IMPORTANT: This is a template document that MUST be reviewed and customized by a qualified securities attorney before use. Do not use this document without legal counsel.
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is entered into as of _____________, 202__ (the "Effective Date"), by and between Cardio AI, a Delaware corporation (the "Company"), and the undersigned investor (the "Investor").
WHEREAS, the Company desires to issue and sell convertible promissory notes (the "Notes") in an aggregate principal amount of up to Three Million Dollars ($3,000,000) on the terms and conditions set forth in the form of Convertible Promissory Note attached hereto as Exhibit A (the "Note"); and
WHEREAS, the Investor desires to purchase from the Company a Note in the principal amount set forth on the signature page hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
Subject to the terms and conditions hereof, the Investor hereby irrevocably subscribes for and agrees to purchase from the Company, and the Company agrees to issue and sell to the Investor, a Note in the principal amount set forth on the signature page hereto (the "Purchase Price"), on the terms and subject to the conditions set forth in the Note and this Agreement.
The purchase and sale of the Note (the "Closing") shall take place at such time and location as the Company shall designate, or at such other time and place as the Company and the Investor mutually agree upon orally or in writing. At the Closing, the Company will deliver to the Investor the Note, duly executed by the Company, against payment of the Purchase Price by wire transfer of immediately available funds to an account designated by the Company.
This Agreement shall be binding upon the Investor upon execution and delivery to the Company. The Company may accept or reject this subscription in whole or in part, for any reason or for no reason, at any time within thirty (30) days after receipt of this Agreement. This Agreement shall become effective and binding upon the Company and the Investor only upon the Company's acceptance hereof, which acceptance may be evidenced by the Company's execution of the signature page attached hereto.
The Investor hereby represents and warrants to the Company that:
The Investor has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes a valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally.
The Investor has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that the Investor can bear the economic risk of its investment in the Note and has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of this investment in the Note.
The Investor is an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"). The Investor has completed, executed and delivered to the Company an Investor Questionnaire in the form provided by the Company.
The Investor is acquiring the Note for its own account for investment only, and not with a view towards its distribution or resale in violation of the Securities Act or applicable state securities laws.
The Investor understands that the Note is being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Investor's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Note.
The Investor has received and reviewed all information that the Investor considers necessary or appropriate to make an informed investment decision with respect to the Note. The Investor further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Note and the business, properties, prospects and financial condition of the Company.
The Investor understands that the Note it is purchasing is characterized as "restricted securities" under the federal securities laws inasmuch as it is being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, the Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
The Investor understands that the Note and any securities issued upon conversion of the Note may bear one or all of the following legends:
Neither the Investor, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including through a broker or finder solicited offers for, or offered or sold, the Note by means of any form of general solicitation or general advertising.
The Investor understands that an investment in the Company involves substantial risks. The Investor has carefully considered and reviewed all of the risk factors relating to the investment in the Company and understands such risks.
The Investor understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Company or the purchase of the Note.
The Investor's principal place of residence (if an individual) or principal place of business (if a corporation, partnership or other entity) is as set forth on the signature page hereto.
The Investor has not engaged any brokers, finders or agents, and the Company has not and will not incur, directly or indirectly, as a result of any action taken by the Investor, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement.
The Investor hereby certifies that it qualifies as an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act by virtue of satisfying one or more of the following categories (please check all that apply):
The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement and the purchase and sale of the Note hereunder.
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
This Agreement, together with the Note and the other documents and instruments referred to herein or delivered pursuant hereto, constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto.
In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
This Agreement may be amended, and the observance of any term of this Agreement may be waived, only by a writing signed by the Company and the Investor.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Facsimile or electronic copies of executed signature pages shall be deemed binding originals.
IN WITNESS WHEREOF, the parties have executed this Subscription Agreement as of the date first written above.
The Company hereby accepts the foregoing subscription as of the date set forth below.
[Form of Convertible Promissory Note to be attached]
The Convertible Promissory Note setting forth the complete terms of the Note, including principal amount, interest rate (6%), maturity date (24 months), conversion discount (10%), valuation cap ($15M), and all other material terms shall be attached as Exhibit A.