, redeem, retire or otherwise acquire for value any shares of such stock, nor make any distribution of any kind in respect thereof, nor make any return of capital to shareholders, nor make any payments in respect of any pension, profit sharing, retirement, stock option, stock bonus, incentive compensation or similar plan (except as required or permitted hereunder), without the prior written consent of the Secured Party.

 

Section 7.6.     Guaranties; Loans.

 

The Company shall not guarantee nor be liable in any manner, whether directly or indirectly, or become contingently liable after the date of this Agreement in connection with the obligations or indebtedness of any person or persons, except for (i) the indebtedness currently secured by the liens identified on the Pledged Property identified on Exhibit A hereto and (ii) the endorsement of negotiable instruments payable to the Company for deposit or collection in the ordinary course of business. The Company shall not make any loan, advance or extension of credit to any person other than in the normal course of its business.

	 
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Section 7.7.     Debt.

 

The Company shall not create, incur, assume or suffer to exist any additional indebtedness of any description whatsoever in an aggregate amount in excess of $25,000 (excluding any indebtedness of the Company to the Secured Party, trade accounts payable and accrued expenses incurred in the ordinary course of business and the endorsement of negotiable instruments payable to the Company, respectively for deposit or collection in the ordinary course of business).

 

Section 7.8.     Conduct of Business.

 

The Company will continue to engage, in an efficient and economical manner, in a business of the same general type as conducted by it on the date of this Agreement.

 

Section 7.9.     Places of Business.

 

The location of the Company’s chief place of business is 6701 Democracy Blvd. - Suite 300, Bethesda, MD 20817. The Company shall not change the location of its chief place of business, chief executive office or any place of business disclosed to the Secured Party or move any of the Pledged Property from its current location without thirty (30) days' prior written notice to the Secured Party in each instance. 

 

ARTICLE 8.

MISCELLANEOUS

 

Section 8.1.     Notices.

 

All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on: (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or (b) five (5) days after mailing if mailed from within the continental United States by certified mail, return receipt requested to the party entitled to receive the same:

 

	 	
If to the Secured Party:
	
Cornell Capital Partners, LP

	 	 	
101 Hudson Street-Suite 3700 

	 	 	
Jersey City, New Jersey 07302 

	 	 	
Attention:      Mark Angelo

	 	 	
                        Portfolio Manager

	 	 	
Telephone:    (201) 986-8300

	 	 	
Facsimile:       (201) 985-8266

	 
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And if to the Company:
	
MobilePro Corp.

	 	 	
6701 Democracy Blvd. - Suite 300

	 	 	
Bethesda, MD 20817

	 	 	
Attention:      Jay O. Wright

	 	 	
Telephone:    (301) 524-4759

	 	 	
Facsimile:       (301) 315-9027

	 	 	 
	 	
With a copy to:
	
Schiff Hardin, LLP

	 	 	
1101 Connecticut Avenue, N.W. - Suite 600

	 	 	
Washington, D.C., 20036

	 	 	
Attention:     Ernest M. Stern, Esq.

	 	 	
Telephone:    (202) 778-6461

	 	 	
Facsimile:       (202) 778-6460

 

Any party may change its address by giving notice to the other party stating its new address. Commencing on the tenth (10th) day after the giving of such notice, such newly designated address shall be such party’s address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement.

 

Section 8.2.     Severability.

 

If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

Section 8.3.     Expenses.

 

In the event of an Event of Default, the Company will pay to the Secured Party the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel, which the Secured Party may incur in connection with: (i) the custody or preservation of, or the sale, collection from, or other realization upon, any of the Pledged Property; (ii) the exercise or enforcement of any of the rights of the Secured Party hereunder or (iii) the failure by the Company to perform or observe any of the provisions hereof.

 

Section 8.4.     Waivers, Amendments, Etc.

 

The Secured Party’s delay or failure at any time or times hereafter to require strict performance by Company of any undertakings, agreements or covenants shall not waiver, affect, or diminish any right of the Secured Party under this Agreement to demand strict compliance and performance herewith. Any waiver by the Secured Party of any Event of Default shall not waive or affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and whether of the same or a different type. None of the undertakings, agreements and covenants of the Company contained in this Agreement, and no Event of Default, shall be deemed to have been waived by the Secured Party, nor may this Agreement be amended,
changed or modified, unless such waiver, amendment, change or modification is evidenced by an instrument in writing specifying such waiver, amendment, change or modification and signed by the Secured Party.

	 
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Section 8.5.     Continuing Security Interest.

 

This Agreement shall create a continuing security interest in the Pledged Property and shall: (i) remain in full force and effect until payment in full of the Obligations; and (ii) be binding upon the Company and its successors and heirs and (iii) inure to the benefit of the Secured Party and its successors and assigns. Upon the payment or satisfaction in full of the Obligations, the Company shall be entitled to the return, at its expense, of such of the Pledged Property as shall not have been sold in accordance with Section 5.2 hereof or otherwise applied pursuant to the terms hereof.

 

Section 8.6.     Independent Representation.

 

Each party hereto acknowledges and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has been sufficiently apprised of its rights and responsibilities with regard to the substance of this Agreement.

 

Section 8.7.     Applicable Law: Jurisdiction.

 

 All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New Jersey or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction of the state court sitting in Hudson County New Jersey and federal courts sitting in Newark, New Jersey, for the adjudication of any dispute hereunder or in connection herewith or therewith,
or with any transaction contemplated hereby or discussed herein, 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 brought in an inconvenient forum or that the venue of 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 to such party at the address for such 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.

 

Section 8.8.     Waiver of Jury Trial.

 

AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION. 

	 
	 	14	 
	

	 

Section 8.9.     Entire Agreement.

 

This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof.

 

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	 	15	 
	

	 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. 

