Exhibit 10.20
BIOSANTE PHARMACEUTICALS, INC.
SUBSCRIPTION AGREEMENT
BioSante Pharmaceuticals, Inc.
000 Xxxx Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxx
Ladies and Gentlemen:
1. SUBSCRIPTION. The undersigned is hereby purchasing from BioSante
Pharmaceuticals, Inc., a Wyoming corporation, ______ units (must be at least
100,000 units, unless BioSante in its sole discretion otherwise agrees) for a
purchase price of $.50 per unit. Each unit consists of (i) one share of
BioSante's common stock, no par value, and (ii) a warrant to purchase .25 shares
of BioSante's common stock at an exercise price of $.625 per full share, in
substantially the form of warrant attached as ANNEX A hereto. This subscription
is being made in connection with BioSante's private placement of units to
certain "accredited investors" (within the meaning of Rule 501 under Regulation
D of the Securities Act of 1933, as amended) and existing accredited investors
in BioSante.
2. CLOSING. The undersigned shall pay the purchase price for the units
by electronic wire transfer in accordance with the following instructions:
Bank Name: XXXXXX BANK, BARRINGTON
ABA #: 000000000 CODE 10
Account #: 0000000
Credit to the account of: BIOSANTE PHARMACEUTICALS, INC.
or by delivery of a bank check or certified check made payable to "BioSante
Pharmaceuticals, Inc." All checks should be delivered, together with an executed
copy of this subscription agreement, to BioSante as follows:
BioSante Pharmaceuticals, Inc.
000 Xxxx Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxx
In the event, BioSante does not receive subscriptions for the minimum placement
of $2,000,000, which may include a minimum of $500,000 from investors identified
by Sunrise Securities Corp., the Company will return the purchase price to the
undersigned, without any interest thereon.
3. REPRESENTATIONS AND WARRANTIES OF BIOSANTE. To induce the
undersigned to enter into this subscription agreement and to purchase the units,
BioSante hereby represents and warrants to the undersigned the following:
(a) ORGANIZATION STANDING, ETC. BioSante is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wyoming and has the requisite corporate power and authority to own or lease its
properties and to carry on its business as it is now being conducted. BioSante
has the requisite corporate power and authority to issue the units and to
perform its obligations under this subscription agreement.
(b) VALID ISSUANCE. The units, when issued and delivered
pursuant to terms of this subscription agreement, will be duly and validly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights and no personal liability will attach to the ownership thereof. The
shares of BioSante common stock underlying the units and issuable upon exercise
of the warrants underlying the units, when issued and delivered pursuant to
terms of this subscription agreement and the warrants, will be duly and validly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights and no personal liability will attach to the ownership thereof.
(c) CORPORATE ACTS AND PROCEEDINGS. This subscription
agreement and this offering have been duly authorized by all necessary corporate
action on behalf of BioSante. This subscription agreement has been duly executed
and delivered by authorized officers of BioSante, is a valid and binding
agreement on the part of BioSante and is enforceable against BioSante in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the rights of creditors generally
or by general equitable principles. All corporate actions necessary to the
authorization, creation, issuance and delivery of the units and the conducting
of this offering have been taken by BioSante.
(d) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS.
Neither the execution or delivery of, nor the performance of or compliance with
this subscription agreement, nor the issuance of the units, nor the consummation
of the transactions contemplated hereby will, with or without the giving of
notice or passage of time, result in any material breach of, or constitute a
material default under, or result in the imposition of any material lien or
encumbrance upon any asset or property of BioSante pursuant to any material
agreement or other instrument to which BioSante is a party or by which it or any
of its properties, assets or rights is bound or affected, and will not violate
BioSante's Articles of Incorporation or Bylaws.
(e) SECURITIES LAWS. Based in part upon the representations of
the undersigned in SECTION 5 hereof, no consent, authorization, approval, permit
or order of or filing with any governmental or regulatory authority is required
under current laws and regulations in connection with the execution and delivery
of this subscription agreement or the offer, issuance, sale or delivery of the
units other than (i) the filing of a Form D pursuant to Regulation D under the
Securities Act of 1933, as amended, (ii) the filing, if required, of any notice
with any state whose laws require such filing, (iii) the qualification thereof,
if required, under other applicable state laws, which qualification has been or
will be effected as a condition of this offering, and (iv) the filing, if
required, of any notice or other document with the Canadian Venture Exchange.
Under the circumstances contemplated by this subscription agreement, the offer,
issuance, sale and delivery of the units will not, under current laws and
regulations, require compliance with the prospectus delivery or registration
requirements in the Securities Act.
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(f) CAPITAL STOCK. As of February 15, 2001, the authorized and
issued capital stock of BioSante is correctly set forth in the term sheet
attached as ANNEX B hereto. All of the outstanding shares of BioSante capital
stock were duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in the term sheet attached as ANNEX B hereto,
there are no outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible securities or other agreements or arrangements
of any character or nature whatever, other than in connection with this
offering, pursuant to which BioSante is obligated to issue any securities of any
kind representing an ownership interest in BioSante. Neither the offer nor the
issuance or sale of the units constitutes an event under any anti-dilution
provisions of any securities issued (or issuable pursuant to outstanding rights,
warrants or options) by BioSante or any agreements with respect to the issuance
of securities by BioSante, which will either increase the number of securities
issuable pursuant to such provisions or decrease the consideration per share to
be received by BioSante pursuant to such provisions. No holder of any securities
of BioSante is entitled to any preemptive or similar rights to purchase any
securities of BioSante in connection with this offering, other than the
investors in BioSante's private placement completed in May 1999, which
pre-emptive rights have been waived with respect to this offering.
(g) SEC FILINGS. BioSante has furnished the undersigned true
and complete copies of BioSante's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999, Quarterly Reports on Form 10-QSB for the quarters
ended March 31, June 30 and September 30, 2000, and a Current Report on Form 8-K
dated June 13, 2000 and all subsequent filings, if any, made by BioSante with
the SEC. As of their respective filing dates, the SEC filings complied in all
material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended. None of the SEC filings as of their respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, except to the extent amendments thereto were made in compliance with
SEC rules and regulations subsequent to the date thereof.
4. TRANSFER RESTRICTIONS.
(a) The undersigned realizes that the units, the shares of
BioSante common stock and warrants underlying the units and the shares of
BioSante common stock issuable upon exercise of the warrants, are not registered
under the Securities Act or any foreign or state securities laws. The
undersigned agrees that the units, the shares of BioSante common stock and
warrants underlying the units and the shares of BioSante common stock issuable
upon exercise of the warrants will not be sold, offered for sale, pledged,
hypothecated or otherwise transferred, except in compliance with the Securities
Act and applicable foreign and state securities laws. The undersigned
understands that the undersigned can only transfer the units, the shares of
BioSante common stock and warrants underlying the units and the shares of
BioSante common stock issuable upon exercise of the warrants pursuant to
registration under the Securities Act or pursuant to an exemption therefrom. The
undersigned understands that to transfer the units, the shares of BioSante
common stock and warrants underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants may require in certain
jurisdictions specific approval by the appropriate governmental agency or
commission in such jurisdiction. The undersigned has been advised that, except
as set forth in SECTION 6 hereof, BioSante has no
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obligation, and does not intend, to cause the units, the shares of BioSante
common stock and warrants underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants to be registered under the
Securities Act or the securities law of any other jurisdiction or to comply with
the requirements for any exemption under the Securities Act, including but not
limited to, those provided by Rule 144 and Rule 144A promulgated under the
Securities Act, or under the securities law of any other jurisdiction.
