CONVERTIBLE NOTE AND WARRANT
SUBSCRIPTION AGREEMENT
This Convertible Note and Warrant Subscription
Agreement (this “Agreement”), dated as of June 4, 2009
(the “Effective Date”), is made and entered into
between Steel Vault Corporation, a Delaware corporation (the
“Company”), and VeriChip Corporation, a Delaware
corporation (the “Investor”).
This Agreement sets forth the terms under which
the Investor will purchase from the Company (i) a Secured
Convertible Promissory Note in the principal amount of five hundred
thousand dollars ($500,000.00) in the form attached hereto as
Appendix A (the “Note”), and (ii) a
Warrant to purchase common stock, par value $0.01 per share, of the
Company (the “Common Stock”), in the form attached
hereto as Appendix B (the “Warrant,” and
together with the Note hereafter collectively referred to as, the
“Securities”), for a purchase price of five hundred
thousand dollars ($500,000.00) (the “Purchase Price”)
as set forth below.
The Securities are part of an offering of
securities made by the Company to various investors, pursuant to
which the Company will issue and sell to the investors and the
investors will purchase, for a minimum of $500,000 and a maximum of
$700,000 in the aggregate, Secured Convertible Promissory Notes
(the “Offering Notes”) and Warrants to purchase Common
Stock (the “Offering”).
NOTICE TO INVESTOR: THE SECURITIES PURCHASED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY BE NOT
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS OR EXEMPTION THEREFROM. FURTHER RESTRICTIONS
ON TRANSFERABILITY OF THE SECURITIES ARE CONTAINED IN THIS
AGREEMENT.
1. Subscription . Subject to the
terms of this Agreement, the Investor hereby subscribes for the
Securities, and the Investor’s delivery of this Agreement
will be accompanied by payment of the Purchase Price for the
Securities subscribed for hereunder, payable in United States
Dollars, as set forth in the instructions attached hereto as
Exhibit A . This Agreement is not enforceable by the
Investor unless it has been accepted by the Company, and the
Investor acknowledges and agrees that the Company reserves the
right to reject any subscription for any reason.
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2. Representations and Warranties of
Investor . The Investor is making the following
representations, warranties and agreements with the intent that
they be relied upon in determining the Investor’s suitability
to purchase the Securities, and the Investor agrees that such
representations, warranties and agreements shall survive the date
of this Agreement and the Investor’s purchase of the
Securities. The Investor hereby represents and warrants to, and
agrees with, the Company, and each of its officers, directors,
persons who control the Company and affiliates of the foregoing, as
follows:
2.1 The Investor is (i) if a natural
person, at least twenty-one (21) years of age, and (ii) a
bona fide permanent resident of and is domiciled in the state shown
in the address line of the Investor’s signature page to this
Agreement, and has no present intention of becoming a resident of
any other state or jurisdiction. The Investor is, and on each
date on which the Investor continues to own restricted securities
from the Offering will be, an “Accredited Investor” as
defined in Rule 501(a) under the Securities Act. In general, an
“Accredited Investor” is deemed to be an institution
with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with his or her spouse.
2.2 The Investor acknowledges careful review of
this Agreement and all exhibits and appendices hereto and hereby
represents that: (i) the Company has provided the Investor
during the course of this transaction with all information
regarding the Company that the Investor has requested and
(ii) the Investor has been afforded access to and the
opportunity to ask questions of and receive answers from duly
authorized officers of the Company concerning the Company, the
terms and conditions of the Offering of the Securities, and any
additional information that the Investor has requested. The
Investor acknowledges that it has access to the periodic reports,
proxy statements and other information that the Company has filed,
or will in the future file with the SEC until the termination of
the Offering (the “SEC Filings”), without charge at the
Public Reference Room of the SEC, 100 F Street, N.E., Washington,
D.C. 20549 or on the Internet at http://www.sec.gov. The Investor
acknowledges that it has read the section entitled “Risk
Factors” in the Company’s Annual Report on Form 10-K
filed with the SEC on December 24, 2008.
2.3 The Investor has such knowledge and
experience in financial and business matters that the Investor is
capable of evaluating the merits and risks of an investment in the
Securities and of making an informed investment decision, and is
not utilizing any other person to be the Investor’s
representative in connection with evaluating such merits and risks.
