SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 30, 2010

 

 

OMNICOMM SYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   000-25203   11-3349762

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2101 W. Commercial Blvd., Suite 3500, Fort Lauderdale, FL   33309
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (954) 473-1254

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2 below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

ITEM 3.02 UNREGISTERED SALE OF EQUITY SECURITIES

 

ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT

 

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR

On November 30, 2010 OmniComm Systems, Inc. (“OmniComm,” “our,” or “we”) sold 250,000 shares of its Series D Preferred Stock, which provides super-voting rights in the amount of 100,000,000 votes as described below, to Cornelis F. Wit, our chief executive officer and a member of our board of directors in exchange for a promissory note from the Company in the aggregate amount of $1,000,000. The promissory note was issued on September 30, 2010 in exchange for a loan of personal funds made by Mr. Wit to OmniComm and would have matured on December 31, 2011.

In connection with the sale of the Series D Preferred Stock to Mr. Wit, on November 30, 2010, the effective date, we amended our certificate of incorporation by filing a certificate of designation that created a series of 250,000 shares of Series D Preferred Stock pursuant to the authority given to our board of directors under our certificate of incorporation which authorizes the issuance of up to 10,000,000 shares of preferred stock and authorizes our board of directors, by resolution or resolutions, at any time and from time to time, to divide and established any or all of the unissued shares of preferred stock, not then allocated to any series into one or more series and to fix and determine the designation of each such share, the number of shares which shall constitute such series and certain preferences, limitations and relative rights of the shares of each series so established.

The following is a summary the terms of the Series D Preferred Stock:

 

   

each share of Series D Preferred Stock has a stated value and, subject to the liquidation preference of the Series A Preferred Stock, a liquidation preference of $0.001 per share,

 

   

the shares of Series D Preferred Stock are not convertible or exchange into any other security,

 

   

the shares of Series D Preferred Stock have no rights to receive dividend distributions,

 

   

each share of Series D Preferred Stock entitles the holder to 400 votes at any meeting of our stockholders and such shares of Series D Preferred Stock will vote together with the common stockholders, provided for the election or removal of directors the shares of Series D Preferred Stock will be voted in the same percentage as all voting shares of common stock voted for each director,

 

   

the shares of Series D Preferred Stock will not be subject to termination upon any event (except for certain redemption rights described below),

 

   

so long as the shares of Series D Preferred Stock are outstanding the Company will not alter or change the rights of the shares of Series D Preferred Stock in a manner which would adversely affect the shares of Series D Preferred Stock, or take any action which would result in the taxation of the holder under Section 305 of the Internal Revenue Code,

 

   

no holder of the Series D Preferred Stock is entitled to preemptive rights,

 

   

the shares of Series D Preferred Stock are transferable provided however that the holder of the Series D Preferred Stock provides OmniComm the right of first refusal upon the same terms and conditions of any bona fide offer for the shares, and

 

   

each share of Series D Preferred Stock is redeemable at the option of OmniComm in the event of death or termination as a result of disability of the holder.

The summary of the rights, privileges and preferences of the Series D Preferred Stock described above is qualified in its entirety by reference to the certificate of designation, a copy of which is attached as an exhibit to this report and is incorporated herein by reference.

 

1


Prior to the issuance of the shares of Series D Preferred Stock to Mr. Wit he controlled the vote of approximately 4.3% of our outstanding voting securities. In addition, Mr. Wit, owns the following securities: vested options to purchase an aggregate of 2,125,000 shares of common stock at prices ranging from $0.20 to $0.61 per share with expiration dates ranging from December 2010 to December 2014; warrants to purchase 22,925,000 shares of common stock at exercise prices ranging from $0.25 to $.60 per share with expiration dates ranging from February 2012 to December 2013; . $2,097,500 principal amount of notes; and $7,560,000 principal amount of convertible notes (“Notes”) and $1,100,000 principal amount of secured convertible notes (“Convertible Notes”), which Notes and Convertibles Notes are collectively convertible into 22,400,000 shares of common stock at prices ranging from $.25 to $.50 per share with due dates ranging from August 2010 to December 2013. As a result of Mr. Wit’s acquisition of the shares of Series D Preferred Stock, a change in voting control of OmniComm took place and Mr. Wit now controls by reason of his ownership of the Series D Preferred Stock approximately 55.88% of our issued and outstanding voting securities. There are no arrangements or understandings among OmniComm and Mr. Wit with respect to the election of directors or other matters, except as described in the certificate of designation.

