SUBSCRIPTION AGREEMENT
THIS
SUBSCRIPTION AGREEMENT made as of this 29th day of December, 2006 between
Symbollon Pharmaceuticals, Inc., a Delaware corporation with its principal
offices at 00 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 (the "Company"), and the
undersigned (the "Subscriber").
WHEREAS,
the Company desires to issue and sell in a private placement to accredited
investors (the “Offering”) up to 937,500 units (“Units”), each consisting of
four shares of Class A common stock, par value $.001 per share (the “Common
Stock”) and three common stock purchase warrant (the “Warrant”). The Units are
being offered at $3.20 per share, or for an aggregate purchase price of up
to
$3,000,000. Each Warrant entitles the holder to purchase one share of common
stock at a price of $1.20 per share for a period of five years from the date
of
issuance, substantially in the form set forth as Attachment V to the
Confidential Private Placement Memorandum, dated November 7, 2006, as it may
be
supplemented and amended (the “Memorandum”), relating to the Offering. The
Offering is being conducted on a “best efforts” basis by the Company, and
completion of the Offering is not subject to the purchase of a minimum number
of
shares. All funds will be deposited directly in the treasury of the Company.
The
shares sold in the Offering and Warrants are sometime hereinafter referred
to as
the “Securities”.
NOW,
THEREFORE, for and in consideration of the prem-ises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
fol-lows:
I. SUBSCRIPTION
FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER
1.1 Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase from the Company the number of Units
set
forth upon the signature page hereof at a price equal to $3.20 per Unit, and
the
Company agrees to sell such number of Units for said purchase price.
Subscriptions will be accepted only for an even number of Units - no fractional
Warrants will be issued. The purchase price is payable by (i) check made payable
to Symbollon Pharmaceuticals, Inc., or (ii) wire transfer in accordance with
the
wire transfer instructions set forth above, contemporaneously with the execution
and deliv-ery of this Sub-scription Agreement. The Subscriber understands
however, that this pur-chase of Securities is contin-gent upon the Company
acceptance of the subscription. This subscription is submitted to the Company
in
accordance with and subject to the terms and conditions described in this
Agreement and the Memorandum.
1.2 The
Subscriber recognizes that the purchase of Securities involves a high degree
of
risk in that (i) the Company has had only limited operations, minimal revenues
and requires sub-stantial funds in addition to the proceeds of this private
place-ment, (ii) an investment in the Company is highly speculative and only
inves-tors who can afford the loss of their entire investment should consider
investing in the Company and the Securities, (iii) he may not be able to
liquidate his investment; (iv) transferability of the Securities is extremely
limited; and (v) in the event of a disposi-tion, an investor could sustain
the
loss of his entire investment.
1
1.3 The
Subscriber represents that he is an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated under the United States
Securities Act of 1933, as amended (the "Act"), as indicated by his responses
to
the Accredited Investor Ques-tion-naire, and that he is able to bear the
economic risk of an investment in the Securities.
1.4 The
Subscriber acknowledges that he has prior investment experience, including
investment in non-listed and non-registered securities, or he has employed
the
services of an investment advisor, attorney or accountant to read all of the
documents furnished or made available by the Company both to him and to all
other prospective investors in the Securities and to evalu-ate the merits and
risks of such an investment on his behalf, and that he recognizes the highly
specu-lative nature of this invest-ment.
1.5 The
Subscriber acknowledges receipt and careful review of the Memorandum (which
includes certain Risks Factors relating to the Company and this Offer-ing),
the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2005,
the
Quarterly Report on Form 10-QSB for the period ended June 30, 2006 and a Proxy
State-ment for the 2006 annual meeting of stock-holders of the Company
(collectively, the "Offering Documents"), and hereby rep-resents that he has
been furnished by the Company during the course of this transaction with all
information regarding the Company which he had requested or desired to know,
that all docu-ments which could be reasonably provided have been made available
for his inspec-tion and review; and that such information and docu-ments have,
in his opinion, afforded the Subscriber with all of the same infor-ma-tion
that
would be provided him in a registra-tion statement filed under the Act; that
he
has been afforded the opportunity to ask questions of and receive answers from
duly authorized offi-cers or other representatives of the Company con-cerning
the terms and con-di-tions of the Offering, and any addi-tional information
which he had requested.
1.6 The
Subscriber hereby acknowledges that this Offering has not been reviewed by
the
United States Securities and Exchange Commission ("SEC") because of the
Com-pany's repre-sentations that this is intended to be a nonpublic offering
pur-suant to Section 4(2) of the Act. The Sub-xxxxxxx repre-sents that the
Securities are being purchased for his own account, for investment and not
for
distribution or resale to others. The Subscriber agrees that he will not sell
or
other-wise transfer such securi-ties unless they are registered under the Act
or
unless an exemp-tion from such registration is available.
