EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement") made as of the date
set forth on the signature page hereof between BioSante Pharmaceuticals, Inc., a
Delaware corporation (the "Company") and the undersigned (the "Subscriber").
WITNESSETH:
WHEREAS, the Company is offering in a private placement to
accredited investors (the "Offering") up to 2,949,207 shares of its common
stock, par value $0.0001 per share (the "Common Stock") at a price equal to
$6.00 per share (the "Offering Price"), and warrants to purchase shares of
Common Stock equal to fifteen percent (15%) of the total number of shares sold
to Subscriber in the Offering at an exercise price per share equal to $7.00 (the
"Warrants"). The Warrants are issued for a four year and nine-month period. The
shares of Common Stock and Warrants offered hereby are sometimes referred to as
the "Securities;" and
WHEREAS, the Subscriber desires to purchase that number of
Securities set forth on the signature page hereof on the terms and conditions
hereinafter set forth; and
WHEREAS, the Company has engaged Leerink Xxxxx & Company (the
"Placement Agent") as placement agent for the Offering on a "best-efforts"
basis.
NOW, THEREFORE, in consideration of the premises and the
mutual representations and covenants hereinafter set forth, the parties hereto
agree as follows:
I. SUBSCRIPTION FOR SECURITIES AND REPRESENTATIONS BY SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the Subscriber
hereby irrevocably subscribes for and agrees to purchase from the Company such
Securities as is set forth upon the signature page hereof and the Company agrees
to sell such Securities to the Subscriber for said purchase price. The purchase
price is payable by wire transfer of immediately available funds
contemporaneously with the execution and delivery of this Agreement by the
Subscriber. All wires should be sent to:
XX Xxxxxx Chase
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA# 021 000 021
Account#: 323 213 251
Attn: Xxxxx Xxxxxxxx
Certificates for the shares of Common Stock and the Warrants
will be delivered by the Company to the Subscriber promptly following the
Closing (as herein defined). Notwithstanding the foregoing, the Subscriber
acknowledges that the final approval of the American Stock Exchange is required
in connection with the issuance of the Common Stock and,
accordingly, the Securities may be subject to return to the Company in exchange
for the return of the full purchase price of the Securities to the Subscriber.
1.2 The Subscriber recognizes that the purchase of Securities
involves a high degree of risk in that (i) the Company remains an early stage
business with a limited operating history and will require funds in addition to
the proceeds of the Offering; (ii) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company; (iii) the Subscriber may
not be able to liquidate its investment; (iv) transferability of the Securities
is extremely limited; and (v) in the event of a disposition, the Subscriber
could sustain the loss of its entire investment.
1.3 The Subscriber represents that the Subscriber is an
"accredited investor" as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended, (the "Act"), as
indicated by the responses to the questions contained in Section VII hereof, and
that the Subscriber is able to bear the economic risk and illiquidity of an
investment in the Securities.
1.4 The Subscriber hereby acknowledges and represents that
(i) the Subscriber has prior investment experience, including investment in
non-listed and unregistered securities, or that the Subscriber has employed the
services of an investment advisor, attorney and/or accountant to read all of the
documents furnished or made available by the Company both to the Subscriber and
to all other prospective investors to evaluate the merits and risks of such an
investment on the Subscriber's behalf; (ii) the Subscriber recognizes the highly
speculative nature of an investment in the Securities; and (iii) the Subscriber
is able to bear the economic risk and illiquidity which the Subscriber assumes
by investing in the Securities.
1.5 The Subscriber (i) hereby represents that the Subscriber
has been furnished by the Company during the course of this transaction with and
has carefully read the Company's SEC Filings (as hereafter defined), including
without limitation the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2003, the additional risk factors specific to the Common
Stock and the Offering contained in Schedule 1.5 (together with the SEC Filings,
the "Offering Documents"), and all other information regarding the Company which
the Subscriber has requested or desired to know; (ii) has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering; and (iii) has received any additional information
which the Subscriber has requested.
1.6 (a) To the extent necessary, the Subscriber has retained,
at its own expense, and relied upon the advice of appropriate professionals
regarding the investment, tax and legal merits and consequences of this
Agreement and its purchase of the Securities hereunder.
(b) The Subscriber represents that (i) the Subscriber was
contacted regarding the sale of the Securities by the Placement Agent (or an
authorized agent or representative thereof) with whom the Subscriber had a prior
substantial pre-existing relationship and (ii) no Securities were offered or
sold to it by means of any form of general solicitation or
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general advertising, and in connection therewith the Subscriber did not (A)
receive or review any advertisement, article, notice or other communication
published in a newspaper or magazine or similar media or broadcast over
television or radio, whether closed circuit or generally available; or (B)
attend any seminar, meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising.
