EXHIBIT 99.3
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this "Agreement") made as of the date set
forth on the signature page hereof between DOR BioPharma, Inc. (the "Company")
and the undersigned (the "Subscriber" and collectively with all of the other
parties who have subscribed for the purchase of Units in this Offering, the
"Subscribers").
WITNESSETH:
WHEREAS, the Company desires to offer a minimum of thirty (30) Units
and up to a maximum of eighty (80) Units (the "Offering") to the Subscribers
pursuant to a private placement exempt from registration under the Securities
Act of 1933, as amended (the "Securities Act"). Each "Unit" will consist of (a)
a number of shares (the "Share Number") of Common Stock, par value $.001 per
share ("Common Stock"), determined by dividing $100,000 by the Average Trading
Price (as defined below); and (b) Warrants to purchase, at any time prior to the
fifth anniversary of the date of issuance, a number of shares of Common Stock
equal to 100% of the Share Number, at an initial exercise price equal to 110% of
the Average Trading Price (the "Warrants"). The "Average Trading Price" shall
mean the lower of (a) the average Closing Price for the thirty consecutive
trading days immediately preceding the Closing Date (as hereinafter defined) or
(b) the average Closing Price for the five (5) consecutive trading days
immediately preceding the Closing Date. The form of the Warrants are attached
hereto as Exhibit A and the terms and provisions of the Warrants are
incorporated herein by reference as if fully set forth herein. In the event that
the Company's Common Stock trades at or above 300% of the Average Trading Price
for a period of twenty (20) consecutive trading days, the Company shall have the
option to accelerate the expiration date of the Warrants. The "Closing Price"
shall be the reported per share closing price of the Common Stock on the
American Stock Exchange ("AMEX") at 4 p.m. New York time on the applicable
trading day. The Units, Common Stock (including any Termination Shares (as
defined below)) and Warrants are sometimes hereinafter collectively referred to
as the Securities (the "Securities"). The "Closing Date" shall be the earliest
of (i) the date upon which the Company has received subscriptions for eighty
(80) Units or (ii) after the Company has received subscriptions for at least
thirty (30) Units (the "Minimum Offering Amount"), the date upon which the
Company determines, in its sole discretion, to close the Offering.
Notwithstanding the foregoing, or anything herein to the contrary, the Offering
shall terminate and be of no further force or effect if the Company has not
received and accepted subscriptions for the Minimum Offering Amount by July 18,
2003 (the "Subscription Expiration Date").
WHEREAS, the Company is seeking approval from its stockholders of (i)
an amendment to its Amended and Restated Certificate of Incorporation, whereby
the Company will increase the number of shares of Common Stock it is authorized
to issue from 50,000,000 shares to 100,000,000 shares (the "Charter Approval")
and (ii) this Offering (such approval, the "Offering Approval," and the Offering
Approval, together with the Charter Approval, the "Approvals") at a meeting of
the stockholders of the Company (the "Stockholder Meeting").
WHEREAS, contemporaneously with the Subscriber's execution of this
Agreement, the Subscriber will deliver, by check or wire transfer of immediately
available funds, the purchase
price for the Units to US Bank Trust National Association, as escrow agent (the
"Escrow Agent"), to be held in escrow pursuant to the terms of an escrow
agreement by and among the Company, the Escrow Agent and the Placement Agent (as
hereinafter defined) each of the Subscribers, the form of which is attached
hereto as Exhibit B (the "Escrow Agreement"), for release, in accordance with
the terms of the Escrow Agreement upon the Company's receipt of the Approvals,
which Approvals shall be obtained by the Company on or prior to September 30,
2003 (the "Approvals Expiration Date").
WHEREAS, if the Company holds a Stockholder Meeting and does not
receive the Approvals at such Stockholder Meeting (such date a "Failed
Stockholder Meeting"), then (i) the Subscriber's purchase price shall be
released from escrow to the Subscriber within five (5) business days and (ii)
the Company shall pay to the Subscriber a fee equal to 25% of the aggregate
purchase price payable by the Subscriber for the Units being subscribed for
hereunder within five (5) business days (the "Termination Fee").
WHEREAS, the Subscriber desires to purchase that number of Units set
forth on the signature page hereof on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
I SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units as is set forth on the signature page hereof at a price equal to
$100,000 per Unit (the "Initial Offering Price"). The Subscriber hereby
acknowledges that the Company may accept or reject the Subscriber's subscription
in its sole discretion. The terms of the Warrants are set forth in the form of
Warrant to purchase Common Stock attached hereto as Exhibit A. The Subscriber
shall pay the Initial Offering Price with respect to the Units being subscribed
for by Subscriber by check, wire transfer of immediately available funds payable
to the Escrow Agent contemporaneously with the execution and delivery of this
Agreement by the Subscriber. In the event the Company rejects the Subscriber's
subscription or the Company has not received and accepted subscriptions for the
Minimum Offering Amount by the Subscription Expiration Date, then the
Subscriber's purchase price shall be returned to the Subscriber by the Escrow
Agent within fifteen (15) business days. In the event the Company accepts the
Subscriber's subscription and has received and accepted subscriptions for no
less than the Minimum Offering Amount on or prior to the Subscription Expiration
Date, then the Subscriber's purchase price shall remain in escrow with the
Escrow Agent until the earliest to occur of (a) the date the Company has
obtained the Approvals (such date, the "Escrow Release Date"), in which case the
Subscriber's purchase price shall be released from escrow to the Company, (b)
the Approvals Expiration Date, in which case (i) the Subscriber's purchase price
shall be released from escrow to the Subscriber within five (5) business days
thereafter, (ii) the Company shall pay to the Subscriber the Termination Fee
within five (5) business days thereafter and (iii) the Offering shall be
terminated and of no further force or effect, or (c) the date of a Failed
Stockholder Meeting, in which case (i) the Subscriber's purchase price shall be
released from escrow to the Subscriber within five (5) business thereafter,
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(ii) the Company shall pay to the Subscriber the Termination Fee within five (5)
business days thereafter and (iii) the Offering shall be terminated and of no
further force or effect. At the Company's option, up to one-half of the
Termination Fee may be paid through the issuance by the Company of shares of its
Common Stock ("Termination Shares"). Termination Shares shall be deemed to have
a value equal to the average Closing Price for the five (5) consecutive trading
days immediately preceding the Approvals Expiration Date or the date of the
Failed Stockholder Meeting, as the case may be. The Company shall provide the
holders of Termination Shares with customary piggyback registration rights with
respect to such Termination Shares for all Company registrations of its Common
Stock (other than in connection with employee benefit plans and business
combination transactions). If the Offering is consummated, the certificates for
the shares of Common Stock sold to the Subscriber shall be delivered by the
Company within forty-five (45) business days following the Escrow Release Date.
