EXHIBIT 4.3
SUBSCRIPTION AGREEMENT
AND INVESTMENT LETTER
---------------------
Date
To the Board of Directors
Belmac Corporation
One Urban Centre, Suite 550
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000-0000
Re: Subscription to Purchase Private
Placement A Units of Belmac Corporation
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Gentlemen:
This will acknowledge that the undersigned hereby agrees to irrevocably
purchase from Belmac Corporation (the "Company" or "Belmac"), a corporation
organized under the laws of the State of Florida in February 1974, ___________ A
Unit(s) (collectively the "A Units") at a price of $60,000 per A Unit. The A
Unit(s) to be purchased by the undersigned is (are) part of a private placement
of securities (the "Private Placement") by the Company of up to 17 A Units which
is being effected on an best efforts basis by the Company. Accordingly, there is
no minimum number of A Units that must be sold in order for the Private
Placement to become effective. The Company reserves the right to sell fractions
of an A Unit.
If all of the A Units are sold, the Company will receive an aggregate
of $1,020,000 less the expenses of this Private Placement which management
estimates will approximate $130,000, including the fee payable to Xxxxxxx and
Company Securities, Inc. ("Xxxxxxx") described below. Xxxxxxx, a member of the
New York Stock Exchange, is acting as the placement agent for the Company in
placing this Private Placement. Xxxxxxx will receive a fee equal to 10% of the
of the aggregate purchase price of the A Units sold. The Private Placement will
terminate on the sooner to occur of the sale of all of the A Units or October 6,
1995, unless extended for an additional 15 days by the mutual consent of the
Company and Xxxxxxx. The undersigned understands that the information provided
to him with respect to the Company has not been independently verified by
Xxxxxxx. Accordingly, there is no representation by Xxxxxxx as to the
completeness or accuracy of such information.
Payment for the A Units shall be made by check, payable to Citibank
N.A. - Belmac Corporation Escrow Account, and delivered to Xxxxxxx, together
with an executed copy of this
Initial ____
Page 1 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
Subscription Agreement and Investment Letter. Payment may be made by wire
transfer pursuant to instructions available on request from Xxxxxxx.
Each A Unit consists of a note (collectively the "A Notes") in the
principal amount of $60,000, bearing interest at the annual rate of 12% payable
quarterly, and 7,500 shares (the "A Unit Shares") of the Company's common stock
(the "Common Stock"). The A Notes and A Unit Shares will be immediately
detachable.
The principal of each A Note is due and payable on the closing of a
Public Offering (as defined below). In the event that a Public Offering is not
completed by September 30, 1996, the principal of each A Note will be converted
automatically into Common Stock at a price per share equal to the average
closing price for the Common Stock quoted on the American Stock Exchange for the
five trading days immediately preceding September 30, 1996. The Company will pay
all accrued but unpaid interest to the A Note holder on the conversion date.
The A Notes will not be secured and will be subordinated to all "Senior
Debt" as that term is defined therein. The A Notes will not be personally
guaranteed and there will be no sinking fund, trustee or indenture with respect
thereto.
The undersigned understands that if a Public Offering is not completed
by September 30, 1996, he will be required to convert the principal of his Note
into Common Stock at a price per share based on the formula described above. The
conversion price is subject to adjustment in accordance with the terms of the
anti-dilution provisions set forth in the Notes.
The undersigned understands that the Company and Xxxxxxx are
contemplating a public offering (the "Public Offering") subsequent to the
completion of this Private Placement. Any registration statement (the
"Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") will include provisions for the registration of
the A Unit Shares and the shares of Common Stock underlying the Notes in the
event that the A Notes are converted as provided above (the "Underlying
Shares"). The undersigned acknowledges that no assurance can be given that the
Registration Statement, if filed, will be declared effective by the Commission
or, if it is, that the Public Offering will ever be successfully completed.
Accordingly, he warrants and represents to the Company that he is purchasing the
A Units without relying on the occurrence of the Public Offering.