1.7 The Subscriber hereby acknowledges that the Offering has
not been reviewed by the United States Securities and Exchange Commission (the
"SEC") because of the Company's representations that this Offering is intended
to be exempt from the registration requirements of Section 5 of the Act pursuant
to Sections 3(b), 4(2) and/or 4(6) thereof and Regulation D promulgated under
the Act. The Subscriber agrees that the Subscriber will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Securities, except in compliance with the Act and the rules and regulations
promulgated thereunder.
1.8 The Subscriber understands that none of the Securities
have been registered under the Act by reason of a claimed exemption under the
provisions of the Act which depends, in part, upon the Subscriber's investment
intention. In this connection, the Subscriber hereby represents that the
Subscriber is purchasing the Securities for the Subscriber's own account for
investment and not with a view toward the resale or distribution thereof to
others. The Subscriber, if an entity, was not formed for the purpose of
purchasing the Securities. The Subscriber understands that Rule 144 promulgated
under the Act requires, among other conditions, a one-year holding period prior
to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the Act.
1.9 The Subscriber understands and hereby acknowledges that
the Company is under no obligation to register the Securities under the Act or
any state securities or "blue sky" laws other than as set forth in Section V.
The Subscriber consents that the Company may, if it desires, permit the transfer
of the Securities out of the Subscriber's name only when the Subscriber's
request for transfer is accompanied by an opinion of counsel reasonably
satisfactory to the Company that neither the sale nor the proposed transfer
results in a violation of the Act or any applicable state "blue sky" laws
(collectively, "Securities Laws").
1.10 The Subscriber consents to the placement of a legend on
any certificate or other document evidencing the Securities indicating that such
Securities have not been registered under the Act or any state securities or
"blue sky" laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement. The Subscriber is
aware that the Company will make a notation in its appropriate records and issue
"stop transfer" instructions to its transfer agent with respect to the
restrictions on the transferability of such Securities.
1.11 The Subscriber understands that the Company will review
this Agreement and, if such Subscriber is an individual, hereby gives authority
to the Company to call Subscriber's bank or place of employment (in a call in
which the Placement Agent participates) or otherwise review the financial
standing of the Subscriber; and it is further agreed that upon
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their mutual agreement the Placement Agent and the Company reserve the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription, to accept subscriptions for
Securities and to close the Offering to the Subscriber at any time.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished by the Subscriber on the signature page hereof is the
Subscriber's principal residence if the Subscriber is an individual or its
principal business address if it is a corporation or other entity.
1.13 The Subscriber represents that the Subscriber has full
power and authority (corporate, statutory and otherwise) to execute and deliver
this Agreement and to purchase the Securities subscribed for hereby. This
Agreement constitutes the legal, valid and binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its terms.
1.14 If the Subscriber is a corporation, partnership, limited
liability company, trust, employee benefit plan, individual retirement account,
Xxxxx Plan, or other entity, then (a) it is authorized and qualified to become
an investor in the Company and the person signing this Agreement on behalf of
such entity has been duly authorized by such entity to do so, and (b) it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
1.15 The Subscriber represents and warrants that the
Subscriber is not (a) a broker or dealer admitted to membership in the National
Association of Securities Dealers, Inc. ("NASD"), (b) a controlling stockholder
of an NASD member, or (c) a person associated with a member of the NASD.
1.16 The Subscriber represents and warrants that it has not
engaged, consented to nor authorized any broker, finder or intermediary to act
on its behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Subscriber
shall indemnify and hold harmless the Company from and against all fees,
commissions or other payments owing to any such person or firm acting on behalf
of such Subscriber hereunder.
1.17 The Subscriber acknowledges that (a) the Company has
engaged, consented to and authorized the Placement Agent in connection with the
transactions contemplated by this Agreement, (b) the Company shall pay the
Placement Agent a commission and reimburse the Placement Agent's expenses and
the Company shall indemnify and hold harmless the Subscriber from and against
all fees, commissions or other payments owing by the Company to the Placement
Agent or any other person or firm acting on behalf of the Company hereunder and
(c) registered representatives of the Placement Agent and/or its designees
(including, without limitation, registered representatives of the Placement
Agent and/or its designees who participate in the Offering and sale of the
securities sold in the Offering) will be paid a portion of the commissions paid
to the Placement Agent.
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1.18 The Subscriber, whose name appears on the signature line
below, shall be the beneficial owner of the Securities for which such Subscriber
subscribes.
1.19 The Subscriber agrees that from the time the Subscriber
was first contacted by the Placement Agent regarding the Offering, until a point
in time equal to the earlier of (i) the date that the Registration Statement (as
defined in Section 5.2(a)) is declared effective by the SEC) or (ii) four months
from the date hereof, the Subscriber has not and shall not, directly or
indirectly, through related parties, affiliates or otherwise, (A) sell "short"
or "short against the box" (as those terms are generally understood) any equity
security of the Company or (B) otherwise engage in any transaction that involves
hedging of the Subscriber's position in any equity security of the Company.