The Subscriber understands that the Offering is contingent upon (i) the
acceptance of the Subscriber's subscription by the Company, (ii) the Company's
receipt of subscriptions for no less than the Minimum Offering Amount on or
prior to the Subscription Expiration Date, and (iii) the Company's receipt of
the Approvals on or prior to the Approvals Expiration Date.
1.2 The Subscriber recognizes that the purchase of Units involves a
high degree of risk including, but not limited to, the following: (a) the
Company remains a development stage business and requires substantial funds in
addition to the proceeds of the Offering; (b) an investment in the Company is
highly speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Units; (c) the
Subscriber may not be able to liquidate its investment; (d) transferability of
the Securities is extremely limited; and (e) in the event of a disposition, the
Subscriber could sustain the loss of the Subscriber's entire investment. Such
risks and other material risks are more fully set forth in the Company's most
recent reports on Form 10-QSB and Form 10-KSB filed with the United States
Securities and Exchange Commission (the "SEC" or "Commission"), all of which
constitute an integral part hereof.
1.3 The Subscriber represents that the Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act, as indicated by the Subscriber's responses to the questions
contained in Article VII hereof, and that the Subscriber is able to bear the
economic risk of an investment in the Units.
1.4 The Subscriber hereby acknowledges and represents that (a) the
Subscriber has prior investment experience, including investments in securities
that are neither registered on a national securities exchange nor on the
National Association of Securities Dealers' (the "NASD") automated quotation
system, or the Subscriber has employed the services of an investment advisor,
attorney and/or accountant to read all of the documents furnished or made
available by the Company both to the Subscriber and to all other prospective
investors in the Units and to evaluate the merits and risks of such an
investment on the Subscriber's behalf; (b) the Subscriber recognizes the highly
speculative nature of this investment; and (c) the Subscriber is able to bear
the full economic risk that the Subscriber hereby assumes.
1.5 The Subscriber hereby acknowledges receipt and careful review of
(a) the Confidential Private Placement Memorandum dated April 24, 2003, together
with all of the
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exhibits, supplements and/or amendments thereto, (b) the Company's most recent
reports on Form 10-QSB and Form 10-KSB filings with the Commission, including
without limitation the Sections entitled "Risk Factors" and (c) this Agreement,
and hereby represents that the Subscriber has been furnished by the Company
during the course of the Offering with all information regarding the Company
that the Subscriber has requested or desired to know, has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering and has received any additional information that the
Subscriber has requested regarding the Company and this Offering.
1.6 (a) To the extent necessary, the Subscriber has retained, at its
own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement, the
Offering and the Subscriber's proposed purchase of Units hereunder. The
Subscriber acknowledges and agrees that (i) the Subscriber has not relied upon
any information about the Company other than information publicly available in
filings made by the Company with the Securities and Exchange Commission, (ii)
the Placement Agent has no responsibility for the accuracy or completeness of
information filed by the Company with the Securities and Exchange Commission,
and (iii) the Subscriber has not relied upon the independent investigation or
verification, if any, that may have been undertaken by the Placement Agent.
(b) The Subscriber represents that (i) the Subscriber was
contacted regarding the sale of the Units by the Placement Agent (or an
authorized agent or representative thereof) with whom the Subscriber had a prior
substantial pre-existing relationship and (ii) no Units were offered or sold to
the Subscriber by means of any form of general solicitation or general
advertising, and in connection therewith the Subscriber did not (A) receive or
review any advertisement, article, notice or other communication published in a
newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (B) attend any seminar
meeting or industry investor conference whose attendees were invited by any
general solicitation or general advertising.
1.7 The Subscriber hereby represents that the Subscriber, either by
reason of the Subscriber's business or financial experience or the business or
financial experience of the Subscriber's professional advisors (who are
unaffiliated with and who are not compensated by the Company or any affiliate or
selling agent of the Company, including the Placement Agent, directly or
indirectly), has the capacity to protect the Subscriber's own interests in
connection with the Offering.
1.8 The Subscriber hereby acknowledges that the Offering has not been
reviewed by the Commission nor any state regulatory authority, as the Offering
is intended to be exempt from the registration requirements of Section 5 of the
Securities Act pursuant to Regulation D promulgated under the Securities Act.
The Subscriber agrees that the Subscriber will not sell or otherwise transfer
the Securities unless they are registered under the Securities Act or unless an
exemption from such registration is available in the opinion of counsel
satisfactory to the Company.
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1.9 The Subscriber understands that the Securities comprising the Units
have not been registered under the Securities Act by reason of a claimed
exemption under the provisions of the Securities Act that depends, in part, upon
the Subscriber's investment intention. The Subscriber hereby represents that the
Subscriber is purchasing the Securities comprising the Units for the
Subscriber's own account for investment and not with a view toward the resale or
distribution to others. The Subscriber, if an entity, further represents that it
was not formed for the purpose of purchasing the Securities.
1.10 The Subscriber understands that even if a public market develops
for the Securities, Rule 144 ("Rule 144") promulgated under the Securities Act
requires for non-affiliates, among other conditions, a one-year holding period
prior to the public resale (in limited amounts) of securities acquired in a
non-public offering without having to satisfy the registration requirements
under the Securities Act. The Subscriber understands and hereby acknowledges
that the Company is under no obligation to register any of the Securities
comprising the Units under the Securities Act or any state securities or "blue
sky" laws other than as set forth in Article V of this Agreement.
