EXHIBIT 10.18
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SUBSCRIPTION AGREEMENT
AND
INVESTMENT LETTER
RxBazaar, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Dear Sirs:
This will acknowledge that the undersigned hereby irrevocably
subscribes to purchase _______ units ("Units"), each Unit consisting of a
$100,000 10% Unsecured Convertible Promissory Note ("Note") and a warrant to
purchase, at an exercise price of $.10 per share, 100,000 shares of common
stock, $0.01 par value per share ("Common Stock") of RxBazaar, Inc. (the
"Company") for the aggregate purchase price set forth below my signature at the
bottom of this Agreement. The Company is offering (the "Offering") for sale,
pursuant to a Confidential Private Placement memorandum (the "Confidential
Memorandum"), up to fifteen (15) Units (the "Maximum Offering"). The Offering
shall be offered on a "best efforts" basis. The Notes will have principal and
interest thereon payable upon the earlier of (i) the second anniversary of the
date of issuance; or (ii) at the election of the holder by written notice to the
Company received by the Company no later than the tenth business day following
the date of successful consummation by the Company of a private placement or
firm commitment underwritten initial public offering of its securities in which
the gross proceeds equal or exceed $5,000,000 (the earliest of such dates
referred to as the "Maturity Date"). The purchase price per Unit is $100,000.
The Units, Notes, the warrants and shares of Common Stock issuable upon exercise
of the Warrants or conversion of the Notes in accordance with the terms thereof,
are collectively referred to herein sometimes as the "Securities." A minimum of
one Unit must be purchased, subject to the right of the Company to accept
subscriptions for lesser amounts.
This Offering is being made to accredited investors pursuant to
exemptions available under the Securities Act of 1933, as amended (the "Act")
and under the securities laws of certain states.
I hereby tender a check payable to the order of "RxBazaar, Inc." or
acknowledge a wire transfer of funds in accordance with the wire transfer
information provided by the Company, in the amount indicated set forth below my
signature at the bottom of this Agreement, two manually executed copies of this
Agreement and an executed copy of my Confidential Prospective Purchaser
Questionnaire.
The offering period for this Offering will terminate upon the earlier
to occur of (1) the date the Maximum Offering is sold or (2) ninety (90) days
from the date of the Confidential Memorandum; provided, however, that the 90-day
period may be extended for up to three additional periods, each such period not
to exceed thirty (30) days, by the Company without notice to any subscriber
(such date or extended date, the "Offering Termination Date"). The Company
reserves the right to hold one or more interim closings prior to the Offering
Termination Date.
The Units subscribed for herein shall not be deemed issued to or owned
by me until two copies of this Agreement have been executed by me and
countersigned by the Company and a closing has occurred.
The undersigned acknowledges that the Securities purchased hereby have
not been registered under the Act or the securities laws of any state; that the
Securities are being purchased for investment purposes and not with a view to
distribution or resale, nor with the intention of selling, transferring or
otherwise disposing of all or any part of the Securities for any particular
price, or at any particular time, or upon the happening of any particular event
or circumstances, except selling, transferring, or disposing of the Securities
made in full compliance with all applicable provisions of the Act, the rules and
regulations promulgated by the Securities and Exchange Commission (the
"Commission") thereunder, and applicable state securities laws; and that the
Securities must be held indefinitely unless they are subsequently registered
under the Act or an exemption from such registration is available and will
require an opinion of counsel that registration is not required under the Act or
such state securities laws; and that the certificates to be issued will bear a
legend indicating that transfer of the Securities have not been so registered in
the following or similar words:
"The Securities have not been registered under the Securities Act of
1933, as amended (the "Act") or under any state securities law and may
not be pledged, sold, assigned or transferred in the absence of an
effective Registration Statement with respect thereto under the Act
and any applicable state securities law, or unless the Company
receives an opinion of counsel satisfactory to the Company that such
registration is not required. The Company's subscription agreement
with the holder contains additional provisions restricting the
transfer of these securities. A copy of such agreement is available
for inspection at the Company's office."
In connection with the purchase of the Securities, I acknowledge that
the Company will be relying on the information and on the representations set
forth herein, and I hereby represent warrant, agree and acknowledge that:
(a) I have not received any general solicitation or general advertising
regarding the purchase of the Securities.
