SUBSCRIPTION AGREEMENT
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BENTLEY PHARMACEUTICALS, INC.
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Bentley Pharmaceuticals, Inc.
Two Urban Centre, Suite 400
0000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
February 11, 1999
Dear Sir or Madam:
Upon the terms and subject to the conditions of an Asset
Purchase Agreement, dated February 1, 1999 effective as of December 31, 1998
(the "Asset Purchase Agreement"), between Conrex Pharmaceutical Corporation
("Conrex ") and Xxxxxxx Xxx ("Xxx"), in which Conrex agreed to sell certain of
its assets to Xxx, Conrex has agreed to accept 359,282 shares (the "Shares") of
common stock, $0.02 par value per share (the "Common Stock") of Bentley
Pharmaceuticals, Inc. (the "Company") as part of the Purchase Price (as defined
in the Asset Purchase Agreement). Therefore, in consideration of the premises
and the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Conrex hereby agrees to:
1. Subscription. Conrex hereby applies to subscribe for the
Shares. Once this Subscription Agreement (this "Agreement") is executed by both
Conrex and the Company, it is intended to create a binding agreement between
Conrex and the Company with respect to the terms and conditions described below.
2. Representations and Warranties of Conrex. Conrex
acknowledges, represents, warrants and agrees as follows:
(a) Organization and Authorization. Conrex
is a corporation duly organized, validly existing and in good standing under the
laws of the state of New Jersey and is qualified to do business as a foreign
corporation in the State of Pennsylvania and has all requisite corporate power
and authority to purchase and hold the Shares. Conrex has all requisite
corporate power and authority to enter into this Agreement, to purchase the
Shares hereunder and to carry out and perform its obligations under the terms of
this Agreement and the consummation by Conrex of the transactions contemplated
hereby requires no other proceedings on the part of Conrex. The undersigned
signatory has all right, power and authority to execute and deliver this
Agreement on behalf of Conrex. This Agreement has been duly executed and
delivered by Conrex and, assuming the execution and delivery hereof and thereof
by the Company, will constitute the legal, valid and binding obligations of
Conrex, enforceable against Conrex in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors generally and
the availability of equitable remedies.
(b) Due Diligence. Conrex has received a
copy of such documents as requested by it, has carefully reviewed such
documents, has had the opportunity to obtain any additional information
necessary to verify the accuracy of the information contained in such documents
and has been given the opportunity to meet with representatives of the Company
and to have them answer any questions and provide any additional information
regarding the terms and conditions of this particular investment deemed relevant
by Conrex, and all such questions have been answered and requested information
provided to Conrex's full satisfaction. Among the documents received and
reviewed by Conrex are: (i) the Company's Annual Report on Form 10-K for the
year ended December 31, 1997; (ii) the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998
(such documents are collectively referred to in this Agreement as the "Exchange
Act Reports"); (iii) the Registration Statement and (iv) a Registration Rights
Agreement between the Company and Conrex with respect to the Shares, dated as of
the date hereof (the "Registration Rights Agreement.") In making its decision to
accept the Shares as part of the Purchase Price, Conrex has relied solely upon
its review of the documents referred to above and this Agreement and independent
investigations made by it or its representatives.
(c) No Legal Advice from the Company. Conrex
acknowledges that it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with its own legal counsel and tax
advisors. Except for any statements or representations of the Company made in
this Agreement, in the Exchange Act Reports and in the Registration Rights
Agreement, Conrex is relying solely on such counsel and advisors and not on any
statements or representations of the Company or any of its representative or
agents for legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
(d) Not an Affiliate. Conrex is not an
officer, director or "affiliate" (as that term is defined in Rule 405 of the
Act) of the Company.
(e) Reliance on Representations and
Warranties. Conrex understands that the Shares are being offered and sold to it
in reliance on specific provisions of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Conrex set forth in this Agreement in order to determine the applicability of
such provisions.