1.11 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities that such Securities
have not been registered under the Securities Act or any state securities or
"blue sky" laws and setting forth or referring to the restrictions on
transferability and sale thereof described in this Agreement. The Subscriber is
aware that the Company will instruct its transfer agent to make a notation in
the appropriate records with respect to the restrictions on the transferability
of such Securities.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished by Subscriber on the signature page hereof is the
Subscriber's principal residence if Subscriber is an individual or its principal
business address if it is a corporation or other entity.
1.13 The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Units and the Securities underlying the Units.
This Agreement constitutes the legal, valid and binding obligation of the
Subscriber, enforceable against the Subscriber in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy. The execution and delivery by the Subscriber of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
violation of any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority to or by which the
Subscriber is bound and will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute (with due notice
or lapse of time or both) a default under, any lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Subscriber is a party or by which it is bound or to which any of its
properties or assets is subject, nor result in the creation or imposition of any
lien upon any of the properties or assets of the Subscriber.
1.14 If the Subscriber is a corporation, partnership, limited liability
company, trust, employee benefit plan, individual retirement account, Xxxxx
Plan, or other tax-exempt entity, it
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is authorized and qualified to become an investor in the Company and the person
signing this Agreement on behalf of such entity has been duly authorized by such
entity to do so.
1.15 The Subscriber acknowledges that, if he or she is a registered
representative of an NASD member firm, he or she must give such firm the notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section 7.4 below.
1.16 The Subscriber acknowledges that at such time, if ever, as the
Securities are registered, sales of the Securities will be subject to state
securities laws, including those of the State of New Jersey, which require any
securities sold in New Jersey to be sold through a registered broker-dealer or
in reliance upon an exemption from registration.
1.17 The Subscriber agrees that, during the period from the date that
Subscriber was first contacted with respect to the potential purchase of
Securities through the last date upon which Subscriber holds any Securities or
Registrable Securities (as hereinafter defined), the Subscriber will not
directly or indirectly, through related parties, affiliates or otherwise sell
"short" or "short against the box" (as those terms are generally understood) any
equity security of the Company; provided, however, that it shall not be a
violation of this Section 1.17, if the Subscriber places a sell order for
Registrable Securities prior to the conversion of the Units.
1.18 The Subscriber recognizes that the Company has retained Paramount
Capital, Inc. (the "Placement Agent") to act as Placement Agent, on a "best
efforts" basis, in the Offering. The Placement Agent will receive (i) a
placement fee equal to 7% of the gross proceeds on the Units sold to investors
introduced to the Company by the Placement Agent, and (ii) warrants to purchase
10% of the Units purchased, exercisable until five (5) years from the Closing
Date, at an exercise price of 110% of the Average Trading Price (the "Placement
Warrants"). At the discretion of the Placement Agent, the Units may be offered
through one or more of the Placement Agent's selected dealers ("Selected
Dealers") that are members of the NASD. The Placement Agent has entered into
certain Selected Dealer Agreements, including agreements with Accredited
Equities, Inc., an NASD member firm ("Accredited Equities"), and KJM Securities,
Inc., an NASD member firm ("KJM"). Pursuant to its Selected Dealer Agreements
with each of Accredited Equities and KJM, each of Accredited Equities and KJM
will receive all or part of the commissions described in the immediately
preceding sentence as a result of investments made by Subscribers introduced to
the Company by Accredited Equities and KJM, respectively. The Company's and the
Placement Agent's respective officers, directors, employees and/or affiliates
may purchase Units in the Offering, which purchases may be used to satisfy the
minimum number of Units to be sold. Except for this Agreement and other
substantially identical (other than with respect to the number of Units
subscribed for) agreements executed by other Subscribers (the "Other
Agreements") or as otherwise disclosed in Section 1.18 herein, there are no
agreements, arrangements, understandings, commitments or undertakings (whether
written or oral) with respect to the transactions contemplated by this Agreement
and the Other Agreements (or understandings to enter into any such agreement,
arrangement, understanding, commitment or undertaking after the date hereof)
between the Company and, to the knowledge of the Company, the Company's
Affiliates, on the one hand, and any Subscriber and, to the knowledge of the
Company, any of the Subscribers' Affiliates, on the other hand, as of the date
of this Agreement. For the purposes of this Agreement, "Affiliate"
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means, with respect to any party, any entity which is a direct or indirect
parent or subsidiary of such party or which directly or indirectly (i) owns or
controls such party, (ii) is owned or controlled by party, or (iii) is under
common ownership or control with such party. For purposes of this definition,
"control" of a party means the power to direct the management or policies of
such party, whether through the ownership of voting securities, by contract or
otherwise.
1.19 The Subscriber acknowledges that the Company has disclosed to the
Subscriber that (i) Xxxxxx X. Xxxxxx, who is the Vice Chairman of the Board of
the Company, is also the sole stockholder of Accredited Equities, (ii) Xxxx
Xxxxxxxxxxxxxxx, a member of our Board of Directors, is a registered
representative of KJM, and (iii) each of Xx. Xxxxxx and Xx. Xxxxxxxxxxxxxxx may
receive a portion of the commissions described in Section 1.18 above.
II. REPRESENTATIONS BY AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants and, where applicable,
covenants to the Subscriber that, at the Subscription Expiration Date and prior
to the consummation of the Offering:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business as described in filings made by the Company with the Commission.
The Company is duly organized, validly existing and in good standing and has
full corporate power and authority to conduct its business as now conducted and
as proposed to be conducted.