1.7 The
Subscriber understands that the shares of Common Stock, the Warrants, and the
shares of Common Stock issuable upon exercise of the Warrants (the shares of
Common Stock sold in the Offering and the shares of Common Stock issuable upon
exercise of the Warrants collectively shall be referred to as the “Shares”),
have not been registered under the Act by reason of a claimed exemption under
the provisions of the Act which depends, in part, upon his investment
inten-tion. In this connection, the Subscriber under-stands that it is the
position of the SEC that the statutory basis for such exemption would not be
present if his repre-senta-tion merely meant that his present intention was
to
hold such securities for a short period, such as the capital gains period of
tax
statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Sub-xxxxxxx realizes that, in
the
view of the SEC, a purchase now with an intent to resell would repre-sent a
purchase with an intent inconsistent with his represen-ta-tion to the Company,
and the SEC might regard such a sale or disposition as a deferred sale to which
such exemptions are not available.
2
1.8 The
Subscriber understands that Rule 144 (the "Rule") promul-gated under the Act
requires, among other condi-tions, a one-year holding period prior to the resale
(in limited amounts) of securities acquired in a non-public offer-ing without
having to satisfy the registration requirements under the Act. The Subscriber
understands that the Company makes no representa-tion or warranty regarding
its
fulfillment in the future of any reporting requirements under the Secu-rities
Exchange Act of 1934, as amended, or its dissemination to the public of any
current financial or other information concerning the Company, as is required
by
the Rule as one of the conditions of its availabil-ity. The Subscriber
understands and hereby acknowledges that the Com-pany is under no obligation
(and does not intend) to register the Warrants under the Act, and is under
no
obligation to register the Shares under the Act except as set forth in Article
IV herein. The Subscriber consents that the Company may, if it desires, permit
the transfer of the Shares out of his name only when his request for transfer
is
accompanied by an opinion of counsel reasonably satisfactory to the Company
that
neither the sale nor the proposed transfer results in a violation of the Act
or
any applicable state "blue sky" laws (collectively "Securities Laws"). The
Sub-xxxxxxx agrees to hold the Company and its direc-tors, officers and
con-trolling per-sons and their respec-tive heirs, representatives, suc-cessors
and assigns harmless and to indemnify them against all liabili-ties, costs
and
expenses incurred by them as a result of any misrepresentation made by the
Subscriber contained herein or in the Selling Securityholder Questionnaire
and
Accredited Investor Questionnaire or any sale or distribution by the undersigned
Sub-xxxxxxx in violation of any Secu-ri-ties Laws.
1.9 Subject
to the conditions set forth in Section 1.10 below and the indemnification set
forth in Section 4.4 below, certificates evidencing the Shares shall not contain
any legend (including the legends referenced below in Section 1.11), (i) while
a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Act, or (ii) following any sale
of such Shares pursuant to the Rule, or (iii) if such Shares are eligible for
sale under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the SEC). Subject to the conditions set
forth in Section 1.10 below and the indemnification set forth in Section 4.4
below, if all or any portion of a Warrant is exercised at a time when there
is
an effective registration statement to cover the resale of the Shares underlying
such Warrant, such Shares shall be issued free of all legends. The Company
agrees that following the effectiveness of the Registration Statement or at
such
time as such legend is no longer required under this Section 1, it will, no
later than three Trading Days following the delivery by a Subscriber to the
Company or the Company’s transfer agent of a certificate representing Shares, as
the case may be, issued with a restrictive legend, deliver or cause to be
delivered to such Subscriber a certificate representing such shares that is
free
from all restrictive and other legends. The Company may not make any notation
on
its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section. Certificates
for
Securities subject to legend removal hereunder shall be transmitted by the
transfer agent of the Company to the Subscribers by crediting the account of
the
Subscriber’s prime broker with the Depository Trust Company System.
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1.10 Each
Subscriber, severally and not jointly with the other Subscribers, agrees that
the removal of the restrictive legend from certificates representing Securities
as set forth in this Section is predicated upon the Subscriber not being an
Affiliate of the Company and the Company’s reliance that the Subscriber will
sell any Securities pursuant to either the registration requirements of the
Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a Registration Statement,
they will be sold in compliance with the plan of distribution set forth therein.
Each Subscriber, severally and not jointly with the other Subscribers,
acknowledges that the Company’s agreement hereunder to remove all legend from
Shares contemplated under this Section 1 is not an affirmative statement or
representation that such Shares are freely tradable.
1.11 The
Subscriber consents to the placement of a legend on any certificate or other
document evidencing the Securities stating that they have not been regis-tered
under the Act and setting forth or referring to the restrictions on
transferability and sale thereof.