If the Registration Statement is not filed, or if filed and is not
declared effective, the holders of a majority of the A Unit shares and the
Underlying Shares will have the right, on one occasion only through December 31,
1997, to demand that the Company register the A Unit Shares and the
Initial ____
Page 2 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
Underlying Shares with the Commission and use its best efforts to have such
registration statement declared effective.
The undersigned is aware that the Company will use the net proceeds of
this Private Placement, which management estimates will approximate $890,000 if
all of the A Units are sold, primarily for payment of general administrative
expenses and working capital. To the extent that less than all of the A Units
are sold, less money will be available for these purposes. The undersigned
understands and acknowledges that the Company will be required to obtain
additional financing, such as that contemplated by the Public Offering, in order
to continue to operate its business over the next 12 months.
The undersigned is also aware that the Company has recently completed a
private sale of 12 Units (the "Prior Units") for a gross aggregate price of
$720,000. The Prior Units are identical to the A Units except that the Prior
Unit notes are convertible at the option of the holders thereof into Common
Stock at a price of $3.00 per share and each Prior Unit holder received 10,000
shares of Common Stock per unit instead of the 7,500 shares per unit to be
received by an A Unit Purchaser.
The undersigned acknowledges that the A Units and the underlying A
Notes and A Unit Shares (the "Underlying Securities") he is purchasing, as well
as any Underlying Shares into which the Notes may be converted, have not been
registered under the Act or qualified under applicable state securities laws and
that the transferability thereof is restricted by the registration provisions of
the Act as well as such state laws. Based upon the representations and
agreements being made by him herein, the A Units and Underlying Securities are
being sold to him pursuant to an exemption from such registration provided by
Section 4(2) of the Act and Rule 506 promulgated thereunder and applicable state
securities law qualification exemptions. The undersigned further acknowledges
that the basis for the exemption may not be available, if notwithstanding such
representations, he intends merely acquiring these securities for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. The undersigned represents and warrants that he does not
have any such intention. The undersigned agrees that the documentation
representing the Underlying Securities to be received by him, as well as the
certificates representing any Underlying Shares into which the Notes may be
converted, will bear a legend indicating that transfer of these securities is
restricted by reason of the fact that they have not been so registered or
qualified.
The undersigned represents that he is acquiring the A Units and
Underlying Securities solely for his own account as principal and not as a
nominee or agent, for investment purposes only and not with a view to resale or
other distribution or fractionalization thereof, nor with the intention of sell-
ing, transferring or otherwise disposing of all or any part of such securities
for any particular event or circumstance, except selling, transferring
or disposing of them upon full compliance with all applicable provisions
of the Act, the Securities Exchange Act of 1934 (the "Exchange Act"), the
Initial ____
Page 3 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
Rules and Regulations promulgated by the Commission thereunder, and any
applicable state securities laws. The undersigned further understands and agrees
that the securities may be sold only if they are subsequently registered under
the Act and qualified under any applicable state securities laws or, in the
opinion of the Company's counsel, an exemption from such registration and
qualification is available, and that any routine sales of securities made in
reliance upon Rule 144 promulgated by the Commission can be made only in the
amounts set forth in and pursuant to the other terms and conditions, including
applicable holding periods, of that Rule. He also understands that, except as
otherwise set forth herein, the Company is under no obligation to register the A
Units or UnderlyingSecurities on his behalf or to assist him in complying with
any exemption from registration under the Act.
The undersigned represents and warrants that he has received a copy of
the A Note, the Company's Form 10-K for the year ended December 31, 1994, the
Company's Form 10Qs for the quarters ended March 31, 1995 and June 30, 1995, the
Company's Proxy Statement for the Company's June 9, 1995 Annual Meeting, and the
Company's 1994 Annual Report, (collectively the "Information Documents") and
that he has read and understood these documents.
The undersigned also represents and warrants that he (i) has reviewed
such other documents as he deems necessary in order for him to make an informed
investment decision; and (ii) is fully aware of the Company's current business
prospects and weak financial condition as set forth below and in the Information
Documents. Except as may be provided in this Subscription Agreement and
Investment Letter and in the Information Documents, he warrants that no
representations, statements or inducements were made to him to purchase the A
Units.
