EXHIBIT 4.2
SUBSCRIPTION AGREEMENT
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SUNPHARM CORPORATION
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UP TO 550,000 UNITS
(EACH CONSISTING OF ONE SHARE OF
COMMON STOCK AND ONE WARRANT TO PURCHASE
ONE SHARE OF COMMON STOCK)
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To: SunPharm Corporation
This Subscription Agreement (this "Agreement") is made between SunPharm
Corporation, a Delaware corporation (the "Company"), and the undersigned
prospective purchaser who is subscribing hereby for Units (the "Units"), each
consisting of one share of the Company's Common Stock ("Common Stock" or
"Shares") and a warrant to purchase one share of the Company's Common Stock
("Warrant"). The purchase price per Unit (the "Purchase Price") is $5.50. This
subscription is submitted to you in accordance with and subject to the terms and
conditions described in this Subscription Agreement and the Confidential Private
Placement Memorandum dated May 15, 1996 (as it may be supplemented or updated
from time to time, the "Memorandum"), relating to the offering (the "Offering")
of up to 550,000 Units (which may be expanded by an additional 363,636 Units at
the discretion of the Company).
In consideration of the Company's agreement to sell Units to the
undersigned upon the terms and conditions summarized in the Memorandum, the
undersigned agrees and represents as follows:
A. SUBSCRIPTION.
(1) The undersigned hereby irrevocably subscribes for and agrees to
purchase the number of Units indicated on the signature page hereto at a
purchase price of $5.50 per Unit. The undersigned encloses herewith a check
payable to "SunPharm Corporation Escrow Account" in the full amount of the
purchase price of the Shares for which the undersigned is subscribing (the
"Payment").
(2) The undersigned understands that all payments by check as provided
in Paragraph (1) above shall be delivered to the Company and, thereafter, such
payment will be deposited as soon as practicable for the undersigned's benefit
in a non-interest bearing escrow account established at SunTrust. The payment
(or, in the case of rejection of a portion of the undersigned's subscription,
the part of the payment relating to such rejected portion) will be returned
promptly, without interest, if the undersigned's subscription is rejected in
whole or in part. The Company expects to hold an
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initial closing of the Offering (the "Initial Closing") at any time after
subscriptions for the minimum number of Units identified in the Memorandum
hereby have been accepted and the other terms specified therein have been met,
before the final closing (the "Final Closing") on the final closing date (the
"Final Closing Date"). The Company may hold additional interim closings after
the Initial Closing. Any such interim closings together with the Initial Closing
are each hereinafter referred to as an "Interim Closing" and shall occur on one
or more dates each hereinafter referred to as an "Interim Closing Date." Upon
receipt by the Company of the requisite payment for all Units to be purchased by
the subscribers whose subscriptions are accepted (each, a "Purchaser" and,
collectively, the "Purchasers") at the Interim Closing and at the Final Closing,
the Shares and Warrants included in the Units so purchased will be issued in the
name of each such Purchaser, and the name of such Purchaser will be registered
on the books of the Company as the record owner of such Shares and Warrants. The
Company will issue to each Purchaser the stock certificates and warrant
certificates representing the Shares and Warrants purchased. The Shares and
Warrants may not be transferred prior to the Final Closing.
(3) The undersigned hereby acknowledges receipt of a copy of the
Memorandum, and hereby agrees to be bound thereby upon the (i) execution and
delivery to the Company of the signature page to this Subscription Agreement,
and (ii) acceptance on the Initial Closing Date, an Interim Closing Date or the
Final Closing Date, as the case may be, by the Company of the undersigned's
subscription (the "Subscription").
(4) The undersigned agrees that the Company may, in its sole and
absolute discretion, reduce the undersigned's subscription to any amount of
Units that in the aggregate does not exceed the amount of Units hereby applied
for without any prior notice to or further consent by the undersigned. The
undersigned hereby irrevocably constitutes and appoints the Company and each
officer of the Company, each of the foregoing acting singly, in each case with
full power of substitution, the true and lawful agent and attorney-in-fact of
the undersigned, with full power and authority in the undersigned's name, place
and stead, to amend this Subscription Agreement and the Questionnaire, including
in each case the undersigned's signature page thereto, to effect any of the
foregoing provisions of this Paragraph (4).
B. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants as follows:
(1) Organization and Good Standing The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the requisite corporate power and authority to own and
operate its properties and assets and to carry on its business as currently
conducted. The Company is qualified to do business in the State of Florida. The
Company is not qualified to do business as a foreign corporation in any other
jurisdiction and such qualification is not now required, except to the extent
that the failure to so qualify would not have a material adverse effect on the
Company's business as currently conducted.
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(2) Corporate Power and Authorization. The Company has the corporate
power and authority to execute and deliver this Agreement, to issue and sell the
Shares and Warrants hereunder, to issue and deliver the Common Stock issuable
upon exercise of the Warrants, and to perform its obligations under the terms of
this Agreement. All corporate action on the part of the Company, its directors
and stockholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement and the authorization, sale,
issuance and delivery of the Shares and Warrants (and the Common Stock issuable
upon exercise of the Warrants) has been taken or will be taken prior to the
Initial Closing, Interim Closing or Final Closing, as the case may be. This
Agreement constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other laws relating to or affecting
creditors' rights generally and by general equitable principles. The Shares have
been duly authorized and, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable; the Common
Stock issuable upon exercise of the Warrants has been duly and validly
authorized and reserved for issuance and, when issued in compliance with the
provisions of this Agreement and the Warrants, will be validly issued, fully
paid and nonassessable; and the Shares, Warrants and such Common Stock, when
issued and delivered, will be free of any liens or encumbrances created by the
Company; provided, however, that the Shares and the Warrants (and the Common
Stock issuable upon exercise thereof) may be subject to restrictions on transfer
under state or federal securities laws as set forth herein.