The sale of the Series D Preferred Stock was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act. We did not pay any commissions or finder’s fees in connection with the sale to Mr. Wit.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

(d) Exhibits

 

Exhibit No.                        Description
3.10    Certificate of Designation, Preferences and Rights of Series D Preferred Stock of OmniComm Systems, Inc.
10.32    Subscription Agreement for the Series D Preferred Stock dated November 30, 2010 by and between OmniComm Systems, Inc. and Cornelis F. Wit.

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    OmniComm Systems, Inc.

November 30, 2010

    By:  

/s/ Ronald T. Linares

      Ronald T. Linares
      Chief Financial Officer

 

3


Exhibit Index

 

Exhibit No.                        Description
3.10    Certificate of Designation, Preferences and Rights of Series D Preferred Stock of OmniComm Systems, Inc.
10.32    Subscription Agreement for the Series D Preferred Stock dated November 30, 2010 by and between OmniComm Systems, Inc. and Cornelis F. Wit.

 

4

Exhibit 3.10

CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF

SERIES D PREFERRED STOCK OF OMNICOMM SYSTEMS, INC.

Pursuant to Section 151 of the General Corporation Law of the State of Delaware, the undersigned Executive Vice President/Chief Financial Officer of OmniComm Systems, Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, DOES HERBY CERTIFY that pursuant to the authority contained in the Corporation's Certificate of Incorporation, as amended, and in accordance with the provisions of the resolution creating a series of the class of the Corporation's authorized Preferred Stock designed as Series D Preferred Stock as follows:

First : The Certificate of incorporation, as amended, of the Corporation authorizes the issuance of 250,000,000 shares of common stock. $0.001 par value per share, and 10,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”) and, further, authorizes the Board of Directors of the Corporation, by resolution or resolutions, at any time and from time to time, to divide and established any or all of the unissued shares of Preferred Stock, not then allocated to any series into one or more series and, without limiting the generality of the foregoing, to fix and determine the designation of each such share, the number of shares which shall constitute such series and certain preferences, limitations and relative rights of the shares of each series so established.

SECOND : By approval of the Board of Directors of the Corporation at a duly organized meeting held on October 13, 2010, the Board of Directors designated 250,000 shares of the Preferred Stock as Series D Preferred Stock. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of the Series D Preferred Stock shall be as hereinafter described.

THIRD : Article Four of the Certificate of Incorporation of this Corporation is amended to include the following:

Series D Preferred Stock

The Corporation shall designate a series of preferred stock, consisting of 250,000 shares, as Series D Preferred Stock which shall have the following designations, rights and preferences (“Series D Preferred”):

1. Stated Value. The stated value of the Series D Preferred shall be $0.001 per share.

2. Dividends. The holders of Series D Preferred shall have no rights to receive dividend distributions or to participate in any dividends declared by the Corporation to or for the benefit of the holders of its common stock.

3. Conversions. The shares of Series D Preferred are not convertible into or exchangeable for any other security of the Corporation.

4. Redemption. Except as provided in Section 10, the Series D Preferred is not redeemable without the prior express written consent of the holders of the majority of the voting power of all then outstanding shares of such Series D Preferred. In the event any shares of Series D Preferred shall be redeemed pursuant to this section, the shares so redeemed shall automatically be canceled and returned to the status of authorized but unissued shares of preferred stock.