The Investor’s overall commitment to investments that
are not readily marketable is not disproportionate to the
Investor’s net worth, and an investment in the Securities
will not cause such overall commitment to become
excessive.
2.4 The Investor is acquiring the Securities for
the Investor’s own account, for investment purposes only, and
not with a view toward the resale, resyndication, distribution,
subdivision or fractionalization thereof, and has no present
intention of selling or transferring or otherwise distributing the
same. The Investor at the present time and in the foreseeable
future (i) has no need for liquidity in this investment,
(ii) has the ability to bear the economic risk of this
investment, (iii) can afford a complete loss of this
investment, (iv) can hold the Securities for an indefinite
period of time, and (v) this investment constitutes an
appropriate investment for and is not in violation of any
investment restrictions (whether by statute, contract or otherwise)
binding upon the Investor.
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2.5 In making an investment in the Securities,
the Investor acknowledges that no oral representations or
warranties have been made to the Investor. In making the decision
to invest in the Securities, the Investor has relied solely on the
information in the SEC Filings. The Investor has been advised that
no person is authorized to give any information or make any
statement not contained in the SEC Filings, and that any
information or statement not contained therein must not be relied
upon as having been authorized by the Company, its officers,
directors, affiliates or persons who control the
Company.
2.6 The Investor is not relying on the Company
or any of its employees, agents, or advisors with respect to the
legal, tax, economic and related considerations of an investment in
the Securities. The Investor has consulted such legal, financial
and tax advisers as have been necessary to evaluate the merits and
risks of this investment.
2.7 The Investor agrees that the Securities
(including any interest therein) will not be sold or otherwise
disposed of by the Investor unless either (i) the sale or
other disposition will be pursuant to a registration statement
under the 1933 Act, and any applicable securities laws of any state
or other jurisdiction or (ii) the Investor shall have notified
the Company in writing of any desire on the part of the Investor to
sell or dispose of all or part of the such Securities and of the
manner and terms of the proposed transaction, and the Company shall
have been advised in writing by counsel acceptable to it that no
registration of such Securities under the 1933 Act, or the rules
and regulations then in effect thereunder, or any applicable state
securities laws, is required in connection with the proposed sale
or other disposition. Except as provided in Section 5 hereof,
the Investor acknowledges that the Company is under no obligation
whatsoever in connection with any such registration or
exemption.
2.8 The Investor understands and agrees that all
certificates evidencing ownership of the Securities, or any
replacement thereof, shall bear an appropriate legend to the effect
that the securities evidenced by such certificate or instruments
have not been registered under the 1933 Act and setting forth or
referring to the restrictions on transferability and sale of the
securities.
2.9 All information provided by the Investor to
the Company is true and correct in all respects as of the date
hereof, and if there should be any material change in such
information either prior to the Company accepting the
Investor’s subscription or thereafter, the Investor will
immediately furnish such revised or corrected information to the
Company.
2.10 The Investor understands that no federal or
state agency has passed on or made any recommendation or
endorsement of the Securities and that the Company is relying on
the truth and accuracy of the representations warranties and
agreements made by the Investor in Offering the Securities for sale
to the Investor without having first registered the same under the
1933 Act.
2.11 The Investor acknowledges that there have
been no representations, guarantees or warranties made to the
Investor by the Company, its officers, directors, controlling
persons, agents or employees or any other person, expressly or by
implication, with respect to the amount of or type of
consideration, profit or loss (including tax benefits) to be
realized, if any, as a result of the Investor’s
investment.
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2.12 The Investor is unaware of, is in no way
relying on, and did not become aware of the Offering of the
Securities through or as a result of, any form of general
solicitation or general advertising including, without limitation,
any article, notice, advertisement or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio, or electronic mail over the Internet, and is
not subscribing for Securities and did not become aware of the
Offering of the Securities through or as a result of any seminar or
meeting to which the Investor was invited by, or any solicitation
of a subscription by, a person not previously known to the Investor
in connection with investments in securities generally.
2.13 The Investor acknowledges that the purchase
of the Securities involves a high
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