Based on the foregoing, the undersigned acknowledges that he is aware
that Belmac is an international pharmaceutical and healthcare company based in
Tampa, Florida, engaged primarily in the research, development, marketing and
distribution of pharmaceutical and healthcare products. The Company has chemical
and pharmaceutical operations in France and Spain as a result of its 1991
acquisition of Chimos S.A. and the establishment of a French pharmaceutical
subsidiary, Laboratories Belmac S.A. (these two French entities have since been
merged into one entity named and referred to herein as "Chimos") and the 1992
acquisition of Rimafar S.A. (subsequently renamed and referred to herein as
"Laboratorios Belmac"), respectively. The Company's operations in France consist
of the brokerage of chemicals and the marketing of the drug Ceredase,
manufactured by the Boston, Massachusetts-based Genzyne Corporation. Ceredase is
used in the treatment of Gaucher's Disease. The Company uses its facility in
Spain to manufacture, package and distribute both its own and other companies
pharmaceutical products. The Company has expanded its healthcare product
distribution business into the United States through the establishment of
Belmac Healthcare Corporation, Belmac Hygiene, Inc. and Belmac Health
Corp. Belmac Healthcare Corporation markets disposable linens
Initial ____
Page 4 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
to emergency health services. Research and development activities are conducted
both in the United States and Europe. The undersigned is also aware of the
following:
1. HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF
FUTURE FINANCIAL RESULTS. As of June 30, 1995, the Company had a cumulative
deficit of approximately $62,899,000. The Company has realized significant
losses in the past and could have quarterly and annual losses in the future. The
Company has only recently begun to generate significant revenue and has not
generated any profits from operations. The Company experiences quarter to
quarter fluctuations in revenues and profits and/or losses, some of which could
be significant. Consequently, the Company may continue to operate at a loss for
the foreseeable future and there can be no assurance that the Company's business
will ever operate on a profitable basis.
2. NO ASSURANCE OF SUCCESSFUL AND TIMELY DEVELOPMENT OF NEW PRODUCTS.
Although the Company was founded in 1974, it his only recently begun to generate
meaningful revenue from product-related sales. The Company has made significant
progress toward commercialization of specific products and has commenced
commercialization of others. The Company is now generating revenues from sales
of products of its subsidiaries Chimos and Laboratorios Belmac which, as noted
above, were acquired by the Company in August 1991 and February 1992,
respectively. Substantial amounts of time and financial and other resources will
be required to complete the development and chemical testing of the Company's
products currently under development including the tablet formulation of
Biolid(R), the Company's macrolide antibiotic. Although over the last several
months the Company has continued its existing limited research and development
program, due to its limited cash resources, it has suspended additional research
and development activities during such period pending receipt of additional
financing. There is no assurance that the Company will receive additional
funding necessary to commence full research and development activities or that
it will otherwise succeed in developing any additional products with
commercially viable applications.
Although the Company has a number of products in various stages of
development, including pre-clinical testing and clinical trials, it has not yet
substantially marketed any of these products other than Biolid(R) in France, the
marketing of which has since been suspended (see "Risks Inherent in
Pharmaceutical Development; Dependence on Regulatory Approvals" below). There
can be no assurance that the Company will be able to develop large scale
production of any particular product for clinical trials or eventual commercial
production. The marketing of certain of the Company's products could be
adversely affected by delays in developing large-scale production processes,
developing or acquiring production facilities or obtaining regulatory approval
for such processes or facilities.
3. ADDITIONAL FINANCING REQUIREMENTS. Belmac's pharmaceutical products
being developed and which may be developed will require the investment of
substantial additional time as
Initial ____
Page 5 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
well as financial and other resources in order to become commercially
successful. Following the development period, the Company's products will
generally be required to undergo lengthy governmental approval processes,
including extensive clinical testing, followed by market development. The
Company's operating revenues and cash resources may not be sufficient over the
next several years for the commercialization by itself of all products currently
in development. Consequently, the Company may require additional licensees or
partners and/or additional financing. The Company believes that careful
management of its research and development activities, together with the net
proceeds from this Offering and the proposed Public Offering, will provide
sufficient liquidity to enable it to conduct its existing operations through the
end of 1996. Belmac further believes, however, that by controlling and managing
its expenses, the funds on hand together with the proceeds of this Offering and
the proposed Public Offering, the sale or license of certain of its assets which
are no longer a part of its strategic plan, or the entering into joint ventures
with other entities will be sufficient for it to continue its operations for the
foreseeable future. There can be no assurance, however, that the Company can
conclude such commercial arrangements or obtain additional capital when needed
on acceptable terms, if at all.