2.2 Authorization; Enforceability. But for the Approvals, the Company
has all corporate right, power and authority to enter into this Agreement and to
consummate the Offering. But for the Approvals, which shall constitute a
condition for the release of the purchase price for the Units by the Escrow
Agent, all corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement by the Company, the authorization, sale, issuance
and delivery of the Securities contemplated hereby and the performance of the
Company's obligations hereunder has been taken. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to Company's receipt of the Approvals and the Offering
Approval, and subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy. Upon the issuance and delivery of the Units as contemplated by
this Agreement, such securities will be validly issued, fully paid and
nonassessable. Upon the issuance and delivery of the Common Stock issuable upon
conversion of the Units (including the Units issuable upon exercise of the
Placement Warrants), and upon compliance by the Subscriber with the terms
hereof, the Common Stock will be validly issued, fully paid and nonassessable.
The issuance and sale of the Units contemplated hereby and the issuance and sale
of the Common Stock underlying the Units (including the Units issuable upon
exercise of the Placement Warrants), will not give rise to any preemptive rights
or rights of first refusal on behalf of any person.
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2.3 No Conflict. Subject to the Company's receipt of the Approvals, the
execution and delivery by the Company of this Agreement and the consummation of
the transactions contemplated hereby will not result in the violation of any
law, statute, rule, regulation, order, writ, injunction, judgment or decree of
any court or governmental authority to or by which the Company is bound, or of
any provision of the Certificate of Incorporation or By-Laws of the Company,
which could have a material adverse effect on the Company, and will not conflict
with, or result in a breach or violation of, any of the terms or provisions of,
or constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its properties or assets is subject which could have a
material adverse effect on the Company, nor result in the creation or imposition
of any lien upon any of the properties or assets of the Company.
2.4 Investment Company. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder.
2.5 Exchange Act Reports. All material reports required to be filed by
the Company within two years prior to the date of this Agreement under the
Securities and Xxxxxxxx Xxx 0000, as amended (the "Exchange Act"), have been
duly filed with the SEC, complied at the time of filing, in all material
respects with the requirements of their respective forms, and except to the
extent updated or superseded by any subsequently filed report, were complete and
correct in all material respects as of the dates at which the information was
furnished, and contained (as of such dates) no untrue statement of a material
fact nor omitted to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
2.6 Use of Proceeds. The proceeds from the Offering will be used to pay
the costs and expenses of the Offering, and advance the pre-clinical and
clinical development of the Company's drug candidates, including the hiring of
additional personnel and contract research organizations and the purchasing of
capital equipment and materials to support these development activities. A
portion of the net proceeds shall also be used for general corporate purposes,
including the maintenance of in-licensed patent rights and proprietary
intellectual property patent applications and patents, as well as repayment of
approximately $500,000 of indebtedness outstanding to Elan Pharmaceuticals.
2.7 Preemptive Rights. If at any time prior to the one year anniversary
of the Closing Date, the Company proposes to issue any equity securities, or
other securities of any kind that are or may become convertible into any equity
securities (collectively, "New Issue Securities"), the Company shall first offer
the New Issue Securities to the Subscribers who have purchased Units in the
Offering (the "Purchases") in accordance with the following provisions:
(a) The Company shall give a written notice to each Subscriber (the
"First Notice") stating (i) its intention to issue the New Issue Securities,
(ii) the number and description of the New Issue Securities proposed to be
issued and (iii) the purchase price (calculated as of the
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proposed issuance date) and the other terms and conditions upon which the
Company is offering the New Issue Securities.
(b) Transmittal of the First Notice to the Subscribers by the Company
shall constitute an offer by the Company to sell each Subscriber up to his, her
or its proportionate number (based upon his, her or its percentage ownership of
the total number of issued and outstanding shares of Common Stock) of the New
Issue Securities for the price and upon the terms and conditions set forth in
the First Notice. For a period of fifteen (15) days after the delivery of the
First Notice to the Subscribers, each Subscriber shall have the option,
exercisable by written notice to the Company, to accept the Company's offer as
to all or any part of such Subscriber's proportionate number of the New Issue
Securities. If two or more types of New Issue Securities are to be issued or New
Issue Securities are to be issued together with other types of securities,
including, without limitation, debt securities, in a single transaction or
related transactions, the rights to purchase New Issue Securities granted to the
Subscribers under this Section 2.7 must be exercised to purchase all types of
New Issue Securities and such other securities in the same proportion as such
New Issue Securities and other securities are to be issued by the Company.
(c) If all of the New Issue Securities proposed to be issued and sold
in such First Notice have not been subscribed for within fifteen (15) days, the
Company shall have one hundred twenty (120) days thereafter to sell any or all
of the remaining New Issue Securities (i.e., those not to be sold to any
Subscriber hereunder) upon terms and conditions no less favorable to the Company
than those set forth in the First Notice. In the event the Company has not sold
such New Issue Securities within said one hundred twenty (120) day period, the
Company will not thereafter issue or sell any New Issue Securities without first
offering such New Issue Securities to the Subscribers in the manner provided
above.
(d) The preemptive rights contained in this Section 2.7 shall not apply
to the issuance and sale by the Company, from time to time hereafter, of (i)
shares of Common Stock, or options, rights, or warrants to acquire shares of
Common Stock, or of securities convertible or exchangeable for shares of Common
Stock, to employees, officers, or directors of the Company, as compensation for
their services to the Company or any of its direct or indirect subsidiaries,
(ii) the issuance of the shares of Common Stock upon the conversion of the Units
and the exercise of the Warrants including, without limitation, the Placement
Warrants, (iii) shares of Common Stock issued and sold in a firm commitment
underwritten public offering or (iv) shares of Common Stock issued as
consideration for the acquisition of another company or business in which the
shareholders of the Company do not have an ownership interest, which acquisition
has been approved by the Board of Directors of the Company.
(e) Notwithstanding anything to the contrary contained herein, OrbiMed
Advisors, LLC ("OrbiMed") shall have the right to waive the preemptive rights
contained in this Section 2.7 with respect to all of the Subscribers in this
Offering. If OrbiMed waives its preemptive rights with respect to an offering of
New Issue Securities, then all of the Subscribers under this Offering shall be
deemed to have waived their preemptive rights under this Section 2.7 in
connection with such issuance of New Issue Securities.