(b) To enable BioSante to enforce the transfer restrictions
contained in SECTION 4(a) hereof, the undersigned hereby consents to the placing
of legends upon, and stop-transfer orders with the transfer agent of the common
stock with respect to, the units, the shares of BioSante common stock and
warrants underlying the units and the shares of BioSante common stock issuable
upon exercise of the warrants.
5. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. To induce
BioSante to accept the undersigned's subscription, the undersigned hereby
represents and warrants to BioSante that:
(a) The undersigned, if an individual, has reached the age of
majority in the jurisdiction in which the undersigned resides, is a bona fide
resident of the jurisdiction contained in the address set forth on the signature
page of this subscription agreement, is legally competent to execute this
subscription agreement, and does not intend to change residence to another
jurisdiction;
(b) The undersigned, if an entity, was not formed solely for
purposes of making this investment and is duly authorized to execute this
subscription agreement and this subscription agreement, when executed and
delivered by the undersigned, will constitute a legal, valid and binding
obligation enforceable against the undersigned in accordance with its terms; and
the execution, delivery and performance of this subscription agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate or other necessary action on the part of the
undersigned;
(c) The units subscribed for hereby are being acquired by the
undersigned for investment purposes only, for the account of the undersigned and
not with the view to any resale or distribution thereof, and the undersigned is
not participating, directly or indirectly, in a distribution of such units and
will not take, or cause to be taken, any action that would cause the undersigned
to be deemed an "underwriter" of such units as defined in Section 2(11) of the
Securities Act;
(d) The undersigned has had access to all materials, books,
records, documents and information relating to BioSante which the undersigned
has requested, including the SEC filings, and has been provided the opportunity
to verify the accuracy of the information contained therein;
(e) The undersigned acknowledges and understands that
investment in the units involves a high degree of risk, has read and understood
the risk factors contained in Annex C attached hereto and in the SEC filings
made by BioSante and provided to the undersigned;
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(f) The undersigned acknowledges that the undersigned has been
offered an opportunity to ask questions of, and receive answers from, officers
of BioSante concerning all material aspects of BioSante and its business and
this offering, and that any request for such information has been fully complied
with to the extent BioSante possesses such information or can acquire it without
unreasonable effort or expense;
(g) The undersigned has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of an investment in BioSante and can afford a complete loss of
the undersigned's investment in BioSante;
(h) The undersigned has, in connection with the undersigned's
decision to purchase the units, relied solely upon this subscription agreement
and the SEC filings;
(i) The undersigned represents and warrants to and covenants
with BioSante that the undersigned has not engaged and will not engage in any
sales of the units, including a short sale covered by the units, prior to the
effectiveness of a resale registration statement (as defined in SECTION 6),
except to the extent that any such short sale is fully covered by shares of
BioSante's common stock other than the units, or such sale is otherwise exempt
from registration under the Securities Act;
(j) The undersigned recognizes that no governmental agency has
passed upon the issuance of the units or made any finding or determination as to
the fairness of this offering;
(k) If the undersigned is purchasing the units subscribed for
hereby in a representative or fiduciary capacity, the representations and
warranties contained herein shall be deemed to have been made on behalf of the
person or persons for whom such units are being purchased;
(l) The undersigned has not entered into any agreement to pay
commissions to any persons with respect to the purchase or sale of the units,
except commissions for which the undersigned will be responsible;
(m) The undersigned acknowledges that BioSante will pay to
Sunrise Securities Corp. a commission with respect to the sale of the units by
BioSante to the undersigned of (i) 7.0% of the gross sales price of the units
sold by BioSante in this offering to investors introduced to BioSante by
Sunrise, payable at the option of Sunrise in cash or in units valued at the unit
sales prices less the cash commission, and (ii) a five-year warrant to purchase
units covering a number of units equal to 7.0% of the total number of units sold
by BioSante in this offering to investors introduced to BioSante by Sunrise,
inclusive of the commission units, if any, issued to Sunrise at an exercise
price of $.625 and the cash commission and five-year warrant will also be
payable with respect to (x) all securities subscribed to by bona fide
"Accredited Investors" introduced to BioSante by Sunrise who are ready willing
and able to close but whose subscriptions are rejected by BioSante other than
due to over-subscription, and (y) any purchase of BioSante securities by any
investor introduced by Sunrise to BioSante taking place at any time within 12
months, as long as such introduction occurred before the closing of this
offering;
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(n) The undersigned acknowledges and understands that the
units, the shares of BioSante common stock and warrants underlying the units and
the shares of BioSante common stock issuable upon exercise of the warrants may
not be resold or otherwise transferred except in a transaction registered under
the Securities Act or unless an exemption from such registration is available.
The undersigned understands that the certificate(s) evidencing the units, the
shares of BioSante common stock and warrants underlying the units and the shares
of BioSante common stock issuable upon exercise of the warrants will be
imprinted with a legend that prohibits the transfer of such shares unless (i)
they are registered or such registration is not required, and (ii) if the
transfer is pursuant to an exemption from registration other than Rule 144 under
the Securities Act and, if BioSante shall so request in writing, an opinion of
counsel reasonably satisfactory to BioSante is obtained to the effect that the
transaction is so exempt; and
(o) The undersigned is an "accredited investor" within the
meaning of Section 501(a) of Regulation D promulgated under the Securities Act.
Specifically the undersigned is (check appropriate item(s)):
/ / a bank as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association or
other institution as defined in Section 3(a)(5)(A) of
the Securities Act whether acting in its individual
or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Exchange Act; an
insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered
under the Investment Company Act of 1940 or a
business development company as defined in Section
2(a)(48) of that Securities Act; a Small Business
Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) of (d)
of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political
subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000;
any employee benefit plan within the meaning of the
Employment Retirement Income Security Act of 1974, if
the investment decision is made by a plan fiduciary,
as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association,
insurance company, or registered investment advisor,
or if the employee benefit plan has total assets in
excess of $5,000,000, or if a self-directed plan,
with investment decisions made solely by persons that
are Accredited Investors;
/ / a private business development company as defined
in Section 202(a)(22) of the Investment Advisers
Act of 1940;
/ / an organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended,
corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose
of acquiring Shares, with total assets in excess of
$5,000,000;
/ / a director or executive officer of BioSante;
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/ / a natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of
his or her purchase exceeds $1,000,000;
/ / a natural person who had an individual income (not
including his or her spouse's income) in excess of
$200,000 in 1999 and 2000 or joint income with his or
her spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching
such income level in 2001;
/ / a trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring
Shares, whose purchase is directed by a person having
such knowledge and experience in financial and
business matters that he or she is capable of
evaluating the merits and risks entailed in the
purchase of units; or
/ / an entity in which all of the equity owners are
accredited investors, within the meaning of Rule 501
under Regulation D of the Securities Act. (If this
alternative is checked, the undersigned must identify
each equity owner and provide statements signed by
each demonstrating how each is qualified as an
accredited investor.)
6. REGISTRATION OF SHARES UNDER THE SECURITIES ACT.
(a) By its acceptance hereof, BioSante agrees that it shall,
at its expense, (i) not later than 90 days after the final closing of this
offering file a registration statement to register under the Securities Act the
resale by the undersigned of the shares of BioSante common stock underlying the
units and the shares of BioSante common stock issuable upon exercise of the
warrants, (ii) use its reasonable best efforts to cause the resale registration
statement to become effective under the Securities Act as promptly as
practicable, (iii) after the resale registration statement is declared effective
under the Securities Act, furnish the undersigned with such number of copies of
the final prospectus included in the resale registration statement as the
undersigned may reasonably request to facilitate the resale of the shares of
BioSante common stock underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants, and (iv) use its reasonable best
efforts to cause such registration statement to remain effective until the
earlier of: (a) the sale of all the shares of BioSante common stock covered by
the resale registration statement; or (b) such time as the selling shareholders
named in the registration statement become eligible to resell the shares of
BioSante common stock underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants pursuant to Rule 144(k) under the
Securities Act.