(b) I have not employed a finder in connection with this transaction.
(c) I have sufficient knowledge and experience of financial and
business matters so that I am able to evaluate the merits and risks of
purchasing the Securities.
(d) I do not require for my liquidity needs the funds being used to
purchase the Securities, I have adequate means to provide for my personal needs,
and I possess the ability to bear the economic risk of holding the Securities
purchased hereunder indefinitely, and can afford a complete loss on the purchase
of the Securities.
(e) During the transaction and prior to purchase, I have read this
Agreement and the Company's Private Placement Memorandum relating to this
offering and have had a full opportunity to ask questions of and receive answers
from the Company and its officers and authorized representatives regarding the
terms and conditions of this Agreement and the transactions contemplated hereby,
as well as the affairs of the Company and related matters.
(f) I understand that a restrictive legend will be placed upon the
certificates representing the Securities purchased hereunder, and that the
instructions will be placed upon the Company's records for the Securities
prohibiting the transfer of the Securities absent full compliance with the Act
and applicable state securities laws.
(g) I understand that the Company intends to use a portion of the
proceeds from the sale of the Securities in this Offering for working capital
and general corporate purposes.
(h) I understand that the purchase price of the Securities being
purchased hereby has been arbitrarily determined and bears no relationship to
the assets or book value of the Company, or other customary investment criteria.
(i) I understand that this Agreement is subject to the Company's
acceptance and may be rejected by the Company at any time prior to the closing
or termination of the Offering, as the case may be, in its sole discretion, for
any reason or no reason at all, notwithstanding prior receipt by me of notice of
acceptance of my subscription. In the event that this subscription is rejected
in whole or in part, or if the sale of the Units is not consummated for any
reason by the close of the offering period, in which event this subscription
shall be deemed to be rejected, this Agreement and any other agreement entered
into between the undersigned and the Company relating to this subscription shall
thereafter have no force or effect and the Company shall promptly return or
cause the return of that applicable portion of the purchase price of the Units
to the undersigned without interest, and this Agreement shall thereafter have no
force or effect to that extent. In the event my subscription is accepted, the
funds specified above shall be released to the Company and the Units will be
delivered to me.
(j) There is no contract, undertaking, agreement or arrangement with
any person to sell, transfer or pledge to such person or anyone else the
Securities or any part thereof, and I have no present plans to enter into any
such contract, undertaking, agreement or arrangement.
(k) I shall not transfer any Securities acquired hereunder before the
date that is one year after the date on which the Company first becomes subject
to the reporting requirements under Section 13 or 15(d) under the Securities
Exchange Act of 1934, as amended.
(l) I further agree that the Securities offered hereby may not be sold
or otherwise transferred until twenty-four months after the date upon which the
registration statement with respect to an initial public offering of the
Company's securities is declared effective (the "Effective Date") by the
Commission, unless the Company, in its sole discretion, agrees to the sale of
all or part of such securities at an earlier date. In addition, (i) any sales of
the Securities shall be effected through the lead underwriter of such initial
public offering for the period commencing on the date of issuance and ending
twenty-four months after the effective date of a registration statement relating
to such initial public offering, and (ii) I shall compensate such underwriter in
accordance with its customary compensation practices, and if I am a Pennsylvania
resident I will comply with ss.204.011 of the Pennsylvania Blue Sky Regulations
to the extent applicable. The parties hereto agree that the above-referenced
underwriter is intended to be a third-party beneficiary of this paragraph (l)
and that no modification of the "lock-up" provisions contained in this paragraph
(l) may be made without the prior written consent of such underwriter.
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Any certificate representing Securities shall carry substantially the
following legend, insofar as is consistent with applicable law:
"The shares of common stock represented by this certificate are subject
to restrictions on transfer set forth in a Subscription Agreement dated as of
________________, 2001. A copy of the Subscription Agreement is available for
inspection without charge at the office of the Treasurer of the Company."
(m) I understand that the Company has been made aware that in
connection with applications by companies to list their securities for quotation
on the Nasdaq Stock Market, the National Association of Securities Dealers, Inc.