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2.8 Form 8-K. The Company shall, prior to 9:00 am on the first business
day after the Closing Date, file a Current Report on Form 8-K disclosing all
material terms of the transactions contemplated by this Agreement and attaching
forms of this Agreement, the Warrant and the Escrow Agreement as exhibits.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will terminate on the Subscription
Expiration Date. The Units will be offered on a "best efforts" basis. The
minimum subscription per Subscriber shall be one Unit, subject to the Company's
right to accept subscriptions for fractional Units. All subscriptions for the
purchase of Units may be rejected by the Company for any reason, in the
Company's sole discretion, including without limitation, if the Company has
reached the Maximum Offering Amount. If the Company rejects a Subscriber's
subscription for any reason, then the Company shall notify the Escrow Agent and
all funds paid hereunder by the Subscriber shall be returned to the Subscriber
within fifteen (15) business days, in accordance with Section 3.6 hereof.
3.2 If the Company receives subscriptions for purchases aggregating at
least thirty (30) Units on or prior to the Subscription Expiration Date, then
the Company may conduct the closing (the "Closing") of the Offering. Upon the
receipt of subscriptions for purchases aggregating at least thirty (30) Units on
or prior to the Subscription Expiration Date, the Company shall provide written
notice to the Escrow Agent that it has received and accepted subscriptions for
the Minimum Offering Amount. If the Company does not receive subscriptions for
purchases aggregating at least thirty (30) Units on or prior to the Subscription
Expiration Date, then the Company shall provide written notice to the Escrow
Agent that it has not received and accepted subscriptions for the Minimum
Offering Amount on or prior to the Subscription Expiration Date and all funds
paid hereunder by the Subscriber shall be returned by the Escrow Agent to the
Subscriber within fifteen (15) business days, in accordance with Section 3.6
hereof.
3.3 If the Company shall have received and accepted subscriptions for
no less than the Minimum Offering Amount by the Subscription Expiration Date,
then all funds paid hereunder by the Subscriber shall remain in escrow with the
Escrow Agent until the earliest to occur of (a) the Escrow Release Date, in
which case the Subscriber's purchase price shall be released from escrow to the
Company, (b) the Approvals Expiration Date, in which case (i) the Subscriber's
purchase price shall be released from escrow to the Subscriber within five (f)
business days thereafter, (ii) the Company shall pay to the Subscriber the
Termination Fee within five (5) business days thereafter and (iii) the Offering
shall be terminated and of no further force or effect and (c) the date of the
Failed Stockholder Meeting, in which case (i) the Subscriber's purchase price
shall be released from escrow to the Subscriber within five (5) business days
thereafter, (ii) the Company shall pay to the Subscriber the Termination Fee
within five (5) business days thereafter or (iii) the Offering shall be
terminated and of no further force or effect. At the Company's option, up to
one-half of the Termination Fee may be paid through the issuance by the Company
of shares of Termination Shares. Termination Shares shall be deemed to have a
value equal to the average Closing Price for the five (5) consecutive trading
days immediately preceding the Approvals Expiration Date or the date of the
Failed Stockholder
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Meeting, as the case may be. The Company shall provide the holders of
Termination Shares with customary piggyback registration rights with respect to
such Termination Shares for all Company registrations of its Common Stock (other
than in connection with employee benefit plans and business combination
transactions). If for any reason either (i) the Closing does not occur by the
Subscription Expiration Date with respect to the sale of all of the Units hereby
subscribed for by Subscriber or (ii) the Company rejects the Subscriber's
subscription for any reason, all funds paid hereunder by the Subscriber to the
Escrow Agent shall be promptly returned to the Subscriber, without interest, in
accordance with Section 3.6 hereof.
3.4 Placement of the Units will be made by the Placement Agent, who
will receive the compensation set forth in Section 1.18 hereof.
3.5 In the event the Offering is consummated, the Subscriber hereby
authorizes and directs the Company, upon the Escrow Release Date, to (i) deliver
the shares of Common Stock to be issued to the Subscriber pursuant to this
Agreement directly to the Subscriber's account, if any, maintained by the
Placement Agent or, if no such account exists, to the residential or business
address indicated on the signature page hereto and (ii) deliver the Warrants to
be issued to the Subscriber pursuant to this Agreement to the residential or
business address indicated on the signature page hereto.
3.6 The Subscriber hereby authorizes and directs the Escrow Agent to
return any funds for unaccepted or returned subscriptions to the same account
from which the funds were drawn, including any customer account maintained with
the Placement Agent.
IV. CONDITIONS
4.1 Conditions upon the Closing. The Subscriber's obligation to
purchase the Units at the Closing is subject to the fulfillment on or prior to
the Closing of the following conditions, which conditions may be waived at the
option of each Subscriber to the extent permitted by law:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in Article II hereof shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects on the Closing with the same force and effect as if they had been made
on and as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to such purchase shall
have been performed or complied with in all material respects.
(c) No Legal Order Pending. There shall not then be in effect any legal
or other order enjoining or restraining the Offering.
(d) No Law Prohibiting or Restricting Such Sale. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of
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any person, which shall not have been obtained, to issue the Securities (except
as otherwise provided in this Agreement).
4.2 Conditions of the Release of the Escrow. In the event the Company
has received and accepted subscriptions for no less than the Minimum Offering
Amount by the Subscription Expiration Date, then the consummation of the
Offering and the release of any funds from the escrow to the Company shall be
conditioned upon the fulfillment on or prior to the Approval Expiration Date of
the following conditions:
(a) Approvals. The Company shall have received the Approvals.
(b) No Legal Order Pending. There shall not then be in effect any legal
or other order enjoining or restraining the Offering.
(c) No Law Prohibiting or Restricting Such Sale. There shall not then
be in effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of any person, which shall not have been
obtained, to issue the Securities (except as otherwise provided in this
Agreement).
