1
DUSA PHARMACEUTICALS, INC.
SUBSCRIPTION AGREEMENT
A Minimum of 800,000 Shares ("Minimum Offering") and
A Maximum of 1,500,000 Shares ("Maximum Offering") of Common Stock
To: DUSA Pharmaceuticals, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn.: President
Ladies and Gentlemen:
1. Subscription. The undersigned is hereby purchasing from DUSA
Pharmaceuticals, Inc., a New Jersey corporation (the "Company"),
________________ shares (the "Shares") of the Company's common stock, no par
value (the "Common Stock"), for a purchase price of $5.00 per share and an
aggregate purchase price of $___________ (the "Purchase Price"). This
Subscription is being made in connection with the Company's private placement of
Shares solely to "Accredited Investors" (the "Offering"). The Terms of the
Offering are more specifically described on Annex A hereto.
2. Closing. On the date hereof (the "Closing"), payment of the Purchase
Price is being made by electronic wire transfer in accordance with the following
instructions:
Bank Name: Chase, NYC
ABA #: 000000000
Credit: United States Trust Company of New York
Account #: 000-0-000000
Further Credit: Sunrise/DUSA Pharmaceuticals, Inc.
Account #: 00000000
Attention: Xxxxx Xxxxx
or by delivery of a bank check or certified check made payable to "DUSA
Pharmaceuticals, Inc. Escrow Account," in either case against delivery to the
undersigned of a certificate representing the Shares. All checks should be
delivered, together with an executed copy of this Subscription Agreement, to the
Placement Agent for this Offering as follows:
Subagmt
January 5, 1999
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Sunrise Securities Corp.
000 Xxxx 00xx Xxxxxx
00xx xxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxx Xxxxxxxxx, Vice President
The Closing shall take place at the offices of Lane and Xxxxxxx,
000 Xxxxx 00 Xxxx, Xxxxxxxxxx, Xxx Xxxxxx xx or about the fifth business day
after the Offering terminates (i.e., on February 15, 1999 unless extended by
mutual consent of the Company and Sunrise Securities Corp.) (the "Termination
Date") or such earlier date that the Company elects to close after receipt of
subscriptions for the Minimum Offering (the "Closing Date"). Promptly after the
Closing, the Company will deliver to the undersigned certificates evidencing the
Shares to be purchased by the undersigned, registered in its name upon receipt
of payment of the Purchase Price. As of the Closing Date, the undersigned shall
be entitled to vote all of the Shares, to receive dividends, if any, and to
obtain all of the rights otherwise granted to the Company's shareholders. The
name of each undersigned shall be registered on the transfer books of the
Company as the record owner of the Shares purchased. If the Company has not
received subscriptions for at least the Minimum Offering on or prior to the
Termination Date, the Purchase Price will be returned promptly without interest.
3. Representations and Warranties of the Company. To induce the
undersigned to enter into this Agreement and to purchase the Shares, the Company
hereby represents and warrants to the undersigned the following:
(a) Organization, Standing, Etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey 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. The Company has the requisite corporate power and authority to issue
the Shares and to perform its obligations under this Subscription Agreement.
(b) Valid Issuance. The Shares, when issued and delivered against
payment therefor pursuant to terms of this Subscription Agreement, will be duly
authorized, validly issued and enforceable in accordance with their respective
terms and the terms of this Subscription Agreement.
(c) Corporate Acts and Proceedings. This Subscription Agreement
and the Offering have been duly authorized by all necessary corporate action on
behalf the Company. This Subscription Agreement has been duly executed and
delivered by an authorized officer of the Company, is a valid and binding
agreement on the part of the Company and is enforceable against the Company in
accordance with its terms. All corporate actions necessary to the authorization,
creation, issuance and delivery of the Shares and the conducting of the Offering
have been taken by the Company.
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January 5, 1999
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(d) Compliance with Applicable Laws and Other Instruments.