(3) Capitalization. The authorized capital stock of the Company
consists of 27,500,000 shares, divided into 25,000,000 shares of Common Stock,
par value $0.0001 per share ("Common Stock"), of which 2,884,535 shares are
issued and outstanding, and 2,500,000 shares of Preferred Stock, par value
$0.001 per share ("Preferred Stock"), none of which will be issued or
outstanding prior to the Initial Closing. All of the outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. The Company has reserved up to 275,000 shares of Common Stock for
issuance upon exercise of the Warrants and up to 2,870,151 shares of Common
Stock for issuance upon exercise of outstanding options and warrants other than
the Warrants. Except for the foregoing, as of the Initial Closing Date, and
other than as described in the Company's SEC Reports (as hereinafter defined)
and the Memorandum, there are no options, warrants or other rights outstanding
to purchase or acquire, or any securities convertible into, nor has the Company
agreed to issue or reissue, other than pursuant to this Agreement (and the
corresponding agreements of other subscribers in the offering), any of the
Company's authorized and unissued capital stock. Except as described in the
Company's SEC Reports, there are no agreements or understandings that affect or
relate to the voting or giving of written consent with respect to any of the
Company's outstanding securities. Except as described in the Company's SEC
Reports, there are no preemptive rights with respect to the issuance or sale of
the Company's capital stock and there are no restrictions on the transfer of the
Company's capital stock other than those arising from federal and state
securities laws.
(4) SEC Reports; Financial Statements. The Company has filed with the
Securities and Exchange Commission (the "Commission") all forms, reports and
documents required to be filed by it pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
by the Commission thereunder, all of which, when filed, complied in all material
respects with all applicable requirements of the Exchange Act. The Memorandum
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includes true and complete copies (not including exhibits) of its (i) Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1995 as filed with
the Commission, (ii) Quarterly Report on Form 10-QSB for the quarter ended March
31, 1996 as filed with the Commission, and (iii) proxy statements relating to
all meetings of its stockholders (whether annual or special) since December 31,
1995 and prior to the date hereof (collectively, the "Company's SEC Reports").
As of their respective dates, the Company's SEC Reports (not including any
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain any 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, in light of the circumstances under which they were made, not
misleading. The audited financial statements and unaudited interim financial
statements of the Company included in the Company's SEC Reports or incorporated
by reference therein were prepared in accordance with generally accepted
accounting principles ("GAAP") (subject, in the case of such unaudited financial
statements, to the absence of complete footnotes) applied on a consistent basis
(except as indicated therein or in the notes thereto) and fairly present in all
material respects the financial position of the Company at the dates thereof and
the results of its operations and cash flows for the periods then ended (subject
in the case of the unaudited interim financial statements, to normal year-end
audit adjustments).
(5) Absence of Certain Developments. Since March 31, 1996, there has
been no change in the assets, liabilities, condition (financial or otherwise),
operating results, business or prospects of the Company from that reflected in
the Company's SEC Reports, except changes in the ordinary course of business
that have not been, individually or in the aggregate, materially adverse to the
assets, properties, condition (financial or otherwise), operating results,
business or prospects of the Company. Since March 31, 1996, the Company has not
(i) directly or indirectly declared or paid any dividend or ordered or made any
other distribution on account of any shares of any class of the capital stock of
the Company, (ii) directly or indirectly redeemed, purchased or otherwise
acquired any such shares or agreed to do so or set aside any sum or property for
any such purpose, (iii) made any capital expenditures exceeding $100,000, or
(iv) incurred any indebtedness exceeding $100,000.
(6) Compliance with Other Instruments. The Company is not in violation
or default of any provision of its Certificate of Incorporation or By-Laws or of
any material mortgage, indenture, contract, agreement, instrument, judgment or
decree to which the Company is a party or by which it is bound. The execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby will not result in any violation of or
conflict with the Company's Certificate of Incorporation or By-Laws, and will
not result in any violation of or conflict with, or constitute a default under,
any material mortgage, indenture, contract, agreement, instrument, judgment or
decree to which the Company is a party or by which it is bound or in the
creation of any material mortgage, pledge, lien, encumbrance or charge upon any
of the properties or assets of the Company.
(7) Registration Rights. Except as set forth in the Memorandum or the
Company's SEC Reports and this Agreement, the Company is not under any
contractual obligation to register under the Securities Act any of its currently
outstanding securities or any of its securities which may hereafter be issued.
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(8) Governmental Consent. No consent, approval or authorization of or
registration, qualification, designation, declaration or filing with any
governmental authority on the part of the Company is required in connection with
the valid execution, delivery and performance of this Agreement, the offer, sale
or issuance of the Shares and the Warrants (and the issuance of the Common Stock
issuable upon exercise of the Warrants), or the consummation of any other
transaction contemplated hereby except for filings that may be required to
comply with applicable federal and state securities laws.
(9) Offering. Subject to the accuracy of the representations of the
Purchasers in their respective Subscription Agreements and Questionnaires, the
offer, sale and issuance of the Shares and the Warrants as contemplated by this
Agreement, and the issuance of the Common Stock to be issued upon exercise of
the Warrants, will constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act.