5. Voting Rights. Each share of Series D Preferred shall entitle the holder thereof to Four Hundred (400) votes, and with respect to such vote, shall be entitled to notice of any stockholders' meeting in accordance with the bylaws of this Corporation, and shall be entitled to vote, together as a single class with holders of common stock and any other series of preferred stock then outstanding, with respect to any question or matter upon which holders of common stock that have the right to vote. Series D Preferred shall also entitle the holders thereof to vote the shares as a separate class as set forth herein and as required by law. In the


event of any stock split, stock dividend or reclassification of the Corporation's common stock, the number of votes which attach to each share of Series D Preferred shall be adjusted in the same proportion as any adjustment to the number of outstanding share of common stock. Notwithstanding anything contained herein to the contrary, in connection with the election or removal of directors to or from the Corporation’s Board of Directors, the shares of Series D Preferred present at a meeting of the Corporation’s shareholders shall be voted in the same percentage as all voting shares voted for each director at such meeting.

6. Liquidation, Dissolution, Winding-Up. In the event of the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of shares of the Series D Preferred then outstanding shall be entitled to receive before holders of shares of common stock receive any amounts, out of the remaining assets of the Corporation available for distribution to its stockholders, an amount equal to $0.001 per share.

7. Protective Provisions. So long as any shares of Series D Preferred are outstanding, this Corporation shall not without first obtaining the written approval of the holders of at least a majority of the voting power of the then outstanding shares of such Series D Preferred Stock (i) alter or change the rights, preferences or privileges of the Series D Preferred, or (ii) increase or decrease the total number of authorized shares of Series D Preferred Stock.

8. No Preemptive Rights. No holder of the Series D Preferred shall be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class.

9. Restrictions Upon Transfer.

(a) The holders of Series D Preferred shall not, directly or indirectly, Transfer (as defined below) any shares of Series D Preferred held by him/her/it and any such purported Transfer shall be of no force or effect and shall not be recognized by the Corporation. The Transfer restrictions contained in this Section 9 shall not apply to any Transfer by the holder of Series D Preferred subject to the rights of first refusal set forth in Section 9(c). The term “Transfer” or any derivation thereof, shall mean to give, sell, assign, pledge, encumber or otherwise dispose of, transfer or permit to be transferred.

(b) The following legend will be endorsed upon the certificate representing shares of Series D Preferred:

THE TRANSFERABILITY OF THE SHARES OF SERIES D PREFERRED REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE PROVISIONS OF THE CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D PREFERRED STOCK OF OMNICOMM SYSTEMS, INC. FILED WITH THE STATE OF DELAWARE, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION, AND ANY TRANSFER OF SUCH SHARES OF SERIES D PREFERRED STOCK IN VIOLATION OF SUCH RESTRICTIONS IS VOID.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR (ii) DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE CORPORATION, THAT SUCH REGISTRATION IS NOT REQUIRED FOR RESALE OF THESE SECURITIES.

(c) Transfer of Shares; Rights of First Refusal .

(i) In the event that a holder of Series D Preferred desires to Transfer any or all of his/hers/its shares of Series D Preferred (the “Offeror”), the Offeror shall first obtain a bona fide written offer from a prospective purchaser for such shares of Series D Preferred which the Offeror intends to accept (the “Offer”).


(ii) The Offer shall set forth the proposed aggregate purchase price for such shares of Series D Preferred (which must be a cash offer by the prospective purchaser), the name and address of the prospective purchaser, the date of proposed Transfer (which date shall be no less than forty-five (45) and no more than ninety (90) days from the date of the Offer) and all material terms and conditions upon which the proposed Transfer is to be made.

(iii) The Offeror shall deliver the Offer to the Corporation and the Corporation shall have thirty (30) days (the “Period”) after receipt of the Offer in which to notify the Offeror that the Corporation accepts the Offer upon the same terms and conditions set forth in the Offer and that the Corporation shall purchase all, but not less than all, of those shares of Series D Preferred offered by the Offeror in the Offer.

(iv) If the Corporation does not exercises its right of first refusal as set forth herein, the Offeror may proceed with the Transfer pursuant to Sections 9 (v) and (vi) below.

(v) If the Corporation does not exercises its right of first refusal as set forth herein, the Offeror shall be permitted to Transfer the shares of Series D Preferred to the prospective purchaser on the terms set forth in the Offer provided that such sale is consummated within sixty (60) days from the date of the Offer. If the Offeror fails to close such transaction within such sixty (60) day period, then the Offeror must again comply with the terms of this Section 9(c) prior to any Transfer of shares of Series D Preferred.

