Exhibit 4.1
SUBSCRIPTION AGREEMENT
IN VERITAS MEDICAL DIAGNOSTICS, INC.
Subscription Agreement for the Purchase of Units
The undersigned hereby subscribes for units, in connection with the
proposed private placement of a maximum of $2,200,000 of units. Each unit
consists of one share of the 5% convertible preferred stock of In Veritas
Medical Diagnostics, Inc. (the "Company"), par value $.001 per share (the "5%
Preferred Shares") and one warrant to purchase one share of our common stock
(the "Unit"), subject to adjustment upon specified events, including stock
splits, stock dividends, mergers, consolidations, exchange of shares,
recapitalizations or reorganizations. In addition, each purchaser of a Unit will
receive a warrant (the "Unit Warrant") to purchase an additional Unit.
The Units shall be registered for public sale with the Securities and
Exchange Commission (the "Commission"), in accordance with the terms set forth
in the registration rights agreement (the "Registration Rights Agreement"),
entered into between the holders of the Units (the "Holders") and the Company of
even date.
The undersigned agrees to pay the aggregate subscription price set forth on
page 8 or 9, as applicable, for the Units being purchased hereunder. The entire
purchase price is due and payable upon the submission of this Subscription
Agreement, and shall be payable by wire transfer or check subject to collection,
to the order of Kogan & Associates, LLC, as Escrow Agent for In Veritas Medical
Diagnostics, Inc. The wire transfer instructions are as follows:
Account: Kogan & Associates, LLC IOLA Account
Bank: HSBC Bank
Routing Number: 021 001 088
Account Number: 983902836
The undersigned acknowledges that the Units being purchased hereunder will
not be registered under the Securities Act of 1933 (the "Act"), or the
securities laws of any state, that absent an exemption from registration
contained in those laws, the Units require registration, and that the Company's
reliance upon such exemption is based upon the undersigned's representations,
warranties, and agreements contained in this Subscription Agreement, the
Registration Rights Agreement and the accompanying Confidential Prospective
Questionnaire (collectively, the "Subscription Documents").
1. The undersigned represents, warrants, and agrees as follows:
a. The undersigned agrees that this Subscription Agreement is and
shall be irrevocable.
b. The undersigned has carefully read the Confidential Term Sheet and
Exhibits thereto (the "Memorandum") and this Subscription Agreement
(collectively, the "Disclosure Materials"), all of which the undersigned
acknowledges have been provided to the undersigned. The undersigned has
been given the opportunity to ask questions of, and receive answers from,
the Company concerning the terms and conditions of this Offering and the
Disclosure Materials and to obtain such additional information, to the
extent the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of same as
the undersigned reasonably desires in order to evaluate the investment. The
undersigned understands the Disclosure Materials, and the undersigned has
had the opportunity to discuss any questions regarding any of the
Disclosure Materials with his counsel or other advisor. Notwithstanding the
foregoing, the only information upon which the undersigned has relied is
that set forth in the Disclosure Materials. The undersigned has received no
representations or warranties from the Company, its employees, agents or
attorneys in making this investment decision other than as set forth in the
Disclosure Materials. The undersigned does not desire to receive any
further information.
c. The undersigned is aware that the purchase of the Units is a
speculative investment involving a high degree of risk, that there is no
guarantee that the undersigned will realize any gain from this investment,
and that the undersigned could lose the total amount of this investment.
The undersigned has specifically reviewed the section in the Disclosure
Materials entitled "Risk Factors."
d. The undersigned understands that no federal or state agency has
made any finding or determination regarding the fairness of this Private
Placement Offering of the Units for investment, or any recommendation or
endorsement of this Private Placement of the Units.
e. The undersigned is purchasing the Units for the undersigned's own
account, with the intention of holding the Units with no present intention
of dividing or allowing others to participate in this investment or of
reselling or otherwise participating, directly or indirectly, in a
distribution of the Units or the securities underlying the Units, and shall
not make any sale, transfer, or pledge thereof without registration under
the Act and any applicable securities laws of any state or unless an
exemption from registration is available under those laws.
f. The undersigned represents that if an individual, he has adequate
means of providing for his or her current needs and personal and family
contingencies and has no need for liquidity in this investment in the
Units. The undersigned has no reason to anticipate any material change in
his or her personal financial condition for the foreseeable future.