(10) Subsidiaries. The Company has no subsidiaries and does not
otherwise own or control, directly or indirectly, any equity interest in any
corporation, association, partnership or business entity, nor has the Company
made any commitment or subscribed for the purchase of any such equity interest.
(11) Absence of Undisclosed Liabilities. The Company does not have any
liability or obligation, absolute or contingent, that is not reflected in the
financial statements included in the Company's SEC Reports, other than
obligations and liabilities which taken individually or in the aggregate would
not have a material adverse effect on the Company's assets, liabilities,
condition (financial or otherwise), operating results, business or prospects.
(12) Taxes. The Company has filed all tax returns and reports required
by law to be filed, and has paid all taxes, assessments and other governmental
charges that are due and payable, except for those matters reasonably being
contested by the Company and those matters which, individually and in the
aggregate, would not have a material adverse effect on the Company's assets,
liabilities, condition (financial or otherwise), operating results, business or
prospects. The charges, accruals and reserves on the books of the Company in
respect of taxes are considered adequate by the Company, and the Company knows
of no assessment for additional taxes or any basis therefor.
(13) Title to Properties; Liens and Encumbrances. The Company has good
title to all of its properties and assets, both real and personal, tangible and
intangible, reflected on the balance sheet included in the financial statements
included in the Company's SEC Reports or acquired after the date thereof (except
inventory or other personal property disposed of in the ordinary course of
business subsequent to the date thereof), and such properties and assets are not
subject to any mortgage, pledge, lien, security interest, encumbrance or charge
other than (i) liens for current taxes not yet due and payable, (ii) liens and
encumbrances that do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, or (iii)
liens securing obligations reflected in such financial statements. With respect
to properties or assets it leases, the Company is in compliance with such leases
(except for such defaults or breaches that would not have a material adverse
affect on the Company) and holds valid leasehold interests free
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of any liens, claims or encumbrances except for those described in subsections
(i) through (iii) hereof.
(14) Litigation, etc. Except as described in the Company's SEC Reports,
there are no actions, suits, proceedings or investigations (i) pending or, to
the Company's knowledge, threatened against the Company or which otherwise
involve the Company's business or operations, or (ii) to the Company's
knowledge, pending or threatened against any of its officers, directors or
principal stockholders in their capacities as officers, directors or
stockholders.
(15) Employees. To the Company's knowledge, no employee of the Company
is in violation of any term of any employment contract or any other contract or
agreement between such employee and the Company. None of the employees of the
Company is represented by any labor union, and there is no strike or other labor
dispute pending or, to the knowledge of the Company, threatened, with respect to
the Company.
(16) Compliance With Law. The Company is conducting its business and
operations in material compliance with all governmental rules and regulations
applicable thereto, including without limitation those relating to occupational
safety, environmental, health and employment practices, and is not in violation
or default in any material respect under any statute, law, ordinance, rule,
regulation, judgment, order, decree, concession, grant, franchise, license or
other governmental authorization or approval applicable to it or any of its
properties.
(17) Permits. The Company has all permits, licenses, orders and
approvals of any federal, state, local or foreign governmental or regulatory
body (collectively, the "Permits") that are material to or necessary in the
conduct of its business as now conducted; all such Permits are in full force and
effect; no violations have been recorded in respect of any such Permits; and no
proceeding is pending or, to the knowledge of the Company, threatened to revoke
or limit any such Permits.
(18) Offering. Subject to the accuracy of the representations of the
Purchasers in their respective Subscription Agreements, the offer, sale and
issuance of the Shares and the Warrants as contemplated by this Agreement, and
the issuance of the Common Stock to be issued upon exercise of the Warrants,
will constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act.
(19) Brokers or Finders. The Company has not retained any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement, and there are no brokerage commissions, finder's fees or similar
items of compensation payable in connection therewith based on any arrangement
or agreement made by or on behalf of the Company except as disclosed in the
Memorandum.
(20) Memorandum. The Memorandum was prepared in good faith by the
Company and does not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements therein not misleading.
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(21) Intellectual Property. The Company owns or possesses the
requisite licenses or rights to use all trademarks, service marks, service
names, trade names, patents and patent applications, copyrights and other rights
(collectively the "Intangibles") described as owned by the Company in the SEC
Reports. There is no claim, action or proceeding by any person pending or, to
the Company's knowledge, threatened which pertains to or challenges the
exclusive right of the Company with respect to any Intangibles used in the
conduct of the Company's business except as described in the SEC Reports. To the
Company's knowledge, the Company's current products, services and processes do
not infringe on any Intangibles held by any third party. Except as set forth in
the SEC Reports, the Company is not under any obligation to pay royalties or
fees of any kind whatsoever to any third party with respect to technology it has
developed, uses, employs or intends to use or employ.
(22) Material Contracts. All contracts, agreements (including license
agreements and any other agreements relative to the Company's technology),
leases or other commitments, written or oral, absolute or contingent, to which
the Company is a party are filed or incorporated by reference as exhibits to the
Company's SEC Reports other than (i) contracts entered into in the ordinary
course of business, requiring the expenditure by the Company or the payment to
the Company of no more than $100,000; and (ii) contracts terminable by the
Company on no more than 30 days' notice without material cost or liability to
the Company.