(f) No Registration. Conrex understands that
the sale of the Shares has not been registered under the Act, in reliance upon
an exemption therefrom by virtue of Section 4(2) and Regulation D promulgated
under the Act. Conrex understands that the Shares must be held indefinitely and
may not be offered, transferred, resold, pledged, hypothecated or otherwise
disposed of until the sale or other transfer thereof is registered under the
Act, pursuant to the terms and conditions of the Registration Rights Agreement
or unless an exemption from such registration
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is available at that time. Conrex is aware that it will be required to bear the
financial risks of this investment for an indefinite period of time unless
transferred in accordance with the above. Conrex covenants that it will not
knowingly make any sale, transfer or other disposition of the Shares or any
interest therein in violation of the Act, the Exchange Act of 1934, as amended,
or the rules and regulations promulgated under either of said Acts.
(g) Investment Intent. Conrex is acquiring
the Shares solely for its own account as principal and not with a view to the
distribution thereof to or for the benefit or account of any other person, in
whole or in part, and no other person has a direct or indirect beneficial
interest in such Shares. Conrex understands and agrees that it must bear the
economic risk of its investment in the Shares for an indefinite period of time.
Conrex will not take any short position in the Shares and not otherwise engage
in any hedging transactions such as option writing, equity swaps or other types
of derivative transactions with respect to the Shares.
(h) Additional Transfer Restrictions. Conrex
understands and agrees that, in addition to the restrictions set forth in this
Agreement, the following restrictions and limitations are applicable to its
purchase and any resales, pledges, hypothecations or other transfers of the
Shares:
(i) The following legend reflecting all
applicable restrictions will be placed on any certificate(s) or other
document(s) evidencing the Shares and Conrex must comply with the terms and
conditions set forth in such legends prior to any resales, pledges,
hypothecations or other transfers of the Shares:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT PURPOSES
ONLY AND MAY NOT BE OFFERED FOR SALE,
SOLD, HYPOTHECATED, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT
COVERING THE SECURITIES UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
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(ii) Stop transfer instructions have
been or will be placed on any certificates or other documents evidencing the
Shares so as to restrict the resale, pledge, hypothecation or other transfer
thereof in accordance with the provisions hereof.
(i) Termination of Restrictions. The
restrictions upon the transferability of the Shares shall cease and terminate as
to any particular Shares (i) when, in the opinion of Xxxxxx Xxxxxx Flattau &
Klimpl, LLP or other counsel reasonably acceptable to the Company, such
restrictions are no longer required in order to assure compliance with the Act
or (ii) when, in the opinion of Xxxxxx Xxxxxx Flattau & Klimpl, LLP or other
counsel reasonably acceptable to the Company, such Shares shall have been
registered under the Act or transferred in reliance upon the exemption afforded
by Section 4(1) of the Act by virtue of Rule 144.
(j) Indemnification. Conrex 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 (i) any actual or alleged misrepresentation or misstatement of
facts or omission to represent or state facts made or alleged to have been made
by Conrex to the Company, (or its agents or representatives), or omitted or
alleged to have been omitted by Conrex, concerning Conrex, or Conrex's authority
to invest or financial position in connection with the offering or sale of the
Shares, or (ii) any breach of warranty or failure to comply with any covenant
contained in this Agreement, including, without limitation, any such
misrepresentation, misstatement or omission, or breach of any warranty or
covenant, contained herein or any other document submitted by Conrex, against
losses, liabilities and expenses for which the Company, or its officers,
directors or control persons has not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement in matters
settled in accordance with the provision of the following paragraph) incurred by
the Company, or such officer, director or control person in connection with such
action, suit or proceeding; provided, however, that Conrex will not be liable in
any such case for losses, claims, damages, liabilities or expenses that a court
of competent jurisdiction shall have found in a final judgment to have arisen
primarily from the gross negligence or willful misconduct of the Company or the
party claiming a right to indemnification.
