SUBSCRIPTION AGREEMENT
1. SUBSCRIPTION. GreenShift Corporation (the "Subscriber") hereby makes
application to purchase SEVEN HUNDRED AND FIFTY THOUSAND (750,000) shares
of Series C Preferred Stock of VERIDIUM CORPORATION (the "Company"), ONE
MILLION FIVE HUNDRED THOUSAND (1,500,000) shares of Common Stock of the
Company, and a five year option to purchase THREE HUNDRED SEVENTY FIVE
THOUSAND shares of Series C Preferred Stock of Veridium Corporation 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. SUBSCRIPTION AND PAYMENT. Upon the Company's acceptance of this
Subscription Agreement, the undersigned will pay to the Company by wire
transfer (per instructions received from the Company) ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000) (the "Investment"), representing the
purchase price for the Securities in two tranches of ONE MILLION TWO
HUNDRED FIFTY THOUSAND DOLLARS ($1,250,000) and TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000) payable on or about December 28, 2004 and February 15,
2005, respectively. Upon receipt of the first tranche of said funds, the
Company will issue the Securities and deliver them to the Subscriber.
6. FEES AND COSTS. The Company shall pay the Subscriber the sum of TWO HUNDRED
THOUSAND DOLLARS ($200,000) for the various professional fees and other
costs associated with the Investment, ONE HUNDRED TWENTY FIVE THOUSAND
DOLLARS ($125,000) of which amount shall be paid out of the first tranche
and SEVENTY FIVE THOUSAND ($75,000) out of the second tranche of the
Investment pursuant to Section 5 hereof.
7. ADJUSTMENT TO SECURITIES. The shares of Series C Preferred Stock shall be
subject to adjustment upon conversion such that the percentage of the
Company's issued and outstanding common stock represented by the shares of
the Securities as if fully converted upon the execution of this
Subscription Agreement, shall remain constant until the second anniversary
of the receipt by the Company of the Investment proceeds. Furthermore, 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 any sales of the Securities, and on the basis of the then-current
market price of the Company's common stock.
8. 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 7 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 7 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.
9. BINDING EFFECT. This Subscription Agreement is executed this 22nd day of
December, 2004, and shall bind the parties hereto and their respective
heirs, executors, administrators, distributees, successors and assigns.
THE UNDERSIGNED REPRESENTS THAT HE HAS READ THIS
SUBSCRIPTION AGREEMENT IN ITS ENTIRETY.
GREENSHIFT CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------------
Xxxxx Xxxxxxxx
Chairman
ACCEPTED BY THE COMPANY THIS 22nd DAY OF DECEMBER, 2004:
VERIDIUM CORPORATION
By:---------------------------------
Xxx Xxxxx President and
Chief Operational Officer
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