(the "NASD") has been reviewing sales of securities by companies prior to the
company offering its securities to the public. The NASD's purpose is to
determine if the potential returns to be received by the earlier investors is
"reasonable" in relation to the risks that they undertook. Although the NASD, as
of the date hereof, has not issued any interpretive release, notice to members
or quantitative standard to determine reasonableness, the NASD has informally
indicated that reasonableness will be determined (until further notice) on a
case-by-case basis. I further understand that it is the Company's current
intention that in connection with an initial public offering of the Company's
securities (a "Company IPO"), if one occurs, to apply to have its securities
approved for listing on the Nasdaq Stock Market. During the application process,
the NASD will likely review the potential returns to investors in this Offering.
In the event that the NASD determines that the returns to investors in this
Offering were unreasonable, the NASD would probably refuse to approve the
Company's securities for listing. TO AVOID SUCH A DETERMINATION, I AGREE TO
PERMIT THE COMPANY, UNILATERALLY AND IN ITS SOLE DISCRETION, TO MAKE ANY CHANGES
IT DEEMS NECESSARY OR ADVISABLE IN THE SECURITIES PURCHASED IN THIS OFFERING SO
THAT THE NASD MAY BE SATISFIED THAT THE RETURNS AN INVESTOR COULD POTENTIALLY
RECEIVE IS "REASONABLE" AND WILL APPROVE ANY LISTING APPLICATION THE COMPANY MAY
SUBMIT. I UNDERSTAND THAT SUCH CHANGES COULD INCLUDE, BUT NOT BE LIMITED TO,
INCREASING THE LOCK-UP PERIOD AND/OR MAKING SUCH LOCK-UP PERIOD UNCONDITIONAL
AND ABSOLUTE OR CHANGING THE TERMS OF THE UNITS. I understand that there can be
no assurance that the NASD's requirements would be satisfied by any modification
that the Company might make. I further understand that investors herein will
have no right to participate in negotiations with the NASD, determine any change
in their securities purchased herein or have any right to receive a refund of
their investment in the Units.
I further understand and acknowledge that if the underwriter of an
initial public offering of RxBazaar's securities notifies the Company that the
presence of any investor might cause the NASD not to approve the Company's
securities for listing, then the Company will have the option to redeem the
investor's Unit for the initial purchase price plus accrued interest on the
Note.
(n) I UNDERSTAND AND AGREE THAT THE COMPANY, IN ITS SOLE DISCRETION,
HAS THE RIGHT TO MAKE ANY CHANGES IT DEEMS NECESSARY OR ADVISABLE IN THE
SECURITIES, INCLUDING BUT NOT LIMITED TO INCREASING THE LOCK-UP PERIOD IN WHICH
THE SECURITIES MAY BE SOLD OR OTHERWISE TRANSFERRED AFTER THE DATE UPON WHICH A
REGISTRATION STATEMENT IS DECLARED EFFECTIVE AND MAKING SUCH LOCK-UP PERIOD
ABSOLUTE AND UNCONDITIONAL, AND CHANGING THE TERMS OF THE SECURITIES, IN THE
EVENT SUCH CHANGES ARE REQUIRED IN ORDER FOR THE COMPANY TO HAVE ITS SECURITIES
LISTED FOR QUOTATION ON THE NASDAQ STOCK MARKET;
(o) I understand that there can be no assurance that a Company IPO will
be undertaken or successfully completed, or if undertaken, will be completed in
any reasonable time period. I further understand that any such undertaking would
be subject to numerous conditions including, but not limited to, negotiation and
finalization of an underwriting agreement that itself would have substantial and
material preconditions and qualifications. In addition, the securities markets
generally have from time to time been volatile, experiencing significant price
and volume fluctuations which have had and may have a negative impact upon the
securities industry generally, including broker-dealers specifically. In the
event the Company was unable to successfully complete a Company IPO the Units
offered hereby would likely be without value, and I understand that I might lose
my entire investment; and
(p) I am not a member of the NASD. I have not, for a period of 12
months prior to the date of this Agreement, been affiliated or associated with
any company, firm, or other entity which is a member of the NASD. I do not own
stock or other interest in, and I am not a creditor of, any member of the NASD
(other than interests acquired in open market purchases).
