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Exhibit
10.1
EXCHANGE
AGREEMENT
THIS EXCHANGE
AGREEMENT (this “ Agreement ”), is made and
entered into as of this 2nd day of May, 2008, by and between
Veri-Tek International, Corp., a Michigan corporation (the “
Company ”), the individuals listed on Schedule
A hereto (each individual, a “ Holder ,” and
collectively the “ Holders ”), and Michael Azar
as the “ Holders’ Representative
.”
RECITALS
WHEREAS , in
connection with the Company’s acquisition of all of the
issued and outstanding membership interests of Quantum Value
Management, LLC and pursuant to that certain Purchase Agreement,
dated May 16, 2006, by and among the Company, Quantum Value
Management, LLC, and the Holders, the Company entered into a
Non-Negotiable Subordinated Promissory Note, dated July 3,
2006 (the “ Note ”), pursuant to which it
promised to pay to the Holders’ Representative as escrow
agent for, and for further distribution to, the Holders an
aggregate amount equal to $1,072,243 together with interest
thereon;
WHEREAS , the total
amount of accrued and unpaid interest under the Note as of the date
hereof is $4,765.53 (the “ Total Interest
”);
WHEREAS , each Holder
is the payee of the percentage of the Total Interest set forth on
Schedule A hereto, which amount shall be referred to as the
“ Interest ” of each respective
Holder;
WHEREAS , the
principal amount outstanding under the Note as of the date of this
Agreement is $1,072,243 (the “ Total Debt
”);
WHEREAS , each Holder
is the payee of the percentage of the Total Debt set forth on
Schedule A hereto, which amount shall be referred to as the
“ Debt ” of each respective Holder;
WHEREAS , the Company
desires to pay in cash to each Holder an amount equal to his
Interest as listed on Schedule A hereto;
WHEREAS , each Holder
desires to exchange his Debt for the number of shares of common
stock of the Company, no par value (the “ Common Stock
”) listed on Schedule A hereto (the “
Shares ”);
WHEREAS , the number
of Shares issuable to each Holder was determined by dividing the
amount of such Holder’s Debt by the average closing price per
share of the Company’s Common Stock for the twenty
(20) consecutive Trading Days immediately preceding
March 18, 2008, which amount was rounded up to the nearest
whole number of shares;
NOW, THEREFORE , in
consideration of the premises and the mutual covenants herein
contained, the parties hereby agree as follows:
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AGREEMENT
1. Recitals.
The above recitals are incorporated herein by reference.
2. Representations and
Warranties of the Holders. Each Holder represents and
warrants to the Company as follows:
(a) Holder owns and holds his
Debt, free and clear of any liens or encumbrances and has full
power and authority to transfer and dispose of his Debt, free and
clear of any liens or encumbrances.
(b) Holder has the requisite
power and authority to enter into and perform his obligations under
this Agreement and each other agreement entered into by the parties
hereto in connection with the transactions contemplated by this
Agreement.
(c) The execution, delivery
and performance of this Agreement by the Holder and the
consummation by the Holder of the transactions contemplated hereby
will not result in a violation of any agreements of the
Holder.
(d) This Agreement has been
duly authorized, executed, and delivered by the Holder and, upon
due execution and delivery by the Holder, will constitute, legal,
valid, and binding obligations enforceable against the Holder in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, and other similar laws of
general application affecting creditors’ rights, and except
as enforcement may be limited by general equitable
principles.
(e) Holder understands that
the Shares are “restricted securities” and have not
been registered under the Securities Act of 1933, as amended (the
“ Securities Act ”) or any applicable state
securities law and is acquiring the Shares as principal for his own
account and not with a view to or for distributing or reselling the
Shares or any part thereof in violation of the Securities Act or
any applicable state securities law, has no present intention of
distributing any of the Shares in violation of the Securities Act
or any applicable state securities law and has no arrangement or
understanding with any other persons regarding the distribution of
the Shares in violation of the Securities Act or any applicable
state securities law. Holder does not have any agreement or
understanding, directly or indirectly, with any person to
distribute any of the Shares.
(f) Holder is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act. Holder has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in
the Shares, and has so evaluated the merits and risks of such
investment. Holder is able to bear the economic risk of an
investment in the Shares and, at the present time, is able to
afford a complete loss of such investment.
(g) Holder has had an
opportunity to discuss the Company’s business, management,
and financial affairs with management of the Company and has had an
opportunity to view the Company’s facilities. Holder
acknowledges that (i) except for the matters that are
expressly covered by the Agreement, Holder is relying on his own
investigation and analysis in
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entering into the Agreement and
consummating the transactions contemplated thereby,
(ii) Holder is sophisticated and has undertaken such
investigation, and has been provided with and has evaluated such
documents and information, as Holder has deemed necessary in
connection with the execution, delivery and performance of the
Agreement, (iii) Holder has reviewed the Disclosure Materials,
and (iv) the Company makes no representation or warranty to
Holder other than as expressly made in this Agreement, including,
without limitation, with respect to any projections, estimates or
budgets heretofore delivered or made available to Holder concerning
future revenues, expenses, expenditures or results of operations of
the Company and Holder is consummating the transactions
contemplated by the Agreement without any representation or
warranty, express or implied, by the Company or any of its advisors
or affiliates, except as expressly set forth in this
Agreement.
(h) It is understood that
each certificate representing the Shares shall be stamped or
otherwise imprinted with legends substantially similar to the
following (in addition to any legend required under applicable
state securities laws:
THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED.
3. Representations and
Warranties by the Company. The Company represents and
warrants to each Holder as follows:
(a) The Company has all
requisite corporate power and authority to enter into and perform
this Agreement, and to issue the Shares to each Holder.
(b) The execution, delivery
and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
will not result in a violation of the Company’s Articles of
Incorporation, as amended and as in effect on the date hereof, the
Company’s Amended and Restated Bylaws, as amended and as in
effect on the date hereof, or any other agreements of the
Company.
(c) This Agreement has been
duly authorized, executed, and delivered by the Company and, upon
due execution and delivery by the Company, will constitute, legal,
valid, and binding obligations enforceable against the Company in
accordance with its terms.
(d) The Shares, when issued,
sold and delivered in compliance with the provisions of this
Agreement, will be duly and validly issued, fully paid and
nonassessable, and such Shares will be free and clear of any liens
or encumbrances; provided, however, that the Shares may be subject
to restrictions on transfer under state or federal securities
laws.
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4. The
Exchange. At the Closing (as defined below), the Company
will pay to each Holder the amount of Interest owed to each Holder
and instruct its transfer agent to issue to each Holder, the Shares
in exchange for the Total Debt, which shall be surrendered by the
Holders (the “ Exchange ”).
5. The Closing.
The Exchange will occur at the offices of the Company on the date
of execution of this Agreement, or at such other time, place, and
manner agreed upon by the Company, the Holders, and the
Holders’ Representative (the “ Closing ”).
The following events will
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