(23) Interested Party Transactions. Except as described in the
Company's SEC Reports, no employee, stockholder, officer or director of the
Company is indebted (or committed to make loans or extend or guarantee credit)
to the Company nor is the Company indebted (or committed to make loans or extend
or guarantee credit) to any of them. The Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. Except
as required to be disclosed in the Company's SEC Reports, no stockholder,
officer, director or employee of the Company, nor any "affiliate" or "associate"
of such persons (as such terms are defined in the rules and regulations
promulgated under the Exchange Act), is now a party to any transaction with the
Company required to be disclosed therein under the Exchange Act or the rules and
regulations promulgated thereunder, including without limitation, any contract,
agreement or other arrangement providing for the employment of, furnishing of
services by, rental of real or personal property from, or otherwise requiring
payments to, any such person or entity.
(24) Books and Records. The minute books of the Company reflect, in all
material respects, all meetings and other corporate actions of the stockholders
and Board of Directors (and any committees thereof) of the Company.
(25) ERISA. Except as disclosed in the Company's SEC Reports, the
Company does not maintain any "Plan" subject to the Employment Retirement Income
Security Act of 1974, as amended ("ERISA").
The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:
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(1) The undersigned has been furnished with and has
carefully read the Memorandum (including the Attachments thereto) and
this Agreement and is familiar with and understands the terms of the
Offering. The undersigned has carefully considered and has, to the
extent the undersigned believes such discussion necessary, discussed
with the undersigned's professional legal, tax, accounting and
financial advisors the suitability of an investment in the Shares and
Warrants for the undersigned's particular tax and financial situation
and has determined that the Shares and Warrants being subscribed for
by the undersigned are a suitable investment for the undersigned.
(2) The undersigned acknowledges that (i) the undersigned
has had the right to request copies of any documents, records, and
books pertaining to this investment and (ii) any such documents,
records and books which the undersigned requested have been made
available for inspection by the undersigned, the undersigned's
attorney, accountant or adviser(s).
(3) The undersigned and/or the undersigned's adviser(s)
has/have had a reasonable opportunity to ask questions of and receive
answers from a person or persons acting on behalf of the Company
concerning the Offering and all such questions have been answered to
the full satisfaction of the undersigned.
(4) The undersigned is not subscribing for Units 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.
(5) If the undersigned is a natural person, the undersigned
has reached the age of majority in the state in which the undersigned
resides, has adequate means of providing for the undersigned's current
financial needs and contingencies, is able to bear the substantial
economic risks of an investment in the Shares and Warrants for an
indefinite period of time, has no need for liquidity in such
investment and, at the present time, could afford a complete loss of
such investment.
(6) The undersigned or the undersigned's purchaser
representative, as the case may be, has such knowledge and experience
in financial, tax and business matters so as to enable the undersigned
to utilize the information made available to the undersigned in
connection with the Offering to evaluate the merits and risks of an
investment in the Shares and Warrants and to make an informed
investment decision with respect thereto.
(7) The undersigned will not sell or otherwise transfer the
Shares or Warrants without registration under the Securities Act of
1933, as amended (the "Securities Act") or applicable state securities
laws or an exemption therefrom. None of the Units, the Shares and the
Warrants have been registered under the Securities Act or under the
securities laws of certain states. The undersigned represents that the
undersigned is purchasing the Shares and Warrants for the
undersigned's own account, for investment and not with a view to
resale or distribution except in compliance with the Securities Act.
The undersigned has not offered
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or sold the Shares or Warrants being acquired nor does the undersigned
have any present intention of selling, distributing or otherwise
disposing of such Shares or Warrants either currently or after the
passage of a fixed or determinable period of time or upon the
occurrence or non-occurrence of any predetermined event or
circumstance in violation of the Securities Act. The undersigned is
aware that there is currently no market for the Units, Shares or
Warrants. The undersigned is aware that an exemption from the
registration requirements of the Securities Act pursuant to Rule 144
promulgated thereunder is not presently available; and, except as
provided in Section D below, the Company has no obligation to register
the Units, Shares or Warrants subscribed for hereunder or to make
available an exemption from the registration requirements pursuant to
such Rule 144 or any successor rule for resale of the Units, Shares or
Warrants.
(8) The undersigned recognizes that investment in the Shares
and Warrants involves substantial risks, including loss of the entire
amount of such investment. Further, the undersigned has carefully read
and considered the matters set forth under the caption "Risk Factors"
in the Memorandum, and has taken full cognizance of and understands
all of the risks related to the purchase of the Shares and Warrants.
(9) The undersigned acknowledges that the certificates
representing the Shares and Warrants (and the Common Stock issuable
upon exercise of the Warrants) shall be stamped or otherwise imprinted
with a legend substantially in the following form:
"The securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or
any state securities laws and neither the securities nor any
interest therein may be offered, sold, transferred, pledged or
otherwise disposed of except pursuant to an effective
registration statement under such act or such laws or an
exemption from registration under such act and such laws,
which, in the opinion of counsel for the holder, which counsel
and opinion are reasonably satisfactory to counsel for this
corporation, is available."
(10) The undersigned is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D promulgated pursuant to
the Securities Act and is a "sophisticated person" within the meaning
of Rule 506(B)(2)(ii) of Regulation D. The information provided by the
undersigned in the Questionnaire is complete and accurate, and the
undersigned agrees to notify the Company in writing immediately upon
the occurrence of any material change in any of such information
before the acceptance of the undersigned's subscription.