1.20 The Subscriber understands, acknowledges and agrees with
the Company as follows:
(a) The Company may terminate the Offering or reject
any subscription at any time in its sole discretion. The execution of this
Agreement by the Subscriber or solicitation of the investment contemplated
hereby shall create no obligation on the part of the Company or the Placement
Agent to accept any subscription or complete the Offering.
(b) The Subscriber hereby acknowledges and agrees
that the subscription hereunder is irrevocable by the Subscriber, and that,
except as required by law, the Subscriber is not entitled to cancel, terminate
or revoke this Agreement or any agreements of the Subscriber hereunder and that
if the Subscriber is an individual this Agreement shall survive the death or
disability of the Subscriber and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
(c) No federal or state agency or authority has made
any finding or determination as to the accuracy or adequacy of the Offering
Documents or as to the fairness of the terms of the Offering nor any
recommendation or endorsement of the Securities. Any representation to the
contrary is a criminal offense. In making an investment decision, the Subscriber
must rely on its own examination of the Company and the terms of the Offering,
including the merits and risks involved.
II. REPRESENTATIONS BY THE COMPANY
The Company hereby represents and warrants to the Subscriber that:
2.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and lawful authority to
conduct its business as presently conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of the business presently conducted by it or the properties
owned, leased or operated by it, makes such qualification or licensing necessary
and where the failure to be so qualified or licensed would have a material
adverse effect upon the business, prospects or financial condition of the
Company.
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2.2 Capitalization and Voting Rights. The authorized capital
stock of the Company is as set forth in its most recent SEC Filing (as hereafter
defined), 14,820,138 shares of common stock and 404,102 shares of class C
special stock of which are issued and outstanding as of May 7, 2004. All issued
and outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable. Except as set forth in this Agreement or in the SEC
Filings, there are no outstanding options, warrants, agreements, commitments,
convertible securities, preemptive rights or other rights to subscribe for or to
purchase any shares of capital stock of the Company nor are there any
agreements, promises or commitments to issue any of the foregoing. Except as set
forth in the SEC Filings, in this Agreement and as otherwise required by law,
there are no restrictions upon the voting or transfer of the Securities pursuant
to the Company's Amended and Restated Certificate of Incorporation, as amended,
(the "Certificate of Incorporation"), By-laws or other governing documents or
any agreement or other instruments to which the Company is a party or by which
the Company is bound; provided, however, that the Securities will be subject to
restrictions on transfer and Securities Laws (as hereafter defined) as provided
herein.
2.3 Authorization; Enforceability. The Company has all
corporate right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of the Company, its directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company, the authorization, sale, issuance and delivery of the Securities and
the performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. The Securities have been duly and validly
authorized and, upon the issuance and delivery thereof and payment therefor as
contemplated by this Agreement, will be free and clear of liens (other than any
liens created by or imposed on the holders thereof through no action of the
Company), duly and validly authorized and issued, fully paid and nonassessable.
The issuance and sale of the Securities contemplated hereby will not give rise
to any preemptive rights or rights of first refusal on behalf of any person.
2.4 No Conflict; Governmental Consents.
(a) The execution and delivery by the Company of this
Agreement, the consummation of the transactions contemplated hereby and the
offer and sale of the Securities will not result in the violation of any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or governmental authority to or by which the Company is bound that would
have a material adverse effect upon the business or financial condition of the
Company, or of any provision of the Certificate of Incorporation or By-laws of
the Company, and will not conflict with, or result in a breach or violation of,
any of the terms or provisions of, or constitute (with due notice or lapse of
time or both) a default under, any lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which any of its properties or assets
is subject, nor result in the creation or imposition of any lien upon any of the
properties or assets of the
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Company that would have a material adverse effect upon the business or financial
condition of the Company.
(b) No consent, waiver, approval, authorization or
other order of any governmental authority or other third-party is required to be
obtained by the Company in connection with the authorization, execution and
delivery of this Agreement or with the authorization, issuance and sale of the
Securities, except for such consents, waivers, approvals, authorizations, orders
or filings as may be required to be obtained or made, and which shall have been
obtained or made at or prior to the required time and except for such consents,
waivers, approvals, authorizations, orders or filings that would not materially
adversely affect the business, property, financial condition or results of
operations of the Company.
2.5 Licenses. The Company has all licenses, permits and other
governmental authorizations currently required for the conduct of its business
or ownership of properties and is in all material respects complying therewith,
except for any licenses, permits or other governmental authorizations which
would not materially adversely affect the business, property, financial
condition, or results of operations of the Company.
2.6 Litigation. Except as set forth in Schedule 2.6, the
Company knows of no pending or threatened legal or governmental proceedings
against the Company which could materially adversely affect the business,
property, financial condition or results of operations of the Company.
2.7 Accuracy of Reports. All reports required to be filed by
the Company within the twelve (12) months prior to the date of this Agreement
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), have
been duly and timely filed with the SEC. All such reports complied at the time
of their respective filing dates in all material respects with the requirements
of the Exchange Act or the Securities Act, as applicable, and all rules and
regulations thereunder of their respective forms. None of such reports contained
(as of their respective dates) any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.