Neither the execution or delivery of, nor the performance of or compliance with
this Subscription Agreement, the issuance of the Shares 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 the Company pursuant to, any material agreement or
other instrument to which the Company is a party or by which it or any of its
properties, assets or rights is bound or affected, and will not violate the
Company's Certificate 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 Agreement or the offer, issuance, sale or delivery of the Shares, other
than (i) the filing of a Form D pursuant to Regulation D under the Securities
Act of 1933, as amended (the "Act"), (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 the Offering and (iv) the listing thereof on
The NASDAQ Stock Market. Under the circumstances contemplated by this
Subscription Agreement, the offer, issuance, sale and delivery of the Shares
will not, under current laws and regulations, require compliance with the
prospectus delivery or registration requirements in the Act.
(f) Capital Stock. The authorized and issued capital stock of the
Company as of the Closing is correctly set forth in the unaudited interim
financial statements for the quarter ended September 30, 1998. All of the
outstanding shares of the Company were duly authorized and validly issued and
are fully paid and nonassessable. Except as described in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, (the "Form
10-K"), quarterly report on Form 10-Q for the quarter ended March 31, 1998,
quarterly report on Form 10-Q for the quarter ended June 30, 1998, quarterly
report on Form 10-Q for the quarter ended September 30, 1998 and any other
reports filed prior to Closing (collectively, the "SEC Filings"), in each case
as filed with the Securities and Exchange Commission (the "Commission"), 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 the Offering,
pursuant to which the Company is obligated to issue any securities of any kind
representing an ownership interest in the Company. Neither the offer nor the
issuance or sale of the Shares constitutes an event under any anti-dilution
provisions of any securities issued (or issuable pursuant to outstanding rights,
warrants or options) by the Company or any agreements with respect to the
issuance of securities by the Company, which will either increase the number of
securities issuable pursuant to such provisions or decrease the consideration
per share to be received by the Company pursuant to such provisions. No holder
of any securities of the Company is entitled to any preemptive or similar rights
to purchase any securities of the Company in connection with the Offering.
(g) SEC Filings. The Company has furnished, or made available
through the XXXXX Internet web site of the Commission, to the undersigned true
and complete copies of the
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January 5, 1999
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SEC Filings. As of their respective filing dates, the SEC Filings complied in
all material respects with the applicable requirements of the Exchange Act of
1934, as amended (the "Exchange Act"). The SEC Filings do not as of their
respective dates contain any untrue statement of a material fact or omit 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.
(h) Representations. The Company certifies that the
representations set forth herein concerning the Company are true and correct as
of the date hereof, shall be true and accurate as of the date of the acceptance
hereof by the Company and shall survive thereafter.
4. Transfer Restrictions.
(a) The undersigned realizes that the Shares are not registered
under the Act or any foreign or state securities laws. The undersigned agrees
that the Shares will not be sold, offered for sale, pledged, hypothecated or
otherwise transferred (collectively, "Transfer"), except in compliance with the
Act and applicable foreign and state securities laws. The undersigned
understands that he can only Transfer the Shares pursuant to registration under
the Act or pursuant to an exemption therefrom. The undersigned understands that
Transfer of the Shares 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, the
Company has no obligation, and does not intend, to cause the Shares to be
registered under the Act or the securities law of any other jurisdiction or to
comply with the requirements for any resale exemption under the Act, including
but not limited to, those provided by Rule 144 and Rule 144A promulgated under
the Act, or under the securities law of any other jurisdiction.
(b) To enable the Company 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 Shares.
5. Representations and Warranties of the Undersigned. To induce the
Company to accept the undersigned's subscription, the undersigned hereby
represents and warrants to the Company that:
(a) the undersigned, if an individual, has reached the age of
majority in the jurisdiction in which he 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, does not intend to change residence to another jurisdiction and is
not a resident of Canada;
(b) the undersigned, if an entity, 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
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January 5, 1999
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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 Shares 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 except as permitted
under Section 6 hereof, and the undersigned is not participating, directly or
indirectly, in a distribution of such Shares and will not take, or cause to be
taken, any action that would cause the undersigned to be deemed an "underwriter"
of such Shares as defined in Section 2(11) of the Act;
(d) the undersigned has had access to all materials, books,
records, documents and information relating to the Company which the undersigned
has requested, including (i) the SEC Filings and (ii) the Company's Proxy
Statement dated April 27, 1998 (the "Proxy Statement"), and has been able to
verify the accuracy of the information contained therein;
(e) the undersigned acknowledges and understands that investment
in the Share involves a high degree of risk, including without limitation, the
risks set forth in the SEC Filings under the captions "Factors Affecting Future
Operating Results" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" as well as those risk factors set forth in
Annex A;
(f) the undersigned acknowledges that the undersigned has been
offered an opportunity to ask questions of, and receive answers from, officers
of the Company concerning all material aspects of the Company and its business
and the Offering, and that any request for such information has been fully
complied with to the extent the Company 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 the Company and can afford a complete loss
of his investment in the Company;
(h) The undersigned has, in connection with its decision to
purchase the Shares, relied solely upon the SEC Filings and the Proxy Statement.