1.12 The
Subscriber understands that the Company will review this Subscription Agreement,
the Selling Securityholder Questionnaire and Accredited Investor Questionnaire
and is hereby given authority by the undersigned to call his bank or place
of
employment or otherwise review the financial standing of the Subscriber; and
it
is further agreed that the Company reserves the unrestricted right to reject
or
limit any sub-scription and to close the offer at any time.
1.13 The
Subscriber hereby represents that the address of Subscriber furnished by him
at
the end of this Subscription Agreement is the undersigned's principal residence
if he is an individual or its principal business address if it is a corpora-tion
or other entity.
1.14 The
Subscriber acknowledges that if he is a Regis-tered Repre-sentative of an NASD
member firm, he must give such firm the notice required by the NASD's Rules
of
Fair Practice, receipt of which must be acknowledged by such firm on the
signa-ture page hereof.
1.15 The
Subscriber hereby represents that, except as set forth in the Offering
Documents, no representations or war-ranties have been made to the Subscriber
by
the Company or any agent (including, without limitation, any placement agent
or
syndicate participant), employee or affiliate of the Company and in entering
into this transaction, the Sub-xxxxxxx is not relying on any informa-tion,
other
than that contained in the Offering Documents and the results of inde-pendent
investigation by the Subscriber.
1.16 If
the
Subscriber is a Georgia resident, the Sub-xxxxxxx hereby acknowledges that
the
Securities have been sold in reliance on Paragraph (13) of Code Section 10-5-9
of the Georgia Securities Act of 1973.
1.17 If
the
Subscriber is a Florida resident, the Subscriber may have the right, to the
extent provided in Section 517.061(11)(a)(5) of the Florida Securities Act,
to
withdraw his subscription for the purchase and receive a full refund of all
monies paid. Such right of withdrawal may be exercised prior to the expiration
of three business days after the later to occur of (A) payment of the purchase
has been made to Symbollon or its agent or (B) communication of the right of
withdrawal to the Florida resident. Withdrawal will be without any further
liability to any person. To accomplish this withdrawal, a Subscriber need only
send a letter or telegram to Symbollon at our address set forth herein
indicating his intention to withdraw. Such letter or telegram should be set
and
postmarked prior to the end of the aforementioned third business day. It is
advisable to send such letter by certified mail, return receipt requested,
to
ensure that it is received and also to evidence the time it was mailed. If
the
request is made orally, in person or by telephone to an officer of Symbollon,
a
written confirmation that the request has been received should be
requested.
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1.18 The
Company may pay brokerage commissions, finders’ fees and/or similar compensation
to certain third parties (the “Placement Agents” or “Agents”) of up to a 8.0%
cash compensation and Warrants equal to 20.0% of the shares of Common Stock
issued (the “Placement Agent Warrants”). The Agents did not prepare any of the
information to be delivered to prospective investors in connection with the
Offering and do not make any representation or warranty concerning the accuracy
or completeness of such information. Prospective investors are advised to
conduct their own review of the business, properties and affairs of the Company
before subscribing to purchase Securities.
II. REPRESENTATIONS
BY THE COMPANY
Except
as
otherwise described in the SEC Documents (as defined below), including any
documents incorporated by reference therein or exhibits referenced or attached
thereto, the Company hereby represents and warrants to each of the Subscriber
as
follows immediately prior to the Closing:
2.1 Incorporation.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and
is
qualified to do business and is in good standing in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, condition (financial or otherwise) or prospects
of the Company ("Material
Adverse Effect").
The
Company does not have any subsidiaries. Complete and correct copies of the
certificate of incorporation (the "Certificate
of Incorporation")
and
bylaws (the "Bylaws")
of the
Company as in effect on the Effective Date have been filed by the Company with
the SEC. The Company has all requisite corporate power and authority to carry
on
its business as now conducted.
2.2 Capitalization.
The
authorized capital stock of the Company consists of (i) 100,000,000 shares
of Common Stock, of which 9,301,237 shares are outstanding on the date hereof.
The outstanding shares of capital stock of the Company have been duly and
validly issued and are fully paid and nonassessable, have been issued in
material compliance with all federal and state securities laws, and were not
issued in violation of any preemptive or similar rights to subscribe for or
purchase securities. Except for (i) options to purchase up to 1,810,000 shares
of Common Stock or other equity awards issued to employees and consultants
of
the Company pursuant to the employee benefits plans disclosed in the SEC
Documents and (ii) warrants to purchase up to 2,031,506 shares of Common Stock,
there are no existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character obligating the Company to issue, transfer or sell, or cause to be
issued, transferred or sold, any shares of the capital stock of the Company
or
other equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests, and
there are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of its capital stock or other equity
interests. There are no voting agreements or other similar arrangements with
respect to the Common Stock to which the Company is a party. The Company has
not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control
of
the Company. The Company does not maintain any pension benefit plan, or other
retirement plan, subject to the Employee Retirement Income Security
Act.