In case any proceeding shall be instituted involving any
person with respect to whom indemnity may be sought, such person (the
"Indemnified Party") shall promptly notify Conrex, and Conrex, upon the request
of the Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others Conrex may
designate in such proceedings and shall pay as incurred the fees and expenses of
such counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel at its own expense, except
that Conrex shall pay as incurred the fees and expenses of counsel retained by
the Indemnified Party in the event that (i) Conrex and the Indemnified Party
shall have mutually agreed to the retention of such counsel or, (ii) the named
parties to any such proceeding (including any impleaded parties) include both
Conrex and the Indemnified Party and representation of both parties by the same
counsel would be inappropriate, in the reasonable opinion
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of the Indemnified Party, due to actual or potential differing interests between
them. Conrex shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, Conrex agrees to indemnify the Indemnified
Party to the extent set forth in this Agreement.
In the event a claim for indemnification as described herein
is determined to be unenforceable by a final judgment of a court of competent
jurisdiction, then Conrex shall contribute to the aggregate losses, claims,
damages or liabilities to which the Company or its officers, directors, agents,
employees or controlling persons may be subject in such amount as is appropriate
to reflect the relative benefits received by each of the undersigned and the
party seeking contribution on the one hand and the relative faults of Conrex and
the party seeking contribution on the other, as well as any relevant equitable
considerations.
The provisions of this Agreement relating to indemnification
and contribution shall survive termination of this Agreement and shall be
binding upon any successors or assigns of Conrex.
(k) Opportunity to Ask Questions. Conrex has
had a reasonable opportunity to ask questions of and receive answers from the
Company concerning the Company and the transactions contemplated by this
Agreement, and all such questions, if any, have been answered to the full
satisfaction of Conrex.
3. Representations and Warranties of the Company. The Company
acknowledges, represents, warrants and agrees as follows:
(a) Organization and Authorization. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of Florida and has all req uisite corporate power
and authority to own and operate its properties and assets and to carry on its
business as currently conducted. The Company is not in default or violation of
any material term or provision of its Articles of Incorporation or Bylaws nor
will the consummation of the transactions contemplated by this Agreement cause
any such default or violation. The Company has all requisite corporate power and
authority to enter into this Agreement, to sell the Shares hereunder and to
carry out and perform its obligations under the terms of this Agreement subject
to the above. This Agreement is a valid and binding obligation of the Company,
enforceable in accordance with its terms.
(b) Capitalization. The authorized capital
stock of the Company consists of 35,000,000 shares of Common Stock and 2,000,000
shares of Preferred Stock, par value $.02 per share. Upon issuance of the Shares
pursuant to the terms of this Agreement and payment therefor pursuant to the
terms of an Asset Purchase Agreement between Xxx and the Company, the Shares
will be duly authorized, validly issued, fully paid and nonassessable. Upon
issuance, the Shares will not be subject to any preemptive or other preferential
rights or similar statutory or contractual rights.
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The Closing shall take place as soon as practicable after (i)
due execution by Conrex and acceptance by the Company of this Subscription
Agreement and (ii) the closings as contemplated by the Asset Purchase Agreement
and the Asset Purchase Agreement between Xxx and the Company.
4. Indemnity by the Company. The Company shall indemnify and
hold harmless Conrex and each officer, director or control person of Conrex from
any claims or demands, including without limitation reasonable attorneys fees
and expenses, relating to any liability to ETR and Associates, Xxxxxx X. Xxxxx,
Creative Technologies, Inc., a Delaware corporation with offices in Jersey City,
New Jersey, and/or each of their respective affiliates, for commissions related
to the transactions arising under this Agreement and/or the Asset Purchase
Agreement.
5. Miscellaneous.
(a) Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day ("Business Day" means a day other than Saturday, Sunday or any day on which
banks located in the State of New York are authorized or obligated to close),
(c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven Business Days after the
date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to Conrex and to the Company at the addresses
indicated below.
If to Conrex, to:
Conrex Pharmaceutical Corporation
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxxxxxxxx & Xxxxxxx LLP
Suite 2600 Aramark Tower
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx
Facsimile No.: (000) 000-0000
If to the Company, to:
Bentley Pharmaceuticals, Inc.