(vi) If the Corporation exercises its respective right of first refusal as set forth herein, the parties to the Transfer shall set the time for closing in connection with the purchase of such shares of Series D Preferred by the Corporation, which closing shall be at the principal office of the Corporation and held within ninety (90) days after the Offer is first received by the Corporation, but not earlier than the date of closing, if any, set forth in the Offer.

10. Redemption rights upon Death and Disability

(a) In the event of (A) death of a holder of Series D Preferred, (B) termination as a result of Disability (as defined herein) of a holder of Series D Preferred, (collectively the “Redemption Event”), then the Corporation shall have the option, but not the obligation, to redeem such holder’s Series D Preferred at a price per share (“Purchase Price”) equal to the purchase price per share of the Series D Preferred as determined in Section 10(c). "Disability" shall mean any mental or physical illness, condition, disability or incapacity which continues for a period of one hundred and eighty (180) days in any three hundred sixty (360) day period. In the event that any disagreement or dispute shall arise between the Company and the holder of Series D Preferred as to whether such holder suffers from any Disability, then, in such event, such holder shall submit to the physical or mental examination of a physician licensed under the laws of the State of Florida, who is agreeable to the Corporation and such holder, and such physician shall determine whether the holder suffers from any Disability. In the absence of fraud or bad faith, the determination of such physician shall be final and binding upon the Corporation and the holder.

(b) Corporation shall have sixty (60) days after the Redemption Event to notify the holder of Series D Preferred or the personal representative of the decedent holder of Series D Preferred, as the case may be, that the Corporation desires to purchase all or a portion of the shares of Series D Preferred from the holder of Series D Preferred Stock or personal representative of the decedent holder of Series D Preferred, as the case may be.

(c) In the event the Corporation notifies the holder of Series D Preferred or the personal representative of the decedent holder of Series D Preferred, as the case may be, that the Corporation will purchase all or a portion of the shares of Series D Preferred from the holder of Series D Preferred Stock or personal representative of the decedent holder of Series D Preferred, as the case may be, pursuant to this Section 10, the Purchase Price shall be determined by a third-party appraiser designated by the holder of


Series D Preferred or the personal representative of the decedent holder of Series D Preferred, as the case may be, and a third-party appraiser designated by the Corporation. The third-party appraisers shall be designated within ninety (90) days following the date of the Redemption Event, and a closing of the sale shall take place within twenty (20) business days’ following the third party’s’ determination of the Purchase Price. In the event the two third party appraisers are unable to agree upon a Purchase Price within thirty (30) days from the date they are designated, the Purchase Price shall be determined by a third third party appraiser who shall be designated by the mutual agreement of the third-party appraiser designated by the holder of Series D Preferred or the personal representative of the decedent holder of Series D Preferred, as the case may be, and a third-party appraiser designated by the Corporation, and the determination of the Purchase Price by the third third party appraiser shall be made within ten (10) days following the designation of the third third party appraiser.

(d) At the option of the Corporation, the Purchase Price may be paid (i) by the issuance of shares of the Corporation’s common stock, (ii) in three equal installments as set forth below, or (iii) a combination of common stock and three installments (as set forth below) as determined by the Corporation. In the event the Purchase Price is paid pursuant to 10(d)(ii) above, the Purchase Price shall be due and payable in three equal installments as follows: the first such installment shall be due at the closing which shall be within thirty (30) days from the date of the determination of the Purchase Price and the following two payments to be made on the first and second anniversary dates thereafter. The obligation shall be evidenced by a promissory note bearing interest at The Wall Street Journal prime rate plus 1% at the date of closing with interest payable quarterly. The promissory note shall provide that the maker shall have the right of prepaying all or any part thereof at any time without penalty, with interest to the date of prepayment, and that a default in the payment of any installment due under the promissory note shall cause any remaining unpaid balance to become due and payable forthwith. The default interest rate shall be 18% per annum simple interest accrued daily based on a 360 day year.

