SUBSCRIPTION AGREEMENT
1. SUBSCRIPTION. VIRIDIS CAPITAL, L.L.C. (the "Subscriber") has, on even date
herewith, purchased certain debt of VERIDIUM CORPORATION (the "Company")
from CASTLERIGG MASTER INVESTMENTS, LTD., CEDAR CRESCENT HOLDINGS, LTD.,
AND STRANCO INVESTMENTS, LTD., in the aggregate amount of SEVEN HUNDRED AND
FIFTY FIVE THOUSAND TWO HUNDRED AND TWO DOLLARS ($755,202), plus ONE
HUNDRED FOUR THOUSAND FOUR HUNDRED AND NINETY ONE DOLLARS ($104,491) from
XXXXXXX XXXXX, JR., plus SEVENTY FIVE THOUSAND DOLLARS ($75,000) from
LAKELAND BANK, plus ONE HUNDRED THOUSAND FOUR HUNDRED THIRTY ONE DOLLARS
AND ELEVEN CENTS ($100,431.11) from GCS INVESTMENTS, LLC (collectively, the
"Investment"), and hereby makes application to convert such debt into FIVE
HUNDRED SIXTEEN THOUSAND NINE HUNDRED SIXTY EIGHT (516,968) shares of
Series B Preferred Stock of the Company, ONE MILLION NINE HUNDRED SIXTY
THOUSAND NINE HUNDRED AND FIFTY FOUR (1,960,954) shares of Common Stock of
the Company, and a five year option to purchase ONE HUNDRED EIGHTY SEVEN
THOUSAND FIVE HUNDRED (187,500) shares of Series B Preferred Stock of the
Company at FOUR DOLLARS ($4.00) per share to be issued by the Company
(collectively, the "Securities").
2. REPRESENTATIONS OF SUBSCRIBER. The undersigned Subscriber represents and
warrants to the Company as follows:
(A) I have relied solely upon:
(a) the information contained in the Company's Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2004;
(b) the information contained in the Company's Annual Report on Form
10-KSB for the year ended December 31, 2004; and
(c) any information furnished in written form by the Company to me
and signed by the Company.
I am not relying upon any oral representations or other written
information in making the decision to purchase the Option subscribed
for herein;
(B) I recognize that the Securities have not been registered under the
Securities Act of 1933, as amended (the "Act"), or under the
securities laws of any state, and, therefore, cannot be resold unless
the Securities are registered under the Act or unless an exemption
from registration is available. I further recognize that no public
agency has passed upon the accuracy or adequacy of any information
presented by the Company in connection with this offering or the
fairness of the terms of the offering;
(C) I am acquiring the Securities for my own account for long-term
investment and not with a view toward resale, fractionalization or
division, or distribution thereof, and I do not presently have any
reason to anticipate any change in my circumstances, financial or
otherwise, or any particular occasion or event which would necessitate
or require my sale or distribution of the Securities;
(D) I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of an investment
in the Company and of making an informed investment decision, and do
not require a Purchaser Representative;
(E) I recognize that the Company, as presently constituted, has had a
limited operating history, that an investment in the Company is
speculative, and that the total amount of funds tendered to purchase
the Option is placed at the risk of the business and may be completely
lost;
(F) I understands that the books and records of the Company are available
for inspection prior to my purchase of the Option, upon reasonable
notice, during reasonable business hours at the Company's place of
business;
(G) I have been provided access to any information I requested in
evaluating my purchase of the Option; and
(H) I have been presented with the opportunity to ask questions and
receive answers from officers of the Company relating to the terms and
conditions of the offering and to obtain any additional information
necessary to verify the accuracy of the information made available to
me.
3. ACCREDITED INVESTORS. Please initial one of the following items:
(A) The undersigned Subscriber is an Accredited Investor (as defined by
the Regulations of the Securities and Exchange Commission) because the
undersigned:
--- is a natural person who has an individual net worth, or joint net
worth with that person's spouse, of more than $1,000,000; or
--- is a natural person who had an individual income in excess of
$200,000 (or $300,000) (jointly with my spouse) in each of the
two most recent years and who reasonably expects an income in
excess of $200,000 (or $300,000 jointly with my spouse) in the
current year; or
--- is an entity in which all of the equity owners fall within one of
the categories set forth above; or
--- is an entity not formed for the specific purpose of acquiring the
Option with total assets in excess of $5,000,000; or
X is otherwise an Accredited Investor as defined in Section
--- 501(a)(1) through (8) of Regulation D under the Securities Act of
1933.
(B) The undersigned is not an Accredited Investor. -------
(NOTE: Subscriptions will not be accepted from any person or
entity that which is not an Accredited Investor.)
4. REGISTRATION RIGHTS. Promptly after the execution of this agreement,
the Company shall prepare and file with the Securities and Exchange
Commission a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of counsel
for the Company in order to comply with the provisions of the
Securities Act, so as to permit a public sale by the Subscriber of the
Securities. In connection with the registration of the Securities, the
Company covenants and agrees as follows:
(A) The Company will use its best efforts to cause the registration
statement to be declared effective as promptly as practicable. .
(B) Until all of the Securities have been sold the Company will file
such amendments to the registration statement as are necessary in
order to permit continued use of the prospectus.
5. ISSUANCE OF SECURITIES. The Company shall issue the Securities and
deliver them to the Subscriber upon the execution hereof.
6. ADJUSTMENT TO SECURITIES. In addition to the conversion and other
rights defined in the Company's Certificate of Designation for its
Series B Preferred Stock, the Investment shall be price-protected such
that the Company shall issue the Subscriber additional shares of
Common Stock to the extent of any difference between the Investment
and the ultimate proceeds realized in the event of conversion and/or
any sales of the Securities, and on the basis of the then-current
market price of the Company's common stock.
7. AUTHORIZATION. The Company has the full corporate power and authority
enter into this Subscription, to issue the Securities upon execution
hereof and, as necessary, pursuant to Section 6 above, and to carry
out the transactions contemplated hereby and thereby. The confirming
resolution of the Company's Board of Directors is attached hereto as
Exhibit A to this Subscription, and the confirming instruction to the
Company's transfer agent in regard to this Subscription and the
ongoing requirements of Section 6 hereof is attached hereto as Exhibit
B to this Subscription. This Subscription has been duly executed and
delivered by the Company, and this Subscription is, and will be, on
the execution hereof, a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with the terms
of this Subscription. 4. 9. BINDING EFFECT. This Subscription
Agreement is executed this 9th day of December, 2004, and shall bind
the parties hereto and their respective heirs, executors,
administrators, distributees, successors and assigns.
2
THE UNDERSIGNED REPRESENTS THAT HE HAS READ THIS SUBSCRIPTION
AGREEMENT IN ITS ENTIRETY.
VIRIDIS CAPITAL, LLC
By:/s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx
Sole Member
ACCEPTED BY THE COMPANY THIS ____ DAY OF DECEMBER, 2004:
VERIDIUM CORPORATION
By:
-------------------------------
Xxx Xxxxx
President and Chief Operational Officer