2.8 Investment Company. The Company is not an "investment
company" within the meaning of such term under the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC thereunder.
2.9 RESERVED.
2.10 No Material Adverse Change. Since the filing of the
Company's most recent SEC Report, there has not been any material adverse change
(financial or otherwise) in the assets, properties, financial condition,
operating results or business of the Company.
2.11 Financial Statements. The financial statements included
in the Company's most recent Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2003 and all other reports filed by the Company with the SEC
pursuant to the Exchange Act since the filing of
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such Annual Report on Form 10-KSB and prior to the date hereof (collectively,
the "SEC Filings") present fairly and accurately in all material respects the
financial position of the Company as of the dates shown and its results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated thereon or in the
notes thereto and subject, in the case of unaudited financial statements, to
normal adjustments). Except as set forth in the financial statements of the
Company included in the SEC Filings filed prior to the date hereof, to the
Company's knowledge, the Company has no liabilities, contingent or otherwise,
except those which individually or in the aggregate are not material to the
financial condition or operating results of the Company.
2.12 Compliance with Laws. Neither the Company nor, to the
Company's knowledge, any Person (as hereafter defined) acting on the Company's
behalf and in accordance with the Company's instructions, has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D of the Act) in connection with the offer or sale of the Securities.
Neither the Company nor any of its Affiliates (as hereafter defined), nor, to
the Company's knowledge, any Person acting on the Company's or on the behalf of
its Affiliates and in accordance with the Company's instructions, has, directly
or indirectly, made any offers or sales of any security of the Company or
solicited any offers to buy any security of the Company, under circumstances
that would adversely affect reliance by the Company on Section 4(2) of the Act
for the exemption from registration for the transactions contemplated hereby or
would require registration of the Securities under the Act. The Company is in
compliance with the requirements of the American Stock Exchange "(AMEX") for
continued listing of the Common Stock thereon and has not received any
notification that, and has no knowledge that, the AMEX is contemplating
terminating such listing nor, to the Company's knowledge, is there any basis
therefore. The transactions contemplated by this Agreement will not contravene
the rules and regulations of the AMEX, however, the approval of the AMEX will be
required for the issuance and sale of the Shares and the Warrant Shares and the
Company will use commercially reasonable efforts to obtain such approval. The
Company has filed a subsequent listing application for listing the Securities on
and hereby represents and warrants to the Placement Agent and the Subscriber
that it will take any other necessary action in accordance with the rules of the
AMEX to enable the Securities to trade on the AMEX.
III. TERMS OF SUBSCRIPTION
3.1 The Offering is for up to 2,949,207 shares of Common Stock
and Warrants. The Securities are offered on a "best efforts" basis.
3.2 Upon the mutual consent of the Company and the Placement
Agent, this Offering may close (the "Closing") prior to the sale of all
2,949,207 shares of Common Stock and there is no assurance that all 2,949,207
shares of Common Stock will be sold. The Closing shall occur at the discretion
of the Company and the Placement Agent (the "Closing Date"). The purchase price
is payable by wire transfer of immediately available funds as provided in
Section 1.1.
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3.3 The Subscriber hereby authorizes and directs the Company
to deliver the Securities to be issued to the Subscriber pursuant to this
Agreement directly to the Subscriber's account maintained by the Placement Agent
or, if no such account exists, to the residential or business address indicated
on the signature page hereto.
3.4 The Subscriber hereby authorizes and directs the Company
to return any funds related to unaccepted subscriptions to the same account from
which the funds were drawn, including any customer account maintained with the
Placement Agent.
IV. CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS AND THE COMPANY
4.1 The Subscribers' obligation to purchase the Securities at
the Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions, which conditions may be waived at the option of each
Subscriber to the extent permitted by law:
(a) Representations and Warranties. The
representations and warranties made by the Company in Section II hereof shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date.
(b) Covenants. All covenants, agreements and
conditions contained in this Agreement to be performed by the Company on or
prior to such purchase shall have been performed or complied with in all
material respects.
(c) No Legal Order Pending. There shall not then be
in effect any legal or other order enjoining or restraining the transactions
contemplated by this Agreement.
(d) No Law Prohibiting or Restricting Such Sale.
There shall not be in effect any law, rule or regulation prohibiting or
restricting such sale or requiring any consent or approval of any person to
issue the Securities which consent or approval shall not have been obtained
(except as may otherwise be provided in this Agreement).
(e) Legal Opinion. Upon the Closing, counsel to the
Company shall have delivered to the Placement Agent for the benefit of the
Subscribers a legal opinion with respect to such legal matters relating to this
Agreement and the Offering as the Placement Agent may reasonably require.
4.2 The Company's obligation to sell the Securities at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions, which conditions may be waived at the option of the
Company to the extent permitted by law:
(a) Acknowledgements, Representations and Warranties.
