IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING. SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN. SUBSCRIPTION AGREEMENT AND LETTER OF INVESTMENT INTENT
Exhibit 10.1
IMPORTANT:
PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.
SUBSCRIPTION AGREEMENT AND
LETTER OF INVESTMENT INTENT
LETTER OF INVESTMENT INTENT
Veritec, Inc.
0000 Xxxxxxxx Xxx. X.
Xxxxxx Xxxxxx, XX 00000
0000 Xxxxxxxx Xxx. X.
Xxxxxx Xxxxxx, XX 00000
Dear Sir or Madam:
Veritec, Inc. (the “Company”) has authorized its officers to execute and deliver to the
undersigned and other investors one or more convertible promissory notes in consideration for an
aggregate loan of up to Two Million Five Hundred Thousand Dollars ($2,500,000.00) (the “Notes” and
each such note individually, a “Note”) (such loan amount to be increased or decreased at the sole
discretion of the Board of Directors of the Company) and the Company desires to sell the Securities
(as defined below) to the undersigned and other investors pursuant to a transaction exempt from
registration under the Securities Act of 1933, as amended (the “Act”).
The undersigned desires to purchase from the Company, and the Company desires to issue and
sell to the undersigned, upon the terms and subject to the conditions of this Subscription
Agreement, a Note in the form attached hereto as Exhibit A. At any time prior to the
Note’s maturity, the holder of the Note may, at its option, either (i) convert the Note into equity
securities issued by the Company in an offering consummated prior to the maturity date, or (ii)
hold the Note until its maturity date and be paid the principal balance and accrued interest at
that time, all upon the terms and conditions set forth in the Note.
In consideration of the undersigned purchasing the Note, the Company will grant to the
undersigned one warrant to purchase the Company’s Common Stock
(the “Common Stock”) upon the terms
and conditions set forth in the form of warrant attached hereto as Exhibit B (the
“Warrant,” and the Note, Warrant and Common Stock to be issued upon the exercise of the Warrant,
collectively, the “Securities”).
(1) Purchase of the Note. The undersigned, , hereby agrees to
purchase a Note in the amount of Dollars ($ ), and the Company agrees to issue
the Note to the undersigned, upon the terms and conditions set forth below.
(2) Issuance of Warrant. In consideration of the undersigned purchasing the Note, the
Company agrees to issue the Warrant to the undersigned.
(3) Delivery of Funds, the Note and Warrant. The undersigned is delivering the funds
for the Note in immediately available funds simultaneously with the execution hereof. The Company
is delivering the Note and Warrant to the undersigned simultaneously with the execution hereof and
receipt of payment in full for the Note.
(4) Representations of the Subscriber. In connection with, and in consideration of,
the sale of the Securities to the undersigned, the undersigned:
| A. | Has had an opportunity to review the reports, schedules, forms, statements and
other documents required to be filed by it under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), including, but not limited to, the section titled
“Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended
June 30, 2008, and has been afforded (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the merits
and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or can
acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the investment. |
| B. | Realizes that a purchase of the Securities represents a speculative investment
involving a high degree of risk. |
| C. | Can bear the economic risk of an investment in the Securities for an indefinite
period of time, can afford to sustain a complete loss of such investment, has no need
for liquidity in connection with an investment in the Securities, and can afford to
hold the Securities indefinitely. |
| D. | Realizes that the Securities have not been registered for sale under the Act,
or applicable state securities laws (the “State Laws”) and may be sold only pursuant to
registration under the Act and State Laws, or an opinion of counsel satisfactory to
counsel for the Company that such registration is not required. |
| E. | Is experienced and knowledgeable in financial and business matters, capable of
evaluating the merits and risks of investing in the Securities and does not need or
desire the assistance of a knowledgeable representative to aid in the evaluation of
such risks (or, in the alternative, has a knowledgeable representative who such
investor intends to use in connection with a decision as to whether to purchase the
Securities and who together with such investor has such knowledge and experience in
financial and business matters that they are together capable of evaluating the merits
and risks of investing in the Securities). |
| F. | Understands and acknowledges that as of the date of this Subscription
Agreement, the Company does not have a sufficient number of shares of Common Stock to
issue to the undersigned in the event of a conversion of the Note (if the Note were to
be converted into Common Stock), or the exercise of the Warrant. The undersigned
understands and acknowledges that the Company has received indications from a majority
of its shareholders that such shareholders will vote in favor of an increase in the
number of authorized shares of Common Stock such that a sufficient number of such
shares will be available upon the conversion of the Note or the exercise of the
Warrant, as the case may be, and that the Company is currently engaged in the process
of authorizing such additional shares of Common Stock. |
(5) Investment Intent; Covenants.