(11) If this Subscription Agreement is executed and
delivered on behalf of a partnership, corporation, trust or estate:
(i) such partnership, corporation, trust or estate has the full legal
right and power and all authority and approval required (a) to execute
and deliver, or authorize execution and delivery of, this Subscription
Agreement and all other instruments executed and delivered by or on
behalf of such partnership, corporation, trust or estate in connection
with the purchase of its Shares and Warrants, (b) to delegate
authority
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pursuant to a power of attorney and (c) to purchase and hold such
Shares and Warrants; (ii) the signature of the party signing on behalf
of such partnership, corporation, trust or estate is binding upon such
partnership, corporation, trust or estate; and (iii) such partnership,
corporation or trust has not been formed for the specific purpose of
acquiring such Shares or Warrants, unless each beneficial owner of
such entity is qualified as an accredited investor within the meaning
of Rule 501 (a) of Regulation D promulgated under the Securities Act
and has submitted information substantiating such individual
qualification.
(12) If the undersigned is a retirement plan or is investing
on behalf of a retirement plan, the undersigned acknowledges that
investment in the Shares and Warrants poses additional risks including
the inability to use losses generated by an investment in the Shares
and Warrants to offset taxable income.
(13) The undersigned shall indemnify and hold harmless the
Company and each officer, director or control person of any such
entity, who is or may be a party or is or may be threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
by reason of or arising from any actual or alleged misrepresentation
or misstatement of facts or omission to represent or state facts made
or alleged to have been made by the undersigned to the Company, (or
any agent or representative of the Company) or omitted or alleged to
have been omitted by the undersigned, concerning the undersigned or
the undersigned's authority to invest or financial position in
connection with the Offering, including, without limitation, any such
misrepresentation, misstatement or omission contained in the
Questionnaire or any other document submitted by the undersigned,
against losses, liabilities and expenses for which the Company, or any
officer, director or control person of the Company has not otherwise
been reimbursed (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by the
Company, or such officer, director or control person in connection
with such action, suit or proceeding.
C. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the Company
as follows:
(1) This Subscription may be rejected, in whole or in part,
by the Company in the Company's sole and absolute discretion, at any
time before the Final Closing Date, notwithstanding prior receipt by
the undersigned of notice of acceptance of the undersigned's
Subscription.
(2) Except as set forth in Section C(1) above, the
undersigned hereby acknowledges and agrees that the subscription
hereunder is irrevocable by the undersigned, that, except as required
by law, the undersigned is not entitled to cancel, terminate or revoke
this Agreement or any agreements of the undersigned hereunder and that
this Agreement and such other agreements shall survive the death or
disability of the undersigned and shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and permitted assigns. If the
undersigned is more than one
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person, the obligations of the undersigned hereunder shall be joint
and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be
binding upon each such person and his/her heirs, executors,
administrators, successors, legal representatives and permitted
assigns.
(3) No federal or state agency has made any finding or
determination as to the accuracy or adequacy of the Memorandum or as
to the fairness of the terms of this offering for investment nor any
recommendation or endorsement of the Units.
(4) The Offering is intended to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities
Act and the provisions of Regulation D thereunder, which is in part
dependent upon the truth, completeness and accuracy of the statements
made by the undersigned herein and in the Questionnaire.
(5) There is no public or other market for the Units, Shares
or Warrants and no such public or other market may ever develop. There
can be no assurance that the undersigned will be able to sell or
dispose of the Shares or Warrants. It is understood that in order not
to jeopardize the Offering's exempt status under Section 4(2) of the
Securities Act and Regulation D, any transferee may, at a minimum, be
required to fulfill the investor suitability requirements thereunder.
(6) Some NASD members may receive compensation in connection
with the Offering but are not guaranteeing or assuming responsibility
for the operation or possible liability of the Company, including,
without limitation, compliance by the Company with the agreements
entered into in connection with the Offering, and will not supervise
or participate in the operation or management of the Company.
(7) The undersigned acknowledges that certain of the
information contained in the Memorandum is confidential and non-public
and agrees that all such information shall be kept in confidence by
the undersigned and neither used by the undersigned for the
undersigned's personal benefit (other than in connection with this
subscription) nor disclosed to any third party for any reason;
provided, however, that this obligation shall not apply to any such
information that (i) is part of the public knowledge or literature and
readily accessible at the date hereof, (ii) becomes part of the public
knowledge or literature and readily accessible by publication (except
as a result of a breach of this provision) or (iii) is received from
third parties (except third parties who disclose such information in
violation of any confidentiality agreements or obligations, including,
without limitation, any Subscription Agreement entered into with the
Company). The undersigned acknowledges that the foregoing restrictions
on the undersigned's use and disclosure of any such confidential,
non-public information contained in the Memorandum restricts the
undersigned from trading in the Company's securities to the extent
such trading is based on such confidential, non-public information.
(8) The representations, warranties and agreements of the
undersigned contained herein and in any other writing delivered in
connection with the transactions contemplated
-11-
hereby shall be true and correct in all respects on and as of the date
of the sale of the Units as if made on and as of such date and shall
survive the execution and delivery of this Agreement and the purchase
of the Units.
(9) Insofar as indemnification for liabilities under the
Securities Act may be permitted to directors, officers or controlling
persons of the Company, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is therefore
unenforceable to such extent.