4. INDEPENDENT AUDITOR'S REPORT. Because Belmac continues to sustain
losses the opinion of its independent auditors with respect to its financial
statements, will include an explanatory paragraph as to the uncertainty of the
Company's ability to continue as a going concern without additional funds. The
ability of Belmac to continue as a going concern is dependent upon the
successful completion of this Private Placement and the Public Offering and/or
receiving sufficient revenue from its operations.
5. RISKS INHERENT IN PHARMACEUTICAL DEVELOPMENT; DEPENDENCE ON
REGULATORY APPROVALS. The process of creating, scaling-up, manufacturing and
marketing any new human pharmaceutical is inherently risky. There can be no
assurance that any drug under development will be safe and effective. Moreover,
pharmaceutical products are subject to significant regulation. Any human
pharmaceutical product developed by the Company would require the approval of
the Food and Drug Administration ("FDA") in the United States and similar
agencies in other countries. The process of obtaining these approvals is costly
and time-consuming, and there can be no assurance that such approvals will be
granted. In general, only a small percentage of new pharmaceutical products
achieve commercial success. Such governmental regulation may prevent or
substantially delay the marketing of the Company's products and may cause Belmac
to undertake costly procedures with respect to its research and development and
clinical testing operations which may furnish a competitive advantage to more
substantially capitalized companies which compete with the Company. In addition,
the Company is required, in connection with a number of its activities, to
comply with local, state and federal regulations. Non-compliance with these
regulations could have a material adverse effect on the Company and/or prevent
the commercialization of the Company's products.
Initial ____
Page 6 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
In 1994 the French regulatory authority requested further documentation
regarding the chemical process/characteristics of Belmac's sachet formulation of
Biolid(R). Until this additional information has been reviewed and approved, the
regulatory authority has requested that marketing of the product be suspended.
Although the Company regards this administrative action as unwarranted in view
of the existing safety and efficacy experience to date in France, it has
determined not to challenge the administrative decision in light of its
previously announced decision to develop the tablet formulation of Biolid(R).
The Company believes that the actions of the French regulatory agency should
have no bearing on the development of and approval process for a Biolid(R)
tablet formulation elsewhere, of which there can be no assurance. Once it
receives regulatory clearance, the Company intends to again evaluate its
alternatives regarding the sachet formulation, including the possibility of
seeking a licensee or buyer for the product's rights in France.
6. DEPENDENCY AN OTHERS. The Company relies on outside sources to
supply certain raw materials such as erythromycin ethyl succinate. The Company
relies on outside contractors for manufacturing of its products in France and
expects to rely at least partially on contract manufacturing in Spain and in
other countries. The Company may also need to utilize third parties for
distribution of its products.
7. UNCERTAINTY OF PHARMACEUTICAL PRICING, PROFITABILITY AND RELATED
MATTERS. The levels of revenues and profitability of pharmaceutical companies
may be affected by the continuing efforts of governmental and third party payors
to contain or reduce the costs of health care through various means. For
example, in certain foreign markets pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States there
have been, and the Company expects that there will continue to be, a number of
federal and state proposals to implement similar government control. While
Belmac cannot predict whether any such legislative or regulatory proposals will
be adopted, the adoption of such proposals could have a material adverse effect
on the Company's business, financial condition and profitability. In addition,
in both the United States and elsewhere, sales of prescription pharmaceuticals
are dependent in part on the availability of reimbursement to the consumer from
third party payors, such as government and private insurance plans. Third party
payors are increasingly challenging the prices charged for medical products and
services. If the Company succeeds in bringing one or more products to the
market, there can be no assurance that these products will be considered cost
effective and that reimbursement to the consumer will be available or will be
sufficient to allow the Company to sell its products on a competitive basis.