 

	 	 	 
	 	
COMPANY:

	 	
MOBILEPRO CORP.

	 
 	 
 	 
 
	 	By: 	/s/ 
	 	 	

		Name: Kurt Gordon
	 	Title : CFO

 

		 	 
	 	

SECURED PARTY:

	 	

CORNELL CAPITAL PARTNERS, LP

	 	 
	 	
By: Yorkville Advisors, LLC

	 	
Its: General Partner

	 
 	 
 	 
 
	 	By: 	/s/ 
	 	 	

		
Name: Mark Angelo 

	 	
Title: Portfolio Manager

	 
	 	16	 
	

	 

EXHIBIT A

DEFINITION OF PLEDGED PROPERTY

 

For the purpose of securing prompt and complete payment and performance by the Company of all of the Obligations, the Company unconditionally and irrevocably hereby grants to the Secured Party a continuing security interest in and to, and lien upon, the following Pledged Property of the Company:

 

(a)     all goods of the Company, including, without limitation, machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles of every kind and description, now or hereafter owned by the Company or in which the Company may have or may hereafter acquire any interest, and all replacements, additions, accessions, substitutions and proceeds thereof, arising from the sale or disposition thereof, and where applicable, the proceeds of insurance and of any tort claims involving any of the foregoing;

 

(b)     all inventory of the Company, including, but not limited to, all goods, wares, merchandise, parts, supplies, finished products (including, without limitation, SEGABA 2000, and all rights (tangible or intangible) therein), other tangible personal property, including such inventory as is temporarily out of Company’s custody or possession and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing;

 

(c)     all contract rights and general intangibles of the Company, including, without limitation, goodwill, trademarks, trade styles, trade names, leasehold interests, partnership or joint venture interests, patents, patent applications, copyrights, deposit accounts whether now owned or hereafter created;

 

(d)     all documents, warehouse receipts, instruments and chattel paper of the Company whether now owned or hereafter created;

 

(e)     all accounts and other receivables, instruments or other forms of obligations and rights to payment of the Company (herein collectively referred to as “Accounts”), together with the proceeds thereof, all goods represented by such Accounts and all such goods that may
be returned by the Company’s customers, and all proceeds of any insurance thereon, and all guarantees, securities and liens which the Company may hold for the payment of any such Accounts including, without limitation, all rights of stoppage in transit, replevin and reclamation and as an unpaid vendor and/or lienor, all of which the Company represents and warrants will be bona fide and existing obligations of its respective customers, arising out of the sale of goods by the Company in the ordinary course of business;

 

(f)     to the extent assignable, all of the Company’s rights under all present and future authorizations, permits, licenses and franchises issued or granted in connection with the operations of any of its facilities;

 

(g)     all products and proceeds (including, without limitation, insurance proceeds) from the above-described Pledged Property.

 

A-1PLACEMENT AGENT AGREEMENT

      THIS PLACEMENT AGENT AGREEMENT (the "AGREEMENT") is entered into as of May
31, 2004 by and between GeneThera,  Inc., a Florida corporation (the "COMPANY"),
and Invest Linc  Securities,  LLC, a Delaware  limited  liability  company  (the
"PLACEMENT AGENT").

      The Company  proposes to offer and sell  exclusively up to $2.5 million in
shares, plus the Over-Allotment, (the "OFFERING") of its common stock, $0.01 par
value per share (the  "SECURITIES") in a registered  offering on Form SB-2 under
the Securities  Act of 1933, as amended (the "ACT").  All Securities are offered
subject to the right of the Company to reject any subscription for Securities in
whole  or in  part  for any  reason  whatsoever  or to  sell to any  prospective
investor less than the number of Securities  subscribed for by such  prospective
investor and subject to certain other conditions.

      The Company has  determined to use the services of the Placement  Agent as
its exclusive agent to solicit  subscriptions for the Securities in the Offering
on a "best  efforts"  basis as set forth in  Section  3 (b),  for as long as the
Offering  continues or until the time period set forth in Section 4(b)  expires,
whichever  first  occurs.  The  Placement  Agent  hereby  agrees  to act in such
capacity and to use its best efforts to find  purchasers  for the  Securities in
accordance with the terms and conditions of this Agreement.  Placement Agent may
engage  other  duly  licensed  agents to  perform  some or all of the  Placement
Agent's duties hereunder  ("PLACEMENT AGENT SYNDICATE MEMBERS").  In such event,
all  arrangements  as to  compensation  of other such Placement  Agent Syndicate
Members shall be determined by Placement  Agent and shall be chargeable  against
the compensation  due to Placement Agent from the Company.  The Company shall be
advised  of and  shall  have the right to  approve  any  other  Placement  Agent
Syndicate Members.

      As promptly as  practicable  following the execution of this  Agreement by
the parties hereto,  the Company shall prepare a Registration  Statement on Form
SB-2,  with  subscription   documents   attached  as  an  exhibit  thereto  (the
"SUBSCRIPTION  DOCUMENTS") for use in conjunction with the offer and sale of the
Securities.  Investors who subscribe for the Securities (the "SUBSCRIBERS") will
be required to complete the Subscription  Documents and execute the Subscription
Agreement  included with the Subscription  Documents.  Such Form SB-2 (as either
may be supplemented or amended from time-to-time) together with the Subscription
Documents is herein called the "OFFERING MEMORANDUM"

      1.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents
and warrants to, and covenants and agrees with, the Placement  Agent,  as of the
date hereof, that:

            (a) The Company is a corporation  duly organized,  validly  existing
and in good standing under the laws of Florida,  and has the power and authority
to carry on its  business as  conducted or proposed to be conducted by it and to
hold title to its property, which business and property will be described in the
Offering  Memorandum.  The  Company has the  corporate  power and  authority  to
execute and deliver this Agreement,  to conduct such business and to perform its
obligations  hereunder and  consummate  the  transactions  contemplated  by each
Subscription  Document tendered by a Subscriber that is accepted by the Company,
subject to the approval of the Offering under the Act and applicable  securities
laws of various states ("Blue Sky" laws).

