Page 16 of 21 Pages
EXHIBIT B
SUBSCRIPTION AGREEMENT
Xx. Xxxxxxx XxXxxx
Executive Vice President
Information Analysis Incorporated
00000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xx. XxXxxx:
In connection with the offering by Information Analysis Incorporated
("IAI") of a minimum of 227,273 and a maximum of 454,545 shares of its $.01 par
value Common Stock (the "Shares"), the undersigned hereby purchases that number
of Shares and hereby tenders the amount in payment thereof set forth on the
Signature Page to this Agreement.
1. Representations, Warranties and Covenants of the Purchaser.
------------------------------------------------------------
The undersigned (jointly and severally if more than one) hereby represents,
warrants and covenants as follows:
a. The undersigned acknowledges receipt of a copy of the
Investor Qualification Questionnaire attached hereto as Exhibit A. The
undersigned has received, and has had an opportunity to review, all of IAI's
current annual, quarterly and periodic reports filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934 (the "1934
Act Reports.") The undersigned further acknowledges that the undersigned has
read the Investor Qualification Questionnaire, and the 1934 Act Reports and has
relied solely upon the information contained therein and upon investigations
made by the undersigned in making the decision to purchase the Shares hereunder.
b. The undersigned has adequate means of providing for the
undersigned's current needs and possible personal contingencies and has no need
for liquidity in this investment and the undersigned can bear the economic risk
and/or entire loss of any investment in the Shares. The undersigned's commitment
to illiquid investments is reasonable in relation to the undersigned's net
worth.
c. The undersigned is acquiring the Shares without relying
upon any sales literature, prospectus, or other written materials other than the
1934 Act Reports including the exhibits thereto, and has investigated to the
undersigned's satisfaction the nature and risks inherent in this investment, and
has relied solely on the investigations made by the undersigned in making the
decision to invest in the Shares.
d. The undersigned is acquiring the Shares in good faith
solely for the undersigned's own account, for investment purposes and not with a
view to resale, fractionalization, disposition or distribution of all or any
part thereof. The undersigned will be the sole party in interest in this
investment and will be vested with all legal and equitable rights in the Shares.
The undersigned is aware that there are legal and practical limits on the
undersigned's ability to sell or dispose of the Shares, and, therefore, that the
undersigned must bear the economic risk of the investment for an indefinite
period of time.
e. The undersigned recognizes that a purchase of the Shares
involves investment risks and the undersigned has taken full cognizance of and
understands all of the risk factors related to the purchase of the Shares.
Page 17 of 21 Pages
f. The undersigned understands that the Shares are being
offered and sold in reliance on specific exemptions from the registration
requirements of federal and applicable state securities laws and that the
representations, warranties, agreements, acknowledgments and understandings set
forth herein are necessary in order to determine the applicability of such
exemptions.
If the undersigned is purchasing the Shares subscribed for hereby
in a fiduciary capacity, the above representations and warranties shall be
deemed to have been made on behalf of the person or persons for whom the
undersigned is so purchasing.
2. Acknowledgments and Indemnity of the Purchaser. The
-----------------------------------------------------
undersigned understands, recognizes and acknowledges that:
a. This subscription may be accepted or rejected by IAI in
whole or in part in its sole and absolute discretion. In the event that the
offer to sell the Shares is terminated or in the event that any subscription is
rejected by IAI in whole or in part for any reason, the undersigned shall have
no claim of any kind against IAI or any officer, director, or agent of IAI,
including, without limitation, any claim as to any ownership interest in IAI.
b. No federal or state agency has recommended or endorsed
the purchase of the Shares.
c. The Shares have not been registered under the Securities
Act of 1933, as amended (the "1933 Act"), or any applicable state securities
laws by reason of exemptions from the registration requirements of the 1933 Act
and such laws, and may not be sold, pledged, assigned, or otherwise disposed of
in the absence of an effective registration statement under the 1933 Act unless
an exemption from such registration is available.
d. The undersigned will not attempt to sell, transfer,
assign, pledge, or otherwise dispose of all or any portion of the undersigned's
Shares, unless registration of the Shares occurs.
e. The undersigned has been provided with such information
as has been requested. In addition, the undersigned has at all times been given
the opportunity to obtain additional information necessary to verify the
accuracy of the information received and the opportunity to ask questions of,
and receive answers from, IAI concerning the terms and conditions of the sale of
the Shares and the nature and prospects of IAI's operations.