8. ACCOUNTS PAYABLE DELINQUENCIES. A significant number of the
Company's accounts payable have been or are delinquent. As of June 30, 1995, the
Company had total accounts payable in the amount of $5,524,000, of which
approximately 5% or $300,000 was overdue. The Company will utilize a portion of
the proceeds of this Offering to make some of these payments.
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Page 7 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
9. UNPREDICTABILITY OF PATENT PROTECTION; PROPRIETARY TECHNOLOGY.
Belmac has filed numerous patent applications and has been granted a number of
patents. However, there can be no assurance that its pending applications will
be issued as patents or that any of its issued patents will afford adequate
protection to the Company or its licensees. Other private and public entities
have also filed applications for, or have been issued, patents and are expected
to obtain patents and other proprietary rights to technology which may be
harmful to the commercialization of the Company's products. The ultimate scope
and validity of patents which are now owned by or may be granted to third
parties in the future, the extent to which the Company may wish or be required
to acquire rights under such patents, and the cost or availability of such
rights cannot be determined by the Company at this time. In addition, Belmac
also relies on unpatented proprietary technology in the development and
commercialization of its products. There is no assurance that others may not
independently develop the same or similar technology or obtain access to the
Company's proprietary technology.
Belmac also relies upon trade secrets, unpatented proprietary know-how
and continuing technological innovations to develop its competitive position.
All of the Company's employees with access to the Company's proprietary
information have entered into confidentiality agreements and have agreed to
assign to the Company any inventions relating to the Company's business made by
them while in the Company's employ. However, there can be no assurance that
others may not acquire of independently develop similar technology or, if
patents in all major countries are not issued with respect to the Company's
products, that the Company will be able to maintain information pertinent to
such research as proprietary technology or trade secrets.
10. TECHNOLOGICAL CHANGE AND COMPETITION. The pharmaceutical industry
has undergone rapid and significant technological change. The Company expects
the technology to continue to develop rapidly, and the Company's success will
depend significantly on its ability to maintain a competitive position. Rapid
technological development may result in actual and proposed products or
processes becoming obsolete before the Company recoups a significant portion of
related research and development and commercialization expenses.
Belmac competes with other pharmaceutical companies, biotechnology firm
and chemical companies which have substantially greater financial, marketing and
human resources than those of the Company (including, in some cases,
substantially greater experience in clinical testing, production and marketing
of pharmaceutical products). The Company also experiences competition in the
development of its products and processes from individual scientists, hospitals,
universities and other research institutions and, in some instances, competes
with others in acquiring technology from these sources.
11. ATTRACTION AND RETENTION OF KEY PERSONNEL. The Company believes
that it has been successful in attracting skilled and experienced
management and scientific personnel. There can be
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Page 8 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
no assurance, however, that Belmac will continue to attract and retain personnel
of high caliber. Since January 1994 two individuals who have each served as
chief executive officer and a member of its board of directors and an additional
member of its board have resigned from their respective positions. The loss of
key management or scientific personnel could have an adverse impact on the
Company. The Company has not entered into non competition agreements with its
key employees and such employees would therefore be able to leave and compete
with the Company.
12. RISK OF PRODUCT LIABILITY. The Company faces an inherent business
risk of exposure to product liability claims in the event that the use of its
technology or prospective products is alleged to have resulted in adverse
effects. While it has taken, and will continue to take, what it believes are
appropriate precautions, there can be no assurance that it will avoid
significant liability exposure. Belmac maintains product liability in the amount
of $5 million. However, there is no assurance that this coverage will be
adequate in terms and scope to protect the Company in the event of a product
liability claim. In connection with the Company's clinical testing activities,
the Company may, in the ordinary course of business, be subject to substantial
claims by, and liability to, subjects who participate in its studies.
13. VOLATILITY OF SHARE PRICE. The market price of the Company's shares
since Belmac's initial public offering in February 1988 has been volatile.