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g. The undersigned is financially able to bear the economic risk of
this investment, including the ability to hold the Units indefinitely, or
to afford a complete loss of his investment in the Units.
h. The undersigned represents that the undersigned's overall
commitment to investments which are not readily marketable is not
disproportionate to the undersigned's net worth, and the undersigned's
investment in the Units will not cause such overall commitment to become
excessive. The undersigned understands that the statutory basis on which
the Units are being sold to the undersigned and others would not be
available if the undersigned's present intention were to hold the Units for
a fixed period or until the occurrence of a certain event. The undersigned
realizes that in the view of the Securities and Exchange Commission (the
"Commission"), a purchase now with a present intent to resell by reason of
a foreseeable specific contingency or any anticipated change in the market
value, or in the condition of the Company, or that of the industry in which
the business of the Company is engaged or in connection with a contemplated
liquidation, or settlement of any loan obtained by the undersigned for the
acquisition of the Units, and for which such Units may be pledged as
security or as donations to religious or charitable institutions for the
purpose of securing a deduction on an income tax return, would, in fact,
represent a purchase with an intent inconsistent with the undersigned's
representations to the Company, and the Commission would then regard such
sale as a sale for which the exemption from registration is not available.
The undersigned will not pledge, transfer or assign this Subscription
Agreement.
i. The undersigned represents that the funds provided for this
investment are either separate property of the undersigned, community
property over which the undersigned has the right of control, or are
otherwise funds as to which the undersigned has the sole right of
management. The undersigned is purchasing the Units with the funds of the
undersigned and not with the funds of any other person, firm, or entity and
is acquiring the Units for the undersigned's account. No person other than
the undersigned has any beneficial interest in the Units being purchased
hereunder.
j. FOR PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES ONLY: If
the undersigned is a partnership, corporation, trust or other entity, (i)
the undersigned has enclosed with this Subscription Agreement appropriate
evidence of the authority of the individual executing this Subscription
Agreement to act on its behalf (e.g., if a trust, a certified copy of the
trust agreement; if a corporation, a certified corporate resolution
authorizing the signature and a certified copy of the articles of
incorporation; or if a partnership, a certified copy of the partnership
agreement), (ii) the undersigned represents and warrants that it was not
organized or reorganized for the specific purpose of acquiring the Units,
and (iii) the undersigned has the full power of such entity to make the
representations and warranties made herein on its behalf, and (iv) this
investment in the Company has been affirmatively authorized, if required,
by the governing board of such entity and is not prohibited by the
governing documents of the entity.
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k. The address shown under the undersigned's signature at the end of
this Subscription Agreement is the undersigned's principal residence if he
or she is an individual or its principal business address if it is a
corporation or other entity.
l. The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Units.
m. The undersigned acknowledges that the certificates for the
securities comprising the 5% Preferred Shares which the undersigned will
receive will contain a legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
BE SOLD, TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AS
AMENDED, OR EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
The undersigned further acknowledges that a stop transfer order
will be placed upon the certificates for the securities in accordance
with the Act. The undersigned further acknowledges that the Company is
under no obligation to aid the undersigned in obtaining any exemption
from registration requirements.
n. Without the express written consent of the Placement Agent, the
undersigned agrees that he or she will not sell or transfer any of the
shares of common stock issuable upon conversion of the 5% Preferred Shares
or the shares of common stock underlying the warrants (the "Shares") until
the earlier of twelve (12) months from the date that this subscription is
accepted by the Company or the date that a registration statement covering
the Shares is declared effective. The undersigned further agrees that he
will not sell or transfer the Shares for any additional period as may be
required by the Nasdaq Stock Market.
2. The undersigned expressly acknowledges and agrees that the Company is
relying upon the undersigned's representations contained in the Subscription
Documents.
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3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows (which representations and
warranties are supplemented by the Company's filings under the Securities
Exchange Act of 1934 made prior to the date of this Agreement (collectively, the
"Exchange Act Filings"), copies of which have been provided to the Purchaser):
3.1 Organization, Good Standing and Qualification. Each of the Company
and its Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of
the Company and the Subsidiary is duly qualified and is authorized to do
business and is in good standing as a foreign corporation, partnership or
limited liability company, as the case may be, in all jurisdictions in
which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions
in which failure to do so has not, or could not reasonably be expected to
have a material adverse effect on the business, assets, liabilities,
condition (financial or otherwise), properties, operations or prospects of
the Company and its Subsidiary, taken as a whole (a "Material Adverse
Effect").