(b) BioSante will prepare and file with the SEC such
amendments and Prospectus supplements, including post-effective amendments to
the resale registration statement, as BioSante determines may be necessary or
appropriate, and use its reasonable best efforts to have such post-effective
amendments declared effective as promptly as practicable; cause the prospectus
to be supplemented by any prospectus supplement, and as so supplemented, to be
filed with the SEC; and promptly notify the undersigned when a prospectus, and
any prospectus supplement or post-effective amendment must be filed or has been
filed (including
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any filing in response to a sale notice) and, with respect to any post-effective
amendment, when the same has become effective.
(c) In connection with the resale registration statement, the
undersigned shall furnish BioSante such information regarding the distribution
of the shares of BioSante common stock covered by the registration statement as
BioSante may, from time to time, reasonably request in writing and BioSante may
exclude from such registration the shares of BioSante common stock of any
investor if such investor unreasonably fails to furnish such information in
writing within a reasonable time after receiving such request. The undersigned
agrees promptly to furnish to BioSante all information required to be disclosed
in the registration statement in order to make the information previously
furnished to BioSante by the undersigned not misleading. The undersigned
understands, acknowledges and agrees that the undersigned will be entitled to
liquidated damages pursuant to SECTION 6(d) hereof unless and until the
undersigned shall have provided all such information. Any sale of any shares of
BioSante common stock under the registration statement by the undersigned will
constitute a representation and warranty by the undersigned that the required
information relating to the undersigned and its plan of distribution is as set
forth in the prospectus delivered by the undersigned in connection with such
disposition, that such prospectus does not as of the time of such sale contain
any untrue statement of a material fact relating to the undersigned or its plan
of distribution and that such prospectus does not as of the time of such sale
omit to state any material fact relating to the undersigned or its plan of
distribution necessary to make the statements in such prospectus, in the light
of the circumstances under which they were made, not misleading.
(d) BioSante acknowledges that the undersigned and other
purchasers of units will suffer damages if BioSante fails to fulfill its
obligation to cause the resale registration statement to become effective under
the Securities Act in a timely fashion, and that it would not be feasible to
ascertain the extent of such damages. Accordingly, in the event that BioSante
fails to cause the resale registration statement to be declared effective within
90 days of the filing of the resale registration statement, other than as a
result of events beyond BioSante's control, BioSante will issue to the
undersigned, as compensation therefor, shares of BioSante common stock equal to
1% of the shares of BioSante common stock underlying the units purchased by the
undersigned for each 30 days or part thereof effectiveness is delayed.
(e) At any time BioSante may refuse to permit the undersigned
to resell any units pursuant to the resale registration statement; PROVIDED,
HOWEVER, that in order to exercise this right, BioSante must deliver a
certificate in writing to the undersigned to the effect that a sale pursuant to
the resale registration statement in its then-current form could constitute a
violation of the federal securities laws or would result in a material adverse
effect on BioSante (i.e., pending corporate developments such as negotiation of
a material transaction which BioSante in its sole discretion after consultation
with legal counsel, determines it would be obligated to disclose in the
registration statement, which disclosure BioSante believes would be premature or
otherwise inadvisable at such time). In such an event, BioSante will use its
reasonable best efforts to amend the resale registration statement if necessary
and take all other actions reasonably necessary to allow such sale under the
federal securities laws, and will notify the undersigned promptly after it has
determined that such sale has become permissible under the federal securities
laws. In any calendar year, BioSante may exercise this right no more than two
times, for not more than 30 days in each instance. The undersigned hereby
covenants and agrees
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that it will not sell any shares of BioSante common stock pursuant to the resale
registration statement during the periods the resale registration statement is
unable to be used by the undersigned as set forth in this SECTION 6(e).
7. MARKET FOR REGISTRABLE COMMON STOCK. BioSante will use commercially
reasonable efforts to list its common stock on the American Stock Exchange,
Nasdaq Small Market System or other comparable exchange or quotation system,
including without limitation effecting a reverse split of its common stock, if
necessary.
8. INDEMNIFICATION.
(a) The undersigned understands the meaning and legal
consequences of the representations and warranties made by the undersigned in
this subscription agreement, and agrees to indemnify and hold harmless BioSante
and each of BioSante's directors, officers, shareholders, employees, counsel,
agents, successors and assignees from and against any and all loss, damage,
liability or expenses (including, without limitation, reasonable and documented
attorneys' fees), as and when incurred, due to or arising out of (in such case
in whole or in part) any breach of any representation or warranty made by the
undersigned set forth herein or in any other agreement or other document
furnished by the undersigned to any of the foregoing in connection with this
offering, any failure by the undersigned to fulfill any of its covenants or
agreements set forth herein, or arising out of the resale or distribution by the
undersigned of the units, the shares of BioSante common stock and warrants
underlying the units and the shares of BioSante common stock issuable upon
exercise of the warrants or any portion thereof in violation of the Securities
Act or any applicable foreign or state securities or "blue sky" law.
(b) BioSante understands the meaning and legal consequences of
the representations and warranties made by it in this subscription agreement,
and agrees to indemnify and hold harmless the undersigned and each of the
undersigned's directors, officers, stockholders, employees, counsel, agents,
successors and assigns from and against any and all loss, damage, liability or
expense (including, without limitation, reasonable and documented attorneys'
fees), as and when incurred, due to or arising out of (in each case in whole or
in part) any breach of any representation or warranty made by BioSante set forth
herein, or any failure by BioSante to fulfill any of its covenants or agreements
set forth herein.
(c) To the extent permitted by law, BioSante will indemnify
and hold harmless each selling shareholder named in the resale registration
statement, the directors, if any, of such holder, the officers, if any, of such
holder, and each person, if any, who controls such holder within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages,
expenses or liabilities to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violation: (i) any untrue statement or
alleged untrue statement of a material fact contained in the resale 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, in light of the circumstances in which
they were made, not misleading, or (iii) any violation or alleged
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violation by BioSante of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and BioSante will reimburse the
holders and each such controlling person, promptly as such expenses are
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding.
(d) To the extent permitted by law, each holder, severally and
not jointly, will indemnify and hold harmless, to the same extent and in the
same manner set forth in SECTION 8(c), BioSante, each of its directors and
officers who have signed the resale registration statement, and each person, if
any, who controls BioSante within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened in respect thereof) 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 the resale registration statement; and such holder will reimburse such
persons for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(e) With respect to the indemnification set forth in SECTIONS
8(c) or (d) above, to the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under said SECTIONS 8(c) or (d) to the extent permitted by law; PROVIDED that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in said
SECTIONS 8(c) or (d), and (ii) no party guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the Securities Act) shall be entitled to
contribution from any party who was not guilty of such fraudulent
misrepresentation.
9. FURTHER DOCUMENTS. The undersigned agrees that it will execute such
other documents as may be necessary or desirable in connection with the
transactions contemplated hereby.
10. MODIFICATION. Neither this subscription agreement nor any
provisions hereof shall be waived, modified, discharged or terminated except by
an instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.
11. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service and delivered against receipt to the party
to whom it is to be given, (i) if to BioSante, at the address set forth on the
first page hereof, (ii) if to the undersigned, at its address set forth on the
signature page hereto, or (iii) in either case, to such other address as the
party shall have furnished in writing in accordance with the provisions of this
SECTION 11. Notice to the estate of any party shall be sufficient if addressed
to the party as provided in SECTION 11. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,
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except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
SECTION 11 shall be deemed given at the time of receipt thereof.