            (b) The Offering Memorandum will not include any untrue statement of
a material fact or omit to state a material fact  necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

            (c) Except as will be disclosed in the  Offering  Memorandum,  there
are no actions, suits,  proceedings or investigations pending or, to the best of
the Company's knowledge, threatened against or affecting the Company.

<PAGE>

            (d) Except as will be  disclosed  in the  Offering  Memorandum,  all
requisite  authorizations,  approvals or orders from any court,  governmental or
regulatory  official  or body  necessary  to permit the  Company to conduct  its
business as will be described in the Offering Memorandum will have been obtained
or are in the process of being applied for prior to the Closing Date (as defined
in Section 4 below). All requisite authorizations,  approvals or orders from any
court or any  governmental  or  regulatory  official or body  necessary  for the
consummation by the Company of the  transactions  contemplated by this Agreement
will have been  obtained or are in the process of being applied for prior to the
Closing Date (as defined in Section 4 below).

            (e) This  Agreement has been duly and validly  authorized,  executed
and delivered by the Company and, when  executed by the  Placement  Agent,  will
constitute  the valid and  binding  agreement  of the  Company,  enforceable  in
accordance  with its terms,  except that (i) such  enforcement may be subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights  generally and general  principles of equity  (regardless of whether such
enforcement  is  considered  in a  proceeding  in equity or at law) and (ii) the
indemnification  provisions  of this  Agreement  may be held to  violate  public
policy (under  either  federal or state law) in the context of the offer or sale
of securities.

            (f) The  Company's  execution  and delivery of this  Agreement,  the
fulfillment  of  the  terms  set  forth  herein  and  the  consummation  of  the
transactions  contemplated  herein will not conflict with or constitute a breach
of, or default under (i) the  Company's  articles of  incorporation  or by-laws,
(ii) any material  agreement,  indenture or  instrument  by which the Company is
bound, or (iii) to its knowledge,  any law,  administrative  regulation or court
decree.

            (g) It is the  Company's  present  intention to utilize the proceeds
from the sale of the Securities substantially in the manner as will be set forth
in the Offering  Memorandum.  Further,  the Company has no present  intention to
make  any  material  changes  in its  business  as it will be  described  in the
Offering Memorandum.

            (h) On the date  hereof,  and at the  Closing  Date (as  defined  in
Section 4 below), the Company is not or will not be an "investment company" or a
company  "controlled"  by an  "investment  company"  within  the  meaning of the
Investment Company Act of 1940, as amended.

            (i)  Any  written  or  oral  information   provided  to  prospective
purchasers of Securities by authorized representatives of the Company other than
the Placement Agent ("AUTHORIZED PERSONS") will not contain any untrue statement
of a material fact or, when taken together with the information set forth in the
Offering Memorandum, omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

            (j) The sale of the Securities has been duly and validly  authorized
by the Company.  There are no outstanding  options,  warrants or other rights to
purchase or  otherwise  acquire any  Securities  of the Company or any  security
convertible  into such  Securities,  except as will be described in the Offering
Memorandum.

            (k) The Company agrees to indemnify the Placement Agent with respect
to any claim for finder's fees made by persons other than the Placement Agent in
connection  with the  Offering.  No director  or  principal  shareholder  of the
Company is a member of a broker-dealer  registered with the National Association
of Securities Dealers,  Inc. (the "NASD") or an employee or associated member of
a broker-dealer registered with the NASD.

            (l) Any financial  statements and related notes that may be included
in the Offering  Memorandum  will fairly  represent the  financial  position and
results of the  operations  of the  Company at the dates and for the  periods to
which  they  relate.  Said  financial  statements  and  related  notes have been
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently  applied  throughout  the  periods  involved  and  comply  with the
requirements  of the  Securities  Act of 1933,  as  amended,  and any  financial
information to be set forth in the Offering  Memorandum  will fairly present the
financial  condition  of the  Company  and will  have been  prepared  on a basis
consistent with such financial statements or the books of the Company.

                                       2
<PAGE>

            (m) Subsequent to the respective dates of which information is given
in the Offering  Memorandum  and prior to the closing date of the Offering;  (i)
the Company will not incur or will not have incurred any material liabilities or
obligations,  direct or contingent,  or entered into any material  transactions,
not in the ordinary  course of business;  (ii) the Company will not have paid or
declared any dividends or other  distributions  on its capital stock;  and (iii)
there will not be and not have been any material  change in the capital stock or
outstanding  indebtedness  of the  Company,  or any material  adverse  change or
development  involving a prospective material adverse change in or affecting the
business,  business prospects,  financial  condition,  or results of operations,
present or prospective, or the Company.

            (n) The Company has filed all necessary  federal,  state and foreign
income and  franchise tax returns and has paid or accrued all taxes due thereon.
The  Company  has no  knowledge  of any tax  proceeding  or  action  pending  or
threatened  against the  Company  which might  materially  adversely  affect the
business,  business  prospects,  financial  condition  or results of  operation,
present  or  prospective,  of  the  Company  or  the  respective  businesses  or
properties of the Company, other than as described in the Offering Memorandum.

      2.  REPRESENTATIONS  AND WARRANTIES OF THE PLACEMENT  AGENT. The Placement
Agent hereby  represents  and warrants to, and  covenants  and agrees with,  the
Company, as of the date hereof, that:

            (a)  The  Placement  Agent  is  a  limited  liability  company  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  with the limited liability company power and authority to conduct its
business, to execute and deliver this Agreement,  and to perform the obligations
contemplated  herein.  The Placement Agent is an "accredited  investor," as such
term is defined in Regulation D promulgated under the Act.