The Undersigned has not relied upon any representations or other information
(whether oral or written) from the Company, the Placement Agent or any of its
agents other than as set forth herein and no oral or written representations
have been made or oral or written information furnished to the undersigned or
its advisors, if any, in connection with the offering of the Shares which were
in any way inconsistent with the SEC filings and the Proxy Statement;
(i) The undersigned represents and warrants to and covenants with
the Company that the undersigned has not engaged and will not engage in any
sales of the Shares, including a short sale covered by the Shares, prior to the
effectiveness of the Resale Registration Statement (as defined
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January 5, 1999
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in Section 6), except to the extent that any such short sale is fully covered by
shares of Common Stock of the Company other than the Shares;
(j) the undersigned recognizes that no governmental agency has
passed upon or endorsed the merits of the issuance of the Shares or made any
finding or determination as to the fairness of this Offering;
(k) if the undersigned is purchasing the Shares 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 Shares 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 Shares,
except commissions for which the undersigned will be responsible;
(m) the undersigned acknowledges that the Company will pay to
Sunrise Securities Corp. with respect to the sale of the Shares by the Company
to the undersigned (except to the extent otherwise provided in Annex A) (i) a
commission of 5.0% of the aggregate Purchase Price and a non-accountable expense
allowance of 3.0% thereof, payable in either case at the option of Sunrise
Securities Corp. in cash or shares of Common Stock valued at the Purchase Price
less the commission and non-accountable expense allowance, and (ii) five-year
warrants to purchase, at a purchase price of $5.00 per share, that number of
shares of Common Stock equal to 10% of the number of Shares being purchased by
the undersigned hereunder;
(n) all information which the undersigned has provided to the
Company concerning his financial position is correct and complete as the date
set forth below, and if there should be any change in such information prior to
the undersigned's acceptance as a security holder of the Company, the
undersigned will immediately provide such information to the Company and will
promptly send confirmation of such information to the Company and the Placement
Agent;
(o) the undersigned is not subscribing for the Shares as a result
of or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting to which the public
was invited;
(p) the undersigned is an "Accredited Investor" as that term is
defined in Section 501(a) of Regulation D promulgated under the Act.
Specifically the undersigned is (check appropriate item(s)):
|_| (i) a bank as defined in Section 3(a)(2) of the Act, or a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act whether acting in its
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January 5, 1999
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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 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
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, an 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;
|_| (ii) a private business development company as defined in
Section 202(a)(22) of the investment Advisers Act of 1940;
|_| (iii) 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;
|_| (iv) a director or executive officer of the Company;
|_| (v) 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;
|_| (vi) a natural person who had an individual income (not
including his or her spouse's income) in excess of $200,000 in 1996 and 1997 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 1998;
|_| (vii) 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 Shares; or
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January 5, 1999
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|_| (viii) an entity in which all of the equity owners are
Accredited Investors. (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.)
(q) the undersigned certifies that the representations set forth
herein concerning the Undersigned are true and correct as of the date hereof,
shall be true and accurate as of the date of the acceptance hereof by the
Company and shall survive thereafter.
6. Registration of Shares under the Act.
(a) By its acceptance hereof, the Company agrees that it shall,
at its expense, (i) not later than 30 business days after the final closing of
the Offering (the "Filing Deadline") file a registration statement or amend an
existing effective registration statement (in either case, the "Resale
Registration Statement") with the Commission to register under the Act the
resale by the undersigned of the Shares, (ii) use its reasonable best efforts to
cause the Resale Registration Statement to become effective under the Act as
promptly as practicable, (iii) after the Resale Registration Statement is
declared effective under the Act, furnish the undersigned with such number of
copies of the final prospectus included in the Resale Registration Statement
(the "Prospectus") as the undersigned may reasonably request to facilitate the
resale of Shares, and (iv) use its reasonable best efforts to cause such
Registration Statement to remain effective until such time as the undersigned
becomes eligible to resell the Shares pursuant to Rule 144 under the Act.