(e) In the event any shares of Series D Preferred shall be redeemed pursuant to this Section 10 or purchased by the Corporation pursuant to Section 9, the shares of Series D Preferred so redeemed or purchased shall automatically be canceled and returned to the status of authorized but unissued shares of preferred stock.

11. Remedies, Characterizations, Other Obligation, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designation shall be cumulative and in addition to all other remedies available under this Certificate of Designation, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holders right to pursue actual damages for any failure by the Corporation to comply with the terms of this Certificate of Designation.

12. Specific Shall Not Limit General. No specific provision contained in this Certificate of Designation shall limit or modify any more general provision contained herein.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed by its Executive Vice President/Chief Financial Officer as of this 26 day of October 2010.

 

OmniComm Systems. Inc.
By:  

/s/ Ronald T. Linares

Ronald T. Linares
Executive Vice President/Chief Financial Officer

Exhibit 10.32

SUBSCRIPTION AGREEMENT

SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) dated as of November 30, 2010 between OmniComm Systems, Inc., a Delaware corporation, with its principal offices at 2101 W. Commercial Blvd., Suite 3500, Fort Lauderdale, FL, 33331 (“Company”) and Cornelis F. Wit (the “Subscriber”).

WHEREAS, the Subscriber, the Company’s chief executive officer and a member of the Company’s board of directors, currently owns an aggregate of 4.3% of our issued and outstanding shares of common stock; $3,097,500 principal amount of the Company’s promissory notes (“Notes”); $7,560,000 principal amount of the Company’s convertible promissory notes (“Convertible Notes”) and $1,100,000 principal amount of the Company’s secured convertible notes (“Secured Convertible Notes”);

WHEREAS, the Company desires to offer and sell to the Subscriber and the Subscriber desires to acquire from the Company 250,000 shares of Series D Preferred Stock, which shares provides super-voting rights in the amount of 100,000,000 votes and containing the rights, preferences and limitations set forth in the certificate of designation attached hereto as Exhibit A (“Shares”), in exchange for a $1,000,000 Note originally issued by the Company to Mr. Wit September 30, 2010 which would have matured December 31, 2011 (“Purchase Price”).

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:

Section 1. Subscription for the Shares . On the terms and subject to the conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company, the Shares in exchange for the Purchase Price. Notwithstanding the minimum amount required, the Company reserves the right to accept subscriptions for lesser amounts. The Purchase Price is payable contemporaneously with the execution and delivery of this Subscription Agreement to the Company. Following the execution of this Subscription Agreement a stock certificate representing the Shares will be delivered by the Company to Subscriber no later than (10) days following the date hereof.

Section 2. Representations, Warranties and Covenants of Subscriber . Subscriber hereby represents, warrants and covenants to the Company that:

2.1 Subscriber recognizes that the purchase of the Shares involves a high degree of risk in that (i) an investment in the Company is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Company and the Shares; (iii) an investor may not be able to liquidate his investment; (iv) transferability of the Shares is restricted pursuant to the terms of the Shares; and (v) a Subscriber could sustain the loss of his entire investment.

2.2 Subscriber is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and that he is able to bear the economic risk of an investment in the Shares.


2.3 Subscriber has prior investment experience, including investment in non-listed and non-registered securities, or has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company to Subscriber and to evaluate the merits and risks of such an investment on his behalf, and that Subscriber recognizes the highly speculative nature of this investment.

2.4 The Company is a corporation subject to the reporting requirements of Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company has made available to Subscriber copies of all filings made by the Company with the Securities and Exchange Commission (“SEC”) since its inception (collectively, the "SEC Reports"). Subscriber has received and has fully read and considered the SEC Reports in making the decision to purchase the Shares. In evaluating the suitability of an investment in the Company, Subscriber has not relied upon any representations or other information (whether oral or written) received from the Company, its officers, directors, agents, employees or representatives, except information set forth in the SEC Reports, herein or obtained from the Company to verify such information. Subscriber has been given the opportunity to ask questions and receive answers concerning the terms and conditions of this offering of Shares and to obtain such additional information as Subscriber deemed necessary for an investment in the Shares.