            (b) This  Agreement has been duly and validly  authorized,  executed
and  delivered by the Placement  Agent and,  when executed by the Company,  will
constitute the valid, binding and enforceable  agreement of the Placement Agent,
except to the extent that (i) such  enforcement  may be subject to the effect of
bankruptcy,  insolvency,  reorganization,  moratorium, fraudulent conveyance and
other similar laws  relating to or affecting  the rights of creditors  generally
and general  principles of equity  (regardless  of whether such  enforcement  is
considered  in a proceeding in equity or at law),  and (ii) the  indemnification
provisions of this  Agreement may be held to violate public policy (under either
federal or state law) in the context of the offer or sale of securities.

            (c) The Placement  Agent's execution and delivery of this Agreement,
and the performance of its obligations hereunder, will not result in a breach or
violation of any of the terms and  provisions of, or constitute a default under,
its articles of organization or operating agreement, any agreement or instrument
to which it is a party or by which it is bound, or any judgment,  decree,  order
or, to its knowledge,  any statute,  rule or regulation  applicable to Placement
Agent.

            (d) As of the  date  of the  Offering  Memorandum,  the  information
contained in the Offering  Memorandum  relating to the Placement  Agent, if any,
will not  include  any untrue  statement  of a material  fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

            (e) The  Placement  Agent  is (i) a  broker-dealer  duly  registered
pursuant to the  provisions  of the Exchange Act; (ii) a member in good standing
of the NASD; and (iii) duly registered as a  broker-dealer  under the applicable
statutes and  regulations of each state in which the Securities  will be offered
and  sold,  except  such  states  in which the  Placement  Agent is exempt  from
registration or such registration is not otherwise required.

                                       3
<PAGE>

            (f) Except as will be disclosed in the  Offering  Memorandum,  there
are no actions, suits,  proceedings or investigations pending or, to the best of
the Placement Agent's  knowledge,  threatened against or affecting the Placement
Agent.

            (g) All requisite authorizations, approvals or orders from any court
or  any   governmental  or  regulatory   official  or  body  necessary  for  the
consummation  by the Placement  Agent of the  transactions  contemplated by this
Agreement  will have been  obtained or are in the  process of being  applied for
prior to the Closing Date (as defined in Section 4 below).

            (h)  Any  written  or  oral  information   provided  to  prospective
purchasers of Securities by authorized representatives of the Placement Agent or
Placement  Agent  Syndicate  Members will not contain any untrue  statement of a
material  fact or, when taken  together  with the  information  set forth in the
Offering Memorandum, omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

      3. SALE OF THE  SECURITIES  BY THE  PLACEMENT  AGENT.  The Company and the
Placement Agent hereby agree as follows:

            (a) To the extent  required under the Act and applicable  state Blue
Sky laws:

                  (i) The  Offering  will  be  made  within  the  United  States
exclusively to accredited  investors in accordance with the rules promulgated by
the  Securities  and Exchange  Commission  relating to public  offerings  and as
permitted in the jurisdictions in which the Securities are to be offered.

                  (ii) The Placement Agent and the Company shall make reasonable
inquiry to determine  whether an accredited  investor is purchasing  for its own
account or if it is purchasing for the account of others.

                  (iii) In the case of any purchaser  acting on behalf of one or
more third parties,  the Placement  Agent and the Company shall make  reasonable
inquiry to determine that each such third party is an accredited investor.

            (b) The Company hereby appoints the Placement Agent as its exclusive
selling agent to solicit prospective purchasers of the Securities and as such to
effect sales of the  Securities,  on a best efforts  basis,  under the terms and
conditions of this  Agreement.  The Company may terminate the Placement  Agent's
agency  hereunder  immediately upon written notice to the Placement Agent in the
event of the Placement  Agent's failure to perform its obligations  hereunder in
any material  respect,  upon the Placement Agent's material breach of any of its
representations  and warranties  contained herein or upon the Placement  Agent's
gross negligence or willful misconduct.  Subject to the terms and conditions and
upon the basis of the  representations  and  warranties  herein set  forth,  the
Placement  Agent accepts such  appointment and agrees to use its best efforts to
find prospective  purchasers for the Securities in accordance with the terms and
conditions of this  Agreement.  Either party may  terminate  the Agreement  upon
thirty (30) days written notice to the other party.

            (c) Each person desiring to purchase  Securities will be required to
complete and execute the  Subscription  Documents.  Each Subscriber will deliver
payment by wire  transfer or by check payable to the order of the Company or the
appointed  "Escrow Agent," in the amount of the aggregate  purchase price of the
Securities subscribed for. Each Subscriber will return to the Placement Agent or
the Company  such  Subscription  Documents  together  with such a check (or wire
transfer) and any other  documents that may be required  under state  securities
laws or by the Company.  Neither the Placement Agent nor any investment  advisor
is permitted to sign any Subscription Documents for any Investor.

                                       4
<PAGE>

            (d) Upon  receipt  of a  Subscriber's  Subscription  Documents,  the
Company  will  determine  promptly  whether  it wishes to  accept  the  proposed
purchaser as a holder of Securities in the Company, it being understood that the
Company  reserves  the right to reject the tender of any  Subscription  Document
before the end of the second business day following the Company's receipt of the
Subscription  Document;  provided,  however, the Company may subsequently reject
the tender of any  Subscription  Documents in the event that at least $1,000,000
of shares have not been subscribed by the end of the Minimum Offering Period (as
hereinafter defined). Should the Company determine to reject the tender, it will
promptly notify the Placement Agent of such  determination.  The Placement Agent
will notify the Subscriber of such determination, and the Company will issue and
mail (or wire  transfer) (or cause the appointed  Escrow Agent to issue and mail
(or  wire  transfer))  to the  Subscriber,  a check  in an  amount  equal to the
tendered purchase price of the Securities.