(b) The Company will prepare and file with the Commission such
amendments and Prospectus supplements, including post-effective amendments to
the Resale Registration Statement, as the Company 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 Commission; and promptly notify the undersigned when a
Prospectus, and any Prospectus supplement or post-effective amendment must be
filed or has been filed (including 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 the Company such information as the Company shall
reasonably request.
(d) At any time the Company may refuse to permit the undersigned
to resell any Shares pursuant to the Resale Registration Statement; provided,
however, that in order to exercise this right, the Company must deliver a
certificate in writing to the undersigned to the effect that withdrawal of such
Resale Registration Statement is necessary because a sale pursuant to the Resale
Registration Statement in its then-current form could constitute a violation of
the federal securities laws. In such an event, the Company shall use its best
efforts to amend the Resale Registration Statement if necessary and take all
other actions necessary to allow such sale under the federal
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January 5, 1999
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securities laws, and shall notify the undersigned promptly after it has
determined that such sale has become permissible under the federal securities
laws. The undersigned hereby covenants and agrees that it will not sell any
Shares pursuant to the Resale Registration Statement during the periods the
Resale Registration Statement is withdrawn as set forth in this Section 6(d).
(e) In connection with the Resale Registration Statement, the
Company shall use its best efforts to cause the registered Shares to be
registered or qualified for sale under the securities or "blue sky" laws of such
jurisdictions as the holders of at least a majority of all such registered
Shares and/or as the Placement Agent may reasonably request.
7. 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 the
Company and each of the Company's directors, officers, stockholders, employees,
counsel, agents, successors and assignees from and against any and all loss,
damage, liability or expenses (including, without limitation, 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 the 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
Shares or any portion thereof in violation of the Act or any applicable foreign
or state securities or "blue sky" law.
(b) The Company 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 imitation, 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 the Company set forth herein, or any failure
by the Company to fulfill any of its covenants or agreements set forth herein.
(c) To the extent permitted by law, the Company will indemnify
and hold harmless each holder of Shares included in the Resale Registration
Statement (a "Holder"), 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 Act or the Exchange Act, against any losses, claims, damages,
expenses or liabilities to which any of them may become subject, under the 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 (collectively, a "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
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January 5, 1999
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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 violation by the Company of the Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Act, the Exchange Act or any state securities law; and the Company
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 7(c), the Company, each of its directors and
officers who have signed the Resale Registration Statement, and each person, if
any, who controls the Company within the meaning of the Act or the Exchange Act,
against any losses, claims, damages or liabilities to which any of them may
become subject, under the 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
7(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 7(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 7(c) or (d),(ii) no party guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the Act) shall be entitled to contribution
from any party who was not guilty of such fraudulent misrepresentation, and
(iii) contribution from any Holder shall be limited in amount to the net amount
of proceeds received by such Holder from the sale of Shares under the Resale
Registration Statement.
8. 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.
9. 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.
10. 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
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January 5, 1999
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receipt to the party to whom it is to be given, (i) if to the Company, 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 10. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in Section 10. Any notice or
other communication given by certified mail shall be deemed given at the time of
certification thereof, 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 10 shall be deemed given at the time of receipt
thereof.
11. 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.
12. 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.
13. Severability. Each provision of this Subscription Agreements 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.
14. Assignability. This Subscription Agreement is not transferable or
assignable by the undersigned.
15. Applicable Law. This Subscription Agreement has been negotiated and
consummated in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws.
16. 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
within New York, New York. Accordingly, the parties consent and submit to the
jurisdiction of the United States federal and state courts located within New
York, New York.
17. 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.
18. Pronouns. Any personal pronoun shall be considered to mean the
corresponding masculine, feminine or neuter personal pronoun, as the context
requires.
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January 5, 1999
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IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement this __ day of ____________, 199_.