The acknowledgements, representations and warranties made by the Subscriber in
Section I hereof shall be true and correct in all respects when made, and shall
be true and correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date; provided,
however, that any acknowledgement, representation or warranty made by
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the Subscriber that is not true and correct and as a result the Subscriber is
not an "accredited investor" under Rule 501 under Regulation D of the Act or the
Company is not able to rely upon a private placement exemption under Rule 506
under Regulation D of the Act for the issuance of the Securities will
automatically be deemed to be material. If any such representations, warranties
or acknowledgements shall not be true and accurate in any respect prior to the
Closing, the undersigned shall give immediate written notice of such fact to the
Company, to the Placement Agent, and to his representatives, if any, specifying
which representations, warranties or acknowledgements are not true and accurate
and the reason therefor.
(b) Covenants. All covenants, agreements and
conditions contained in this Agreement to be performed by the Subscriber on or
prior to such purchase shall have been performed or complied with in all
material respects.
(c) No Legal Order Pending. There shall not then be
in effect any legal or other order enjoining or restraining the transactions
contemplated by this Agreement.
(d) No Law Prohibiting or Restricting Such Sale.
There shall not be in effect any law, rule or regulation prohibiting or
restricting such sale or requiring any consent or approval of any person to
issue the Securities which consent or approval shall not have been obtained
(except as may otherwise be provided in this Agreement).
V. REGISTRATION RIGHTS.
5.1 As used in this Agreement, the following terms shall have
the following meanings:
(a) "Affiliate" shall mean, with respect to any
Person (as defined below), any other Person controlling, controlled by, or under
direct or indirect common control with, such Person (for the purposes of this
definition "control," when used with respect to any specified Person, shall mean
the power to direct the management and policies of such person, directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing).
(b) "Business Day" shall mean a day, Monday through
Friday, on which banks are generally open for business in each of New York, New
York; Boston, Massachusetts; and Chicago, Illinois.
(c) "Holders" shall mean the Subscriber and any
person holding Registrable Securities as defined below, or any person to whom
the rights under Section V have been transferred in accordance with Section 5.10
hereof, and who, if known by the Company, shall be specifically named by the
Company as selling stockholders in the Registration Statement (as defined
below).
(d) "Person" shall mean any person, individual,
corporation, limited liability company, partnership, trust or other
nongovernmental entity or any governmental agency, court, authority or other
body (whether foreign, federal, state, local or otherwise).
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(e) The terms "register," "registered" and
"registration" refer to the registration effected by preparing and filing with
the SEC a registration statement in compliance with the Act, and the declaration
or ordering by the SEC of the effectiveness of such registration statement.
(f) "Registrable Securities" shall mean (i) the
Common Stock, and (ii) the shares of Common Stock issuable upon exercise of the
Warrants; provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC,
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon the consummation
of such sale, (C) are held by a Holder or a permitted transferee pursuant to
Section 5.10 and (D) are held by a Holder that may sell all such securities of
the Company then held by such Holder under Rule 144 under the Act in a
three-month period.
(g) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 5.2 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and expenses of counsel for the Company, blue sky fees and
expenses and the expense of any special audits incident to, or required by, any
such registration (but excluding the aggregate fees of legal counsel for all
Holders).
(h) "Registration Statement" shall have the meaning
ascribed to such term in Section 5.2 (a).
(i) "Registration Period" shall have the meaning
ascribed to such term in Section 5.4 (a).
(j) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities and the aggregate fees and expenses of legal counsel for all Holders.
5.2 The Company shall, as soon as reasonably practicable, but
not later than thirty (35) days after the Closing Date (the "Filing Date"), (i)
use its reasonable best efforts to file with the SEC a registration statement on
Form S-3 (or if not eligible for such form, on such other form on which the
Company is eligible) (the "Registration Statement") with respect to the resale
of the Registrable Securities and use its reasonable best efforts to have such
Registration Statement declared effective by the SEC within 90 days from the
Closing Date and (ii) cause such Registration Statement to remain effective for
the Registration Period.