5
2.3 Authorization.
All
corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Subscription Agreement and the consummation of the
transactions contemplated herein has been taken. When executed and delivered
by
the Company, this Subscription Agreement shall constitute the legal, valid
and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and by
general equitable principles. The Company has all requisite corporate power
to
enter into this Subscription Agreement and to carry out and perform its
obligations under the terms of this Subscription Agreement.
2.4 Valid
Issuance of the Shares.
The
Shares being purchased by the Subscribers hereunder and upon exercise of the
Warrants will, upon issuance pursuant to the terms hereof and thereof, be duly
authorized and validly issued, fully paid and nonassessable. No preemptive
rights or other rights to subscribe for or purchase the Company's capital stock
exist with respect to the issuance and sale of the Securities by the Company
pursuant to this Subscription Agreement, except for any such right disclosed
in
the SEC Documents. No further approval or authority of the stockholders or
the
Board of Directors of the Company shall be required for the issuance and sale
of
the Securities by the Company, or the filing of the Registration Statement
by
the Company, as contemplated in this Subscription Agreement. The Shares and
Warrants will, upon issuance pursuant to the terms hereof and thereof, be free
and clear from any security interest, pledge, mortgage, lien (statutory or
other), charge, option to purchase, lease or otherwise acquire any interest
or
any claim, restriction or covenant, title defect, hypothecation, assignment,
deposit arrangement or other encumbrance of any kind or any preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement).
2.5 Financial
Statements.
As of
their respective dates, the financial statements of the Company included in
the
SEC Documents (as defined in Section 2.6 below) complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as permitted
pursuant to Regulation G promulgated under the Exchange Act, or (ii) in the
case
of unaudited interim financial statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year end audit
adjustments).
6
2.6 SEC
Documents.
The
Company has filed all reports, schedules, forms, statements (collectively,
and
in each case including all exhibits, financial statements and schedules thereto
and documents incorporated by reference therein and including all registration
statements and prospectuses filed with the SEC) required to be filed by it
with
the SEC through the date of the Memorandum, and the Company will file, on a
timely basis, all similar documents with the SEC during the period commencing
on
the date of the Memorandum and ending on the termination of the Offering (all
of
the foregoing being hereinafter referred to as the “SEC Documents”). As of their
respective dates, the SEC Documents complied or will comply in all material
respects with the requirements of the Securities Act, the Exchange Act and
the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary in order to make the statements
made
therein, in light of the circumstances under which they were made, not
misleading, as of their respective filing dates, except to the extent corrected
by a subsequently filed SEC Document.
2.7 Consents.
All
consents, approvals, orders and authorizations required on the part of the
Company in connection with the execution, delivery or performance of this
Subscription Agreement and the consummation of the transactions contemplated
herein have been obtained and will be effective as of the Closing
Date.
2.8 No
Conflict.
The
execution and delivery this Subscription Agreement by the Company and the
consummation of the transactions contemplated hereby will not conflict with
or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under
(i) any provision of the Certificate of Incorporation or Bylaws of the
Company, (ii) any material bond, debenture, note or other evidence of
indebtedness, or any material lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture, franchise, license or other agreement
or
instrument to which the Company is a party or by which it or its property is
bound or (iii) any judgment, order, statute, law, ordinance, rule or
regulations, applicable to the Company or its respective properties or
assets.
2.9 Nasdaq
Stock Market.
The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act and
is
quoted on the Nasdaq Stock Market Over-the-Counter Bulletin Board ("OTCBB")
under
the ticker symbol "SYMBA.OB." The Company has taken no action designed to
remove, or which, to the Company's knowledge, is likely to have the effect
of,
suspending or terminating the quotation of the Common Stock on the OTCBB. The
Company shall comply with all requirements, if any, of the National Association
of Securities Dealers, Inc. (the "NASD")
with
respect to the issuance of the Shares and Conversion Stock and the quoting
of
the Shares and Conversion Stock (when issued) on the OTCBB.
7
2.10 Absence
of Litigation.
There
is no action, suit or proceeding or, to the Company’s knowledge, any
investigation, pending, or to the Company’s knowledge, threatened by or before
any court, governmental body or regulatory agency against the Company that
is
required to be disclosed in the SEC Documents and is not so disclosed. The
Company has not received any written or oral notification of, or request for
information in connection with, any formal or informal inquiry, investigation
or
proceeding from the SEC or the NASD. The foregoing includes, without limitation,
any such action, suit, proceeding or investigation that questions this
Subscription Agreement or the right of the Company to execute, deliver and
perform under same.
