Exhibit 7(c)(1)
CROWN LABORATORIES, INC.
REGULATION S SECURITIES
SUBSCRIPTION AGREEMENT
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE. THE SECURITIES ARE BEING OFFERED
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS
DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT OR PURSUANT TO AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS AND
THE COMPANY IS PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH
INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES
OFFERED HEREBY OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED". IN MAKING AN INVESTMENT DECISION, INVESTORS MUST
RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE
OFFERING, INCLUDING THE MERIT'S AND THE RISKS INVOLVED. THESE
SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE
ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATIONS TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement (the
"Agreement") is executed by the undersigned (the "Subscriber") in
connection with the offer and subscription by the undersigned for
shares of Series E Preferred Stock (the "Preferred Stock") of
Crown Laboratories, Inc., a Delaware Corporation (the "Company"),
and offered in units of not less than ten (10) shares. The
Company is offering up to 100 shares of Preferred Stock in this
offering at a purchase price of $10,000 U.S. per share. The
rights and preferences of the Preferred Stock, including the
terms on which the Preferred Stock may be converted into Common
Stock of the Company (the "Shares") are set forth in the
Certificate of Designation of Series E Preferred Stock attached
hereto as Exhibit A (the "Certificate of Designation"). The
solicitation of this subscription and, if accepted by the
Company, the offer and sale of Preferred Stock, are being made in
reliance upon the provisions of Regulations S ("Regulation S")
under the United States Securities Act of 1933, as amended (the
"Act"). The Preferred Stock and the Shares issuable upon
conversion thereof are sometimes referred to herein as the
"Securities". The Subscriber wishes to subscribe for the number
of shares of Preferred Stock set forth in Section 14 in
accordance with the terms and conditions of the Certificate of
Designation and this Agreement. It is agreed as follows:
1. Offer to Subscribe; Purchase Price.
The Subscriber hereby offers to purchase and subscribe for
the number of shares of Preferred Stock and at the price set out
in Section 14 of this Agreement. The Closing shall be deemed to
occur when this Agreement has been executed by both the
Subscriber and the Company (the "Closing") and payment shall have
been made by the Subscriber, by wire transfer, as directed in
writing by the Company, to the Company's designated account or
that of its attorney's client trust account, against the
Company's delivery of certificates representing the Preferred
Stock subscribed for.
2. Representations; Access to Information; Independent
Information; Independent Investigation.
2.1. Offshore Transaction. The Subscriber represents and
warrants to the Company that (i) the Subscriber is not
a "U.S. person" as that term is defined in Rule 902(o)
of Regulation S; (ii) the Preferred Stock was not
offered to the Subscriber in the United States and at
the same time of execution of this Subscription
Agreement and of any offer to buy the Preferred Stock
hereunder, the Subscriber was physically outside the
United States; (iii) the Subscriber is purchasing the
Securities for its own account and not on behalf of or
for the benefit of any U.S. person and the sale of the
Securities has not been prearranged with or on behalf
of any buyer in the United States; (iv) the Subscriber
and to the best knowledge of the Subscriber each
distributor, if any, participating in the offering of
the Securities, has agreed and the Subscriber hereby
agrees that all offers and sales of the Securities
prior to the expiration of a period commencing on the
Closing of all Preferred Stock offered and ending forty
days thereafter (the "Restricted Period") shall not be
made to U.S. persons or for the account or benefit of
U.S. persons and shall otherwise be made in compliance
with the provisions of Regulation S. Subscriber is not
a dealer with respect to this transaction.
2.2. Independent Investigation. The Subscriber, in offering
to subscribe for the Securities hereunder, has relied upon an
independent investigation made by it and its representatives, if
any, and has, prior to the date hereof, been given access to and
the opportunity to examine all books and records of the Company,
and all material contracts and documents of the Company. The
Subscriber has been given no oral or written representations or
assurances from the Company or any representation of the Company
other than as set forth in this Agreement, public filings of the
Company or in a document executed by a duly authorized
representative of the Company making reference to this Agreement.
The Subscriber has such experience in business and financial
matters that it is capable
of evaluating the risk of its investment and
determining the suitability of its investment. The
undersigned Subscriber is a sophisticated investor, as
defined in Rule 506(b)(2)(ii) of Regulation D, and an
accredited investor as defined in Rule 501 of
Regulation D.
2.3. No Government Recommendation or Approval. The
Subscriber understands that no United States federal or
state agency or similar agency of any other country,
has passed upon or made any recommendation or
endorsement of the Company, this transaction or the
subscription of the Securities.
2.4. No Directed Selling Efforts in Regard to this
Transaction. To the best of the knowledge of the
Subscriber and Company neither the Company nor any
distributor, if any, participating in the offering of
the Securities nor any person acting for the Company or
any such distributor has conducted any "directed
selling efforts" as that term is defined in Rule 902 of
Regulation S.