Number of Shares Subscribed for: ____________________ Shares
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)
__________________________________ _____________________________
(Tax I.D. or Social Security Number) (Tax I.D. or Social Security Number)
ACCEPTED:
DUSA PHARMACEUTICALS, INC. For entities desiring that certificates
for Shares be delivered to an address
By:_______________________________ other than that set forth above, set
Name:_____________________________ for the delivery address:
Title:____________________________
Dated: January _____, 1999 _____________________________
(Address)
_____________________________
(City, State and Zip Code)
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January 5, 1999
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Annex A
DUSA Pharmaceuticals, Inc.
January 1999 Private Placement
Terms of Offering (Amendment 1)
January 11, 1999
Private placement This offering is being made exclusively to
institutions and high-net worth individuals that
meet the definition of "Accredited Investor" as set
forth in Section 501(a) of Regulation D under the
Securities Act of 1933 ("the Act").
Amount $7,000,000 to $7,500,000
Shares 1,400,000 to 1,500,000 shares of common stock (the
Shares") of DUSA Pharmaceuticals, Inc. (the
"Company")
Price $5.00 per share
Pre-Offering outstanding 9,365,950 shares of common stock
shares
Pre-Offering warrants and 2,275,300
options
Escrow Funds shall be placed in a non-interest bearing
escrow account at US Trust Company pending receipt
of the minimum placement of $4,000,000.
Summary Update This Summary Update is a summary only and is
qualified in its entirety by the information
contained in the registration statements, current
reports and periodic reports ("SEC Filings") filed
by the Company with the Securities and Exchange
Commission.
The Company is a pharmaceutical company engaged
primarily in the development of photodynamic therapy
("PDT") and photodetection ("PD"), using Levulan(R),
the Company's brand of 5-aminolevulinic acid for
various medical indications. The Company's lead
indications are the use of Levulan(R) for PDT of
actinic keratoses ("AKs") and PD of bladder cancer.
AKs are common sun-induced pre-cancerous skin
lesions that occur primarily in fair-skinned
individuals. There are an estimated 4 million
patient visits per year in the US for this
condition.
In 1997 the Company completed a Phase III trial of
Levulan(R) for
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multiple AKs. Overall in these trials 91% of the AK
lesions were cleared with Levulan(R) PDT compared
with 25% of controls. Assessed by individual patient
responses, 89% of patients were considered cleared
with Levulan(R)PDT compared to 13% of controls. A
well-tolerated burning, stinging discomfort was
experienced in the AK lesions during light exposure.
There were no significant treatment-related side
effects, and no systemic photosensitivity reported.
Cosmetic responses were rated as good or excellent
by physicians and patients in over 90% of cases, and
84% of patients stated that they would choose
Levulan(R) PDT if they required treatment for AKs in
the future.
On June 30, 1998 the Company submitted to the US
Food and Drug Administration ("FDA") a New Drug
Application ("NDA") for Levulan(R) PDT for AKs. In
September of 1998 the FDA accepted that NDA for
filing.
The Company is in active negotiations with a number
of pharmaceutical companies for a marketing alliance
for Levulan(R) PDT for dermatology.
The Company is close to completing a Phase I/II
trial for the use of Levulan(R) in the PD of bladder
cancer.
Other potential Levulan(R) indications targeted for
development by the Company include acne, hair
removal, endometrial ablation and cervical
cancer/dysplasia.
Risk factors Investment in the Common Stock of the Company
involves a high degree of risk including, but not
limited to, those risks set forth in the SEC Filings
such as: (i) the ability of the Company to obtain
FDA approval of Levulan(R)for AKs or any other
indication, (ii) the ability of the Company to enter
into a marketing alliance for Levulan(R)for AKs or
to market the product itself, (iii) market
acceptance for Levulan(R)or any other product of the
Company, (iv) the potential impact of health care
reforms and the ability to obtain third party
reimbursement for Levulan(R)for AKs or any other
product, (v) the ability of the Company to
manufacture Levulan(R), Kerasticks(TM)and light
device products and its reliance on third-parties to
do so, (vi) the Company's ability to secure adequate
financing for its ongoing operations, (vii) the
potential impact of competitive products and the
pricing of those products and (viii) the ability of
the Company to maintain its patent portfolio. The
Shares have not been registered under the Act or any
foreign or state securities laws. The Shares may not
be sold until registration under the Act in
accordance with the registration rights described
below or pursuant to an exemption from registration.