(q) The indebtedness evidenced by the Note, and the payment of the
principal and any interest thereon, shall be wholly subordinated, junior and
subject in right of payment, to the extent and in the manner therein provided,
to the prior payment of all Senior Indebtedness of the Company now outstanding
or hereinafter incurred. "Senior Indebtedness" means the principal, interest and
reasonable and customary charges and expenses arising out of or relating to all
indebtedness of the
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Company for monies borrowed from banks, trust companies, insurance companies and
other financial institutions, and indebtedness thereto for any related costs,
expenses and indemnities.
(r) I understand that, upon repayment of the Notes by the Company, I
may realize interest income which, if I am a non-U.S. taxpayer, may be subject
to withholding by the Company. I hereby authorize the Company to withhold and
pay over to the Internal Revenue Service, from the value of any sums payable to
me in respect of any of the Securities, any and all amounts required by law to
be withheld by U.S. federal and state tax laws and regulations.
(s) Except for any rescission rights that may be provided under
applicable laws, I am not entitled to cancel, terminate, or revoke my
subscription, and any agreements made in connection herewith shall survive my
death or disability.
(t) I hereby agree to indemnify and hold harmless the Company, and its
officers, directors, stockholders, employees, agents and attorneys against any
and all losses, claims, demands, liabilities and expenses (including reasonable
legal or other expenses) incurred by each such person in connection with
defending or investigating any claims or liabilities, whether or not resulting
in any liability to such person to which any such indemnified party may become
subject under the Act, under any other statute, at common law or otherwise,
insofar as such losses, claims, demands, liabilities and expenses (i) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact made by the undersigned in this Agreement or the Confidential
Prospective Purchaser Questionnaire, (ii) arise out of or are based upon any
breach by the undersigned of any representation, warranty or agreement contained
herein, or (iii) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
including any post-effective amendment or amendments thereto in which shares of
Common Stock of the undersigned are included in reliance upon written
information furnished to the Company with respect to the undersigned by or on
behalf of the undersigned expressly for use in such registration statement.
The Company represents, warrants and agrees that:
(a) The Company has been duly incorporated and is validly existing as a
corporation under the laws of Delaware and has the requisite corporate power to
own its properties and to carry on its business as proposed to be conducted.
(b) As of the date hereof, the authorized capital stock of the Company
consists of 70,000,000 shares of which (i) 60,000,000 shares are designated in
the Company's Restated Certificate of Incorporation as common stock, par value
$0.001 per share, of which 23,793,962 shares were issued and outstanding as of
November 17, 2001, and (ii) 10,000,000 shares are designated as preferred stock,
par value $0.001 per share, of which 2,466,667 shares of Series A Convertible
Preferred Stock were issued and outstanding as of November 17, 2001. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other similar rights or liens or encumbrances suffered or permitted by the
Company.
(c) This Agreement and the Note have been duly authorized by the
Company and when executed and delivered in receipt of full consideration will
constitute valid and binding agreements, enforceable in accordance with their
respective terms (except to the extent that the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally), and the Company has full corporate power and authority
necessary to enter into this Agreement and the Note and to perform its
obligations hereunder and thereunder.
(d) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates or of any third party or of the stockholders of the
Company is required for execution by the Company of this Agreement or the Note
or the performance of its obligations hereunder or thereunder including, without
limitation, the issuance and sale of the Common Stock (except for registration
of the Common Stock under the Securities Act pursuant to the relevant provisions
hereof and notices of sale required to be filed with the Securities and Exchange
Commission pursuant to Regulation D promulgated under the Securities Act of 1933
or any state securities law authority pursuant to applicable blue sky laws).
(e) Neither the sale of the Units pursuant to this Agreement, nor the
performance of its obligations under this Agreement or the Note by the Company
will violate, conflict with, result in a breach of, or constitute a default (or
an event which with the giving or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the Restated Certificate of
Incorporation or by-laws of the Company or any decree, judgment, order, law,
treaty, rule regulation or determination applicable to the Company of any court,
governmental agency or body, or arbitrator having jurisdiction over the Company
or its subsidiaries or over the properties or assets of the Company, the
violation, conflict, breach or default of which would have a material adverse
effect on the Company.