2.5. Reliance on Representation. This Agreement is made by
the Company with each Subscriber in reliance upon such
Subscriber's representations and covenants made in this
Section 2, which by his execution of this Agreement the
Subscriber hereby confirms.
2.6. No Registration. Subscriber understands that the
Preferred Stock (and the Shares issuable upon
conversion of the Preferred Stock) have not been
registered under the Act and are being offered and sold
pursuant to a "safe harbor" from registration contained
in Regulation S promulgated under the Act based in part
upon the representations of Subscriber contained
herein.
2.7. No Public Solicitation. Subscriber knows of no public
solicitation or advertisement of an offer in connection
with the proposed issuance and sale of the Preferred
Stock.
2.8. Investment Intent. Subscriber is acquiring the
Preferred Stock to be issued and sold hereunder (and
the Shares issuable upon conversion of the Preferred
Stock) for his own account (or a trust account if such
Subscriber is a trustee) for investment and not as a
nominee and not with a view to the distribution
thereof. Subscriber understands that he must bear the
economic risk of this investment indefinitely unless
sale of such Preferred Stock or such Shares is
registered pursuant to the Act, or an exemption from
such registration is available, and that the Company
has not present intention of registering any such sale
of the Preferred Stock or such Shares. Subscriber
represents and warrants to the Company that it has no
present plan or intention to sell the Preferred Stock
or the Shares in the United States pursuant to any
predetermined arrangements. Subscriber covenants that
neither Subscriber not its affiliates nor any person
acting on its or their behalf has the intention of
entering or will enter during the Restricted Period,
into any put option, short position, hedging
transactions, equity swaps or other similar instrument
or position with respect to the Securities or
securities of the same class as the Securities and
neither Subscriber nor any of its affiliates or any
person acting on its or their behalf will use at any
time Securities acquired pursuant to this Agreement to
settle any put option, short position, hedging
transactions, equity swaps or other similar instrument
or position that may have been entered into prior to
the execution of this Agreement.
2.9. No Sale in Violation of the Act. Subscriber further
covenants that he or she will not make any sale,
transfer or other disposition of the Preferred Stock or
the Shares in violation of the Act, the Securities and
Exchange Act of 1934, as amended (the "Exchange Act")
or the rules and regulations of the Securities and
Exchange Commission (the "Commission") promulgated
thereunder.
2.10. Authority. Subscriber has the full power and
authority to execute, deliver and perform this
Agreement. This Agreement when executed and delivered
by each Subscriber will constitute a valid and legally
binding obligation of such Subscriber, enforceable in
accordance with its terms.
2.11. No Reliance on Tax Advice. Subscriber has
reviewed with his or her own tax advisors the foreign,
federal, state and local tax consequences of this
investment, where applicable, and the transactions
contemplated by this Agreement. Subscriber is relying
solely on such advisors and not on any statements or
representations of the Company or any of its agents and
understands that Subscriber (and not the Company) shall
be responsible for the Subscriber's own tax liability
that may arise as a result of this investment or the
transactions contemplated by this Agreement.
2.12. No Legal Advice from Company. Subscriber
acknowledges that he or she has had the opportunity to
review this Agreement and the transactions contemplated
by this Agreement with his or her own legal counsel.
Subscriber is relying solely on such counsel.
Subscriber is relying solely on such counsel and not on
any statements or representations of the Company or any
of its agents for legal advice with respect to this
investment or the transactions contemplated by this
Agreement.
2.13. Professionals. Subscriber will send to any
broker/dealer or other person receiving a commission on
the sale of the Securities, a confirmation or other
notice stating that such person is subject to the same
restrictions on transfer to U.S. Persons or for the
account of or benefit of U.S. Persons during the
Restrictive Period as provided herein.
3. Resales.
Subscriber acknowledges and agrees that the Securities may
only be resold (a) in compliance with Regulation S; (b) pursuant
to a Registration Statement under the Act; or (c) pursuant to an
exemption from registration under the Act.
4. Legends; Subsequent Transfer of Securities.
4.1. Legends. The certificates representing the Preferred
Stock shall bear the first legend set forth on the
first page of this Agreement and any other legend, if
such legend or legends are reasonably required by the
Company to comply with state, federal or foreign law.
4.2. Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders
necessary for the authorization, execution and delivery
of this Agreement, the performance of all obligations
of the Company hereunder and the authorization,
issuance (or reservation for issuance) and delivery of
the Preferred Stock being sold hereunder and the Shares
issuable upon conversion of the Preferred Stock have
been taken, and this Agreement constitutes a valid and
legally binding obligation of the Company, enforceable
in accordance with its terms.