Two Urban Centre, Suite 400
0000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Jordan X. Xxxxxxx
Facsimile: (000) 000-0000
(b) Assignment; Benefit. This Agreement may
not be assigned by Conrex without the prior written consent of the Company and
any assignment without such consent shall be void. This Agreement may be
assigned by the Company to any person or entity which purchases all or
substantially all of the stock or assets of the Company or is the successor to
the Company by merger or consolidation. This Agreement shall be binding upon and
inure to the benefit of the respective successors and permitted assigns of the
Company and of Conrex.
(c) Severability. The invalidity or
unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, each of
which shall remain in full force and effect.
(d) Amendments. This Agreement may be
amended, supplemented or modified, and any provision hereof may be waived, only
pursuant to a written instrument making specific reference to this Agreement
signed by each of the parties hereto.
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(e) Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(f) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to a contract executed and performed in such State without giving
effect to the conflicts of laws principles thereof, except that if it is
necessary in any other jurisdiction to have the law of such other jurisdiction
govern this Agreement in order for this Agreement to be effective in any
respect, then the laws of such other jurisdiction shall govern this Agreement to
such extent.
(g) Arbitration of Disputes
(i) If any controversy or dispute arises
under, out of or in relation to any of the provisions hereof, such controversy
or dispute shall be submitted for arbitration in New York, New York before a
panel of three arbitrators, one of which shall be selected by the party
initiating such arbitration, one of which shall be selected by the other party
and the third of which (the "Third Arbitrator") shall be selected by the two
arbitrators so selected; provided, however, that in the event that such other
arbitrators shall not agree on the selection of the Third Arbitrator, the Third
Arbitrator shall be selected by the American Arbitration Association located in
New York, New York. Any dispute or controversy submitted to arbitration in
accordance with the provisions of this Section shall be determined by such
arbitrators in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then existing.
(ii) The arbitrators may award any
relief which they shall deem proper in the circumstances, without regard to the
relief which would otherwise be available to any party in a court of law or
equity including, without limitation, an award of money damages, specific
performance, injunctive relief and/or declaratory relief, however, such an award
may not include punitive damages. The award and findings of the arbitrators
shall be conclusive and binding upon all of the parties hereto, whether or not
all parties hereto participate in the arbitration proceeding, and judgment upon
the award may be entered in any court of competent jurisdiction upon the
application of any party. The parties hereby agree that such courts of competent
jurisdiction shall include, but not be limited to, the courts located in any
jurisdiction in which the party against whom such judgment is being enforced
maintains any assets.
(iii) The costs of the arbitration and
each party's associated costs shall be borne by the losing party.
Notwithstanding the foregoing, if the parties reach a compromise, the costs of
the arbitration shall be borne equally by the parties and each party shall bear
its own associated costs.
(iv) Notwithstanding the foregoing, the
parties reserve the right to seek and obtain injunctive relief, whether in the
form of a temporary restraining order, preliminary injunction, injunction to
enforce an arbitration award, or other order of similar import,
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from the federal and state courts located in New York, New York prior to,
during, or after commencement or prosecution or arbitration proceedings of the
final decision and award of the arbitrators; provided, however, that such
preliminary injunctive relief shall be subject to final arbitral decisions.
(v) Each party hereby consents and
agrees that the federal and state courts located in New York, New York each
shall have exclusive personal jurisdiction and proper venue with respect to any
such action seeking injunctive or similar relief hereunder. In any dispute
between the parties, neither party will raise, and each party hereby expressly
waives, any objection or defense to any such court as an inconvenient forum.
Each party hereby waives personal service of any summons, complaint or other
process, which may be delivered by any of the means permitted for notices under
Section 5(a) hereof.
(h) Entire Agreement. This Agreement
constitutes the entire agreement between Conrex and the Company with respect to
the subject matter hereof.
CONREX PHARMACEUTICAL CORPORATION
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, President
ACCEPTED AND AGREED:
BENTLEY PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Chairman, President
and Chief Executive Officer
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