4.3 Escrow Release. Upon the satisfaction of each of the conditions
contained in Section 4.3 on or prior to the Approvals Expiration Date, the
Company shall provide the Escrow Agent written notice of the satisfaction of
such conditions and the Escrow Agent shall deliver the purchase price for the
Units to the Company, in accordance with the terms of the Escrow Agreement, and
the Company shall (i) deliver the shares of Common Stock to be issued to the
Subscriber pursuant to this Agreement directly to the Subscriber's account, if
any, maintained by the Placement Agent or, if no such account exists, to the
residential or business address indicated on the signature page hereto and (ii)
deliver the Warrants to be issued to the Subscriber pursuant to this Agreement
to the residential or business address indicated on the signature page hereto.
V. REGISTRATION RIGHTS
5.1 As used in this Agreement, the following terms shall have the
following meanings:
(a) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof.
(b) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
order of effectiveness of such registration statement or document.
(c) The term "Registrable Securities" shall mean (i) any shares of
Common Stock included in the Units (including the shares of Common Stock
issuable upon exercise of the Warrants included in the Units), (ii) any shares
of Common Stock included in the Units (including the Common Stock issuable upon
exercise of the Warrants included in the Units)
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issuable upon exercise of the Placement Warrants and (iii) any shares of Common
Stock issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with
respect to or in replacement of any such shares of Common Stock; provided,
however, that securities shall only be treated as Registrable Securities if and
only for so long as they (A) have not been disposed of pursuant to a
registration statement declared effective by the Commission, (B) have not been
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale or (C) are held by a Holder or a permitted transferee of a Holder
pursuant to Section 5.9.
In addition, for purposes of all calculations and notices under this
Article V, and all other provisions of this Article V where the context permits,
a holder of Units shall be deemed the Holder of the Registrable Securities
issuable upon conversion thereof, and such Units shall be deemed outstanding
Registrable Securities hereunder. Notwithstanding the foregoing, nothing in this
Article V shall require the Company actually to register any shares of Common
Stock.
5.2 The Company will use its best efforts to (i) prepare and file
within thirty (30) days after the Escrow Release Date (the "Filing Date") with
the Commission a registration statement on Form S-3 under the Securities Act
(the "Shelf Registration Statement") with respect to the Registrable Securities,
(ii) have such Shelf Registration Statement declared effective by the Commission
within 120 days after the Escrow Release Date or not more than five (5) days
from the date upon which the Commission shall allow the Company to accelerate
effectiveness, whichever is earlier (the "Mandatory Effective Date") and (iii)
cause such Shelf Registration Statement to remain effective until the second
anniversary of the date such Shelf Registration Statement is declared effective
(or, in the case of the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares"), the first anniversary of the date of issuance
of such Warrant Shares, but in any event not later than the fourth anniversary
of the date such Shelf Registration Statement is declared effective); provided,
however, if Rule 144 is amended so that the longest period that Rule 144
restricts the manner in which privately placed securities may be sold is a
period shorter than two years, then the period required by this clause shall be
reduced to (A) such shorter period, (B) such date as all of the Registrable
Securities have been resold or (C) such date as all Registrable Securities may
be sold pursuant to Rule 144 (or any successor rule). In the event the Shelf
Registration Statement is not declared effective by the Mandatory Effective
Date, the Company shall pay to each Subscriber an amount in cash equal to the
product of (i) 2% of the aggregate purchase price previously paid by such
Subscriber for Units acquired in this Offering multiplied by (ii) the sum of (a)
one plus (b) the number of full calendar months which have lapsed since the
Mandatory Effective Date. The payments to which a holder shall be entitled
pursuant to this Section 5.2 are referred to herein as "Registration Delay
Payments." Registration Delay Payments shall be paid on the earlier of (i) the
last day of the calendar month during which such Registration Delay Payments are
incurred and (ii) the third business day after the event or failure giving rise
to the Registration Delay Payments is cured.
5.3 Obligations of the Company. Whenever required under this Article V
to include Registrable Securities in a registration statement, the Company
shall, as expeditiously as reasonably possible:
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(a) Prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus contained therein as may be
necessary to keep the Registration Statement and prospectus accurate and
complete during the period such registration statement is required to remain
effective under this Agreement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other federal or
state securities laws of such jurisdictions as shall be reasonably requested by
the Holders; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdictions and except as may be required by the Securities Act.
(e) The Company shall make available for inspection upon reasonable
request of the Holder, and by any attorney, accountant or other agent, retained
by the Holder, such information in connection with the Registration Statement as
is necessary for the Holder to discharge its due diligence obligations under the
Act, if any; provided, however that the Holder shall be obligated prior to such
inspection to provide assurances in form satisfactory to the Company that the
Company's confidential and proprietary data, information and know-how, and any
other material, non-public information regarding the Company, shall not be
divulged.
(f) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered hereunder to be
listed on each securities exchange or quotation service on which similar
securities issued by the Company are then listed or quoted.
5.4 Furnish Information. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Article V with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding
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the Holder, the Registrable Securities held by the Holder, and the intended
method of disposition of such securities as shall be reasonably required by the
Company to effect the registration of such Holder's Registrable Securities.
5.5 Expenses of Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
5.2 for each Holder, including (without limitation) all registration, filing,
and qualification fees, printers and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to
Registrable Securities; provided, however, that the Company shall not bear the
cost of any professional fees or costs of accounting, financial or legal
advisors to any of the Holders, other than the cost of one special legal counsel
to all of the selling Holders in connection with each registration under Section
5.2. Such special legal counsel shall be selected by the Holders of a majority
of Registrable Securities to be included in such registration, subject to the
consent of the Company, which shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, each Holder shall pay all registration expenses
that such Holder is required to pay under applicable law.
5.6 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article V.
5.7 Indemnification. In the event that any Registrable Securities are
included in a registration statement under this Article V:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, or the Exchange Act, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 5.7(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
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(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, or the Exchange Act, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 5.7(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 5.7(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld); provided, that, in no
event shall any indemnity under this Section 5.7(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
5.7 of notice of the commencement of any action (including any governmental
action), such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose approval shall
not be unreasonably withheld); provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.7.
(d) If the indemnification provided for in this Section 5.7 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable
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by such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Holders under this Section 5.7
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article V, and otherwise.