3.2 Subsidiaries. Each direct and indirect Subsidiary of the Company,
the direct owner of such Subsidiary and its percentage ownership thereof,
is set forth on Schedule 3.2. For the purpose of this Agreement, a
"Subsidiary" of any person or entity means (i) a corporation or other
entity whose shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority
of the directors of such corporation, or other persons or entities
performing similar functions for such person or entity, are owned, directly
or indirectly, by such person or entity or (ii) a corporation or other
entity in which such person or entity owns, directly or indirectly, more
than 50% of the equity interests at such time.
3.3 Capitalization; Voting Rights. The authorized capital stock of the
Company, as of the date hereof consists of 150,000,000 shares, of which
100,000,000 are shares of Common Stock, par value $.001 per share,
51,677,339 shares of which are issued and outstanding and 50,000,000 are
shares of preferred stock, par value $.001 per share of which 34,343,662
shares of preferred stock are issued and outstanding. The authorized
capital stock of each Subsidiary of the Company is set forth on Schedule
3.3 All issued and outstanding shares of the Company's Common Stock: (i)
have been duly authorized and validly issued and are fully paid and
nonassessable; and (ii) were issued in compliance with all applicable state
and federal laws concerning the issuance of securities.
3.4 Authorization; Binding Obligations. The Company has all requisite
power, authority and legal capacity to execute and deliver this Agreement,
and each other agreement, document or instrument or certificate
contemplated by this Agreement or to be executed by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, including the purchase and sale of the units in connection with
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the offering (the "Unit"), each of which consists of one share of Series B
convertible preferred stock, par value $.001 per share of the Company (the
"Preferred Stock"), and one warrant (the "Warrant") to purchase one share
of the Company's common stock (together with this Agreement, the "Company
Documents"), and to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and each of the Company Documents will be
at or prior to the Closing, duly and validly executed and delivered by the
Company and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each of
the Company Documents when so executed and delivered will constitute,
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles or equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
3.5 Liabilities. The Company has no contingent liabilities, except
current liabilities incurred in the ordinary course of business and
liabilities disclosed in any Exchange Act Filings.
3.6 Agreements; Action. Except as set forth on Schedule 3.6 or as
disclosed in any Exchange Act Filings:
(a) there are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees
to which the Company or the Subsidiary is a party or by which it is
bound which may involve: (i) obligations (contingent or otherwise) of,
or payments to, the Company in excess of $50,000 (other than
obligations of, or payments to, the Company arising from purchase or
sale agreements entered into in the ordinary course of business); or
(ii) the transfer or license of any patent, copyright, trade secret or
other proprietary right to or from the Company (other than licenses
arising from the purchase of "off the shelf" or other standard
products); or (iii) provisions restricting the development,
manufacture or distribution of the Company's products or services; or
(iv) indemnification by the Company with respect to infringements of
proprietary rights.
(b) Since January 31, 2005, neither the Company nor the
Subsidiary has: (i) declared or paid any dividends, or authorized or
made any distribution upon or with respect to any class or series of
its capital stock; (ii) incurred any indebtedness for money borrowed
or any other liabilities (other than ordinary course obligations)
individually in excess of $50,000 or, in the case of indebtedness
and/or liabilities individually less than $50,000, in excess of
$100,000 in the aggregate; (iii) made any loans or advances to any
person not in excess, individually or in the aggregate, of $100,000,
other than ordinary course advances for travel expenses; or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.
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(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or
entity (including persons or entities the Company has reason to
believe are affiliated therewith) shall be aggregated for the purpose
of meeting the individual minimum dollar amounts of such subsections.
3.7 Obligations to Related Parties. Except as set forth in the
Exchange Act Filings or on Schedule 3.7, there are no obligations of the
Company or the Subsidiary to officers, directors, stockholders or employees
of the Company or the Subsidiary other than:
(a) for payment of salary for services rendered and for bonus
payments;
(b) reimbursement for reasonable expenses incurred on behalf of
the Company and the Subsidiary;
(c) for other standard employee benefits made generally available
to all employees (including stock option agreements outstanding under
any stock option plan approved by the Board of Directors of the
Company); and
(d) obligations listed in the Company's financial statements or
disclosed in any of its Exchange Act Filings.