| A. | The undersigned has been advised that the Securities have not been registered
under the Act or the relevant State Laws but are being offered, and will be offered and
sold, pursuant to exemptions from the Act and State Laws, and that the Company’s
reliance upon such exemptions is predicated in part on the undersigned’s
representations contained herein. The undersigned represents and Warrant that the
Securities are being purchased for the undersigned’s own account and for long term
investment and without the intention of reselling or redistributing the Securities,
that the undersigned has made no agreement with others regarding any of the Securities,
and that the undersigned’s financial condition is such that it is not likely that it
will be necessary for the undersigned to dispose of any of the Securities in the
foreseeable future. The undersigned is aware that (i) in the view of the Securities
and Exchange Commission, a purchase of securities with an intent to resell by reason of
any foreseeable specific contingency or anticipated change in market values, or any
change in the liquidation or settlement of any loan obtained for the acquisition of any
of the Securities and for which the Securities were or may be pledged as security would
represent an intent inconsistent with the investment representations set forth above
and (ii) the transferability of the Securities is restricted. |
| B. | The undersigned further represents and agrees that if, contrary to the
undersigned’s foregoing intentions, the undersigned should later desire to dispose of
or transfer any of the Securities in any manner, the undersigned shall not do so
without first obtaining (i) an opinion of counsel satisfactory to the Company that such
proposed disposition or transfer may be made lawfully
without the registration of such Securities pursuant to the Act and applicable State
Laws, or (ii) registration of such Securities (it being expressly understood that
the Company shall not have any obligation to register such Securities). |
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| C. | The undersigned agrees and acknowledges that information provided by the
Company to the undersigned in connection with the transactions contemplated by this
Subscription Agreement may constitute material non-public information under applicable
securities laws (such information, “Material Information”). The undersigned
understands and acknowledges that (i) entering into or engaging in securities
transactions or investment decisions involving the securities of the Company while in
possession of Material Information may breach applicable securities laws; (ii) the
undersigned or its employees, directors, agents and consultants will not engage in any
securities transactions or investment decisions while in possession of Material
Information; (iii) any securities transaction or investment decision by the undersigned
or its employees, directors, agents and consultants involving the securities of the
Company is made at its or their sole discretion and risk; and (iv) the Company will
not, and has no obligation to, disclose any Material Information to the public via its
filings with the Securities and Exchange Commission (the
“SEC”) or otherwise. |
| D. | The undersigned agrees and acknowledges that the Company may elect at any time
to engage in a “going private” transaction, the effects of which could include, but are
not limited to (i) the Company no longer filing periodic reports with the SEC under the
Exchange Act and (ii) an inability of the Company to register the Securities for sale
in the public markets. In addition, depending on how the “going private” transaction
is consummated, the undersigned may no longer remain a holder of Securities as a result
of the transaction. |
(6) Residence. The undersigned represents and Warrant that the undersigned is a bona
fide resident of (or, if an entity, is organized or incorporated under the laws of, and is
domiciled in) the state indicated in the Subscriber Information on the last page of this
Subscription Agreement and that the Securities are being purchased by the undersigned in the
undersigned’s name solely for the undersigned’s own beneficial interest and not as nominee for, on
behalf of, for the beneficial interest transfer to, any other person, trust, or organization
(except as specifically indicated in the Subscriber Information on the last page of this
Subscription Agreement).