5.8 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (ii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
5.9 Transfer of Registration Rights. The rights to cause the Company to
register Registrable Securities granted to the Holders by the Company under this
Article V may be assigned in full or in part by a Holder in connection with a
transfer by such Holder of any of its Registrable Securities if: (a) such Holder
gives prior written notice to the Company; and (b) such transferee agrees to
comply with the terms and provisions of this Agreement, and such transfer is
otherwise in compliance with this Agreement; provided, however, that such
transfer may otherwise be effected in accordance with applicable securities
laws. Except as specifically permitted by this Section 5.9, the rights of a
Holder with respect to Registrable Securities as set out herein shall not be
transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited.
5.10 Termination of Registration Xxxxxx.Xx addition, the right of any
Holder to request inclusion in any registration or require the Company to
maintain the effectiveness of any registration statement pursuant to this
Agreement shall terminate if all shares of Registrable
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Securities held by such Holder may immediately be sold under Rule 144; provided,
however, that the provisions of this Section 5.10 shall not apply to any Holder
who owns more than three percent (3%) of the Company's outstanding stock until
such time as such Holder owns less than three percent (3%) of the outstanding
stock of the Company.
VI MISCELLANEOUS
6.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed to: c/o DOR BioPharma, Inc. 00000 Xxxxxxx Xxxxx, Xxxx Xxxxxx, XX
00000, Attn: President, and to the Subscriber at the Subscriber's address
indicated on the signature page of this Agreement. Notices shall be deemed to
have been given or delivered on the date of mailing, except notices of change of
address, which shall be deemed to have been given or delivered when received.
6.2 Except as otherwise provided herein, this Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3 Subject to the provisions of Section 5.9 and 6.13, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and to
their respective heirs, legal representatives, successors and assigns. This
Agreement sets forth the entire agreement and understanding between the parties
as to the subject matter hereof and merges and supersedes all prior discussions,
agreements (other than agreements, if any, which refer explicitly to this
Section 6.3 of this Agreement) and understandings of any and every nature among
them. The recitals set forth beginning on the first page hereof are incorporated
into and made a part of this Agreement.
6.4 Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided, subject, however, to
the right hereby reserved by the Company to enter into the same agreements with
other subscribers and to add and/or delete other persons as subscribers.
6.5 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. IN
THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING
DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE SUPREME COURT OF
THE STATE OF NEW YORK IN AND FOR THE COUNTY OF NEW YORK OR THE FEDERAL COURTS
FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS. THE PARTIES HEREBY
IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
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6.6 In order to discourage frivolous claims the parties agree that in
the event of any litigation between them relating to this Agreement, the
prevailing party in such litigation shall be entitled to recover from the
non-prevailing party the prevailing party's reasonable legal costs and expenses
in connection with such litigation, and the parties agree to request that the
court in any such litigation determine the prevailing party for such purpose.
6.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
6.8 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.9 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.10 This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
6.11 The Company agrees not to disclose the names, addresses or any
other information about the Subscribers, except as required by law; provided,
that the Company may use the name and address of the Subscriber in any
registration statement filed pursuant to Article V in which the Subscriber's
shares are included.
6.12 (a) Each Subscriber severally represents and warrants that it has
not engaged, consented to or authorized any broker, finder or intermediary to
act on its behalf, directly or indirectly, as a broker, finder or intermediary
in connection with the transactions contemplated by this Agreement. Each
Subscriber hereby severally agrees to indemnify and hold harmless the Company
from and against all fees, commissions or other payments owing to any such
person or firm acting on behalf of such Subscriber hereunder.
(b) The Company has engaged, consented to and authorized the Placement
Agent to act as placement agent for the Company in connection with the
transactions contemplated by this Agreement. The Company hereby agrees to pay
the Placement Agent the compensation set forth in Section 1.18, and the Company
agrees to indemnify and hold harmless the Subscriber from
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and against all fees, commissions or other payments owing by the Company to the
Placement Agent or any other person or firm acting on behalf of the Company
hereunder.
6.13 Nothing in this Agreement shall create or be deemed to create any
rights in any person or entity not a party to this Agreement, except (a) for the
holders of Registrable Securities and (b) for the Placement Agent pursuant to
Sections 1.6(a) and 6.12(b) hereof.
6.14 The covenants, representations and warranties of the parties
contained herein shall survive the Closing. Each of the parties may rely on such
covenants, representations and warranties irrespective of any investigation
made, or notice or knowledge held by, it or any other person. All statements
contained in any certificate or other instrument delivered by any party pursuant
to this Agreement or in connection with the transactions contemplated by this
Agreement shall constitute representations and warranties by such party under
this Agreement, subject to the qualifications set forth herein and therein.
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VII CONFIDENTIAL INVESTOR QUESTIONNAIRE
7.1 The Subscriber represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he, she or
it has truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.
Category A The undersigned is an individual (not a partnership,
--- corporation, etc.) whose individual net worth, or joint
net worth with his or her spouse, presently exceeds
$1,000,000.
Explanation. In calculating net worth you may include
equity in personal property and real estate, including
your principal residence, cash, short-term investments,
stock and securities. Equity in personal property and
real estate should be based on the fair market value of
such property less debt secured by such property.
Category B The undersigned is an individual (not a partnership,
--- corporation, etc.) who had an individual income in
excess of $200,000 in each of the two most recent years,
or joint income with his or her spouse in excess of
$300,000 in each of those years (in each case including
foreign income, tax exempt income and full amount of
capital gains and losses but excluding any income of
other family members and any unrealized capital
appreciation) and has a reasonable expectation of
reaching the same income level in the current year.
Category C The undersigned is a director or executive officer of
--- the Company which is issuing and selling the Units.
Category D The undersigned is a bank; a savings and loan
--- association; insurance company; registered investment
company; registered business development company;
licensed small business investment company ("SBIC"); or
employee benefit plan within the meaning of Title 1 of
ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan
association, insurance company or registered investment
advisor, or (b) the plan has total assets in excess of
$5,000,000 or is a self directed plan with investment
decisions made solely by persons that are accredited
investors.