2.5 Subscriber acknowledges that the offering of the Shares may involve tax consequences and that he must retain his own professional advisors to evaluate the tax and other consequences of an investment in the Shares.

2.6 Subscriber acknowledges that the Offering has not been reviewed by the SEC and that the Shares are being offered without registration under the Securities Act in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder and without registration under any state securities laws. Subscriber is purchasing the Shares for its own account for the purpose of investment and not with a view to or for sale in connection with, or for purposes of, any “distribution” thereof within the meaning of Section 2(11) of the Securities Act, and no other person has or will have a direct or indirect beneficial interests in the Shares. Subscriber agrees that it will not sell or otherwise transfer the Shares without providing the Company a right of first refusal and will not sell or otherwise transfer the Shares unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration is available.

2.7 Subscriber understands that the Company has no obligation to register the Shares and the Company is under no obligation to register any of the Shares. Subscriber further understands that the Company has no obligation to assist Subscriber in complying with any exemption from the registration of the Shares. Subscriber understands that there is no public market for the Shares and there is no intent that a public market will ever exist for the Shares. Subscriber agrees to hold the Company and its directors, officers and controlling persons and their respective heirs, representatives, successors and assigns harmless and to indemnify them against all liabilities, costs and expenses incurred by them as a result of any misrepresentation made by Subscriber contained herein or any sale or distribution of the Shares by Subscriber in violation of any securities laws.

2.8 Subscriber consents to the placement of one or more legends on any certificate or other document evidencing the Shares stating that they have not been registered under the Securities Act or any applicable state securities laws and setting forth or referring to the restrictions on transferability and sale thereof.

2.9 Subscriber’s address set forth on the signature page hereto is the principal residence of Subscriber.

2.10 Subscriber is not subscribing for the Shares as a result of, or subsequent to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or general meeting.

2.11 Subscriber understands that the Company is relying upon the truth and accuracy of the representations, warranties and agreements of Subscriber set forth herein in making its determination that the offering and sale of the Shares is exempt from registration under the Securities Act and state securities laws.

2.12 The funds provided for this investment, underlying the Note, are either separate property of Subscriber, community property over which Subscriber has the right of control or are otherwise funds as to which Subscriber has the sole right of management.

2.13 Subscriber has all requisite legal and other power and authority to execute and deliver this Subscription Agreement and to carry out and perform Subscriber’s obligations under the terms of this Subscription Agreement. This Subscription Agreement constitutes a valid and legally binding obligation of Subscriber, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other general principals of equity, whether such enforcement is considered in a proceeding in equity or law.


2.14 This Subscription Agreement does not contain any untrue statement of a material fact or omit any material fact concerning Subscriber.

2.15 There are no actions, suits, proceedings or investigations pending against Subscriber or Subscriber’s assets before any court or governmental agency (nor, to Subscriber’s knowledge, is there any threat thereof) which would impair in any way Subscriber’s ability to enter into and fully perform Subscriber’s commitments and obligations under this Subscription Agreement or the transactions contemplated hereby.

2.16 The execution, delivery and performance of and compliance with this Subscription Agreement and the issuance of the Shares will not result in any violation of, or conflict with, or constitute a default under, any agreement to which Subscriber is a party or by which it is bound, nor result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of Subscriber or the Shares.

2.17 Subscriber represents that the Shares were not offered through a registered broker/dealer and no commission was paid to any broker-dealer or other persons by the Subscriber.

2.18 With respect to the United States Patriot Act:

(i) Subscriber represents, warrants and covenants that Subscriber:

(A)(I) is subscribing for the Shares for Subscriber’s own account, own risk and own beneficial interest, (II) is not acting as an agent, representative, intermediary, nominee or in a similar capacity for any other person or entity, nominee account or beneficial owner, whether a natural person or entity (each such natural person or entity, an “Underlying Beneficial Owner”) and no Underlying Beneficial Owner will have a beneficial or economic interest in the Shares (whether directly or indirectly, including without limitation, through any option, swap, forward or any other hedging or derivative transaction), (III) if it is an entity, including, without limitation, a fund-of-funds, trust, pension plan or any other entity that is not a natural person (each, an “Entity”), has carried out thorough due diligence as to and established the identities of such Entity’s investors, directors, officers, trustees, beneficiaries and grantors (to the extent applicable, each a “Related Person” of such Entity), holds the evidence of such identities, will maintain all such evidence for at least five years from the date of Subscriber’s resale or other disposition of the Shares, will request such additional information as the Company may require to verify such identities as may be required by applicable law, and will make such information available to the Company upon its request, and (IV) does not have the intention or obligation to sell, pledge, distribute, assign or transfer all or a portion of the Shares to any Underlying Beneficial Owner or any other person; or