2.11 Offering.
The
Company has not in the past nor will it hereafter take any action to sell,
offer
for sale or solicit offers to buy any securities of the Company which would
require the offer, issuance or sale of the Securities, as contemplated by this
Subscription Agreement, to be registered under Section 5 of the Securities
Act.
2.12 Investment
Company.
The
Company is not and, after giving effect to the offering and sale of the Shares
and the Warrants, will not be required to register as, an “investment company”
as such term is defined in the Investment Company Act of 1940, as
amended.
2.13 No
Manipulation of Stock.
The
Company has not taken and will not, in violation of applicable law, take, any
action designed to or that might reasonably be expected to cause or result
in
unlawful manipulation of the price of the Common Stock.
2.14 No
Violations.
The
Company is not in violation of its Certificate of Incorporation, Bylaws or
other
organizational documents, or in violation of any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company, which violation, individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect,
or is
not in default (and there exists no condition which, with the passage of time
or
otherwise, would constitute a default) in the performance of any material bond,
debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company is a party or by which the Company is bound or by which the property
of the Company is bound, which would be reasonably expected to have a Material
Adverse Effect.
2.15 Accountants.
Xxxxxx,
Xxxxxxxx & Company, Ltd., who issued their report with respect to the
financial statements to be incorporated by reference from the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2005 into the Registration
Statement and the prospectus which forms a part thereof, are an independent
registered public accounting firm as required by the Securities
Act.
2.16 Internal
Accounting Controls.
The
Company maintains a system of internal accounting controls (as such term is
defined in Rule 13a-14 and 15d-14 under the Exchange Act) sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
8
2.17 Disclosure
Controls.
The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-14 and 15d-14 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries,
if
any, is made known to the Company’s Chief Executive Officer and its Chief
Financial Officer by others within those entities, and such disclosure controls
and procedures are effective to perform the functions for which they were
established; the Company’s auditors and the Audit Committee of the Board of
Directors have been advised of: (i) any significant deficiencies in the design
or operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data; and (ii)
any
fraud, whether or not material, that involves management or other employees
who
have a role in the Company’s internal controls; any material weaknesses in
internal controls have been identified for the Company’s auditors; since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses; the
principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company have made all certifications
required by the Sarbanes Oxley Act of 2002 (the “Sarbanes Oxley Act”) and any
related rules and regulations promulgated by the Commission, and the statements
contained in any such certification are complete and correct; and the Company
is
otherwise in compliance in all material respects with all applicable effective
provisions of the Sarbanes Oxley Act.
2.18 Disclosure.
Neither
this Subscription Agreement, any of the schedules or exhibits hereto, nor any
other document or certificate provided by the Company to the Subscribers in
connection herewith contains any untrue statement of a material fact or, when
considered as a whole, omits a material fact necessary to make the statements
contained herein, in light of the circumstances in which they were made, not
misleading.
III. TERMS
OF
SUBSCRIPTION
3.1 The
subscription period will begin on November 7, 2006 and will terminate upon
the
earlier to occur of (i) the sale of all of the Securities or (ii) 11:59 PM
Eastern time on December 7, 2006 unless (in the sole discretion of the Company)
extended by the Company for an additional period, not to exceed February 7,
2007, or earlier terminated by the Company (the "Termina-tion Date"). The
Securities are offered on a "best efforts" basis, and the acceptance of
subscriptions is at the discretion of the Company. The mini-mum sub-scription
per subscriber shall be 3,125 Units ($10,000); provided, however, that smaller
investments may be accepted at the discre-tion of the Company.
3.2 Placement
of the Securities may be made by the Placement Agents, who will receive up
to
(i) a place-ment fee in the amount of 8% of the purchase price of the Securities
placed by them and (ii) Placement Agent Warrants equal to 20.0% of the shares
of
Common Stock sold by them.
9
3.3 Pending
the sale of the Securities, all funds paid hereunder shall be deposited by
the
Company in its bank account. If the Company, in its sole discretion, rejects
this subscription for purchase of Securities, then this subscription shall
be
void and all funds paid hereunder by the Subscriber, without inter-est, shall
be
promptly returned to the Subscriber, subject to paragraph 3.5 hereof. Sale
of
the Securities shall occur in upon acceptance by the Company of such
Subscriber’s subscription. Closings are not subject to the purchase of a minimum
number of Securities.
3.4 The
Subscriber hereby authorizes and directs the Company to deliver the Securities
to be issued to such Subscriber pursuant to this Subscription Agreement either
to the residential or business address indicated in the Selling Securityholder
Ques-tionnaire, or as instructed by the Placement Agents.