      4. CLOSING DATES.

            (a) The Company will hold the closing of this  Offering  (the "FIRST
CLOSING") at any time in its  discretion  on or before sixty (60) days after the
Effective Date and upon receipt of at least  $1,000,000 in shares  subscribed in
accordance with Section 3 above. Thereafter, the Offering will be sold until the
Final  Closing,  which  will  occur on the  earlier of sixty (60) days after the
First  Closing  or the  sale  of the  maximum  placement,  as  described  in the
following paragraph (the "FINAL CLOSING").  The First Closing, Final Closing and
any additional  closing in connection with the  Over-Allotment are each referred
to as a "Closing."

            (b) The time limit for the minimum placement of $1,000,000 of shares
shall be sixty  (60)  days  after the  Effective  Date  (the  "MINIMUM  OFFERING
PERIOD"). If the minimum has not been reached within the Minimum Offering Period
either party may terminate  this Agreement by written notice to the other party.
Upon completion of the minimum  placement  within the Minimum  Offering  Period,
Placement  Agent  shall  have up to the date of the  Final  Closing  in which to
complete the maximum placement,  which shall be $2,500,000 in shares, subject to
the Over-Allotment  (defined below). If by mutual consent, any of the above time
periods may be extended or shortened;  provided,  however,  that no extension of
the Minimum  Offering  Period may be made  without  the  written  consent of all
Subscribers  who have then  executed  Subscription  Documents  and  tendered the
purchase price for such securities.

            (c) If the maximum  placement of  $2,500,000 in shares is reached by
the Final  Closing,  then the Company agrees that it will, for a period of up to
30 days,  sell up to an  additional  $250,000 in shares to investors  previously
contacted by the Placement  Agent (the  "OVER-ALLOTMENT"),  subject to the prior
approval of individual subscriptions as described in Section 3(d), above.

            (d) Included in the  Over-Allotment if requested by the Company will
be the shares of one or more selling shareholders.

      5. COMPENSATION.

            (a) For the  services  of the  Placement  Agent  in  soliciting  and
obtaining purchasers of the Securities,  the Company agrees to pay the Placement
Agent a one-time,  non-refundable fee of $10,000 of which $5000 is to be paid at
the beginning of the engagement and the remaining  $5000 upon the earlier of the
Final Closing or the  termination of this Agreement;  (ii) a selling  commission
equal to ten percent (10%) of the aggregate  proceeds  received from the sale of
Securities at each  particular  Closing (the "SELLING  COMMISSION"),  payable at
each particular  Closing;  (iii) one Placement Agent warrant entitling Placement
Agent or its designees to purchase seven percent (7%) of the number of shares of
Company  Common  Stock  sold  at  each  particular  Closing   ("PLACEMENT  AGENT
WARRANT"),  payable at each  particular  Closing,  which Placement Agent Warrant
will be exercisable at the price of the Securities sold in the Offering, subject
to cashless exercise rights, and (iv) a non-accountable expenses fee equal to 3%
of the total  funds  raised in the round and whose  purpose is to cover  travel,
promotional  and  other  miscellaneous  expenses  incurred  in  syndicating  the
offering.  Notwithstanding  the foregoing,  the total compensation to be paid to
the Placement Agent shall not exceed the compensation  permitted by the rules of
the NASD.

                                       5
<PAGE>

            (b) Each  Placement  Agent  Warrant  shall  have  cashless  exercise
rights.  Placement Agent shall pay $10.00 for the Placement  Agent Warrant.  The
Placement Agent Warrant will have a five-year exercise period.

            (c) For the services of the Placement  Agent in connection  with any
Strategic  Transaction with any person or entity (or an affiliate  thereof) with
whom  the  Company  had  substantive  discussions  about a  potential  Strategic
Transaction  and  which  was  contacted  by  Advisor  during  the  term  of this
Agreement,  Company  agrees to pay  Advisor a success  fee,  upon  closing  of a
Strategic  Transaction  in  which  of 1% of all  Consideration  received  by the
Company and/or its stockholders  initially and  subsequently,  including without
limitation   contingent   Consideration   and   other   post-closing   payments.
"Consideration" will be deemed to include extraordinary  dividends,  forgiveness
of debt,  and  other  consideration  paid in  connection  with  the  transaction
including any indebtedness for borrowed money directly or indirectly  assumed in
connection  with a  transaction,  but shall not include  amounts  payable  under
consulting, non-competition,  employment, severance or other similar agreements.
This fee will be due when the  consideration  is  received by the Company or its
stockholders,  as applicable,  and will be payable in cash at closing (except as
otherwise provided herein). The value of any Consideration  received in the form
of securities will be determined based on the average of the closing daily sales
prices of such  securities on the primary  exchange on which they are traded for
the ten trading days ending two trading days prior to the  transaction  closing.
Should the Company request that Advisor provide an opinion as to the fairness of
the financial  Consideration  to be received by  stockholders  of the Company (a
"Fairness Opinion"),  the request to Advisor must be made at least 30 days prior
to the  delivery  date,  and $75,000  will be due upon  delivery of the Fairness
Opinion.  This amount will be credited against the success fee which will be due
when the Consideration is received,  directly or in escrow. The Fairness Opinion
may be  included  in any  disclosure  document  filed  by the  Company  with the
Securities and Exchange Commission with respect to such proposed  transaction or
in any disclosure document disseminated to the Company's  stockholders to obtain
the stockholders' consent to the transaction,  provided that it is reproduced in
full,  and that any  description  of or  reference  to Advisor or summary of the
Fairness Opinion in the disclosure  document is in a form reasonably  acceptable
to Advisor and its counsel.

      6. TERM.

      The term of this Agreement shall be six months from the execution  hereof,
unless extended by the mutual agreement of the parties.