f. The offer to sell the Shares was communicated to the
undersigned directly by IAI or its representative, and not through any form of
general advertising or solicitation such as advertisements or other
communications in newspapers, magazines or other media, broadcast on radio or
television, seminars or promotional meetings or any generally circulated letter,
circular or other written communication.
g. The undersigned agrees to indemnify IAI, its respective
officers, directors, shareholders, employees, and their attorneys and agents,
and hold each of them harmless from and against any and all loss, damage,
liability or expense, including costs and reasonable attorneys' fees, to which
any such persons may be put or may incur by reason of or in connection with any
misrepresentation made by the undersigned, any breach of the undersigned's
representations and warranties or the undersigned's failure to fulfill any of
its covenants or agreements under this Subscription Agreement. This Subscription
Agreement and the representations and warranties contained herein shall be
binding upon the heirs, executors, administrators, successors and assigns of the
undersigned.
2
Page 18 of 21 Pages
h. If the undersigned is a corporation, partnership or
trust, the undersigned (i) is authorized and duly qualified to purchase and hold
the Shares; (ii) has its principal place of business as set forth in the
signature page hereof; and, (iii) at IAI's request, will execute and deliver
such other and further instruments as IAI shall designate with respect to the
power, authority, capacity and rights of the undersigned.
i. The undersigned understands and agrees that the
representations and warranties made herein do not in any way constitute a
waiver, as set forth in section 14 of the 1933 Act, of rights with respect to
any provision of the 1933 Act or the rules and regulations of the Commission.
3. Best Efforts Registration Obligation of IAI; Issuance of
--------------------------------------------------------------
Additional Shares. IAI agrees that it shall use its best efforts to cause the
------------------
Shares purchased by the Undersigned to be registered by the Securities and
Exchange Commission on or before February 23, 1998 through the filing of a
registration statement on Form S-3 or such other form as may be available to
IAI. If the registration statement is not declared effective by the Securities
and Exchange Commission on or before February 23, 1998 then on that date, and on
every 30th day after February 23, 1998, IAI shall issue to the undersigned a
quantity of shares equal to 5% of the Shares subscribed for by the undersigned
without additional consideration provided, however that the aggregate number of
shares which IAI shall be obligated to issue under this section 3 shall not
exceed 20% of the total shares which the undersigned purchases hereunder.
4. Miscellaneous. The undersigned and IAI agree that:
-------------
a. The minimum number of Shares subscribed for by the
undersigned and other purchasers in the offering shall be 227,273 for which
payment shall be made in full in cash by the undersigned to IAI not later than
January 7, 1998. The undersigned and other purchasers in the offering shall have
the right, but not the obligation, to purchase up to an additional 227,272
Shares on or before February 6, 1998. Any purchase of additional Shares shall be
for installments of at least 45,455 shares for which payment shall be made in
full in cash at the price per share shown on the Signature Page to this
Agreement. All purchases of additional Shares shall be governed by the terms and
conditions of this Agreement.
b. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
c. The provisions of this Agreement may not be modified or
waived except in writing signed by the party to be charged.
d. This Agreement and the rights, powers and duties set
forth herein shall, except as set forth herein, bind and inure to the benefit of
the heirs, executors, administrators, legal representatives, successors and
assigns of the parties hereto.
e. The undersigned understands that it may not assign any of
its rights or participation in and under this Agreement without the prior
written consent of IAI and any attempted assignment without such consent shall
be void and without effect.
IN WITNESS WHEREOF, the undersigned has executed the signature page
attached hereto.
3
Page 19 of 21 Pages
Signature Page to Subscription Agreement
----------------------------------------
The undersigned hereby subscribes for the number of Shares designated
below and hereby tenders payment in the amount of $11.00 for each share.
NUMBER OF SHARES SUBSCRIBED FOR: ___________
INDIVIDUAL INVESTOR(S)
(If Shares are to be held
in joint ownership, all
owners must sign.)
----------------------------
Signature
----------------------------
Signature
NON-INDIVIDUAL INVESTOR
-----------------------------
Name of Entity
-----------------------------
Address of Entity
By:__________________________
Signature
Name:________________________
Title:_______________________
Subscription Accepted:
INFORMATION ANALYSIS INCORPORATED
By:_________________________ Date: _____________, 1998
(Title)_____________________
4