3.5 The
Subscriber hereby authorizes and directs the Company to return any funds for
unaccepted subscriptions to the same account from which the funds were drawn,
including any cus-tomer account maintained with the Place-ment
Agents.
IV. REGISTRATION
RIGHTS
4.1 Registration.
The
Company hereby agrees with the holders of the Securities, or their permitted
transferees (collec-tively, the "Holders") who shall have agreed in writing
with
the Company to be bound by the provisions hereof applicable to the Holders,
to
use its best efforts to file within thirty (30) days following the final closing
of this Offering a registra-tion statement under the Act covering the resale
of
the Shares included in the Offering and issuable upon exercise of the Warrants
(the "Registrable Securities") by the Holders and to use its best efforts to
have such registration statement declared effective within 90 days of the final
closing of this Offering.
4.2 Registration
Procedures.
In
connection with the registration of Registrable Securities under the Act
pursuant to Section 4.1, the Company will use its commercially reasonable best
efforts to:
(a) prepare
and file with the SEC a registration statement with respect to such securities,
and cause such registration statement to become effective, and to cause the
same
to remain effec-tive for such period as may be reasonably necessary to effect
the sale of such securities, provided
that
such period need not extend beyond the date that all the Reg-istrable
Securi-ties are eligible for sale under Rule 144 under the Act (the
"Registra-tion Termination Date").
(b) prepare
and file with the SEC such amendments to such registration statement and
supplements to the prospectus contained therein as may be necessary to keep
such
registration statement effective for such period as may be reasonably neces-sary
to effect the sale of such securities, but not beyond the Registration
Termination Date.
10
(c) furnish
to the security holders participating in such regis-tration such rea-sonable
number of copies of the registration statement, preliminary prospectus, final
pro-spectus and such other documents as they may reasonably request in order
to
facilitate the public offering of such securities;
(d) register
or qualify the securities covered by such registration statement under such
state securities or blue sky laws of such jurisdictions as such participating
holders may reasonably request in writ-ing within ten (10) days following the
original filing of such registra-tion statement, except that the Company shall
not for any purpose be required to execute a gen-eral consent to service of
process or to qualify to do business as a foreign corpora-tion in any
juris-diction wherein it is not so qualified;
(e) notify
the security holders participating in such registra-tion, promptly after it
shall receive notice thereof, of the time when such registra-tion statement
has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(f) notify
such holders promptly of any request by the SEC for the amending or
supplementing of such registration statement or prospectus or for additional
infor-mation;
(g) prepare
and file with the SEC, promptly upon the request of any such holders, any
amendments or supplements to such registration state-ment or prospectus which,
in the opinion of counsel for such holders (and con-curred in by counsel for
the
Company), is required under the Act or the rules and regulations thereunder
in
connection with the distribution of Common Stock by such holder,
(h) prepare
and promptly file with the SEC and promptly notify such holders of the filing
of
such amendment or supplement to such regis-tration statement or pro-spectus
as
may be necessary to correct any statements or omissions if, at the time when
a
prospec-tus relating to such securities is required to be delivered under the
Act, any event shall have occurred as the result of which any such prospectus
or
any other prospectus as then in effect would include an untrue statement of
a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading; and
(i) advise
such holders, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC sus-pending the
effectiveness of such registration statement or the initiation or threat-ening
of any proceeding for that purpose and promptly use its best efforts to pre-vent
the issuance of any stop order or to obtain its with-drawal if such stop order
should be issued.
4.3 Expenses.
(a) With
respect to the registration pursuant to Section 4.1 hereof, all fees, costs
and
expenses of and incidental to such registra-tion (as specified in paragraph
(b)
below) shall be borne by the Company, provided, however, that any security
holders par-ticipating in such registration shall bear their pro rata share
of
any underwriting discount and com-missions and transfer taxes.
11
(b) The
fees,
costs and expenses of registration to be borne by the Company as provided in
paragraph (a) above shall include, without limita-tion, all registration,
filing, and NASD fees, printing expenses, fees and disburse-ments of counsel
and
accountants for the Company, and expenses of complying with state securities
or
blue sky laws of any juris-dictions in which the securities to be offered are
to
be registered and qualified, including blue sky legal fees and expenses of
Company counsel. Fees and disbursements of counsel and accoun-tants for the
selling security holders and any other expenses incurred by the selling security
holders not expressly included above shall be borne by the selling security
holders.