5.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 5.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
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5.4 In the case of the registration, qualification, exemption
or compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company shall:
(a) use its reasonable best efforts to keep such
registration, and any qualification, exemption or compliance under state
securities laws which the Holders reasonably request the Company to obtain,
continuously effective as to all Registrable Securities until the earlier of:
(i) the Holders having completed the distribution of the Registrable Securities
described in the Registration Statement relating thereto; or (ii) with respect
to any Holder, such time as all Registrable Securities then held by such Holder
may be sold in compliance with Rule 144 under the Act within any three-month
period. The period of time during which the Company is required hereunder to
keep the Registration Statement effective is referred to herein as "the
Registration Period";
(b) advise the Holders (or in the case of (ii) below,
advise the Placement Agent):
(i) when the Registration Statement or any
amendment thereto has been filed with the SEC and when the Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the SEC for
amendments or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for such purpose;
(iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities included therein for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and
(v) subject to the limitations set forth in
Section 5.7(b) hereof, of the happening of any event that requires the making of
any changes in the Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(c) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time;
(d) furnish to each Holder, without charge, at least
one copy of such Registration Statement and any post-effective amendment or
supplement thereto, including
12
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (excluding those incorporated by reference) in the form filed with
the SEC;
(e) during the Registration Period, deliver to each
Holder, without charge, a reasonable number of copies of the prospectus included
in such Registration Statement and any amendment or supplement thereto as such
Holder may reasonably request; and the Company consents to the use, consistent
with the provisions hereof, of the prospectus and any amendment or supplement
thereto by each of the selling Holders of Registrable Securities in connection
with the offering and sale of the Registrable Securities covered by the
prospectus and any amendment or supplement thereto;
(f) during the Registration Period, deliver to each
Holder, upon request, (i) a copy of the full Registration Statement (excluding
exhibits); (ii) all exhibits excluded by the parenthetical to the immediately
preceding clause (i); and (iii) such other documents as may be reasonably
requested by the Holder.
(g) prior to any public offering of Registrable
Securities pursuant to the Registration Statement, register or qualify or obtain
an exemption for the offer and sale under the securities or blue sky laws of
such jurisdictions as any such Holders reasonably request in writing, provided
that the Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction, and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by the Registration Statement;
(h) cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to the Registration Statement, free of any
restrictive legends to the extent not required at such time as determined by the
Company after consultation with legal counsel and in such denominations and
registered in such names as Holders may request;
(i) upon the occurrence of any event contemplated by
Section 5.4(b)(v) above, the Company shall promptly prepare a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus, or file any other required document so that, as thereafter delivered
to purchasers of the Registrable Securities included therein, the prospectus
will not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(j) use its reasonable best efforts to comply in all
material respects with all applicable rules and regulations of the SEC, and make
generally available to the Holders not later than 45 days (or 90 days if the
fiscal quarter is the fourth fiscal quarter) after the end of its fiscal quarter
in which the first anniversary date of the effective date of the Registration
Statement occurs, an earnings statement satisfying the provisions of Section
11(a) of the Act.
13
5.5 The Holders shall have no right to take any action to
restrain, enjoin or otherwise delay any registration pursuant to Section 5.2
hereof as a result of any controversy that may arise with respect to the
interpretation or implementation of this Agreement.
5.6 (a) To the extent permitted by law, the Company shall
indemnify each Holder, each underwriter of the Registrable Securities and each
person controlling such Holder and each such underwriter within the meaning of
Section 15 of the Act, with respect to which any registration, qualification or
compliance has been sought pursuant to this Agreement, against all claims,
losses, expenses, costs, damages and liabilities (or action in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 5.6(c) below), arising out of or
based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus or offering circular,
or any amendment or supplement thereof, incident to any such registration,
qualification or compliance, or based on 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 in light of the circumstances in which
they were made, or (ii) any violation or alleged violation by the Company of the
Act, the Exchange Act, or any rule or regulation promulgated under the Act or
the Exchange Act, and shall reimburse each Holder, each underwriter of the
Registrable Securities and each person controlling such Holder and each such
underwriter, for reasonable legal and other expenses, in connection with
investigating or defending any such claim, loss, damage, liability or action as
and when incurred; provided that the Company shall not be liable in any such
case to the extent that any untrue statement or omission or allegation thereof
is made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such Holder or underwriter and stated to be
specifically for use in preparation of such registration statement, prospectus
or offering circular; provided that the Company shall not be liable in any such
case where the claim, loss, damage or liability arises out of or is related to
the failure of the Holder to comply with the covenants and agreements contained
in Section 5.7 hereof, and except that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the preliminary prospectus but eliminated or remedied in the amended prospectus
on file with the SEC at the time the registration statement becomes effective or
in the amended prospectus filed with the SEC pursuant to Rule 424(b) of the Act
or in the prospectus subject to completion under Rule 434 of the Act, which
together meet the requirements of Section 10(a) of the Act (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
such Holder, any such underwriter or any such controlling person, if a copy of
the Final Prospectus furnished by the Company to the Holder for delivery was not
furnished to the person or entity asserting the loss, liability, claim or damage
at or prior to the time such furnishing is required by the Act and the Final
Prospectus would have cured the defect giving rise to such loss, liability,
claim or damage. Notwithstanding any provision herein to the contrary, the
Company shall reimburse each Holder, upon such Holder's demand, for all
reasonably necessary expenses and costs which are incurred, as and when
incurred, by such Holder as a result of the indemnification claims described in
this Section 5.6(a). Such demand may be made from time to time prior to
resolution of the claim. In no event shall the Company be liable for the
expenses and costs of more than one attorney on behalf of the Holders unless in
the reasonable judgment of a Holder, based upon written advice of its counsel, a
conflict of
14
interest exists between the Holders with respect to such claims, in which case
the Company shall reimburse the Holders for additional attorneys.