5. Representations and Warranties of Company.
Company represents and warrants to Subscriber as follows:
5.1. Organization, Good Standing 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 all
requisite corporate power and authority to carry on its business
as now conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to
so qualify would have a material adverse effect on the
business or properties of the Company and its
subsidiaries taken as a whole. The Company to its
knowledge is not the subject of any pending or
threatened investigation or administrative or legal
proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, or the
Securities and Exchange Commission which have not been
disclosed in the reports referred to in Section 5.4
below.
5.2. Corporate Condition. The Company's condition is as
described in the Company's reports filed pursuant to
the Exchange Act and the Act and provided to
Subscriber. There have been no material adverse
changes in the Company's financial condition or
business since the date of those reports which have not
been disclosed to Subscriber.
5.3. Valid Issuance of Preferred Stock and Common Stock.
This Agreement, when executed and delivered by the
Company, shall constitute a valid and binding
obligation of the Company, enforceable in accordance
with its terms. The Preferred Stock, when issued, sold
and delivered in accordance with the terms hereof for
the consideration expressed herein, will be validly
issued, fully paid and nonassessable and, based in part
upon the representations of the Subscriber in this
Agreement, will be issued in compliance with all
applicable federal, state, and other applicable
securities laws. The Shares issuable upon conversion
of the Preferred Stock when issued in accordance with
the terms of the Certificate of Designation, shall be
duly and validly issued, fully paid and nonassessable,
and based in part on the representations and warranties
of Subscriber and any transferee of the Preferred
Stock, will be issued in compliance with all applicable
federal, state and other applicable securities laws.
5.4. Current Public Information. The Company represents and
warrants to the Subscriber that the Company is a
"reporting issuer" as defined in Rule 902(1) of
Regulation S and its Common Stock is registered under
Section 12(b) of the Exchange Act and it has filed all
the material required to be filed as reports pursuant
to the Exchange Act for a period of at least twelve
months preceding the date hereof (or for such shorter
period as the Company was required by law to file such
material). The Company has furnished the Subscriber
with copies of the Company's Form 10-KSB Annual Report
for the year ended December 31, 1995, Form 10-QSB
quarterly report for the period ended March 31, 1996
and Proxy Statement for its July 18, 1996 Annual
Meeting of Stockholders and Risk Factors Exhibit B
hereto and the Company undertakes to furnish the
Subscriber with copies of such other information as may
be reasonably requested by the Subscriber.
5.5. No U.S. Offering. The Company represents that it has
not offered the Securities to the Subscriber in the
U.S. or, to the best knowledge of the Company, to any
person in the United States or any U.S. Person.
6. Covenants of Company.
6.1. Accountants. The Company will, until at least December
31, 1998, maintain as its independent auditors an
accounting firm of national reputation.
6.2. Corporate Existence and Taxes. The Company shall,
until at least December 31, 1998, maintain its
corporate existence in good standing, and shall pay all
of its taxes when due except for taxes which the
Company disputes.
7. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada except for
matters arising under the Act or the Exchange Act which matters
shall be construed and interpreted in accordance with such laws.
8. Entire Agreement; Amendment.
This Agreement, the Certificate of Designation, the
Registration Rights Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof
and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
Except as expressly provided herein, neither this Agreement nor
any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or
termination is sought.
9. Notices, Etc.
Any notice, demand or request required or permitted to be
given by either the Company or the Subscriber pursuant to the
terms of this Agreement shall be in writing and shall be deemed
given when delivered personally or three days after it is
deposited in the mail, First Class with postage prepaid and
addressed to the parties at the addresses of the parties set
forth at the end of this Agreement or such other address as a
party may request by notifying the other in writing.
10. Counterparts.
This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which
together shall constitute one instrument.
11. Severability.
In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full
force and effect without said provision; provided that no such
severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.
12. Titles and Subtitles.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
13. No Recourse.
Except as provided by applicable law, no recourse shall be
had on account of this Agreement or the Securities, or for any
claim based hereon, or otherwise in respect hereof, against any
incorporator, shareholder, officer or director, as such, past,
present, or future, of the Company or of any successor
corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty
or otherwise, all such liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly
waived and released.
14. Amount.
The undersigned hereby subscribes for _____ shares of
Preferred Stock and pays herewith funds in the amount of
$________ Dollars ($ __________ U.S.).
The undersigned acknowledges that this subscription shall
not be effective unless accepted by the Company as indicated
below.
Dated this ____ day of _____, 199_.
Registration Instructions:
(Name) (Please Print)
(Signature)
(Mailing Address)
The Subscriber is a resident of ________________________.
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE ____ DAY
OF _______________ 199_.
CROWN LABORATORIES, INC.
By:____________________________________
Print Name:
Its: Chief Executive Officer