(10) IN MAKING AN INVESTMENT DECISION PURCHASERS MUST RELY ON
THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY
HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION
OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE
NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE MEMORANDUM
OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(11) THE SECURITIES OFFERED HEREBY MAY NOT BE TRANSFERRED,
RESOLD OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
(12) For Residents of Arkansas:
THE SECURITIES OFFERED HEREBY ARE OFFERED PURSUANT TO A CLAIM
OF EXEMPTION UNDER SECTION 23-42-504(a)(14) OF THE ARKANSAS SECURITIES
ACT AND SECTION 4(2) Of THE SECURITIES ACT OF 1933. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE
ARKANSAS SECURITIES DEPARTMENT OR WITH THE SECURITIES AND EXCHANGE
COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED UPON
THE VALUE OF THE SECURITIES OFFERED HEREBY, MADE ANY RECOMMENDATIONS AS
TO THEIR PURCHASE, APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
-12-
(13) For Residents of California:
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
SUBSCRIPTION AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SHARES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES
TO THIS SUBSCRIPTION AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
(14) For Residents of Connecticut:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 36-
485 OF THE CONNECTICUT UNIFORM SECURITIES ACT AND THEREFORE CANNOT BE
RESOLD UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SECURITIES OFFERED
HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BANKING
COMMISSIONER OF THE STATE OF CONNECTICUT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
(15) For Residents of Florida:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE FLORIDA SECURITIES ACT (THE "FLORIDA ACT") AND WILL BE OFFERED AND
SOLD PURSUANT TO AN EXEMPTION UNDER SECTION 517.061 OF THE FLORIDA
ACT. ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE
PURCHASE OF ANY OF THE SECURITIES WITHIN THREE DAYS AFTER THE FIRST
TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE COMPANIES, AN
AGENT OF THE COMPANIES, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER
THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
WHICHEVER OCCURS LATER.
(16) For Residents of Georgia:
THE UNDERSIGNED ACKNOWLEDGES AND UNDERSTANDS (I) THAT THE
SECURITIES SUBSCRIBED FOR HEREBY WILL BE ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF
1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH
IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND (II) THAT
-13-
THE CERTIFICATES REPRESENTING THE SECURITIES SUBSCRIBED FOR HEREBY
WILL CONTAIN A LEGEND TO SUCH EFFECT.
(17) For Residents of Missouri:
THE UNDERSIGNED ACKNOWLEDGES AND UNDERSTANDS (I) THAT THE
SECURITIES SUBSCRIBED FOR HEREBY ARE NOT REGISTERED UNDER THE MISSOURI
UNIFORM SECURITIES ACT AND MAY BE DISPOSED OF ONLY THROUGH A LICENSED
BROKER-DEALER AND (II) THAT IT IS A FELONY TO SELL SECURITIES IN
VIOLATION OF THE MISSOURI SECURITIES ACT.
(18) For Residents of New York:
THIS PRIVATE OFFERING MEMORANDUM HAS NOT BEEN REVIEWED BY
THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY
GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
(19) For Residents of Pennsylvania:
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES
BEING OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD
OF TWELVE MONTHS AFTER THE DATE OF PURCHASE. UNDER PROVISION OF THE
PENNSYLVANIA SECURITIES ACT OF 1972, EACH PENNSYLVANIA RESIDENT SHALL
HAVE THE RIGHT TO WITHDRAW HIS OR HER ACCEPTANCE WITHOUT INCURRING ANY
LIABILITY TO THE ISSUER WITHIN TWO BUSINESS DAYS FROM THE DATE OF
RECEIPT BY THE COMPANY OF THIS SUBSCRIPTION AGREEMENT. TO ACCOMPLISH
THIS WITHDRAWAL A SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO
THE ISSUER AT THE ADDRESS SET FORTH IN THE TEXT HEREOF, INDICATING HIS
OR HER INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT
AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS
DAY. IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE
THE TIME WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY (IN PERSON
OR BY TELEPHONE, TO THE ISSUER AT THE NUMBER LISTED IN THE TEXT
HEREOF), A WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED
SHOULD BE REQUESTED.
D. REGISTRATION RIGHTS.
(1) Registration of Common Shares. After the expiration of one year
from the Final Closing Date, the Company shall use its reasonable best efforts
to prepare for filing with the
-14-
Commission, and cause to be declared effective, a "shelf" registration statement
(the "Shelf Registration") pursuant to Rule 415 under the Securities Act
providing for the sale by the Purchasers of the shares of Common Stock included
in the Units and issuable upon exercise of the Warrants (the "Underlying Common
Shares"). The registration statement for the Shelf Registration shall be
prepared and filed as soon as practicable after the expiration of one-year from
the Final Closing Date. The Company shall use its reasonable best efforts to
cause the registration statement to be declared effective as soon as practicable
after it has been filed with the Commission. The Company agrees to use its
reasonable best efforts to keep such Shelf Registration continuously effective
for a period ending on the earliest of (a) the fifth anniversary of the
effective date of such Shelf Registration, (b) the date on which all such
Underlying Common Shares covered thereby have been sold thereunder, or (c) the
date upon which all such Underlying Common Shares are freely transferable
without restriction under the Securities Act. For the purpose of this Agreement,
"reasonable best efforts" shall mean the best efforts of the Company consistent
with sound and reasonable business practices and judgment.