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Paragraph (7) is required in connection with the exemptions from the Act and State Laws being
relied on by the Company with respect to the offer and sale of the Securities. All of such
information will be kept confidential and will be reviewed only by the Company and its counsel.
The undersigned agrees to furnish any additional information which the Company or its legal counsel
deem necessary in order to verify the responses set forth below.
(7) Accredited Status. The undersigned represents and Warrant as follows (check all
that apply):
| o | A. | The undersigned is an individual with a net worth, or a joint net worth together
with his or her spouse, in excess of $1,000,000. (In calculating net worth, you may
include equity in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities. Equity in personal
property and real estate should be based on the fair market value of such property
minus debt secured by such property.) |
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| o | B. | The undersigned is an individual (not a partnership, corporation, etc.) with
income in excess of $200,000 in each of the prior two years and reasonably expects an
income in excess of $200,000 in the current year. |
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| o | C. | The undersigned is an individual (not a partnership, corporation, etc.) who, with
his or her spouse, had joint income in excess of $300,000 in each of the prior two
years and reasonably expects joint income in excess of $300,000 in the current year. |
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| o | D. | The undersigned is a corporation or partnership, not formed for the specific
purpose of acquiring the Securities, with total assets in excess of $5,000,000. |
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| o | E. | The undersigned is a director or executive officer of the Company. |
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| o | F. | The undersigned is an entity all of whose equity owners meet one of the tests set
forth in A through E above (if relying on this category alone, each equity owner must
complete a separate copy of this Subscription Agreement). |
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| o | G. | The undersigned does not meet any of the criteria set forth in
A through F hereof. |
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(8) Miscellaneous.
| A. | The undersigned is of legal age. | ||
| B. | The undersigned understands the meaning and legal consequences
of the agreements, representations and warranties contained herein, agrees that
such agreements, representations and warranties shall survive and remain in
full force and effect after the execution hereof and payment for the
Securities, and further agrees to indemnify and hold harmless the Company, each
current and future officer, director, employee, agent and shareholder from and
against any and all loss, damage or liability due to, or arising out of, a
breach of any agreement, representation or warranty of the undersigned
contained herein. |
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| C. | This Subscription Agreement shall be governed by the laws of
the State of Minnesota without regard to its conflicts-of-law principles. Any
judicial action to enforce any right of any party under this Subscription
Agreement may be brought and maintained in Minnesota state or federal courts
located in Hennepin County. Accordingly, the parties hereby submit to the
process, jurisdiction and venue of any such court. Each party hereby waives,
and agrees not to assert, any claim that it is not personally subject to the
jurisdiction of the foregoing courts in the State of Minnesota or that any
action or other proceeding brought in compliance with this Section is brought
in an inconvenient forum. |
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| D. | The undersigned agrees to furnish to the Company, upon request,
such additional information as may be deemed necessary to determine the
undersigned’s suitability as an investor. |
SIGNATURES |
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Dated: , 200
_____
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× |
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× |
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Page 5 of 6
This Subscription Agreement and Letter of Investment Intent is accepted as of this day of
, 200_.
| VERITEC, INC. | ||||||||||
| By: | ||||||||||
| Its: | ||||||||||
| SUBSCRIBER INFORMATION | ||||||||||
| Name | Name | |||||||||
| Tax Identification or Social Security Number | Tax Identification or Social Security Number | |||||||||
| Residence Address | ||||||||||
| Mailing Address (for registration on books of the Company) | ||||||||||
| Type of Ownership (Check One): | ||||||||||
o
|
Individual Ownership | o | Joint Tenants with
right of
Survivorship (both
parties must sign) |
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o
|
Trust or Estate (Describe, and enclose authority) | o | Tenants-in-Common (both parties must
sign) |
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o
|
Other (explain): | |||||||||
EXHIBIT A
Note
EXHIBIT B
$2.00 Warrant
Page 6 of 6