(b) Each Holder will severally, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, each underwriter of the Registrable
Securities and each person who controls the Company and each underwriter of the
Registrable Securities within the meaning of Section 15 of the Act, against all
claims, losses, expenses, costs, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance or based on 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 in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, each underwriter of the Registrable Securities and each
person controlling the Company and each underwriter of the Registrable
Securities for reasonable legal and any other expenses or costs reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred, in each case to the extent, but only to
the extent, that such untrue statement or omission or allegation thereof is made
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of the Holder and stated to be specifically for use in
preparation of such registration statement, prospectus or offering circular;
provided that the indemnity shall not apply to the extent that such claim, loss,
damage or liability results from the fact that a current copy of the prospectus
or offering circular was not made available to the Holder and such current copy
of the prospectus or offering circular would have cured the defect giving rise
to such loss, claim, expense, costs, damage or liability. Notwithstanding the
foregoing, in no event shall a Holder be liable for any such claims, losses,
expenses, costs, damages or liabilities in excess of the proceeds received by
such Holder in that offering, except in the event of fraud by such Holder.
(c) Each party entitled to indemnification under this
Section 5.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense with its own counsel at such Indemnified Party's expense unless the
named parties to any proceeding covered hereby (including any impleaded parties)
include both the Company or any others the Company may designate and one or more
Indemnified Persons, and representation of the Indemnified Persons and such
other parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement, unless
such failure is materially prejudicial to the Indemnifying Party in defending
such claim or
15
litigation. An Indemnifying Party shall not be liable for any settlement of an
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) If the indemnification provided for in this
Section 5.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, cost or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage, cost or expense in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
which resulted in such loss, liability, claim, damage, cost or expense as well
as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied or which should have been supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
5.7 (a) Subject to the limitations set forth in Section
5.7(b) below, upon receipt of any notice from the Company of the happening of
any event requiring the preparation of a supplement or amendment to a prospectus
relating to Registrable Securities so that, as thereafter delivered to the
Holders, such prospectus will not contain an 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 not misleading, each Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement contemplated by Section 5.2 until its receipt of copies of the
supplemented or amended prospectus from the Company and, if so directed by the
Company, each Holder shall deliver to the Company all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
(b) Any Holder of the Company's outstanding Common
Stock shall suspend, upon request of the Company, any disposition of Registrable
Securities pursuant to the Registration Statement and prospectus contemplated by
Section 5.2 during any period, not to exceed two 30-day periods within any
12-month period, when the Company determines in good faith that offers and sales
pursuant thereto should not be made by reason of the presence of material
undisclosed circumstances or developments with respect to which the disclosure
that would be required in such a prospectus is premature, would have an adverse
effect on the Company or is otherwise inadvisable. The period of time in which
the disposition of Registrable Securities pursuant to the Registration Statement
and prospectus is so suspended shall be referred to as a "Black-Out Period." The
Company agrees to so advise the Holders promptly of the commencement and
termination of any such Black-Out Period, and the Holders agree to keep the fact
of such Black-Out Period confidential.
16
(c) As a condition to the inclusion of its
Registrable Securities, each Holder shall furnish to the Company such
information regarding such Holder, the securities of the Company owned
beneficially or of record by such Holder and the distribution proposed by such
Holder as the Company may request in writing because it is required in
connection with any registration, qualification or compliance referred to in
this Section V. Any sale of any Registrable Securities by any Holder shall
constitute a representation and warranty by such Holder that the required
information relating to such Holder and its plan of distribution is as set forth
in the prospectus delivered by such Holder in connection with such disposition,
that such prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to such Holder or its plan of distribution
and that such prospectus does not as of the time of such sale omit to state any
material fact relating to such Holder or its plan of distribution necessary to
make the statements in such prospectus, in the light of the circumstances under
which they were made, not misleading.
(d) With respect to any sale of Registrable
Securities pursuant to a Registration Statement filed pursuant to this Section
V, each Holder hereby covenants with the Company not to make any sale of the
Registrable Securities without effectively causing the prospectus delivery
requirements under the Act to be satisfied.
(e) Each Holder acknowledges and agrees that the
Registrable Securities sold pursuant to the Registration Statement described in
this Section are not transferable on the books of the Company unless the stock
certificate submitted to the transfer agent evidencing such Registrable
Securities is accompanied by a certificate reasonably satisfactory to the
Company to the effect that (i) the Registrable Securities have been sold in
accordance with such Registration Statement and (ii) the requirement of
delivering a current prospectus has been satisfied.
(f) Each Holder shall not take any action with
respect to any distribution deemed to be made pursuant to such registration
statement, which would constitute a violation of Regulation M under the Exchange
Act or any other applicable rule, regulation or law.
(g) At the end of the Registration Period, the
Holders of Registrable Securities included in the Registration Statement shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold.