(2) Registration Procedures. In connection with the Company's
obligations with respect to the Shelf Registration, the Company shall use its
reasonable best efforts to effect the registration in furtherance of the sale of
the Underlying Common Shares by the holders thereof in accordance with the
intended method or methods of distribution thereof described in the Shelf
Registration. In connection therewith, the Company shall, as promptly as may be
practicable:
(a) prepare and file with the Commission a registration
statement with respect to the Underlying Common Shares on any form for
which the Company then qualifies or which counsel for the Company shall
deem appropriate and which form shall be available for the disposition
of the Underlying Common Shares in accordance with the intended method
or methods of disposition thereof;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the applicable period specified in Paragraph
(1) above;
(c) furnish to each Purchaser which is selling Underlying
Common Shares a copy of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto but
excluding all documents incorporated by reference therein unless
specifically so requested by such Purchaser) and such reasonable number
of copies of the prospectus included in such registration statement
(including each preliminary prospectus) as such Purchaser may
reasonably request;
(d) use reasonable best efforts to register or qualify the
Underlying Common Shares under such other securities laws or blue sky
laws of such jurisdictions as the Purchasers shall reasonably request,
and take any and all such actions as may be reasonably necessary or
advisable to enable the Purchasers to consummate the disposition in
such jurisdictions of such Underlying Common Shares;
-15-
(e) notify each Purchaser, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the period that the Company is required to keep the registration
statement effective, of the happening of any event as a result of which
the prospectus included in such registration statement (as then in
effect) contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(f) advise each Purchaser, promptly after receiving notice
thereof, of any stop order issued or threatened by the Commission and
use its reasonable best efforts to take all actions required to prevent
the entry of such stop order, or to remove it if entered;
(g) use its reasonable best efforts to cause all Underlying
Common Shares including in such registration statement to be listed, by
the date of the first sale of Underlying Common Shares pursuant to such
registration statement, on each securities exchange on which the Common
Stock of the Company is then listed or proposed to be listed;
(h) furnish to each Purchaser on the effective date of such
registration statement a signed counterpart, addressed to the
Purchasers, of (i) an opinion of counsel representing the Company and
reasonably satisfactory to such Purchasers that the registration
statement (including each amendment or supplement thereto and
prospectus included therein) complies as to form in all material
respects with the requirements of the Securities Act and the applicable
rules and regulations thereunder, and (ii) a "comfort" letter from the
independent public accountants retained by the Company, stating that
they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included or incorporated by
reference in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the published rules and regulations thereunder, and covering
such other financial matters of the type customarily covered by such
letters;
(i) otherwise use its reasonable best efforts to comply with
the provisions of the Securities Act with respect to the disposition of
all of the Underlying Common Shares covered by such registration
statement in accordance with the intended methods of disposition by the
Purchasers thereof set forth in such registration statement and to make
generally available to its security holders, as soon as reasonably
practicable, an earnings statement satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder.
(3) Expenses. All expenses incident to the Company's performance of or
compliance with the provisions of this Section D (including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, fees and expenses incurred in connection with the
listing of the Underlying Common Shares to be registered on each securities
exchange on which similar securities issued by the Company are then listed,
printing expenses, fees and disbursements of counsel for the Company, reasonable
fees and disbursements of one counsel for the Purchasers and fees and
disbursements of all independent certified public accountants and
-16-
other persons retained by the Company) will be borne by the Company.
Notwithstanding the foregoing, the Purchasers shall pay any and all underwriting
fees, discounts or commissions attributable to the sale of Underlying Common
Shares.
(4) Indemnification.
(a) Upon the registration of Underlying Common Shares pursuant
to Section D(1) of this Agreement, and in consideration of the
agreements of the Purchasers contained herein, the Company shall, and
it hereby agrees to, indemnify and hold harmless, to the extent
permitted by law, each of the Purchasers which holds Underlying Common
Shares to be included in such registration, its officers and directors,
each underwriter of such Underlying Common Shares, if any, and each
person who controls such person (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and expenses) to which such
Purchaser, its officers, directors, each underwriter, or such
controlling persons may become subject, insofar as such losses, claims,
damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of material fact contained in any such registration
statement, any prospectus or preliminary prospectus contained therein
or any amendment or supplement thereto, 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, and will
reimburse each such Purchaser, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; except (i) insofar as the same
arise out of or are based upon an untrue statement or omission or
alleged omission so made based upon information furnished by such
Purchaser, underwriter or controlling person in writing specifically
for use in such registration statement or prospectus or (ii) insofar as
the same are caused by such Purchaser's or such underwriter's failure
to deliver a copy of such registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Purchaser or such underwriter with a sufficient number of copies of the
same; and provided, however, that the foregoing indemnity and
reimbursement obligation shall not be applicable to the extent that any
such loss, claim, damage, liability or action arises out of or is based
on any untrue statement or omission made in: (i) a preliminary
prospectus, which untrue statement or omission is corrected in the
final prospectus and such final prospectus is made available to such
Purchaser in accordance with the requirements of Rule 424 under the
Securities Act; or (ii) any prospectus, which untrue statement or
omission is corrected in a prospectus supplement or amended prospectus
and such prospectus supplement or amended prospectus is made available
to such Purchaser prior to the sale of Underlying Common Shares which
gave rise to such loss, claim, damage, liability or expense.
(b) In connection with any registration statement under which
Underlying Common Shares are registered under the Securities Act and
pursuant to which a Purchaser offers and sells Underlying Common
Shares, each such Purchaser shall, and it hereby agrees to, indemnify
and hold harmless, to the extent permitted by law, each of the Company,
its officers and directors, and each person who controls the Company
(within the meaning of
-17-
the Securities Act) and, if the offering is an underwritten offering,
the underwriters, against all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and expenses) to which
the Company, its officers and directors, underwriters, or controlling
persons may become subject, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of
material fact contained in any such registration statement, any
prospectus or preliminary prospectus contained therein or any
amendment or supplement thereto, 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 and will
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action, insofar as (i) the same arise out
of or are based upon any untrue statement or omission or alleged
omission so made based upon information furnished by such Purchaser,
or an underwriter or controlling person of such Purchaser, in writing
specifically for use in such registration statement or prospectus or
(ii) the same are caused by such Purchaser's or such underwriter's
failure to deliver a copy of such registration statement or prospectus
or any amendments or supplements thereto after the Company has
furnished such Purchaser or such underwriter with a sufficient number
of copies of the same and provided, further, that the liability of
each Purchaser under this Paragraph 4(b) shall be limited to the
proportion of any such loss, claim, damage, liability or expense which
is equal to the proportion that the public offering price of
Underlying Common Shares sold by such Purchaser under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the amount of the
proceeds received by such Purchaser from the sale of the Underlying
Common Shares covered by such registration statement.