4.4 Indemnification.
(a) To
the
extent permitted by law, the Company will indemnify and hold harmless each
holder of Registrable Securities which are included in a registration statement
pur-suant to the provisions of Section 4.1, its directors and officers, and
any
under-writer (as defined in the Act) for such holder and each person, if any,
who controls such holder or such underwriter within the meaning of the Act,
from
and against, and will reimburse such holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon 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; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with informa-tion
furnished by such holder, such underwriter or such control-ling person in
writing specifically for use in the preparation thereof.
(b) Each
holder of Registrable Securities included in a regis-tration pursuant to the
provisions of Section 4.1 hereof will indemnify and hold harmless the Company,
its directors and officers, any controlling person and any under-writer and
any
person which controls such underwriter from and against, and will reimburse
the
Company, its directors and officers, any controlling person and any under-writer
and any person which controls such underwriter with respect to, any and all
loss, damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter or controlling person thereof may become subject
under the Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by, arise out of or are based upon (i) any untrue
statement (or alleged untrue statement) of a material fact contained in any
such
registration statement, prospectus, offering circular or other document, or
any
omission (or alleged omission) to state therein a material fact required to
be
stated therein or necessary to make the statements therein not misleading,
but
only to the extent, that such untrue statement or alleged untrue statement
or
omission or alleged omission was so made in reliance upon and in strict
con-formity with written information fur-nished by or on behalf of such holder
specifically for use in the preparation thereof (ii) such holder’s failure to
sell the Registrable Securities only pursuant to and in the manner contemplated
by the Registration Statement, including the Plan of Distribution section
contained therein, and otherwise in compliance with the prospectus delivery
requirements of such Act or (iii) violations of the Securities Act arising
solely from the holder’s request to remove the legends from the Registrable
Securities prior to a sale of the Registrable Securities pursuant to a
Registration Statement, Rule 144 of the Securities Act, or any other exemption
from registration under the Securities Act,.
12
(c) Promptly
after receipt by an indemnified party pursuant to the provisions of paragraph
(a) or (b) of this Section 4.4 of notice of the com-mencement of any action
involving the subject matter of the foregoing indemnity provisions such
indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said para-graph (a) or (b),
promptly notify the indemnifying party of the commencement thereof; but the
omission to so notify the indemni-fying party will not relieve it from any
liability which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any indemnified party and it noti-fies
the indemnifying party of the commencement thereof, the indem-nifying party
shall have the right to participate in, and, to the extent that it may wish,
jointly with any other indemnify-ing party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
provided, how-ever, if the defendants in any action include both the
indemni-fied party and the indemnifying party and the indemnified party shall
have rea-sonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are dif-ferent from or in addition to
those available to the indemnifying party, or if there is a conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties have the right to select
separate counsel to partici-xxxx in the defense of such action on behalf of
such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to
the
provisions of said paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connec-tion with the defense
thereof other than reasonable costs of investigation, unless (i) the indemnified
party shall have employed counsel in accordance with the provi-sions of the
preced-ing sentence, (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party.
4.5 Additional
Provisions.
(a) Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event requiring the preparation of a supplement or amendment to a
prospectus relating to Registrable Securities so that, as thereafter delivered
to the Holders, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, each Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
registration statement contemplated by Section 4.1 until its receipt of copies
of the supplemented or amended prospectus from the Company and, if so directed
by the Company, each Holder shall deliver to the Company all copies, other
than
permanent file copies then in such Holder’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. The Company agrees to use its best efforts to promptly prepare and
file
any such supplemented or amended prospectus that may be required.
13
(b) Each
Holder agrees to suspend, upon request of the Company, any disposition of
Registrable Securities pursuant to the Registration Statement and prospectus
contemplated by Section 4.1 during (A) any period not to exceed two 30-day
periods within any one 12-month period the Company requires in connection with
a
primary underwritten offering of equity securities and (B) any period, not
to
exceed one 60-day period per circumstance or development, when the Company
determines in good faith that offers and sales pursuant thereto should not
be
made by reason of the presence of material undisclosed circumstances or
developments with respect to which the disclosure that would be required in
such
a prospectus is premature, would have an adverse effect on the Company or is
otherwise inadvisable.
(c) As
a
condition to the inclusion of its Registrable Securities, each Holder shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may request in writing
or as
shall be required in connection with any registration, qualification or
compliance referred to in this Article IV.
(d) Each
Holder hereby covenants with the Company (1) not to make any sale of the
Registrable Securities without effectively causing the prospectus delivery
requirements under the Act to be satisfied, and (2) if such Registrable
Securities are to be sold by any method or in any transaction other than on
a
national securities exchange, in the over-the-counter market, in privately
negotiated transactions, or in a combination of such methods, to notify the
Company at least five (5) business days prior to the date on which the Holder
first offers to sell any such Registrable Securities.