12. COUNTERPARTS. This subscription agreement may be executed through
the execution of separate signature pages or in any number of counterparts, and
each such counterpart shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the same
counterpart.
13. ENTIRE AGREEMENT. This subscription agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there are
no representations, covenants or other agreements except as stated or referred
to herein.
14. SEVERABILITY. Each provision of this subscription agreement is
intended to be severable from every other provision, and the invalidity or
illegality of any portion hereof shall not affect the validity or legality of
the remainder hereof.
15. ASSIGNABILITY. This subscription agreement is not transferable or
assignable by the undersigned.
16. APPLICABLE LAW. This subscription agreement has been negotiated and
consummated in the State of Illinois and shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to
conflict of laws.
17. CHOICE OF JURISDICTION. Any action or proceeding arising directly,
indirectly or otherwise, in connection with, out of or from this subscription
agreement, any breach hereof or any transaction covered hereby shall be resolved
in Chicago, Illinois. Accordingly, the parties consent and submit to the
jurisdiction of the United States federal and state courts located in Chicago,
Illinois.
18. TAXPAYER IDENTIFICATION NUMBER. The undersigned verifies under
penalties of perjury that any taxpayer identification number or social security
number shown on the signature page hereto is true, correct and complete.
19. PRONOUNS. Any personal pronoun shall be considered to mean the
corresponding masculine, feminine or neuter personal pronoun, as the context
requires.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, the undersigned has executed this subscription
agreement this ____ day of ________________, 2001.
Number of units subscribed for: __________________ units.
INDIVIDUAL SUBSCRIBER: ENTITY SUBSCRIBER:
------------------------ -------------------------
(Signature of Subscriber) (Print Name of Subscriber)
By:
------------------------ -------------------------
(Typed or Printed Name)
Name:
-------------------------
Title:
-------------------------
------------------------ -------------------------
(Residence Address) (Address)
------------------------ -------------------------
(City, State and Zip Code) (City, State and Zip Code)
------------------------ -------------------------
(Telephone Number) (Telephone Number)
------------------------ -------------------------
(Telecopier Number) (Telecopier Number)
------------------------ -------------------------
(Social Security Number) (Tax I.D. or Social Security Number)
ACCEPTED:
BIOSANTE PHARMACEUTICALS, INC. FOR ENTITIES DESIRING THAT CERTIFICATES
FOR UNITS BE DELIVERED TO AN ADDRESS
By: OTHER THAN THAT SET FORTH ABOVE, SET
---------------------------------------------- FOR THE DELIVERY ADDRESS:
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
Dated: ________________, 2001
----------------------------------------
(Address)
----------------------------------------
(City, State and Zip Code)
12
ANNEX A
FORM OF WARRANT
Warrant to Purchase Up To
______________ Shares Of Common Stock of
BioSante Pharmaceuticals, Inc.
THIS CERTIFIES that, for value received, ________________ ("Investor")
or any transferee of Investor (Investor or such transferee being hereinafter
referred to as the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, to purchase from BioSante Pharmaceuticals,
Inc., a Wyoming corporation (the "Company"), that number of fully paid and
nonassessable shares of common stock, no par value (the "Warrant Shares") of the
Company (the "Common Stock") at the purchase price per share as set forth in
Section 1 below (the "Exercise Price"). The number of Warrant Shares purchasable
and Exercise Price are subject to adjustment as provided in Section 10 hereof.
1. NUMBER OF WARRANT SHARES; EXERCISE PRICE; TERM.
(a) Subject to adjustments as provided herein, the Holder of
this Warrant may, at the Holder's option, exercise this Warrant in
whole at any time or in part from time to time for
_____________________________ (__________) Warrant Shares at an
Exercise Price of $0.625 per Warrant Share.
(b) Subject to the terms and conditions set forth herein, this
Warrant and all rights and options hereunder shall expire at 5:00 p.m.
central standard time on __________________, 2006. This Warrant and all
options and rights hereunder shall be wholly void to the extent this
Warrant is not exercised before it expires.
2. TRANSFERABILITY OF WARRANT. The Warrant and all rights hereunder are
not transferable, in whole or in part.
3. EXERCISE OF WARRANT. The Warrant is exercisable by the Holder, in
whole or in part, at any time, or from time to time, during the term hereof as
described in Section l above, by the surrender of the Warrant and the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder
hereof, at the office of the Company in Lincolnshire, Illinois (or such other
office or agency of the Company as it may designate by notice in writing to the
Holder hereof at the address of the Holder appearing on the books of the
Company), and subject to Section 4 hereof, upon payment of the Exercise Price in
cash or check, whereupon the Holder of the Warrant shall be entitled to receive
shares of Common Stock of the Company for the number of Warrant Shares so
purchased and, if the Warrant is exercised for fewer than all of the Warrant
Shares, a new Warrant representing the right to acquire the number of Warrant
Shares in respect of which this Warrant shall not have been exercised.
Notwithstanding the foregoing, payment of the Exercise Price may also be made by
(a) delivering shares of Common Stock already owned by the Holder having a total
Fair Market Value (as defined in Section 4) on the date of delivery equal to the
aggregate Exercise Price; (b) authorizing the Company to return Warrant Shares
which would otherwise be issuable upon exercise of this Warrant having a total
Fair Market Value on the date of exercise equal to the aggregate Exercise Price;
or (c) any
13
combination of the foregoing. The Company agrees that, upon exercise
of the Warrant in accordance with the terms hereof, the Warrant Shares so
purchased shall be deemed to be issued to the Holder as the record owner of such
Warrant Shares as of the close of business on the date on which the Warrant
shall have been exercised.
Certificates for Warrant Shares purchased hereunder and, on exercise of
fewer than all of the Warrant Shares purchasable hereunder, a new Warrant
representing the right to acquire Warrant Shares not so purchased shall be
delivered to the Holder hereof as promptly as practicable after the date on
which the Warrant shall have been exercised.
The Company covenants that all Warrant Shares which may be issued upon
the exercise of the Warrant shall, upon exercise of the Warrant and payment of
the Exercise Price, be fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously or otherwise specified herein).
4. NO FRACTIONAL WARRANT SHARES OR SCRIP. No fractional Warrant Shares
or scrip representing fractional shares shall be issued upon the exercise of the
Warrant. In lieu of any fractional Warrant Share to which the Holder would
otherwise be entitled, such Holder shall be entitled, at its option, to receive
either (a) a cash payment equal to the excess of Fair Market Value (as defined
herein) for such fractional Warrant Share above the Exercise Price for such
fractional share or (b) a whole share if the Holder tenders the Exercise Price
for one whole Warrant Share. For purposes hereof, the term "Fair Market Value"
shall mean an amount determined as follows: (A) if the Common Stock is listed on
a national or regional securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the Nasdaq National Market
System or the Nasdaq Small Cap Market (collectively, "Nasdaq"), the Fair Market
Value on a particular day shall be the last reported sale price of a share of
Common Stock on such exchange or on Nasdaq, on the last business day prior to
such day or, if no such sale is made on such business day, the business day
before such business day, or (B) if the Common Stock is not listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq, the fair market
value on a particular day shall be the mean of the last reported bid and asked
prices reported by the National Quotation Bureau, Inc., or the National
Association of Securities Dealers, Inc. OTC Bulletin Board on the last business
day prior to such day, or (C) if the Common Stock is not so listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq and bid and asked
prices are not so reported, the Fair Market Value on a particular day shall be
an amount determined in such reasonable manner as may be prescribed by the board
of directors of the Company.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares upon the exercise of the Warrant shall be made without charge to the
Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of the Warrant or in such name or names as may be directed by the
Holder of the Warrant; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder of
the Warrant, the Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the Holder and the Notice
of Exercise duly completed and executed and stating in whose name the
14
certificates are to be issued; and provided further, that such assignment shall
be subject to applicable laws and regulations.