Except as described above or set forth in the Exchange Act Filings or
on Schedule 3.7, none of the officers, directors or, to the best of the
Company's knowledge, key employees or stockholders of the Company or any
members of their immediate families, are indebted to the Company,
individually or in the aggregate, in excess of $50,000 or have any direct
or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company,
other than passive investments in publicly traded companies (representing
less than one percent (1%) of such company) which may compete with the
Company. Except as described above, no officer, director or stockholder, or
any member of their immediate families, is, directly or indirectly,
interested in any material contract with the Company and no agreements,
understandings or proposed transactions are contemplated between the
Company and any such person. Except as set forth in the Exchange Act
Filings or on Schedule 3.7, the Company is not a guarantor or indemnitor of
any indebtedness of any other person, firm or corporation.
3.8 Changes. Since January 31, 2005, except as disclosed in any
Exchange Act Filing or in any Schedule to this Agreement or to any of the
Company Documents, there has not been:
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(a) any change in the business, assets, liabilities, condition
(financial or otherwise), properties, operations or prospects of the
Company or the Subsidiary, which individually or in the aggregate has
had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(b) any resignation or termination of any officer, key employee
or group of employees of the Company or the Subsidiary;
(c) any material change, except in the ordinary course of
business, in the contingent obligations of the Company or the
Subsidiary by way of guaranty, endorsement, indemnity, warranty or
otherwise;
(d) any damage, destruction or loss, whether or not covered by
insurance, has had, or could reasonably be expected to have a Material
Adverse Effect;
(e) any waiver by the Company or the Subsidiary of a valuable
right or of a material debt owed to it;
(f) any direct or indirect loans made by the Company or the
Subsidiary to any stockholder, employee, officer or director of the
Company or the Subsidiary, other than advances made in the ordinary
course of business;
(g) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder of the
Company or the Subsidiary;
(h) any declaration or payment of any dividend or other
distribution of the assets of the Company or the Subsidiary;
(i) any labor organization activity related to the Company or the
Subsidiary;
(j) any debt, obligation or liability incurred, assumed or
guaranteed by the Company or the Subsidiary, except those for
immaterial amounts and for current liabilities incurred in the
ordinary course of business;
(k) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets owned by the
Company or the Subsidiary;
(l) any change in any material agreement to which the Company or
the Subsidiary is a party or by which either the Company or the
Subsidiary is bound which either individually or in the aggregate has
had, or could reasonably be expected to have a Material Adverse
Effect;
(m) any other event or condition of any character that, either
individually or in the aggregate, has had, or could reasonably be
expected to have a Material Adverse Effect; or
(n) any arrangement or commitment by the Company or the
Subsidiary to do any of the acts described in subsection (a) through
(m) above.
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3.9 Title to Properties and Assets; Liens, Etc. Except as set forth in
the Exchange Act Filings or on Schedule 3.9, each of the Company and the
Subsidiary has good and marketable title to its properties and assets, and
good title to its leasehold estates, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than:
(a) those resulting from taxes which have not yet become
delinquent;
(b) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair
the operations of the Company or the Subsidiary; and
(c) those that have otherwise arisen in the ordinary course of
business.
All facilities, machinery, equipment, fixtures, vehicles and
other properties owned, leased or used by the Company and the
Subsidiary are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being
used. Except as set forth in the Exchange Act Filings or on Schedule
3.9, the Company and the Subsidiary are in compliance with all
material terms of each lease to which it is a party or is otherwise
bound.
3.10 Intellectual Property.
(a) Except as set forth in the Exchange Act Filings or on
Schedule 3.10, each of the Company and the Subsidiary owns or
possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes necessary for its business
as now conducted and to the Company's knowledge, as presently proposed
to be conducted (the "Intellectual Property"), without any known
infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing
proprietary rights, nor is the Company or the Subsidiary bound by or a
party to any options, licenses or agreements of any kind with respect
to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and
processes of any other person or entity other than such licenses or
agreements arising from the purchase of "off the shelf" or standard
products.