      7. FURTHER AGREEMENTS OF THE COMPANY.

            (a) The Company covenants and agrees that it will pay or cause to be
paid (i) all expenses and fees in  connection  with the  preparation,  printing,
filing, delivery and shipping of the Offering Memorandum (and all other exhibits
to the Offering  Memorandum and any amendments or supplements  thereto,  but not
including the  preparation or negotiation of this  Agreement);  (ii) filing fees
required in connection  for offering and sale by the  Placement  Agent under the
securities  or Blue  Sky  laws  of the  states  and  other  jurisdictions  where
necessary;  and (iii) all  reasonable  fees and  expenses of  Placement  Agent's
counsel for its review of the Offering Memorandum and work related thereto,  not
to exceed $5,000 without prior approval by the Company.

                                       6
<PAGE>

            (b) If at any  time  when an  Offering  Memorandum  relating  to the
Securities  is  required  to be  delivered  under the Act,  any event  will have
occurred as a result of which,  in the opinion of counsel for the Company or the
Placement  Agent,  the  Offering  Memorandum  includes an untrue  statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not misleading, or if it is necessary at any time to amend
the  Offering  Memorandum  to comply  with the Act,  the Company  promptly  will
prepare an appropriate  supplement or amendment thereto, and will deliver to the
Placement  Agent  such  number  of copies  thereof  as the  Placement  Agent may
reasonably request.

            (c) To the extent  required under the Act and applicable  state Blue
Sky laws:

                  (i) The Company shall exercise  reasonable  care to assure the
Subscribers are not underwriters within the meaning of Section 2(11) of the Act,
shall take all actions  required by state  securities laws, and setting forth or
referring to the restrictions on transferability and sale of the Securities.

                  (ii)  The  Company  will  duly  and  timely  file (i) with the
Commission all required reports,  with respect to the sale of the Securities and
(ii) all reports required to be filed under applicable state securities laws and
regulations and by the regulatory agencies charged with enforcement thereof.

            (d)  The  Company  shall  make  available  to each  offeree  and any
individual  advising such offeree the  opportunity  to ask questions and receive
answers concerning the Company and the terms and conditions of the Offering, and
to obtain any additional information,  to the extent that such information is in
the  possession  of  the  Company  or  can be  acquired  by  any  of it  without
unreasonable  effort  or  expense,  necessary  to  verify  the  accuracy  of the
information contained in the Offering Memorandum.

            (e) The Company will notify the  Placement  Agent  immediately  upon
receipt  thereof  and  confirm  the  notice in writing  of the  issuance  by the
Commission or any state  securities  administrator  of any stop order suspending
the  effectiveness of any  qualification of the Securities for sale or enjoining
the sale of the  Securities  or of the  initiation  of any  proceeding  for that
purpose.  The Company will make every reasonable  effort to prevent the issuance
of any stop order and, if any stop order shall be issued,  to obtain the lifting
of the stop order at the earliest possible time.

            (f) The  Company,  at Company  expense,  shall  establish  an escrow
account which fulfills the Placement  Agent's  obligations as promulgated  under
Rule 15(c)2-4 of the  Securities  Exchange Act of 1934, as amended.  Such escrow
account may be  established  at a mutually  acceptable  national bank or as such
other place as may be agreed upon.

            (g) The Company  agrees to furnish,  at Company's  sole expense,  to
Placement  Agent  throughout  the  life  of the  Placement  Agent  Warrants  the
following documentation:

                  (i) all filings with state and federal  securities  regulatory
bodies,  including without limitation all documents filed with any office of the
United States  Securities and Exchange  Commission,  any exchange upon which the
Company's  securities are listed in any state and copies of all other documents,
reports and information furnished by the Company to its shareholders; and

                  (ii) copies of monthly transfer sheets.

The furnishing of such reports shall not be characterized as additional
compensation.

      8. FURTHER AGREEMENTS OF THE PLACEMENT AGENT.

                                       7
<PAGE>

            (a) The  Placement  Agent  agrees (on behalf of itself and the other
Placement Agent Syndicate  Members) that it will accept  subscriptions only from
investors  who have received a copy of the Offering  Memorandum,  who have fully
completed and executed the  appropriate  Subscription  Documents.  The Placement
Agent  agrees  (on  behalf of itself  and the other  Placement  Agent  Syndicate
Members)  not  to  publish,   circulate  or  use  any  other   advertisement  or
solicitation  material  without  the prior  written  approval  of the Company or
otherwise  conduct the offering in a manner which would be deemed to be a public
offering  where  this  would  violate  any  federal  or  state  securities  laws
applicable to the Offering.

            (b) The  Placement  Agent  agrees (on behalf of itself and the other
Placement Agent Syndicate Members) to solicit Subscribers only in the states and
other  jurisdictions  that such  solicitation can be made in accordance with any
limitations  described  therein and in the states and jurisdictions in which the
Placement  Agent (or any  Placement  Agent  Syndicate  Members)  is  licensed or
qualified to make offers and sales of the Securities. The Placement Agent agrees
(on behalf of itself and the other  Placement  Agent  Syndicate  Members) not to
make offers and sales to residents of foreign countries.

            (c) The Placement Agent (on behalf of itself and the other Placement
Agent  Syndicate  Members)  agrees  to keep  confidential  and not  provide  any
information  to  prospective  purchasers  of  Securities  or other  persons  not
contained in the Offering Memorandum or publicly disclosed and available.

            (d) The  Placement  Agent shall use its best  reasonable  efforts to
register or qualify the  Securities  to be offered in the  Offering in each such
state as the Placement  Agent shall  determine to offer and sell the  Securities
(or in which any Placement  Agent Syndicate  Member  determines to offer or sell
the Securities).