Factors such as announcements of technological innovations or new commercial
products by the Company or its competitors, the results of clinical testing,
patent or proprietary rights, developments or other matters may have a
significant impact on the market price of the Common Stock.
14. POSSIBLE DELISTING OF COMMON STOCK FROM AMERICAN STOCK EXCHANGE.
The Company currently does not satisfy some of the American Stock Exchange's
financial guidelines for continued listing of its Common Stock. While there can
be no assurance that listing on the American Stock Exchange will be continued,
management of the Company believes that the Company's business prospects are
improving and that it will be able to maintain continued listing. If the Common
Stock were delisted, an investor could find it more difficult to dispose of or
to obtain accurate quotations as to the price of the Common Stock.
15. LACK OF DIVIDENDS; INABILITY TO FUND DIVIDEND PAYMENTS. Belmac has
not paid dividends on its Common Stock since its inception and does not intend
to pay any dividends on its Common Stock in the foreseeable future. The holders
of the Company's outstanding Series A Preferred Stock have been entitled to
receive cumulative dividends, payable annually on October 15, since 1992, out of
funds legally available therefor at the rate of $2.25 per year on each share of
Series A Preferred Stock. The Company has not paid dividends to holders of
Series A Preferred Stock due on October 15, 1994. These arrearages currently
have the effect of limiting the payment of cash
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Page 9 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
dividends to holders of Common Stock. There can be no assurance that cash flow
from Belmac's future operations will be sufficient to meet these obligations.
16. BROAD DISCRETION IN APPLICATION OF PROCEEDS. Approximately all of
the estimated net proceeds from this Offering has been allocated to working
capital. Accordingly, the Company's management will have broad discretion as to
the application of such funds.
17. CERTAIN FLORIDA LEGISLATION. The State of Florida has enacted
legislation that may deter or frustrate takeovers of Florida corporations. The
Florida Control Share Act generally provides that shares acquired in excess of
certain specified thresholds will not possess any voting rights unless such
voting rights are approved by a majority vote of a corporation's disinterested
shareholders. The Florida Affiliated Transactions Act generally requires
supermajority approval by disinterested shareholders of certain specified
transactions between a public corporation and holders of more than 10% of the
outstanding voting shares of the corporation (or their affiliates). Florida law
also authorizes the Company to indemnify the Company's directors, officers
employees and agents.
18. UNCERTAINTY OF ORPHAN DRUG DESIGNATION. Under the Orphan Drug Act,
the FDA may designate a product or products as having Orphan Drug status to
treat a rare disease or condition, which is a disease or condition that affects
populations of less than 200,000 individuals in the United States or, if victims
of a disease number more than 200,000, the sponsor establishes that it does not
realistically anticipate its product sales will be sufficient to recover its
costs. If a product is designated an Orphan Drug, then the sponsor is entitled
to recover its costs and receive certain incentives to undertake the development
and marketing of the product, including limited tax credits and high-priority
FDA review of a New Drug Application ("NDA"). In addition, the sponsor that
obtains the first marketing approval for a designated Orphan Drug for a given
indication is eligible to receive marketing exclusivity for a period of seven
years. There may be multiple designations of Orphan Drug status for a given drug
and for different indications. However, only the sponsor of the first approved
NDA for a given drug for its use in treating a given rare disease may receive
marketing exclusivity. While it may be advantageous to obtain Orphan Drug status
for eligible products, there can be no assurance that the precise scope of
protection that is currently afforded by Orphan Drug status will be available in
the future or that the current level of exclusivity and tax credits will remain
in effect. Currently, Congress is considering legislation that would amend the
Orphan Drug Act and may limit the scope of marketing exclusivity granted to
Orphan Drug products. Moreover, the Orphan Drug Act tax credits expired on June
30, 1992. Although legislation has been introduced to renew these tax benefits,
there can be no assurance that they will be renewed.
The undersigned understands that, because of the Company's financial
condition and acute working capital problem as well as the other risk factors
referred to herein and in the Information Documents, he could lose his entire
investment.