(c) Any person entitled to indemnification hereunder will
(i) give prompt notice to the indemnifying party of any claim with
respect to which it seeks indemnification (but the failure to give
such notice will not affect the right to indemnification hereunder,
unless the indemnifying party is materially prejudiced by such
failure) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party. If such defense is not assumed by the indemnifying
party or if the indemnifying party is not permitted to assume such
defense then (x) the indemnified party shall select counsel, which
counsel must be reasonably satisfactory to the indemnifying party and
(y) the indemnifying party will not be subject to any liability for
any settlement made without its consent (which consent will not be
unreasonably withheld). No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonably judgment of any indemnified party
a conflict of interest may exist
-18-
between such indemnified party and any other of such indemnified
parties with respect to such claim, in which case the indemnifying
party shall be obligated to pay the fees and expenses of one
additional counsel, who must be reasonably satisfactory to the
indemnifying party.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Paragraph 4(a) or Paragraph
4(b) are unavailable or are insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and the indemnified party as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying
party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Paragraph 4(d)
were determined by pro rata allocation (even if the Purchasers or any
underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in this Paragraph
4(d). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnification and contribution obligations and each
other provision set forth in this Paragraph 4 shall remain in full
force and effect regardless of any investigation made by or on behalf
of the Company, any Purchaser, any officer or employee of the Company
or such Purchaser, any underwriter, any officer or employee of such
underwriter, or any controlling person of any of the foregoing and
shall survive the transfer and registration of Underlying common Shares
by such Purchaser.
(5) Rule 144 Reporting. With a view to making available to Purchasers
the benefits of Rule 144 promulgated by the Commission under the Securities Act,
the Company agrees to use its reasonable best efforts to:
(a) make and keep adequate current public information with
respect to the Company available, as those terms are used in Rule 144
under the Securities Act, at all times after the Final Closing Date;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Exchange Act;
and
-19-
(c) furnish to Purchasers promptly upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents of the Company as any Purchaser may reasonably
request in order to permit such Purchaser to avail itself of any rule
or regulation of the Commission allowing such Purchaser to sell its
Underlying Common Shares without registration.
(6) Holders of Underlying Common Shares. For purposes of this Section
D, holders of the Warrants shall be deemed to be holders of the Underlying
Common Shares issuable upon exercise thereof.
(7) Amendments and Waivers. Any provision of this Section D may be
amended or waived if, but only if, in the case of an amendment, such amendment
is in writing and is signed by the Company and the Purchasers who are the
holders of a majority of the Underlying Common Shares or, in the case of a
waiver, such waiver is in writing and is signed by the party to be charged with
having granted such waiver. No failure or delay by the Company or any Purchaser
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
E. MISCELLANEOUS.
(1) All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(2) Except as set forth in Section A(4) and D(7) herein, neither this
Agreement nor any provision hereof shall be waived, modified, changed,
discharged, terminated, revoked or canceled except by an instrument in writing
signed by the party effecting the same against whom any change, discharge or
termination is sought.
(3) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed: (i) if to the
Company, to SunPharm Corporation, 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx,
Xxxxxxx 00000, Attention: Xxxxxx Xxxx (ii) if to the undersigned, to the address
for correspondence set forth in the Questionnaire, or at such other address as
may have been specified by written notice given in accordance with this
Paragraph (3).
(4) Failure of the Company to exercise any right or remedy under this
Agreement or any other agreement between the Company and the undersigned, or
otherwise, or delay by the Company in exercising such right or remedy, will not
operate as a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed by the Company.
(5) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Florida, as such laws are
applied by Florida courts to
-20-
agreements entered into and to be performed in Florida by and between residents
of Florida, and shall be binding upon the undersigned, the undersigned's heirs,
estate, legal representatives, successors and assigns and shall inure to the
benefit of the Company, its successors and assigns. If any provision of this
Subscription Agreement is invalid or unenforceable under any applicable statute
or rule of law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof that may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
(6) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended only by a
writing executed by both parties hereto.
(7) Each party hereto has had the opportunity to review this Agreement
with its separate legal counsel.
F. SIGNATURE.
The signature of this Agreement is contained as part of the applicable
subscription package, entitled "Signature Page".
-21-
SUNPHARM CORPORATION
SIGNATURE PAGE
The undersigned hereby subscribes for the number of Units set forth
below.
1. Dated: , 1996
------------------------
2. Number of Units subscribed for :
------------------------
3. Aggregate purchase price for number of Units subscribed for,
at $5.50 per Unit:
$
------------------
------------------------------ ------------------------------
Signature of Subscriber Taxpayer Identification or
(and title, if applicable) Social Security Number
------------------------------ ------------------------------
Signature of Joint Purchaser Taxpayer Identification or
(if any) Social Security Number
------------------------------ ------------------------------
Name and Residence Address Mailing Address, if different
(Post Office Address Not Acceptable): from Residence Address:
------------------------------ ------------------------------
Name (please print as name will Name (please print)
appear on certificate)
------------------------------ ------------------------------
Number and Street Number and Street
------------------------------ ------------------------------
City State Zip Code City State Zip Code