      9. INDEMNIFICATION.

            (a) The Company  agrees to  indemnify  and hold  harmless  Placement
Agent and each person who controls Placement Agent within the meaning of the Act
(collectively,  the "PLACEMENT AGENT  INDEMNIFIED  PARTIES") against any losses,
claims, damages or liabilities, joint or several (including, without limitation,
any  legal  or  other  expenses  reasonably  incurred  by such  Placement  Agent
Indemnified Party in connection with  investigating or defending any such claim,
liability or action), to which such Placement Agent Indemnified Party may become
subject under the Act or otherwise,  insofar as such losses,  claims, damages or
liabilities  (or actions in respect  thereof) arise out of or are based upon (i)
any untrue  statement or alleged  untrue  statement of a material fact contained
(A) in the  Offering  Memorandum  or any  amendment  or  supplement  thereof  or
thereto,  as  applicable,  or (B) in any Blue Sky  application or other document
executed  by the Company  specifically  for that  purpose or based upon  written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Securities  under the securities laws thereof
(any such application,  document or information being hereinafter called a "BLUE
SKY  APPLICATION");  (ii)  the  omission  or  alleged  omission  to state in the
Offering  Memorandum  or any  amendment  or  supplement  thereof or thereto,  as
applicable,  or in any Blue Sky  Application,  a material  fact  required  to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances  under  which  they  were  made,  not  misleading;  or  (iii)  any
misrepresentation,  breach of warranty or  nonfulfillment  of any  agreement  or
covenant  on the  part  of  the  Company  under  this  Agreement,  or  from  any
misrepresentation  in or omission  from any  certificate,  agreement,  schedule,
statement,  document or  instrument  furnished to the Placement  Agent  pursuant
hereto; provided,  however, that the Company will not be liable in any such case
to the extent that any such loss,  claim,  damage or liability (x) arises out of
or is based upon an untrue  statement or alleged untrue statement or omission or
alleged   omission  made  in  reliance  upon  and  in  conformity  with  written
information furnished to the Company by the Placement Agent specifically for use
with  reference  to the  Placement  Agent  in the  preparation  of the  Offering
Memorandum  or  any  such  Blue  Sky  Application  or  any  such  amendments  or
supplements  thereto or (y) is  primarily  the result of the  Placement  Agent's
willful  misconduct or gross  negligence.  This  indemnity  agreement will be in
addition to any liability which the Company may otherwise have.

                                       8
<PAGE>

            (b) The  Placement  Agent agrees to indemnify  and hold harmless the
Company   and  each  of  its   directors,   officers,   employees,   agents  and
representatives  (collectively,  the "COMPANY INDEMNIFIED  PARTIES") against any
losses,  claims,  damages or liabilities,  joint or several (including,  without
limitation,  any legal or other  expenses  reasonably  incurred by such  Company
Indemnified Party in connection with  investigating or defending any such claim,
liability or action), to which such Company Indemnified Party may become subject
under  the  Act or  otherwise,  insofar  as  such  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof) arise out of or are based upon (i)
any untrue  statement or alleged  untrue  statement of a material fact contained
based upon written  information  supplied by the Placement  Agent  regarding the
Placement  Agent (A) in the Offering  Memorandum  or any amendment or supplement
thereof or thereto,  as applicable,  regarding the Placement Agent or (B) in any
Blue Sky  Application;  (ii) the  omission  or alleged  omission to state in the
Offering  Memorandum  or any  amendment  or  supplement  thereof or thereto,  as
applicable,  or in any Blue Sky  Application,  a  material  fact  regarding  the
Placement  Agent  required  to be  stated  therein  or  necessary  to  make  the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading;   or  (iii)  any  misrepresentation,   breach  of  warranty  or
nonfulfillment  of any agreement or covenant on the part of the Placement  Agent
under this  Agreement,  or from any  misrepresentation  in or omission  from any
certificate, agreement, schedule, statement, document or instrument furnished to
the Company pursuant hereto.

            (c)  Promptly  after  receipt  by an  indemnified  party  under this
Section 9 of notice of the commencement of any action,  such  indemnified  party
will, if a claim in respect thereof is to be made against any indemnifying party
under  this  Section  9,  notify  in  writing  the  indemnifying  party  of  the
commencement  thereof; but the omission so to notify the indemnifying Party will
not relieve it from any liability under this Section 9. The  indemnifying  party
shall,  upon the request of the  indemnified  party,  retain counsel  reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceedings and shall pay as
incurred  the  reasonable  fees and  expenses  of such  counsel  related to such
proceeding.  In no event shall the indemnifying party be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one action or separate but  substantially  similar or related actions in the
same jurisdiction  arising out of the same general  allegations or circumstances
(other than such local counsel as may be employed by counsel to the  indemnified
parties to render legal  advice with  respect to the laws of, or legal  services
in, states or jurisdictions  other than those states and  jurisdictions in which
counsel to the  indemnified  parties is admitted  to practice  law.) In any such
proceeding,  any indemnified party shall cooperate in the defense and shall have
the right to retain its own counsel at its own expense.  In case any such action
is brought against any indemnified  party, and it notifies an indemnifying party
of the  commencement  thereof,  the  indemnifying  party  will  be  entitled  to
participate therein, and, to the extent that it may wish, jointly with any other
indemnifying  party,  similarly  notified,  to assume the defense  thereof,  the
indemnifying  party  will not be liable to such  indemnified  party  under  this
Section  9 for  any  legal  or  other  expenses  subsequently  incurred  by such
indemnified party in connection with the defense thereof.  In the event that the
indemnified  party  assumes  the  defense  of such  action  or  proceeding,  the
indemnified  party will keep the indemnifying  party reasonably  informed of the
progress of any defense, compromise or settlement and will cooperate and consult
with  the  indemnifying  party  and its  counsel  in  connection  therewith.  No
indemnifying  party will enter into any comprise or  settlement  of any claim or
action without the consent of the indemnified  party,  which consent will not be
unreasonably  withheld.  Likewise,  No  indemnified  party  will  enter into any
comprise  or  settlement  of any  claim or action  without  the  consent  of the
indemnifying party, which consent will not be unreasonably withheld.