Initial ____
Page 10 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
The undersigned also understands the following:
THE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THESE LAWS. THE UNITS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES REGULATORY
AUTHORITY NOR HAS THE COMMISSION OR ANY SUCH AUTHORITY PASSED UPON OR ENDORSED
THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION
AGREEMENT AND INVESTMENT LETTER AND/OR THE INFORMATION DOCUMENTS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
In connection with the subscription being made hereby the undersigned
also warrants and represents that:
(a) He has not received any general solicitation or
advertising regarding the Private Placement or been furnished with any oral
representation or oral information in connection with the Private Placement
which is not set forth herein or in the Information Documents;
(b) He has sufficient knowledge and experience of financial
and business matters so that he is able to evaluate the merits and risks of
purchasing the A Units and has determined that the A Units are a suitable
investment for him;
(c) He has the means to provide for his personal needs,
possesses the ability to bear the economic risk hereunder indefinitely, and can
afford a complete loss of his investment;
(d) He has carefully read and reviewed this Subscription
Agreement and Investment Letter, the form of A Note, and the Information
Documents, and has asked such questions of the Company's management and received
from them such information as he deems necessary in order for him to make an
informed decision with respect to the purchase of the A Units;
(e) He understands the meaning of the twelfth and thirteenth
paragraphs of this Subscription Agreement and Investment Letter and that the
Company will prohibit the transfer of the undersigned's A Units and Underlying
Securities absent full compliance with the Act, the Exchange Act and all
applicable state securities laws;
(f) He has had substantial experience in previous private and
public purchases of speculative securities and is not relying on the Company or
its affiliates with respect to economic considerations involved in this
investment; and
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Page 11 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
(g) He has reviewed carefully the definition of Accredited
Investor as set forth below and is an Accredited Investor within that
definition. The particular subparagraph or subparagraphs by which the
undersigned qualifies as such is (are) filled in by him below.
DEFINITION OF ACCREDITED INVESTOR
The term "accredited investor" is defined in Rule 501 (a) of Regulation D
promulgated under the Act as follows:
(a) Certain banks, savings and loan institutions,
broker-dealers, investment companies and other
entities including an employee benefit plan within
the meaning of Title I of the Employee Retirement
Income Security Act of 1974 with total assets in
excess of $5,000,000;
(b) Certain banks, savings and loan institutions,
broker-dealers, investment companies and other
entities including an employee benefit plan within
the meaning of Title I of the Employee Retirement
Income Security Act of 1974 with total assets in
excess of $5,000,000;
(c) Any private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act
of 1940;
(d) Any organization described in Section 501(c)(3) of
the Internal Revenue Code, not formed for the
specific purpose of acquiring the A Units, with total
assets in excess of $5,000,000;
(e) Any director, executive officer or general partner of
the issuer of the securities being offered or sold,
or any director, executive officer or general partner
of a general partner of that issuer;
(f) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the
time of his purchase exceeds $1,000,000;
(g) Any natural person who had an individual income in
excess of $200,000 or, with that person's spouse a
joint income in excess of $300,000 in each of the two
most recent years and who reasonably expects an
income in excess of $200,000, or $300,000 with that
person's spouse, in the current year;
Initial ____
Page 12 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
(h) Any trust with total assets in excess of $5,000,000
not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a
sophisticated person as described in Section
230.506(b)(2)(ii) of Regulation D; or
(i) Any entity in which all of the equity owners are
accredited investors under any of the paragraphs
above.
THE UNDERSIGNED SUBSCRIBER IS AN ACCREDITED INVESTOR BY REASON OF
SUBPARAGRAPH(S) _____ SET FORTH IN THE DEFINITION ABOVE.
In connection with the foregoing representations the undersigned has
appended hereto as EXHIBIT A, a Purchaser Questionnaire which he has completed
and executed. He represents and warrants that the information set forth therein
as well as all other information which he is furnishing to the Company with
respect to his financial condition and business experience is accurate and
complete as of the date hereof and he covenants that, in the event a material
change should occur in such information, he will immediately provide the Company
with such revised or corrected information.
All notices, requests, demands and other communications under this
Subscription Agreement shall be in writing and shall be deemed to have been
given only when delivered in person or, if mailed, when mailed by certified or
registered mail prepaid, to the parties at their respective addresses set forth
herein, or at such other address as may be given in writing in future by either
party to the other.