6. NO RIGHTS AS WARRANT SHAREHOLDERS. The Warrant does not entitle the
Holder hereof to any voting rights, dividend rights or other rights as a
shareholder of the Company prior to the exercise thereof.
7. EXCHANGE AND REGISTRY OF WARRANT. The Company shall maintain a
registry showing the name and address of the Holder of the Warrant. The Warrant
may be surrendered for exchange, transfer or exercise, in accordance with the
terms hereof, at the office of the Company, and the Company shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.
8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of the Warrant.
9. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. ADJUSTMENTS. The above provisions are, however, subject to the
following:
(a) The Exercise Price shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of the
Exercise Price, the Holder shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of shares purchasable pursuant to this
Warrant immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Except for (i) shares of capital stock of the Company
issued to employees, directors, advisors and consultants of the
Company, vendors and other similar persons to whom the Company owes
money, (ii) options and warrants granted to employees, directors,
advisors and consultants of the Company, (iii) shares of Common Stock
of the Company issuable upon the exercise of options and warrants
granted to employees, directors, advisors and consultants, (iv) shares
of Common Stock issuable upon the exercise of all currently outstanding
warrants and other convertible securities and (v) shares of capital
stock issuable upon the conversion of all currently outstanding shares
of preferred stock of the Company, if the Company shall issue or sell
any shares of Common Stock during the next twelve months for a
consideration per share less than $0.50, then, forthwith upon such
issue or sale, the Exercise Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (A) an amount
equal to the
15
sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the then existing Exercise
Price, and (2) the consideration, if any, received by the Company upon
such issue or sale by (B) an amount equal to the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issue
or sale and (2) the number of shares of Common Stock thus issued or
sold.
(c) For the purposes of paragraph (b), the following
provisions (i) to (vi), inclusive, shall also be applicable:
(i) In case at any time the Company shall grant
(whether directly or by assumption in a merger or otherwise)
any rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or any obligations, stock or
securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being
herein called "Convertible Securities") whether or not such
rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the
price per share at which shares of Common Stock are issuable
upon the exercise of such rights or options or upon conversion
or exchange of such Convertible Securities (determined by
dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the granting of such
rights or options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the
exercise of such rights or options, plus, in the case of such
rights or options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities
and upon the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon the conversion or
exchange of all such Convertible Securities issuable upon the
exercise of such rights or options) shall be less than the
Exercise Price in effect immediately prior to the time of the
granting of such rights or options, then the total maximum
number of shares of Common Stock issuable upon the exercise of
rights or options or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon
the exercise of such rights or options shall (as of the date
of granting of such rights or options) be deemed to have been
issued for such price per share. Except as provided in
paragraph (f) below, no further adjustments of the Exercise
Price shall be made upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such rights
or options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) In case the Company shall issue or sell (whether
directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (A) the total
amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange
thereof, by (B) the total
16
maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities)
shall be less than the Exercise Price in effect immediately
prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities
shall (as of the date of the issue or sale of such Convertible
Securities) be deemed to be outstanding and to have been
issued for such price per share, provided that (x) except as
provided in paragraph (f) below, no further adjustments of the
Exercise Price shall be made upon the actual issue of such
shares of Common Stock upon conversion or exchange of such
Convertible Securities, and (y) if any such issue or sale of
such Convertible Securities is made upon exercise of any
rights to subscribe for or to purchase or any option to
purchase any such Convertible Securities for which adjustments
of the Exercise Price have been or are to be made pursuant to
other provisions of this paragraph (c), no further adjustment
of the Exercise Price shall be made by reason of such issue or
sale.
(iii) In case the Company shall declare a dividend or
make any other distribution upon any stock of the Company
payable in Common Stock or Convertible Securities, or in any
rights or options to purchase any Common Stock or Convertible
Securities, any Common Stock or Convertible Securities, or any
such rights or options, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(iv) In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
any shares of Common Stock or Convertible Securities shall be
issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company
therefor, without deduction therefrom of any expenses incurred
or any underwriting commissions, discounts or concessions paid
or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights
or options to purchase any shares of Common Stock or
Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be
the fair value of such consideration as determined by the
Board of Directors of the Company, without deduction of any
expenses incurred or any underwriting commissions, discounts
or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase shares of
Common Stock or Convertible Securities shall be issued in
connection with any merger or consolidation in which the
Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as
determined by the Board of Directors of the Company of such
portion of the assets and business of the non-surviving
corporation or corporations as such Board shall have
determined to be attributable to such shares of Common Stock,
Convertible Securities, rights or options, as the case may be.
In the event of any consolidation or merger of the Company in
which the Company is not the surviving corporation or in the
event of any sale of all or substantially all of the assets of
the Company
17
for stock or other securities of any other corporation, the
Company shall be deemed to have issued a number of shares of
its Common Stock for stock or securities of the other
corporation computed on the basis of the actual exchange ratio
on which the transaction was predicated and for a
consideration equal to the fair market value on the date of
such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment
of the Exercise Price, the determination of the number of
shares of Common Stock issuable upon exercise immediately
prior to such merger, consolidation or sale, for purposes of
paragraph (f) below, shall be made after giving effect to such
adjustment of the Exercise Price.
(v) In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in
shares of Common Stock or in Convertible Securities, or in any
rights or options to purchase any shares of Common Stock or
Convertible Securities, or (B) to subscribe for or purchase
shares of Common Stock or Convertible Securities, then such
record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such
rights of subscription or purchase, as the case may be.
(vi) The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common
Stock for the purposes of this paragraph (c).
(d) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number
of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
(e) Upon the happening of any of the following events, namely,
if the purchase price provided for in any rights or options referred to
in clause (i) of paragraph (c), the additional consideration, if any,
payable upon the conversion or exchange of Convertible Securities
referred to in clause (i) or clause (ii) of paragraph (c), or the rate
at which any Convertible Securities referred to in clause (i) or clause
(ii) of paragraph (c) are convertible into or exchangeable for Common
Stock shall change (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at
the time of such event shall forthwith be increased or decreased to the
Exercise Price which would have obtained had the adjustments made upon
the issuance of such rights, options or Convertible Securities been
made upon the basis of (i) the issuance of the number of shares of
Common Stock theretofore actually delivered upon the exercise of such
options or rights or upon the conversion or exchange of such
Convertible Securities, and the total consideration received therefor,
and (ii) the issuance at the time of such
18
change of any such options, rights or Convertible Securities then still
outstanding for the consideration, if any, received by the Company
therefor and to be received on the basis of such changed price; and on
the expiration of any such option or right or the termination of any
such right to convert or exchange such Convertible Securities, the
Exercise Price then in effect hereunder shall forthwith be increased to
the Exercise Price which would have obtained had the adjustments made
upon the issuance of such rights or options or Convertible Securities
been made upon the basis of the issuance of the shares of Common Stock
theretofore actually delivered (and the total consideration received
therefor) upon the exercise of such rights or options or upon the
conversion or exchange of such Convertible Securities. If the purchase
price provided for in any such right or option referred to in clause
(i) of paragraph (c) or the rate at which any Convertible Securities
referred to in clause (i) or clause (ii) of paragraph (c) are
convertible into or exchangeable for Common Stock shall decrease at any
time under or by reason of provisions with respect thereto designed to
protect against dilution, then in case of the delivery of Common Stock
upon the exercise of any such right or option or upon conversion or
exchange of any such Convertible Securities, the Exercise Price then in
effect hereunder shall forthwith be decreased to such Exercise Price as
would have obtained had the adjustments made upon the issuance of such
right, option or Convertible Securities been made upon the basis of the
issuance of (and the total consideration received for) the shares of
Common Stock delivered as aforesaid.
