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 Bentley Pharmaceuticals, Inc. (the
"Company") and Xxxxxxx Xxx ("Xxx"), in which Xxx agreed to sell certain of his
assets to the Company, Xxx has agreed to accept as part of the Purchase Price
(as defined in the Asset Purchase Agreement) (a) 225,807 shares (the "Shares")
of common stock, $0.02 par value per share (the "Common Stock") of the Company,
and (b) a warrant to purchase 450,000 shares of Common Stock (the "Warrant",
collectively the Shares and the Warrant, the "Securities"). 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, Xxx hereby agrees to:
1. Subscription. Xxx hereby applies to subscribe for the
Securities. Once this Agreement is executed by both Xxx and the Company, it is
intended to create a binding agreement between Xxx and the Company with respect
to the terms and conditions described below.
2. Representations and Warranties of Xxx. Xxx acknowledges,
represents, warrants and agrees as follows:
(a) Authorization. Xxx has full power and
legal capacity to execute and deliver this Agreement. This Agreement has been
duly executed and delivered by Xxx and, assuming the execution and delivery
hereof and thereof by the Company, will constitute the legal, valid and binding
obligations of Xxx, enforceable against Xxx 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) Accredited Investor. Xxx is an
accredited investor (as defined in Rule 501 of Regulation D ("Regulation D")
promulgated under the Securities Act of 1933, as amended (the "Act"). Xxx has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of, and bearing the economic risks entailed
by, an investment in the Company and of protecting his interests in connection
with this transaction. Xxx recognizes that his investment in the Company
involves certain risks which are set forth in the Company's Registration
Statement on Form S-3 (SEC File No. 333-28593, the "Registration Statement" )
declared effective by the Securities and Exchange Commission on June 10, 1997
and any amendments thereto.
(c) Due Diligence. Xxx has received a copy
of such documents as requested by him, 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 Xxx, and all
such questions have been answered and requested information provided to Xxx'x
full satisfaction. Among the documents received and reviewed by Xxx 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 Xxx with respect to the Shares, dated as of the date hereof (the
"Registration Rights Agreement.") In making his decision to accept the
Securities as part of the Purchase Price, Xxx has relied solely upon his review
of the documents referred to above and this Agreement and independent
investigations made by him or his representatives.
(d) No Legal Advice from the Company. Xxx
acknowledges that he has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his 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, Xxx 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.
(e) Not an Affiliate. Xxx is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of the Act) of the
Company.
(f) Reliance on Representations and
Warranties. Xxx understands that the Securities are being offered and sold to
him in reliance on specific provisions of United States federal and state
securities laws and that the Company is relying upon the truth and
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accuracy of the representations, warranties, agreements, acknowledgments and
understandings of Xxx set forth in this Agreement in order to determine the
applicability of such provisions.
(g) No Registration. Xxx understands that
the sale of the Securities 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. Xxx understands that the Securities must be held
indefinitely and may not be offered, transferred, resold, pledged, hypothecated
or other wise 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 is available at that
time. Xxx is aware that he will be required to bear the financial risks of this
investment for an indefinite period of time unless transferred in accordance
with the above. Xxx covenants that he will not knowingly make any sale, transfer
or other disposition of the Securities 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.
(h) Investment Intent. Xxx is acquiring the
Securities solely for his 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 Securities. Xxx understands and agrees that he must bear the
economic risk of his investment in the Securities for an indefinite period of
time. Xxx will not take any short position in the Securities and not otherwise
engage in any hedging transactions such as option writing, equity swaps or other
types of derivative transactions with respect to the Securities.
(i) Additional Transfer Restrictions. Xxx
understands and agrees that, in addition to the restrictions set forth in this
Agreement, the following restrictions and limitations are applicable to his
purchase and any resales, pledges, hypothecations or other transfers of the
Securities:
(i) The following legend reflecting all
applicable restrictions will be placed on any certificate(s) or other
document(s) evidencing the Securities and Xxx must comply with the terms and
conditions set forth in such legends prior to any resales, pledges,
hypothecations or other transfers of the Securities:
"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
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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.
(ii) Stop transfer instructions have
been or will be placed on any certificates or other documents evidencing the
Securities so as to restrict the resale, pledge, hypothecation or other transfer
thereof in accordance with the provisions hereof.
(j) Termination of Restrictions. The
restrictions described in Section 2 hereof upon the transferability of the
Securities shall cease and terminate as to any particular Securities (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 Securities 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.
(k) Indemnification. Xxx 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 Xxx to the Company, (or its officers, directors, employees, agents or
representatives), or omitted or alleged to have been omitted by Xxx, concerning
Xxx, or Xxx'x authority to invest or financial position in connection with the
offering or sale of the Securities, 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
Xxx, 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 Xxx
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.
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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 Xxx, and Xxx, upon the request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others Xxx 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 Xxx shall pay as incurred the fees and expenses of counsel retained by the
Indemnified Party in the event that (i) Xxx 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 Xxx and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate, in the reasonable opinion of the Indemnified Party, due to
actual or potential differing interests between them. Xxx 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,
Xxx 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 Xxx 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 Xxx 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 Xxx.
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 Securities 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
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share. Upon issuance of the Securities 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 and the Warrant will be duly authorized and validly
issued. Upon issuance, the Shares will not be subject to any preemptive or other
preferential rights or similar statutory or contractual rights.
The Closing shall take place as soon as practicable after (i)
due execution by Xxx 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 Conrex Pharmaceutical
Corporation.
4. 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 Xxx and to the Company at the addresses indicated
below.
If to Xxx, to:
Xxxxxxx Xxx
Facsimile No.:
With a copy (which shall not constitute notice) to:
Lagerlof, Senecal, Bradley, Xxxxxx & Xxxxx, LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
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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 No.: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Jordan X. Xxxxxxx
Facsimile No.: (000) 000-0000
(b) Assignment; Benefit. This Agreement may
not be assigned by Xxx 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 Xxx.
(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.
(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
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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 prevailing party in the
arbitration proceeding shall be entitled to recover from the other party its
reasonable attorneys' fees, costs and expenses incurred in the proceeding and in
any subsequent action to enforce or collect upon the decision rendered in the
arbitration proceeding.
(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, 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
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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 6(a) hereof.
(h) Entire Agreement. This Agreement
constitutes the entire agreement between Xxx and the Company with respect to the
subject matter hereof.
/s/ Xxxxxxx Xxx
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Xxxxxxx Xxx, in his personal capacity
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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