(B)(I) is subscribing for the Shares as a record owner and will not have a beneficial ownership interest in the Shares, (II) is not acting as an agent, representative, intermediary, nominee or in a similar capacity for one or more Underlying Beneficial Owners (as defined in (i)(A)(I) above), and understands and acknowledges that the representations, warranties and agreements made in this


Agreement are made by Subscriber with respect to both Subscriber and the Underlying Beneficial Owner(s), (III) has all requisite power and authority from the Underlying Beneficial Owner(s) to execute and perform the obligations under the Subscription Agreement, (IV) has carried out thorough due diligence as to and established the identities of all Underlying Beneficial Owners (and, if an Underlying Beneficial Owner is not a natural person, the identities of such Underlying Beneficial Owner’s Related Persons (to the extent applicable)), holds the evidence of such identities, will maintain all such evidence for at least five years from the date of Subscriber’s resale or other disposition of all the Shares, and will make such information available to the Company upon its request and (V) does not have the intention or obligation to sell, pledge, distribute, assign or transfer all or a portion of the Shares to any person other than the Underlying Beneficial Owner(s).

(ii) Subscriber hereby represents and warrants that the proposed investment in the Company that is being made on its own behalf or, if applicable, on behalf of any Underlying Beneficial Owners does not directly or indirectly contravene United States federal, state, local or international laws or regulations applicable to Subscriber, including anti-money laundering laws (a “Prohibited Investment”).

(iii) Federal regulations and Executive Orders administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at www.treas.gov/ofac. Subscriber hereby represents and warrants that neither Subscriber nor, if applicable, any Underlying Beneficial Owner or Related Person, is a country, territory, person or entity named on an OFAC list, nor is Subscriber nor, if applicable, any Underlying Beneficial Owner or Related Person, a natural person or entity with whom dealings are prohibited under any OFAC regulations.

(iv) Subscriber represents and warrants that neither Subscriber nor, if applicable, any Underlying Beneficial Owner or Related Person, is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure within the meaning of, and applicable guidance issued by the Department of the Treasury concerning, the U.S. Bank Secrecy Act (31 U.S.C. §5311 et seq.), as amended, and any regulations promulgated thereunder.

(iv) Subscriber agrees promptly to notify the Company should Subscriber become aware of any change in the information set forth in paragraphs (A) through (D).

(v) Subscriber agrees to indemnify and hold harmless the Company, its affiliates, their respective directors, officers, shareholders, employees, agents and representatives (each, an “Indemnitee”) from and against any and all losses, liabilities, damages, penalties, costs, fees and expenses (including legal fees and disbursements) (collectively, “Damages”) which may result, directly or indirectly, from Subscriber’s misrepresentations or misstatements contained herein or breaches hereof relating to subparagraphs (i) through (iv) of this Section.

(vi) Subscriber understands and agrees that, notwithstanding anything to the contrary contained in any document (including any side letters or similar agreements), if, following Subscriber’s investment in the Company, it is discovered that the investment is or has become a Prohibited Investment, such investment may immediately be redeemed by the Company or otherwise be subject to the remedies required by law, and Subscriber shall have no claim against any Indemnitee for any form of Damages as a result of such forced redemption or other action.

(vii) Upon the written request from the Company, Subscriber agrees to provide all information to the Company to enable the Company to comply with all applicable anti-money laundering statutes, rules, regulations and policies, including any policies applicable to a portfolio investment held or proposed to be held by the Company. Subscriber understands and agrees that the Company may release confidential information about Subscriber and, if applicable, any Underlying Beneficial Owner(s) or Related Person(s) to any person, if the Company, in its sole discretion, determines that such disclosure is necessary to comply with applicable statutes, rules, regulations and policies.