(f) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of
its assets to another corporation shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities
or assets with respect to or in exchange for shares of Common Stock
(such stock, securities or assets being hereinafter referred to as
"substituted property"), then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provision shall be made whereby the holder of this Warrant shall
thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified herein and in lieu of the
shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of this Warrant, such
substituted property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of this Warrant had such
reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provision shall be made
with respect to the rights and interests of the holder of this Warrant
to the end that the provisions hereof (including without limitation
provisions for adjustments of the Exercise Price and of the number of
shares purchasable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be, in relation to any substituted
property thereafter purchasable and receivable upon the exercise of
this Warrant. The Company shall not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed to the holder of this
Warrant at the last address of such holder appearing on the books of
the Company, the obligation to deliver to such holder such substituted
property as, in
19
accordance with the foregoing provisions, such holder may be entitled
to purchase and receive.
(g) If the Company takes any other action, or if any other
event occurs, which does not come within the scope of the provisions of
Paragraphs (a) through (f) of this Section 10 but which should result
in adjustment in the Exercise Price and/or the number of shares subject
to the Warrant in order to fairly protect the purchase rights of the
holder of this Warrant, an appropriate adjustment of such Exercise
Price shall be made by the Company.
(h) Upon any adjustment of the Exercise Price, then and in
each such case, the Company shall give written notice thereof, by
first-class mail, postage prepaid, addressed to the holder of this
Warrant at the address of such holder as shown on the books of the
Company, which notice shall state the Exercise Price resulting from
such adjustment and the increase or decrease, if any, in the number of
shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
(i) In case any time:
(i) the Company shall pay any dividend payable in
stock upon its Common Stock or make any distribution (other
than regular cash dividends) to the holders of its Common
Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of its Common Stock any additional shares
of stock of any class or other rights;
(iii) there shall be any capital reorganization,
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the holder
of this Warrant at the address of such holder as shown on the books of
the Company, of the date on which (A) the books of the Company shall
close or a record shall be taken for such dividend, distribution or
subscription rights, or (B) such reorganization, reclassification
consolidation, merger, sale, dissolution, liquidation or winding up
shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall
participate in such dividend distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as
the case may be. Such written notice shall be at least 20 days prior to
the action in question and not less than 20 days prior to the record
date or the date on which the Company's transfer books are closed in
respect thereto.
20
(j) Notwithstanding anything in this Warrant to the contrary,
no adjustment will be made to the Exercise Price as a result of the
issuance of securities by the Company after twelve months after the
date of this Warrant.
11. MISCELLANEOUS.
(a) GOVERNING LAW. The Warrant shall be binding upon any
successors or assigns of the Company. The Warrant shall constitute a
contract under the laws of Illinois and for all purposes shall be
construed in accordance with and governed by the laws of said state,
without giving effect to the conflict of laws principles.
(b) RESTRICTIONS. THIS WARRANT AND THE COMMON STOCK TO BE SOLD
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
THEREFROM.
(c) AMENDMENTS. The Warrant may be amended and the observance
of any term of the Warrant may be waived with the written consent of
the Company and the Holder.
(d) SECTION HEADINGS. The section headings used herein are
for convenience of reference only, are not part of this Warrant and
are not to affect construction of or be taken into consideration in
interpreting this Warrant.
(e) NOTICES. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be
notified upon deposit with the United States Post Office, by certified
mail, postage prepaid and addressed to the party to be notified at the
address: with respect to the Company, at its principal address in
Lincolnshire, Illinois (or such other office or agency of the Company
as it may designate by notice in writing to the Holder); and with
respect to the Holder, at the address of the Holder appearing on the
books of the Company.
* * * *
THIS WARRANT AND THE COMMON STOCK TO BE SOLD UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN EXEMPTION THEREFROM.
21
IN WITNESS WHEREOF, BioSante Pharmaceuticals, Inc. has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: _______________________, 2001
BIOSANTE PHARMACEUTICALS, INC.
By:
--------------------------------------------
Title:
--------------------------------------------
22
NOTICE OF EXERCISE
To: BioSante Pharmaceuticals, Inc.
1. The undersigned hereby elects to exercise the right to purchase
represented by the attached Warrant for, and to purchase thereunder, _______
shares of common stock, no par value (the "Warrant Shares") of BioSante
Pharmaceuticals, Inc. (the "Company") and tenders herewith payment of the
purchase price and any transfer taxes payable pursuant to the terms of the
Warrant.
2. The Warrant Shares to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Warrant Shares. The undersigned believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Warrant Shares.
3. Please issue a certificate or certificates representing said Warrant
Shares in the name set forth below:
---------------------------------
[Name]
4. If said number of Warrant Shares are not all the Warrant Shares
purchasable under the Warrant, please issue a new Warrant for the balance of
such Warrant Shares in the name set forth below:
---------------------------------
[Name]
Executed on __________________________ (date).
--------------------------------------------------------------
[NAME OF HOLDER]
By:
-----------------------------------------------------------
Printed Name:
-------------------------------------------------
Title (if applicable):
----------------------------------------
23
ANNEX B
BIOSANTE PHARMACEUTICALS, INC.
2001 FINANCING
SUMMARY OF PRINCIPAL TERMS OF OFFERING
The following is a summary of the basic terms and conditions of the private
placement of up to 15,000,000 units, each unit consisting of one share of common
stock of BioSante Pharmaceuticals, Inc. and a warrant to purchase 0.25 shares of
BioSante common stock. This summary is intended as an outline and does not
purport to include all of the terms and conditions which will be contained in a
definitive securities purchase agreement. This summary is provided for
discussion purposes only and is not intended as an offer or commitment to
purchase, or an offer or commitment to sell, the securities described herein.
The terms are not intended to be binding on any of the parties unless and until
definitive documents for the transaction are executed.
ISSUER: BioSante Pharmaceuticals, Inc.
("BioSante" or the "Company")
INVESTORS: Certain accredited investors within
the meaning of Rule 501 under
Regulation D of the Securities Act of
1933 and existing investors in
BioSante (the "Investors")
SECURITIES OFFERED: Up to 15,000,000 units (the
"Units"), each unit consisting of one
share of BioSante common stock (the
"Investor Shares") and a five-year
warrant to purchase 0.25 shares of
BioSante common stock (the "Investor
Warrants").
The Investor Warrants will have an
exercise price of $0.625 per full
share. The exercise price of the
Investor Warrants will be subject to
proportional adjustment for stock
splits and stock dividends and will be
adjusted on a weighted average basis
in the event of the sale of BioSante
securities within 12 months at a price
less than $0.50 per share, other than
as a result of the issuance of shares
of BioSante common stock to employees,
consultants and directors and upon the
exercise of stock options and
outstanding warrants and other
customary exceptions. In no event will
the number of shares subject to an
Investors Warrant be increased as a
result of the anti-dilution protection
for issuance of BioSante securities at
a price less than $0.50 per share.
24
PURCHASE PRICE: $0.50 per Unit, up to an aggregate of
$7,500,000
MINIMUM SUBSCRIPTION: 100,000 Units, or $50,000, unless
BioSante in its sole discretion agrees
to a lesser amount
MINIMUM AGGREGATE In the event BioSante does
not receive subscriptions for the
minimum OFFERING AMOUNT: placement of
$2,000,000, which may include a
minimum of $500,000 from investors
identified by Sunrise Securities
Corp., BioSante will return the
purchase price to the Investors,
without any interest thereon.