(b) Except as set forth in the Exchange Act Filings or on
Schedule 3.10, neither the Company nor the Subsidiary has received any
communications alleging that the Company or the Subsidiary has
violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other
person or entity, nor is the Company or the Subsidiary aware of any
basis therefor.
(c) The Company does not believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of
any of its employees made prior to their employment by the Company or
the Subsidiary, except for inventions, trade secrets or proprietary
information that have been rightfully assigned to the Company or the
Subsidiary.
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3.11 Compliance with Other Instruments. Neither the Company nor the
Subsidiary is in violation or default of (x) any term of its Charter or
Bylaws, or (y) of any provision of any indebtedness, mortgage, indenture,
contract, agreement or instrument to which it is party or by which it is
bound or of any judgment, decree, order or writ, which violation or
default, in the case of this clause (y), has had, or could reasonably be
expected to have a Material Adverse Effect. The execution, delivery and
performance of and compliance with this Agreement and the Company Documents
to which it is a party will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict
with or constitute a default under any such term or provision, or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any
of the properties or assets of the Company or the Subsidiary or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business
or operations or any of its assets or properties.
3.12 Litigation. Except as set forth in the Exchange Act Filings or on
Schedule 3.12 hereto, there is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the
Company or the Subsidiary that prevents the Company or the Subsidiary from
entering into this Agreement or the other Company Documents, or from
consummating the transactions contemplated hereby or thereby, or which has
had, or could reasonably be expected to have a Material Adverse Effect or
any change in the current equity ownership of the Company or the
Subsidiary, nor is the Company aware that there is any basis to assert any
of the foregoing. Neither the Company nor the Subsidiary is a party or
subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. Except as set
forth on Schedule 3.12 hereto, there is no action, suit, proceeding or
investigation by the Company or the Subsidiary currently pending or which
the Company or the Subsidiary intends to initiate.
3.13 Tax Returns and Payments. Except as set forth in the Exchange Act
Filings or on Schedule 3.13, each of the Company and the Subsidiary has
timely filed all tax returns (federal, state and local) required to be
filed by it. All taxes shown to be due and payable on such returns, any
assessments imposed, and all other taxes due and payable by the Company or
the Subsidiary on or before the Closing, have been paid or will be paid
prior to the time they become delinquent.
Except as set forth in the Exchange Act Filings or on Schedule 3.13,
neither the Company nor the Subsidiary has been advised:
(a) that any of its returns, federal, state or other, have been
or are being audited as of the date hereof; or
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(b) of any deficiency in assessment or proposed judgment to its
federal, state or other taxes.
The Company has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.14 Employees. Except as set forth in the Exchange Act Filings or on
Schedule 3.14, neither the Company nor the Subsidiary has any collective
bargaining agreements with any of its employees. There is no labor union
organizing activity pending or, to the Company's knowledge, threatened with
respect to the Company or the Subsidiary. Except as disclosed in the
Exchange Act Filings or on Schedule 3.14, neither the Company nor the
Subsidiary is a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan,
profit sharing plan, retirement agreement or other employee compensation
plan or agreement. To the Company's knowledge, no employee of the Company
or the Subsidiary, nor any consultant with whom the Company or the
Subsidiary has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating
to the right of any such individual to be employed by, or to contract with,
the Company or the Subsidiary because of the nature of the business to be
conducted by the Company or the Subsidiary; and to the Company's knowledge
the continued employment by the Company or the Subsidiary of its present
employees, and the performance of the Company's and the Subsidiary
contracts with its independent contractors, will not result in any such
violation. Neither the Company nor the Subsidiary is aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with their duties to the Company or the Subsidiary. Neither the Company nor
the Subsidiary has received any notice alleging that any such violation has
occurred. Except for employees who have a current effective employment
agreement with the Company or the Subsidiary, no employee of the Company or
any the Subsidiary has been granted the right to continued employment by
the Company or the Subsidiary or to any material compensation following
termination of employment with the Company or the Subsidiary. Except as set
forth on Schedule 3.14, the Company is not aware that any officer, key
employee or group of employees intends to terminate his, her or their
employment with the Company or the Subsidiary, nor does the Company or the
Subsidiary have a present intention to terminate the employment of any
officer, key employee or group of employees.