The undersigned acknowledges and agrees that:
(a) He has full power and authority to enter into this Agreement which,
upon his execution, will constitute a valid and legally binding obligation by
him;
(b) The Company may in its sole discretion (i) reject this Subscription
Agreement in whole or in part; and (ii) accept subscription agreements other
than in the order received;
(c) If for any reason this Private Placement does not close or
the undersigned's subscription is not accepted by the Company, the undersigned
shall have no claim against the Company, Xxxxxxx, or their respective officers,
directors, employees of affiliates and shall have no interest in the A Units,
Underlying Securities or the Company;
(d) He shall indemnify and hold harmless the Company, Xxxxxxx, and
their respective officers, directors, employees and affiliates against any loss,
liability, claim, damage or expense,
Initial ____
Page 13 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
(including but not limited to, any and all expenses reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim) arising out of or based upon any false representation
or warranty or breach or failure by the undersigned to comply with any covenant
or agreement made by him herein or in any other document provided by him to any
of the foregoing in connection with this transaction;
(e) The representations, warranties and agreements made by the
undersigned set forth herein shall survive the closing of the Private Placement;
(f) Neither this Subscription Agreement nor any provisions hereof shall
be modified, discharged or terminated except by an instrument in writing signed
by the party against whom any waiver, change, discharge or termination is
sought;
(g) The laws of the State of New York shall govern the interpretation
and enforcement of this Subscription Agreement. In the event of a dispute, the
undersigned agrees that any law suit brought to enforce or interpret the
provisions hereof shall be brought in state or federal courts, as appropriate,
in New York County, New York, and the undersigned agrees to submit to the
personal jurisdiction of such court;
(h) This Subscription Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same
instrument; and
(i) This Subscription Agreement constitutes the entire agreement of the
parties hereto, and supersedes all prior understandings with respect to the
subject matter hereof.
Initial ____
Page 14 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
The undersigned hereby agrees to purchase ____ A Unit(s) as set forth
in the first paragraph of this Subscription Agreement and Investment Letter, and
is tendering herewith his check therefor in the amount of $____, made payable to
Citibank N.A. - Belmac Corporation Escrow Account.
Very truly yours,
DATE:_______________________
____________________________
(Signature)
____________________________
(Please print name)
ADDRESS: _____________________ TELEPHONE NUMBER: __________________
______________________________
______________________________ SOCIAL SECURITY OR
IRS IDENTIFICATION
NUMBER: ___________________________
DATE: ________________________
ACCEPTED:
BELMAC CORPORATION
By: __________________________
Initial ____
Page 15 of 16 Pages
Subscription Agreement and Investment Letter for
investment in A Units of Belmac Corporation dated _________ __, ____.
ACKNOWLEDGMENT FORM FOR
INDIVIDUAL OR JOINT OWNERS
STATE OF _________________
COUNTY OF ________________
I HEREBY CERTIFY that , whose name(s) (is) (are) signed to the foregoing
instrument acknowledged the same before me in my aforesaid jurisdiction on this
___ day of ______, 19__.
_____________________________
Notary Public
_____________________________
My Commission Expires
ACKNOWLEDGMENT FORM FOR
PARTNERSHIP OR TRUST
STATE OF _________________
COUNTY OF ________________
I HEREBY CERTIFY that , (general partner of the partnership) (trustee of the
trust) executed the foregoing instrument, acknowledged the same as the act and
deed of said (partnership) (trust) before me in my aforesaid jurisdiction on
this ___ day of ______, 19__.
_____________________________
Notary Public
_____________________________
My Commission Expires
ACKNOWLEDGMENT FORM FOR CORPORATIONS
STATE OF _________________
COUNTY OF ________________
I HEREBY CERTIFY that , President and , Secretary of the corporation that
executed the foregoing instrument acknowledged as the act and deed of said
corporation before me in my aforesaid jurisdiction on this ___ day of ______,
19__.
_____________________________
Notary Public
_____________________________
My Commission Expires
Initial ____
Page 16 of 16 Pages