Section 3. Representations and Warranties of the Company . The Company represents and warrants to the Subscriber that:

3.1 The Company is a corporation duly organized, existing and in good standing under the laws of the State of Delaware and has the power to conduct the business which it conducts and proposes to conduct.


3.2 The execution, delivery and performance of this Subscription Agreement by the Company have been duly approved by its Board of Directors and all other actions required to authorize and effect the offer and sale of the Shares have been duly taken and approved. Upon the acceptance by the Company of the subscription made hereby, this Subscription Agreement will constitute a valid and binding obligation of the Company enforceable against it in accordance with its terms.

Section 4. Miscellaneous .

4.1 Any notice or other communication required, permitted or provided for hereunder (each, a “Notice”) shall be effective as between the parties only if given in writing and sent by (a) personal delivery, (b) registered or certified mail (return receipt requested); or (c) internationally recognized express delivery service, to the Company at 2101 W. Commercial Blvd., Suite 3500, Fort Lauderdale, FL, 33331, and to the Subscriber at his address indicated on the signature page of this Subscription Agreement. Notice shall be deemed to have been duly given and received (i) if personally delivered, on the date of such delivery, (ii) if mailed, on the date set forth on the return receipt, or (iii) if delivered by express delivery, on the date of such delivery (as evidenced by the receipt provided to the express delivery service). If Notice cannot be delivered because of a changed address of which no Notice was given, or the refusal to accept delivery, the Notice shall be deemed received on the date it is sent (as evidenced by the affidavit of the sender).

4.2 This Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns. This Subscription Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.

4.3 Notwithstanding the place where this Subscription Agreement may be executed by any of the parties hereto, the Company and Subscriber hereby: (a) agree that all questions concerning the construction, validity, enforcement and interpretation of this Subscription Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to the principles of conflicts of law thereof, and (b) all legal proceedings concerning the interpretation, enforcement and defense of this Subscription Agreement shall be commenced in the Courts of the State of Florida or the courts of the United States of America, in each case located in Broward County, Florida, and appellate courts from any thereof (the “Courts”), (c) irrevocably submit to the exclusive jurisdiction of the Courts for the adjudication of any dispute hereunder (including with respect to the enforcement of this Subscription Agreement); (d) irrevocably waive and agree not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any of such Courts, or that such suit, action or proceeding is improper; (e) irrevocably waive 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 the other at the address in effect for notices to it under this Subscription 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); and (f) irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Subscription Agreement or the transactions contemplated hereby.

4.4 This Subscription Agreement may be executed in counterparts. Upon the execution and delivery of this Subscription Agreement by the Subscriber, this Subscription Agreement shall become a binding obligation of the Subscriber with respect to the purchase of Shares as herein provided; subject, however, to the right hereby reserved to the Company to enter into the same agreements with other subscribers and to add and/or to delete other persons as subscribers.

4.5 If any provision of this Subscription Agreement is declared by a court of competent jurisdiction to be in any way invalid, illegal or unenforceable, the balance of this Subscription Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.


4.6 No term or provision contained herein may be modified, amended or waived except by written agreement or consent signed by the party or parties to be bound thereby. It is agreed that a waiver by either party of a breach of any provision of this Subscription Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party.

4.7 The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Subscription Agreement.

4.8 All references in this Subscription Agreement to the “Subscriber” shall include all parties (other than the Company) who execute this Subscription Agreement.

IN WITNESS WHEREOF, this Subscription Agreement has been executed by Subscriber and by the Company on the respective dates set forth below.

 

 

Cornelis F. Wit  
Address  

 

 

Telephone #  

 

Fax #  

 

Email:  

 

Social Security #  

 

Date:  

 

Amount of Series D Preferred Stock Subscribed For: 250,000 Shares

 

Subscription Accepted:
OmniComm Systems, Inc.
By:  

 

  Name:   Ronald Linares
  Title:   Chief Financial Officer
Date:   November 30, 2010