3.15 Registration Rights and Voting Rights. Except as set forth in the
Exchange Act Filings or on Schedule 3.15, neither the Company nor the
Subsidiary is presently under any obligation, and neither the Company nor
the Subsidiary has granted any rights, to register any of the Company's
presently outstanding securities or any of its securities that may
hereafter be issued. Except as set forth on Schedule 3.15 and except as
disclosed in Exchange Act Filings, to the Company's knowledge, no
stockholder of the Company or the Subsidiary has entered into any agreement
with respect to the voting of equity securities of the Company or the
Subsidiary.
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3.16 Compliance with Laws; Permits. Neither the Company nor the
Subsidiary is in violation of any applicable statute, rule, regulation,
order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business
or the ownership of its properties which has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material
Adverse Effect. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement or any other Related Agreement and the issuance
of any of the Units, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing,
as will be filed in a timely manner. Each of the Company and the Subsidiary
has all material franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the
lack of which could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.17 Environmental and Safety Laws. Neither the Company nor the
Subsidiary is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation. Except as set
forth on Schedule 3.17, no Hazardous Materials (as defined below) are used
or have been used, stored, or disposed of by the Company or the Subsidiary
or, to the Company's knowledge, by any other person or entity on any
property owned, leased or used by the Company or the Subsidiary. For the
purposes of the preceding sentence, "Hazardous Materials" shall mean:
(a) materials which are listed or otherwise defined as "hazardous" or
"toxic" under any applicable local, state, federal and/or foreign laws
and regulations that govern the existence and/or remedy of
contamination on property, the protection of the environment from
contamination, the control of hazardous wastes, or other activities
involving hazardous substances, including building materials; or
(b) any petroleum products or nuclear materials.
3.18 Valid Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in this Agreement, the offer, sale
and issuance of the Units will be exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and will
have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements
of all applicable state securities laws.
3.19 Full Disclosure. Each of the Company and the Subsidiary has
provided the Purchaser with all information requested by the Purchaser in
connection with its decision to purchase the Units, including all
information the Company and the Subsidiary believe is reasonably necessary
to make such investment decision. Neither this Agreement, the Company
Documents, the exhibits and schedules hereto and thereto nor any other
document delivered by the Company or the Subsidiary to Purchaser or its
attorneys or agents in connection herewith or therewith or with the
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transactions contemplated hereby or thereby, contain any untrue statement
of a material fact nor omit to state a material fact necessary in order to
make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading. Any financial
projections and other estimates provided to the Purchaser by the Company or
the Subsidiary were based on the Company's and the Subsidiary's experience
in the industry and on assumptions of fact and opinion as to future events
which the Company or the Subsidiary, at the date of the issuance of such
projections or estimates, believed to be reasonable.
3.20 Insurance. Each of the Company and the Subsidiary has general
commercial, product liability, fire and casualty insurance policies with
coverages which the Company believes are customary for companies similarly
situated to the Company and the Subsidiary in the same or similar business.
3.21 SEC Reports. Except as set forth on Schedule 3.21, since January
31, 2005, the Company has filed all proxy statements, reports and other
documents required to be filed by it under the Securities Exchange Act
1934, as amended. The Company has furnished the Purchaser with copies of:
(i) its Annual Report on Form 10-KSB for its fiscal year ended July 31,
2004; and (ii) its Quarterly Report on Form 10-QSB for its fiscal quarter
ended January 31, 2005, (collectively, the "SEC Reports"). Except as set
forth on Schedule 3.21, each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and
none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted 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.
3.22 Listing. The Company's common stock is traded on the National
Association of Securities Dealers Over the Counter Bulletin Board ("NASD
OTCBB") and satisfies all requirements for the continuation of such
trading. The Company has not received any notice that its common stock will
not be eligible to be traded on the NASD OTCBB or that its common stock
does not meet all requirements for such trading.
3.23 No Integrated Offering. Neither the Company, nor the Subsidiary
or affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the
offering of the Units pursuant to this Agreement or any of the Company
Documents to be integrated with prior offerings by the Company for purposes
of the Securities Act which would prevent the Company from selling the
Units pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or
any of its affiliates or Subsidiary take any action or steps that would
cause the offering of the Units to be integrated with other offerings.