------------------------------
(describe entity)
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Category E The undersigned is a private business development
--- company as defined in section 202(a)(22) of the
Investment Advisers Act of 1940.
--------------------------
(describe entity)
Category F The undersigned is either a corporation, partnership,
--- business trust, or non-profit organization within the
meaning of Section 501(c)(3) of the Internal Revenue
Code, in each case not formed for the specific purpose
of acquiring the Units and with total assets in excess
of $5,000,000.
--------------------------
(describe entity)
Category G The undersigned is a trust with total assets in excess
--- of $5,000,000, not formed for the specific purpose of
acquiring the Units, where the purchase is directed by a
"sophisticated person" as defined in Regulation
506(b)(2)(ii) under the Securities Act.
Category H The undersigned is an entity (other than a trust) all
--- the equity owners of which are "accredited investors"
within one or more of the above categories. If relying
upon this Category alone, each equity owner must
complete a separate copy of this Agreement.
--------------------------
(describe entity)
Category I The undersigned is not within any of the categories
--- above and is therefore not an accredited investor. The
undersigned agrees that the undersigned will notify the
Company at any time on or prior to the Closing Date in
the event that the representations and warranties in
this Agreement shall cease to be true, accurate and
complete.
-22-
7.2 SUITABILITY (please answer each question)
(a) For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:
--------------------------------------------------------------------------------
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(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
--------------------------------------------------------------------------------
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(c) For all Subscribers, please list types of prior investments:
--------------------------------------------------------------------------------
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(d) For all Subscribers, please state whether you have you participated in other
private placements before:
YES NO
----- -----
-23-
(e) If your answer to question (d) above was "YES", please indicate frequency of
such prior participation in private placements of:
Public Private Public or Private
Companies Companies Biotechnology Companies
Frequently
---- ---- ----
Occasionally
---- ---- ----
Never
---- ---- ----
(f) For individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:
YES NO
----- -----
(g) For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future:
YES NO
----- -----
(h) For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:
YES NO
----- -----
-24-
(i) For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?
YES NO
----- -----
(j) For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
YES NO
----- -----
7.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of
Survivorship (both parties
must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
*If Units are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
-25-
7.4 NASD AFFILIATION.
Are you affiliated or associated with an NASD member firm (please check one):
YES NO
----- -----
If Yes, please describe:
----------------------------------------------
----------------------------------------------
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*If Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
---------------------------------
Name of NASD Member Firm
By:
------------------------------
Authorized Officer
Date:
----------------------------
7.5 The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Section 7 and such answers have been provided
under the assumption that the Company will rely on them.
-26-
NUMBER OF UNITS_______X $100,000 =__________ (THE "PURCHASE PRICE")
----------------------------- ---------------------------------
Signature Signature (if purchasing jointly)
----------------------------- ---------------------------------
Name Typed or Printed Name Typed or Printed
----------------------------- ---------------------------------
Entity Name Entity Name
----------------------------- ---------------------------------
Address Address
----------------------------- ---------------------------------
City, State and Zip Code City, State and Zip Code
----------------------------- ---------------------------------
Telephone-Business Telephone--Business
----------------------------- ---------------------------------
Telephone-Residence Telephone--Residence
----------------------------- ---------------------------------
Facsimile-Business Facsimile--Business
----------------------------- ---------------------------------
Facsimile-Residence Facsimile--Residence
----------------------------- ---------------------------------
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should be issued:
---------------------------
(THE SECURITIES WILL BE DELIVERED TO YOU AT THE ADDRESS PROVIDED ABOVE.)
Dated: , 2003
-----------------------
This Subscription Agreement is agreed to and accepted as of __________ , 2003.
DOR BioPharma, Inc.
By:
---------------------------------------
Name: Dr. Xxxxx Xxxxxxx
Title: President & Chief Executive Officer
CERTIFICATE OF SIGNATORY
(To be completed if Units are
being subscribed for by an entity)
I,______________________________, am the____________________________ of
______________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute the Subscription Agreement on behalf of the Entity and that the Entity
is empowered and duly authorized to carry out the terms of the Subscription
Agreement and to purchase and hold the Units, and certify further that the
Subscription Agreement has been duly and validly executed on behalf of the
Entity and constitutes a legal and binding obligation of the Entity subject to
any qualifications set forth in the Subscription Agreement.
IN WITNESS WHEREOF, I have set my hand this ________day of
________________, 2003.
---------------------------------------
(Signature)
DOR BIOPHARMA, INC.
00000 XXXXX XXXXXXX XXXXX, XXXXX X
XXXX XXXXXX, XXXXXXXX 00000
July 16, 2003
Dear Subscriber:
Reference is hereby made to that certain Subscription Agreement (the
"Subscription Agreement"), dated of even date hereof, by and between DOR
BioPharma, Inc. (the "Company") and you, as a subscriber for the Units (as
defined in the Subscription Agreement). Notwithstanding Section 6.3 of the
Subscription Agreement, this letter is intended to modify the Subscription
Agreement and shall survive the execution of the Subscription Agreement. You
also acknowledge that this letter and other substantially similar letters
delivered to other Subscribers shall be deemed disclosed in Section 1.18 of the
Subscription Agreement. To induce you to purchase the Units, the Company hereby
covenants and agrees that all of the restrictions on "short sales" of the
Company's equity securities contained in Section 1.17 of the Subscription
Agreement shall terminate on the earliest to occur of (i) the date that is two
months after the Escrow Release Date (as defined in the Subscription Agreement)
or (ii) such time as the Company's common stock trades at or above 200% of the
Average Trading Price (as defined in the Subscription Agreement) for a period of
twenty (20) consecutive trading days, and after such date, Section 1.17 of the
Subscription Agreement shall be of no further force and effect.
Very truly yours,
DOR BioPharma, Inc.
By:
-------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
Acknowledged and Agreed to
as of the date hereof:
------------------------------
By:
---------------------------
Name
---------------------------
Title