INFORMATION ABOUT BIOSANTE: Enclosed with this term sheet is a
copy of BioSante's Annual Report on
Form 10-KSB for the year ended
December 31, 1999, Quarterly Reports
on Form 10-QSB for the quarters ended
March 31, June 30 and September 30,
2000, a Current Report on Form 8-K
dated June 13, 2000 and recent press
releases issued by BioSante.
USE OF PROCEEDS: The proceeds of the Units will be used
to fund clinical development, acquire
or license technology or products, and
for working capital and other general
corporate purposes.
PRO FORMA CAPITALIZATION: The following sets forth the fully
diluted capitalization of BioSante
currently and pro forma after giving
effect to the issuance of the Units:
10 Million 15 Million
Units Issued Units Issued
Pre-Issuance Pro-Forma Pro-Forma
------------ ---------- ---------
Co mmon Stock* 52,952,943 62,952,943 67,952,943
Class C Stock** 4,687,684 4,687,684 4,687,684
Warrants 11,822,500 14,847,500 16,447,500
Options 6,025,125 6,025,125 6,025,125
----------- ----------- -----------
Total Equivalents 75,488,252 88,513,252 95,113,252
========== ========== ==========
* Does not include shares of common
stock issuable to Paladin pursuant to
that certain sub-license agreement
dated September 1, 2000.
** Class C shares are convertible to
common stock on the basis of one Class
C share and $0.25. These shares,
similar to common shares, carry one
vote per share, but are not entitled
to a dividend.
ANTICIPATED CLOSING DATE: February 28, 2001
TERMINATION DATE: April 9, 2001, unless extended by
the mutual agreement of BioSante and
Sunrise Securities Corp.
25
PRINCIPAL TERMS OF THE SECURITIES PURCHASE AGREEMENT
REPRESENTATIONS
AND WARRANTIES OF BIOSANTE: Customary for transactions of this type,
including:
o Due organization, good standing,
corporate power and authority
o Valid issuance of Units
o Exchange Act reports do not contain
any material misstatements or
omissions
o BioSante has complied with all blue
sky laws in connection with the
issuance of the Units
o Sale of the Units will not require
compliance with the prospectus
delivery or registration
requirements of the Securities Act
REGISTRATION RIGHTS: BioSante will covenant to use its reasonable
best efforts to:
o promptly file after the closing of
the offering a registration
statement (the "Registration
Statement") with the Securities and
Exchange Commission, but in no
event later than a date 90 days
after the final closing of the
Offering, to register under the
Securities Act the resale of the
Shares and the shares of BioSante
common stock underlying the
Investor Warrants;
o use its reasonable best efforts to
cause the Registration Statement to
be declared effective under the
Securities Act as promptly as
reasonably practicable;
o after the Registration Statement
is declared effective under the
Securities Act, furnish holders
with such number of copies of the
prospectus included in the
Registration Statement as the
holders may reasonably request to
facilitate the resale of shares;
and
o use its reasonable best efforts to
cause such Registration Statement
to remain effective until the
earlier of: (a) the sale of all
the shares of BioSante common
stock covered by the Registration
Statement; or (b) such time as the
holders become eligible to resell
the shares pursuant to Rule
144(k).
In the event that BioSante fails to cause
the Registration Statement to be declared
effective within 90 days of the filing
26
of the Registration Statement, BioSante
will issue to the Investors shares of
BioSante common stock equal to 1% of the
Shares for each 30 days or part thereof
effectiveness is delayed.
OTHER COVENANTS OF THE BioSante will covenant that it will use
COMPANY: commercially reasonable efforts to list of
its common stock on the American Stock
Exchange, Nasdaq or other comparable stock
exchange or quotation system, and will take
such steps necessary to meet the
requirements for such listing.
PLACEMENT AGENT: Sunrise Securities Corp.
AGENT COMMISSION: BioSante will pay a commission to Sunrise
of 7.0% of the gross sales price of the
Units sold by BioSante in the offering to
investors introduced to BioSante by Sunrise
(the "Cash Commission"), which Cash
Commission may be paid, at Sunrise's
option, in Units valued at the Unit sales
price less the Cash Commission. In
addition, BioSante will sell to Sunrise
(or its designees) a five-year warrant to
purchase Units (the "Agent's Warrants")
covering a number of Units equal to 7.0% of
the total number of Units sold by BioSante
in the offering to investors introduced to
BioSante by Sunrise, inclusive of the
Commission Units, if any, issued to
Sunrise.
The Cash Commission and Agent's Warrants
will also be payable with respect to (i)
all securities subscribed to by bona fide
accredited investors introduced to BioSante
by Sunrise who are ready willing and able
to close but whose subscriptions are
rejected by BioSante other than due to
over-subscription and (ii) any purchase of
BioSante securities by any investor
introduced by Sunrise to BioSante taking
place at any time within 12 months, as
long as such introduction occurred before
the closing of the offering.
EXPENSES: BioSante will bear all reasonable and
documented out-of-pocket expenses incurred
by Sunrise in connection with the offering
including fees of Sunrise's counsel,
printing, postage, overnight delivery,
escrow agent fees and pre-approved travel,
up to a maximum of $20,000.
DRAFTING: The transaction documents will be drafted by
counsel for BioSante.
27
ANNEX C
RISK FACTORS
AN INVESTMENT IN BIOSANTE'S UNITS INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE THE RISK FACTORS IN BIOSANTE'S ANNUAL REPORT ON FORM 10-KSB FOR THE
YEAR ENDED DECEMBER 31, 1999 AND QUARTERLY REPORTS ON FORM 10-QSB FOR THE
QUARTERS ENDED MARCH 31, JUNE 30 AND SEPTEMBER 30, 2000.
YOU SHOULD ALSO CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE INVESTING
IN THE UNITS.
RISKS RELATING TO OUR COMMON STOCK
BECAUSE OUR COMMON STOCK IS TRADED ON THE OVER-THE-COUNTER BULLETIN BOARD AND
THE CANADIAN VENTURE EXCHANGE, YOUR ABILITY TO SELL YOUR SHARES IN THE SECONDARY
TRADING MARKET MAY BE LIMITED.
Our common stock is currently traded on the Over-the-Counter Bulletin
Board and the Canadian Venture Exchange. Consequently, the liquidity of our
common stock is impaired, not only in the number of shares that are bought and
sold, but also through delays in the timing of transactions, and coverage by
security analysts and the news media, if any, of our company. As a result,
prices for shares of our common stock may be lower than might otherwise prevail
if our common stock was traded on Nasdaq or a national securities exchange
(i.e., the American Stock Exchange)
BECAUSE OUR SHARES ARE "XXXXX STOCKS," YOU MAY HAVE DIFFICULTY SELLING THEM IN
THE SECONDARY TRADING MARKET.
Federal regulations under the Securities Exchange Act of 1934 regulate
the trading of so-called "xxxxx stocks," which are generally defined as any
security not listed on a national securities exchange or Nasdaq, priced at less
than $5.00 per share and offered by an issuer with limited net tangible assets
and revenues. Since our common stock currently trades on the OTC Bulletin Board
at less than $5.00 per share, our shares are "xxxxx stocks" and may not be
traded unless a disclosure schedule explaining the xxxxx stock market and the
risks associated therewith is delivered to a potential purchaser prior to any
trade.
In addition, because our common stock is not listed on Nasdaq or any
national securities exchange and currently trades at less than $5.00 per share,
trading in our common stock is subject to Rule 15g-9 under the Exchange Act.