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3.24 Stop Transfer. The Units are restricted securities as of the date
of this Agreement. The Company will not issue any stop transfer order or
other order impeding the sale and delivery of any of the Units at such time
as the Units are registered for public sale or an exemption from
registration is available, except as required by state and federal
securities laws.
3.25 Dilution. The Company specifically acknowledges that its
obligation to issue the shares of common stock upon conversion of the
Preferred Stock and exercise of the Warrant is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.
3.26 Patriot Act. The Company certifies that, to the best of the
Company's knowledge, the Company has not been designated, and is not owned
or controlled, by a "suspected terrorist" as defined in Executive Order
13224. The Company hereby acknowledges that the Purchaser seeks to comply
with all applicable Laws concerning money laundering and related
activities. In furtherance of those efforts, the Company hereby represents,
warrants and agrees that: (i) none of the cash or property owned by the
Company has been or shall be derived from, or related to, any activity that
is deemed criminal under United States law; and (ii) no contribution or
payment by the Company has, and this Agreement will not, cause the Company
to be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act
of 2001.
4. Except as otherwise specifically provided for hereunder, no party shall
be deemed to have waived any of his or its rights hereunder or under any other
agreement, instrument or papers signed by any of them with respect to the
subject matter hereof unless such waiver is in writing and signed by the party
waiving said right. Except as otherwise specifically provided for hereunder, no
delay or omission by any party in exercising any right with respect to the
subject matter hereof shall operate as a waiver of such right or of any such
other right. A waiver on any one occasion with respect to the subject matter
hereof shall not be construed as a bar to, or waiver of, any right or remedy on
any future occasion. All rights and remedies with respect to the subject matter
hereof, whether evidenced hereby or by any other agreement, instrument, or
paper, will be cumulative, and may be exercised separately or concurrently.
5. The parties have not made any representations or warranties with respect
to the subject matter hereof not set forth herein, and this Subscription
Agreement, together with any instruments or documents executed simultaneously
herewith in connection with the Private Placement Offering, constitutes the
entire agreement between them with respect to the subject matter hereof. All
understandings and agreements heretofore had between the parties with respect to
the subject matter hereof are merged in this Subscription Agreement and any such
instruments and documents, which alone fully and completely expresses their
agreement.
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6. This Subscription Agreement may not be changed, modified, extended,
terminated or discharged orally, but only by an agreement in writing, which is
signed by all of the parties to this Subscription Agreement.
7. The parties agree to execute any and all such other further instruments
and documents, and to take any and all such further actions reasonably required
to effectuate this Subscription Agreement and the intent and purposes hereof.
8. This Subscription Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the undersigned hereby
consents to the jurisdiction of the courts of the State of New York and the
United States District Courts situated therein.
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ALL SUBSCRIBERS MUST COMPLETE THIS PAGE
1. __ Individual 8. __ Trust
Date Opened____________
2. __ Joint Tenants with Right
of Survivorship 9. __ As a Custodian for
3. __ Husband and Wife (Tenants Under the Uniform Gift
by the Entirety) to Minors Act of the State
10. __ Married with Separate
4. __ Community Property Property
5. __ Tenants in Common 11. __ Keogh
6. __ Corporation/Partnership
7. __ IRA
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EXECUTION BY SUBSCRIBER WHO IS A NATURAL PERSON
_______ Units x $.65 = $
- --------------------------------------------------------------------------------
Exact Name in Which Title is to be Held
- --------------------------------------------------------------------------------
(Signature)
- --------------------------------------------------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
Residence: Number and Street
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Social Security Number
Accepted this day of March, 2005, on behalf of In Veritas Medical Diagnostics,
Inc.
By:
---------------------------------
John Fuller, President
and Chief Executive Officer
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EXECUTION BY SUBSCRIBER WHO IS A CORPORATION,
PARTNER, TRUST, ETC.
______ Units x $.65 = $
- --------------------------------------------------------------------------------
Exact Name in Which Title is to be Held
- --------------------------------------------------------------------------------
(Signature)
- --------------------------------------------------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
Residence: Number and Street
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Tax Identification Number
Accepted this day of March, 2005, on behalf of In Veritas Medical Diagnostics,
Inc.
By:
---------------------------------
John Fuller, President
and Chief Executive Officer
18