(e) Each
Holder acknowledges and agrees that the unregistered Registrable Securities
sold
pursuant to the Registration Statement described in this Article V are not
transferable on the books of the Company unless the stock certificate submitted
to the transfer agent evidencing such unregistered Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (A) the unregistered Registrable Securities have been sold in
accordance with such Registration Statement and (B) the requirement of
delivering a current prospectus has been satisfied.
(f) Each
Holder agrees not to take any action with respect to any distribution deemed
to
be made pursuant to such Registration Statement, that constitutes a violation
of
Regulation M under the Exchange Act or any other applicable rule, regulation
or
law.
(g) At
the
end of the period during which the Company is obligated to keep the Registration
Statement current and effective as described above, the Holders of Registrable
Securities included in the Registration Statement shall discontinue sales of
shares pursuant to such Registration Statement upon receipt of notice from
the
Company of its intention to remove from registration the shares covered by
such
Registration Statement which remain unsold, and such Holders shall notify the
Company of the number of shares registered which remain unsold immediately
upon
receipt of such notice from the Company.
14
V. MISCELLANEOUS
5.1 Any
notice or other communication given hereunder shall be deemed sufficient if
in
writing and sent by registered or certified mail, return receipt requested,
addressed to the Company, at its address set forth on the first page hereof,
Attention: Xxxx X. Xxxxxxxxx, Pres-ident and to the Subscriber at his address
indicated on the last page of this Subscription Agreement. Notices shall be
deemed to have been given on the date of mailing, except notices of change
of
address, which shall be deemed to have been given when received.
5.2 This
Subscription Agreement shall not be changed, modified or amended except by
a
writing signed by the parties to be charged, and this Sub-scription Agreement
may not be discharged except by performance in accordance with its terms or
by a
writ-ing signed by the party to be charged.
5.3 This
Subscription Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Subscription Agreement sets forth the entire agree-ment and
understanding between the parties as to the subject matter thereof and merges
and supersedes all prior discussions, agree-ments and understandings of any
and
every nature among them.
5.4 Notwithstanding
the place where this Subscription Agreement may be executed by any of the
parties hereto, the par-ties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and gov-erned by the laws of The
Commonwealth of Massachusetts. The parties hereby agree that any dispute which
may arise between them arising out of or in connection with this Subscription
Agreement shall be adjudicated before a court located in Boston, Massachusetts
and they hereby submit to the exclusive jurisdiction of the courts of The
Commonwealth of Massachusetts located in Boston, Massachusetts and of the
federal courts in the District of Massachusetts with respect to any action
or
legal proceed-ing com-menced by any party, and irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is
an
inconvenient forum, relating to or arising out of this Subscription Agreement
or
any acts or omis-sions relating to the sale of the securities hereunder, and
con-sent to the service of process in any such action or legal pro-ceeding
by
means of registered or certified mail, return receipt requested, in care of
the
address set forth below or such other address as the undersigned shall furnish
in writing to the other.
5.5 This
Subscription Agreement may be executed in counterparts. Upon the execution
and
delivery of this Subscrip-tion Agreement by the Subscriber, this Subscription
Agree-ment shall become a binding obligation of the Subscriber with respect
to
the purchase of Securities as herein provided; subject, however, to the right
hereby reserved to the Company to enter into the same agreements with other
subscribers and to add and/or to delete other persons as
subscribers.
15
5.6 The
holding of any provision of this Subscription Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Sub-scription Agreement, which shall remain in full force
and
effect.
5.7 It
is
agreed that a waiver by either party of a breach of any provision of this
Subscription Agreement shall not operate, or be construed, as a waiver of any
subsequent breach by that same party.
5.8 The
parties agree to execute and deliver all such further docu-ments, agreements
and
instruments and take such other and further action as may be necessary or
appro-priate to carry out the purposes and intent of this Subscrip-tion
Agreement.
[Next
Page is the Signature Page]
16
IN
WITNESS WHEREOF, the parties have executed this Subscrip-tion Agree-ment as
of
the day and year first written above.
|
______________________________
Signature
of Subscriber(s)
|
______________________________
|
|
______________________________
Name
of Subscriber(s)
[please
print]
|
______________________________
|
|
______________________________
Address
of Subscriber(s)
|
______________________________
|
|
______________________________
Social
Security of Taxpayer
Identification
Number of Sub-xxxxxxx(s)
|
______________________________
|
|
______________________________
Number
of Units Sub-scribed For
|
*
If
Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The
undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
_________________________________
Name
of
NASD Member Firm
_________________________________
By:
Authorized Officer
Subscription
Accepted:
SYMBOLLON
PHARMACEUTICALS, INC.
By:______________________________________
Xxxx
X.
Xxxxxxxxx,
Presi-dent
and Chief Executive Offi-cer
Date:
December 29, 2006
17