Under this rule, broker-dealers must take certain steps prior to selling a
"xxxxx stock," which steps include:
o obtaining financial and investment information from the investor;
o obtaining a written suitability questionnaire and purchase
agreement signed by the investor; and
o providing the investor a written identification of the shares
being offered and the quantity of the shares.
28
If these xxxxx stock rules are not followed by the broker-dealer, the
investor has no obligation to purchase the shares. The application of these
comprehensive rules will make it more difficult for broker-dealers to sell our
common stock and our shareholders, therefore, may have difficulty in selling
their shares in the secondary trading market.
OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN OUR COMMON STOCK COULD
SUFFER A DECLINE IN VALUE.
Our common stock is listed on the Over-the-Counter Bulletin Board in
the United States and on the Canadian Venture Exchange in Canada. The market
price of our common stock may fluctuate significantly in response to a number of
factors, some of which are beyond our control. These factors include:
o progress of our products through the regulatory process;
o results of preclinical studies and clinical trials;
o announcements of technological innovations or new products by us
or our competitors;
o government regulatory action affecting our products or our
competitors' products in both the United States and foreign
countries;
o developments or disputes concerning patent or proprietary rights;
o general market conditions for emerging growth and pharmaceutical
companies;
o economic conditions in the United States or abroad;
o actual or anticipated fluctuations in our operating results;
o broad market fluctuations; and
o changes in financial estimates by securities analysts.
In addition, the value of our common stock may fluctuate because it is
listed on both the OTC Bulletin Board and the Canadian Venture Exchange. We do
not know what effect, if any, the dual listing will have on the price of our
common stock in either market. Listing on both the Canadian Venture Exchange and
the OTC Bulletin Board may increase our stock price volatility due to:
o trading in different time zones;
o different ability to buy or sell our stock; and
o different trading volume.
29
WE MAY INCUR SIGNIFICANT COSTS FROM CLASS ACTION LITIGATION DUE TO OUR EXPECTED
STOCK VOLATILITY.
In the past, following periods of large price declines in the public
market price of a company's stock, holders of that stock have occasionally
instituted securities class action litigation against the company that issued
the stock. If any of our shareholders were to bring this type of lawsuit against
us, even if the lawsuit is without merit, we could incur substantial costs
defending the lawsuit. The lawsuit could also divert the time and attention of
our management, which would hurt our business. Any adverse determination in
litigation could also subject us to significant liabilities.
PROVISIONS IN OUR CORPORATE DOCUMENTS AND WYOMING LAW COULD DISCOURAGE OR
PREVENT A TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR
SHAREHOLDERS.
Provisions of our articles of incorporation and bylaws, as well as
provisions of Wyoming law, could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our shareholders. These
provisions include:
o authorizing the issuance of "blank check" preferred that could be
issued by our board of directors to increase the number of
outstanding shares and thwart a takeover attempt; and
o prohibiting cumulative voting in the election of directors, which
would otherwise allow less than a majority of shareholders to
elect director candidates.
In addition, the laws of the State of Wyoming, our state of
incorporation, contain certain provisions that could have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of our company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of our common stock. These provisions could also make it more difficult
for shareholders to change the management of our company or to effect certain
transactions.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUFFICIENT NUMBER OF SHARES OF OUR
COMMON STOCK TO CONTROL OUR COMPANY, WHICH COULD DISCOURAGE OR PREVENT A
TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR SHAREHOLDERS.
Our directors and executive officers own or control approximately 50.5%
of our outstanding voting power. Accordingly, these shareholders, individually
and as a group, may be able to influence the outcome of shareholder votes,
involving votes concerning the election of directors, the adoption or amendment
of provisions in our articles of incorporation and bylaws and the approval of
certain mergers or other similar transactions, such as sales of substantially
all of our assets. Such control by existing shareholders could have the effect
of delaying, deferring or preventing a change in control of our company. In
addition, under a shareholders agreement entered into in connection with our May
1999 private placement, several of our shareholders entered into a voting
agreement with respect to the election of directors.
30
WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS IN THE FORESEEABLE FUTURE AND,
THEREFORE, ANY RETURN ON YOUR INVESTMENT IN OUR CAPITAL STOCK MUST COME FROM
INCREASES IN THE FAIR MARKET VALUE AND TRADING PRICE OF THE CAPITAL STOCK.
We do not intend to pay any cash dividends in the foreseeable future
and, therefore, any return on your investment in our capital stock must come
from increases in the fair market value and trading price of the capital stock.
WE WILL LIKELY ISSUE ADDITIONAL EQUITY SECURITIES THAT WILL DILUTE YOUR SHARE
OWNERSHIP.
We will likely issue additional equity securities to raise capital and
through the exercise of options and warrants that are outstanding or may be
outstanding. These additional issuances will dilute your share ownership.
31
AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT
This Amendment No. 1 (this "Amendment") amends the attached
Subscription Agreement (the "Subscription Agreement") between the undersigned
and BioSante Pharmaceuticals, Inc. ("BioSante"), relating to the offer and sale
of up to 15,000,000 units to certain "accredited investors" (within the meaning
of Rule 501 under Regulation D of the Securities Act of 1933, as amended) and
existing accredited investors in BioSante. Except as otherwise provided herein,
all capitalized terms used herein are as defined in the attached Subscription
Agreement.
WHEREAS, BioSante has agreed to change the terms of the units being
sold under the Subscription Agreement as provided herein, and the undersigned
agrees to such changes.
NOW, THEREFORE, in consideration of the forgoing premises and the
mutual covenants and agreements contained herein, the parties hereby amend the
Subscription Agreement as follows:
1. AMENDMENT. The first sentence of paragraph 1 of the
Subscription Agreement is hereby amended in its entirety to state as follows:
1. SUBSCRIPTION. The undersigned is hereby purchasing from
BioSante Pharmaceuticals, Inc., a Wyoming corporation, ______ units (must be at
least 100,000 units, unless BioSante in its sole discretion otherwise agrees)
for a purchase price of $0.40 per unit, or an aggregate or total purchase price
of $_____________. Each unit consists of (i) one share of BioSante's common
stock, no par value, and (ii) a warrant to purchase .50 shares of BioSante's
common stock at an exercise price of $0.50 per full share, in substantially the
form of warrant attached as ANNEX A hereto.
2. AMENDMENT. The first sentence of paragraph 3(g) of the
Subscription Agreement is hereby amended in its entirety to state as follows:
(g) SEC FILINGS. BioSante has furnished the undersigned true
and complete copies of the latest draft of BioSante's Annual Report on Form
10-KSB for the fiscal year ended December 31, 2000 (which the undersigned
understands and acknowledges will be filed by BioSante with the SEC on or before
April 2, 2001), BioSante's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999, Quarterly Reports on Form 10-QSB for the quarters ended
March 31, June 30 and September 30, 2000, and a Current Report on Form 8-K dated
June 13, 2000 and all subsequent filings, if any, made by BioSante with the SEC.
3. AMENDMENT. A new paragraph 20 of the Subscription
Agreement is hereby added and states in its entirety as follows:
20. The undersigned agrees not to disclose any of the
material, non-public information contained in the latest draft of BioSante's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 until
such time as such Annual Report has been filed with the SEC.
4. CONTINUING EFFECT OF SUBSCRIPTION AGREEMENT. Except as
modified hereunder, the Subscription Agreement continues in full force and
effect.
BioSante and the undersigned have caused this Amendment No. 1 to be
duly executed on their behalf by their respective duly authorized
representatives as of the date first written above.
BIOSANTE PHARMACEUTICALS, INC. SUBSCRIBER
By:
----------------------------- -----------------------------
[Print Name]
Its:
-----------------------------
32