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(f) The shares of Common Stock issuable upon exercise of the Warrants
have been duly and validly authorized and are (i) free and clear of any security
interests, liens, claims or other encumbrances, (ii) when issued upon receipt of
full consideration therefor will be fully paid and nonassessable, (iii) are not
subject to any preemptive or other similar rights of the holders of any
securities of the Company, and (iv) do not subject the holders thereof to
personal liability by reason of being such holders.
(g) None of the Company, any affiliate of the Company, or any person
acting on behalf of the Company or any such affiliate has engaged, or will
engage in any general solicitation or general advertising with respect to the
Securities.
(h) Neither the Company nor any of its affiliates has directly or
indirectly made any offers or sales of any securities or solicited any offers to
buy any security, under circumstances that would require registration of the
Securities under the 1933 Act.
The Company covenants and agrees with the undersigned:
(a) To comply with all requirements of Section 4(2) and Section 3(a)(9)
applicable to the Company, and, to the extent applicable, Regulation D under the
Securities Act, with respect to the Offering.
(b) To notify the Purchaser of the expected closing date of a private
placement or firm commitment underwritten initial public offering of the
Company's securities in which the gross proceeds equal or exceed $5,000,000, no
later than two business days before the closing date of such offering or as soon
thereafter as practicable, for the purpose of enabling the Purchaser to elect to
cause the Maturity Date to occur on the tenth business day after the closing
date.
This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts applicable to contracts made and
to be performed entirely within such state.
This Agreement contains the entire agreement of the parties, and there
are no representations, covenants or other agreements except as stated or
referred to herein. Neither this Agreement nor any provision hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be delivered by hand, sent via overnight
courier, sent by facsimile, or mailed by first class certified or registered
mail, return receipt requested, postage prepaid:
(a) if to the Company, at:
RxBazaar, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
(b) if to the undersigned, to the address of the undersigned as it
appears in the signature block below.
or to such other person or entity or at such other address as any party
shall designate by notice to the other in accordance with this paragraph.
Notices provided in accordance with this paragraph shall be deemed delivered (i)
upon personal delivery with signature required, (ii) one Business Day after they
have been sent to the recipient by reputable overnight courier service (charges
prepaid and signature required), (iii) upon confirmation, answer back received,
of successful transmission of a facsimile message containing such notice if sent
between 9 a.m. and 5 p.m., local time of the recipient, on any Business Day, and
as of 9 a.m. local time of the recipient on the next Business Day if sent at any
other time, or (iv) three Business Days after deposit in the mail. The term
"Business Day" as used in this paragraph shall mean any day other than Saturday,
Sunday or a day on which banking institutions are not required to be open in
Tokyo Japan.
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This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which taken together shall
be deemed to be one and the same instrument.
* * *
Dated: _______________________, 2001
ENTITY SUBSCRIBERS SIGN HERE: INDIVIDUAL SUBSCRIBERS SIGN HERE:
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Print Name of Subscriber Print Name of Subscriber
By:
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Signature
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Print Name and Title of Person Signing Signature of Joint Subscriber, if any
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Taxpayer Identification Number Social Security Number
Notice Address: Notice Address (No P.O. Box Numbers):
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Telephone: ( ) Telephone: ( )
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Facsimile: ( ) Facsimile: ( )
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* * * * * * * * *
Number of Units Subscribed For:___________________________
Total Purchase Price: $________________________________
Payment Tendered Herewith: $__________________________
(Check One)
__________ Individual
__________ Tenants-in-Common
__________ Joint tenants with right of survivorship (each must sign)
__________ Community Property*
__________ In Partnership
__________ As custodian, trustee or agent for _______________
__________ Corporation
* If the investor(s) is a resident of a community property state the
subscription should indicate whether the Securities will be owned as
separate or community property, if the Securities are to be registered
jointly in the name of more than one person and the nature of the joint
ownership should be indicated (i.e., tenants in common, joint tenants with
right of survivorship, tenants by the entirety, or other designation as may
be permitted by law of the investor's domicile).
* * *
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The foregoing subscription is hereby accepted by RxBazaar, Inc. this
_____ day of _______________, 2001 for ___________ Units. RxBazaar, Inc., by its
execution hereof, hereby confirms its agreement to be bound by the provisions of
this Agreement.
RXBAZAAR, INC.
By:
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Name:
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Title:
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