5.8 With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which at any time permit
the sale of the Registrable Securities to the public without registration, the
Company shall use its reasonable best efforts:
(a) to make and keep public information available, as
those terms are understood and defined in Rule 144 under the Act, at all times;
17
(b) to file with the SEC in a timely manner all
reports and other documents required of the Company under the Exchange Act; and
(c) so long as a Holder owns any Registrable
Securities, to furnish to such Holder upon any reasonable request a written
statement by the Company as to its compliance with Rule 144 under the Act, and
of the Exchange Act, and a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents of the Company as such Holder
may reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
5.9 With the written consent of the Company and the Holders
holding a majority of the Registrable Securities that are then outstanding, any
provision of this Section V may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended. Upon the effectuation of each such
waiver or amendment, the Company shall promptly give written notice thereof to
the Holders, if any, who have not previously received notice thereof or
consented thereto in writing.
5.10 The rights and obligations of the Holders under this
Section V may not be assigned or transferred to or assumed by any transferee or
assignee except (i) to a transferee that acquires at least 20% of such Holder's
Registrable Securities or (ii) to an Affiliate or limited or general partner of
a Holder; provided that such transfer was not in violation of this Agreement or
the Securities Laws; and provided, further, that any person to whom the rights
under this Section V have been transferred in accordance with this Section 5.10
has assumed the obligations of a Holder hereunder and a copy of such written
assignment and assumption is provided to the Company.
VI. MISCELLANEOUS
6.1 Any notice or other communication given hereunder shall be
deemed sufficient in writing and sent by (a) telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received); or (b) registered or
certified mail, return receipt requested, or delivered by hand against written
receipt therefor, addressed to BioSante Pharmaceuticals, Inc., 000 Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000, Facsimile: (000) 000-0000, Attention:
Xxxxxxx X. Xxxxx, with a copy to Leerink Xxxxx & Company, Xxx Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Facsimile (000) 000-0000, Attention: Xxxxxx X.
Xxxxxx. Notices shall be deemed to have been given or delivered on the date of
mailing, except notices of change of address, which shall be deemed to have been
given or delivered when received.
6.2 Except as set forth in Section 5.9, this Agreement shall
not be changed, modified or amended except by a writing signed by the parties to
be charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3 Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of
18
Securities as herein provided, subject to acceptance by the Company and the
Placement Agent; subject, however, to the right hereby reserved to the Company
to enter into the same agreements with other subscribers and to add and/or
delete other persons as subscribers.
6.4 Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of Delaware without regard to principles of conflicts
of law.
6.5 The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and
effect. If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, such provision shall be interpreted so as to remain
enforceable to the maximum extent permissible consistent with applicable law and
the remaining conditions and provisions or portions thereof shall nevertheless
remain in full force and effect and enforceable to the extent they are valid,
legal and enforceable, and no provisions shall be deemed dependent upon any
other covenant or provision unless so expressed herein.
6.6 It is agreed that a waiver by either party of a breach of
any provision of this Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party.
6.7 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.8 This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
6.9 The Subscriber agrees not to issue any public statement
with respect to the Subscriber's investment or proposed investment in the
Company or the terms of any agreement or covenant between them and the Company
without the Company's prior written consent, except such disclosures as may be
required under applicable law or under any applicable order, rule or regulation.
6.10 Nothing in this Agreement shall create or be deemed to
create any rights in any person or entity not a party to this Agreement, except
for the Placement Agent and the holders of Registrable Securities.
6.11 Any pronoun herein shall include all genders and/or the
plural or singular as appropriate from the context.
19
SIGNATURE PAGE DATE SIGNED: , 2004
-----------
NUMBER OF SHARES:
--------------
MULTIPLIED BY OFFERING PRICE PER SHARE: x $6.00
EQUALS SUBSCRIPTION AMOUNT: =
--------------
--------------------------------------------------------------------------------
Warrants (multiply the number of shares by 15%):
---------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
"INVESTOR" (Name in which securities should be issued)
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
----------------------------------------
Address
----------------------------------------
City, State and Zip Code
----------------------------------------
Telephone-Business
----------------------------------------
Facsimile-Business
----------------------------------------
Tax ID # or Social Security #
*THE ATTACHED CERTIFICATE OF SIGNATORY MUST ALSO BE COMPLETED.
20
================================================================================
This Subscription Agreement is agreed to and accepted as of ____________, 2004.
BIOSANTE PHARMACEUTICALS, INC.
By:
------------------------------------
Name:
Title:
21
CERTIFICATE OF SIGNATORY
(To be completed if Securities are being subscribed for by an entity)
I,______________________________, am the______________________
of _____________________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Subscription Agreement and to purchase
and hold the Securities, and certify further that the Subscription Agreement has
been duly and validly executed on behalf of the Entity and constitutes a legal
and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this___ day of ____, 2004.
---------------------------------------
(Signature)
22