      10.  EFFECTIVE  DATE. Upon the execution and delivery of this Agreement by
all of the parties  hereto,  this Agreement will become  effective upon the date
specified on the signature page hereto.  The Offering shall become  effective at
such time as the Company  informs the Placement Agent that the Offering has been
approved by the Company's  Board of Directors and  indicating  that the Offering
Memorandum is released for distribution.

                                       9
<PAGE>

      11.  SURVIVAL  OF  INDEMNITIES,   WARRANTIES  AND   REPRESENTATIONS.   The
respective  indemnity agreements of the Company and Placement Agent contained in
Section 9 hereof,  and the  representations  and  warranties  of the Company and
Placement  Agent set forth herein,  will remain  operative and in full force and
effect,  regardless of any  termination or cancellation of this Agreement or any
investigation  made by or on behalf of the Company or  Placement  Agent,  or any
controlling  person  referred to in Section 9, and will  survive the delivery of
and payment for the Securities,  and any successor of the Placement Agent or the
Company or of any such  controlling  person or any legal  representative  of any
such controlling  person, as the case may be, will be entitled to the benefit of
the respective indemnity agreements.

      12. CREDIT. Upon Closing of any Offering,  Placement Agent may, at its own
expense,  place  announcements in financial and other newspapers and periodicals
(such  as  customary  "tombstone"  advertisement)  describing  its  services  in
connection therewith.  Notwithstanding,  Placement Agent is hereby authorized to
include the Company on its publicly disclosed list of clients.

      13.  NOTICES.  Except as is  otherwise  provided  in this  Agreement,  (a)
whenever  notice is required by the provisions of this Agreement or otherwise to
be given to the Company, such notice will be in writing addressed to the Company
at 3930  Youngfield  Street,  Wheat Ridge,  Colorado 80033  Attention:  Dr. Tony
Milici.; and (b) whenever notice is required by the provisions of this Agreement
or  otherwise  to be given to  Placement  Agent,  such notice will be in writing
addressed to the Placement Agent at 120 N. Congress St., Ste. 400,  Jackson,  MS
39201, Attention: LeRoy H. Paris, II. Any notice referred to herein may be given
in writing or by telecopy or telephone  and if by telecopy or telephone  will be
immediately confirmed in writing.  Notice (unless actual) will be effective upon
mailing or telecopy transmission, as the case may be.

      14.  PERSONS  ENTITLED TO BENEFIT OF  AGREEMENT.  This  Agreement  is made
solely for the benefit of  Placement  Agent,  the  Company  and the  controlling
persons  referred to in Section 9 hereof,  and their  respective  successors and
assigns,  and no other  person will  acquire or have any right by virtue or this
Agreement,  and the term  "successors  and assigns," as used in this  Agreement,
will not include any Purchaser.

      15. DISPUTE RESOLUTION.  (a) If a dispute arises out of or relates to this
Agreement, the parties agree first to try in good faith to settle the dispute by
mediation before resorting to arbitration or litigation.  The parties agree that
the mediator shall be chosen no later than thirty (30) days after the submission
of a claim by either party, and that the mediation process shall be concluded no
later than  thirty (30) days after  selection  of the  mediator.  If the parties
cannot  agree on the  selection  of a  mediator,  one shall be  selected  by the
American Arbitration  Association ("AAA"). The fees and expenses of the mediator
shall be borne equally by the parties.  (b) If the  controversy  is not resolved
through  mediation  pursuant to Paragraph (a) above,  the parties agree that any
controversy  or claim  arising  out of or relating  to this  Agreement  shall be
determined by binding arbitration.  This transaction involves commerce,  and the
arbitration  is  subject to and shall be  conducted  by a single  arbitrator  in
accordance with the United States Arbitration Act  notwithstanding any choice of
law provision in this Agreement,  and under the Commercial  Arbitration Rules of
the AAA. The  arbitrator  shall have  authority to award damages and grant other
relief he deems  appropriate.  The  arbitrator  shall give  effect to statues of
limitation in determining any claim.  Reasonable discovery shall be permitted in
any  arbitration  proceeding.  Any  controversy  concerning  whether an issue is
arbitrable, shall be determined by the arbitrator. Judgment upon the arbitration
award may be entered in any court having jurisdiction.  The fees and expenses of
the arbitrator  and AAA shall be borne equally by the parties.  Any mediation or
arbitration under this Section 15 shall be held in Texas.

      16.  GOVERNING  LAW. This  Agreement is to be governed by and construed in
accordance with the laws of the State of Illinois,  without regard to principles
of conflicts of law.

                                       10
<PAGE>

      17. COUNTERPARTS.  This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.

      18.  ENTIRE  AGREEMENT.   This  Agreement,   including  all  exhibits  and
schedules,  sets  forth the  entire  agreement  of the  Placement  Agent and the
Company with respect to the subject  matter hereof and terminates and supersedes
all prior agreements and understandings between or among the Placement Agent and
the Company with respect to the subject matter hereof.

      19.  HEADINGS.  The  descriptive  headings  in this  Agreement  have  been
inserted for convenience only and do not constitute a part of this Agreement.

                                       11
<PAGE>

      IN WITNESS WHEREOF, the parties have entered into this Agreement effective
as of the as of the date first set forth above.

                                 GENETHERA, INC.

                                 By: _________________________________
                                     Dr. Tony Milici, Chairman, President & CEO

                                 Date: ________________________________

INVEST LINC SECURITIES, LLC

By:________________________________________
   Randy A. Grudzinski, President

Date:_____________________________________

                                       12

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