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Placement agent Sunrise Securities Corp.("Sunrise") is acting as
placement agent. Sunrise shall be paid a commission
of 5% of the sales price and a non-accountable
expense allowance of 3% of the sales price. Sunrise
may elect to receive all or any part of its
commission and non- accountable expense allowance in
shares of common stock valued at the sales price
less the per-share commission and non-accountable
expense allowance (the "Commission Shares"). In
addition, Sunrise shall be issued warrants to
purchase a number of shares of Common Stock equal to
10% of the shares placed including any Commission
Shares. The term of these warrants is 5 years, and
the exercise price is $5.00 per share. Employees of
the Placement Agent who meet the definition of
"Accredited Investor" as set forth in Section 501(a)
of Regulation D under the Act may purchase Shares
for their own personal account on the same terms and
conditions as other investors in the offering. Any
such purchases shall count towards the minimum and
maximum offerings, respectively. The Company shall
reimburse Sunrise for all reasonable, documented out
of pocket expenses incurred by Sunrise in connection
with the offering including fees of Sunrise's
counsel, printing, postage, overnight delivery and
travel and entertainment.
Registration rights The Company shall, at its expense, (i) not
later than a date 30 business days after the final
closing of the Offering (the "Filing Deadline") file
a registration statement(s) (the "Registration
Statement") with the Securities and Exchange
Commission ("Commission") to register under the Act
the resale by the subscribers to the Shares, (ii)
use its reasonable best efforts to cause the
Registration Statement to become effective under the
Act as promptly as practicable, (iii) after the
Registration Statement is declared effective under
the Act, furnish subscribers with such number of
copies of the prospectus included in the
Registration Statement as the subscribers may
reasonably request to facilitate the resale of the
Shares; and (iv) use its reasonable best efforts to
cause such Registration Statement to remain
effective until such time as the subscribers become
eligible to resell the Shares pursuant to Rule 144.
In the event that the Company shall fail to cause
the Registration Statement to be declared effective
within 90 days of the Filing Deadline, the Company
shall issue to the subscribers as compensation
thereof, shares of Common Stock equal to (i) 1% of
the Shares for each 30 days or part thereof
effectiveness is delayed beyond 90 days up to 150
days after the Filing Deadline and (ii) 2% of the
Shares for each 30 days or part thereof
effectiveness is delayed beyond 150 days after the
Filing Deadline; provided, however, that the Company
shall not be required to issue such shares if such
failure has been caused by (a) the failure of the
subscribers to provide information in connection
with The Registration Statement or (b) the
occurrence of a material event not in the ordinary
course which may delay the effectiveness of the
Registration Statement pending public disclosure,
which disclosure shall be promptly made; and
provided further that no such shares shall be issued
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to the extent that such issuance would result in a
total number of shares being issued in the placement
that would require the consent of shareholders under
the rules of the Nasdaq Oil Market.
The Company may at any time refuse to permit
subscribers to resell any Shares pursuant to the
Registration Statement upon delivery to the
Subscribers of a written certificate to the effect
that withdrawal of the Registration Statement is
necessary because a sale thereunder in the then
current form would constitute a violation of federal
securities laws. In the event of a withdrawal, the
Company shall use its best efforts to amend the
Registration Statement and/or take all other
necessary actions to again permit sales in
compliance with the federal securities laws.
Lock-up For a period of one year following the final closing
of the offering, the Company shall not sell or offer
to sell any of its securities in a private
placement, except pursuant to the Company's stock
option plan or in connection with a dermatology
corporate alliance transaction, without the written
consent of Sunrise, which consent shall not be
unreasonably withheld. All of the Company's officers
and directors shall agree to lock-up their shares
for a period of 180 days following the final closing
of the offering.
Termination of offering The offering will terminate on February 15,
1999 unless extended by mutual consent of the
Company and Sunrise (the "Termination Date"). On
the Termination Date, any funds remaining in escrow
that have not been closed upon shall be promptly
returned to subscribers, without interest thereon.
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