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Exhibit 10.19
RIBOGENE, INC.
SUBSCRIPTION AGREEMENT
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TABLE OF CONTENTS
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1. PURCHASE AND SALE OF PREMIUM PREFERRED UNITS....................................1
1.1 Authorization.....................................................1
1.2 Sale and Issuance of Units........................................1
2. CLOSING AND DELIVERY............................................................2
2.1 Initial Closing Date..............................................2
2.2 Subsequent Closings...............................................2
2.3 Escrow Arrangements...............................................2
3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................................2
3.1 Organization, Good Standing and Qualification ....................3
3.2 Capitalization ...................................................3
3.3 Subsidiaries......................................................4
3.4 Authorization.....................................................4
3.5 Valid Issuance of Securities......................................4
3.6 Governmental Consents.............................................5
3.7 Litigation........................................................5
3.8 Employee Agreement................................................5
3.9 Patents and Trademarks............................................5
3.10 Compliance with Other Instruments.................................6
3.11 Agreements; Action................................................6
3.12 Disclosure........................................................7
3.13 Rights of Registration and First Offer........................... 7
3.14 Corporate Documents...............................................7
3.15 Title to Property and Assets......................................7
3.16 Financial Statements..............................................7
3.17 Employee Benefit Plans............................................8
3.18 Tax Returns and Payments..........................................8
3.19 Insurance.........................................................8
3.20 Labor Agreements and Actions......................................8
4. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBERS ..............................9
4.1 Risk .............................................................9
4.2 Accredited Investor ..............................................9
4.3 Investment Experience ............................................9
4.4 Due Diligence ....................................................9
4.5 Offering ........................................................10
4.6 Protection of Interests; Exempt Offering ........................10
4.7 Investment Intent ...............................................10
4.8 Restricted Securities ...........................................11
4.9 Legends .........................................................11
4.10 Background and Rejection ........................................11
4.11 Address .........................................................11
4.12 Authority .......................................................11
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4.13 Entity...................................... ....................12
4.14 NASD........................................ ....................12
4.15 Blue Sky Laws............................... ....................12
4.16 Foreign Investors........................... ....................12
5. CALIFORNIA COMMISSIONER OF CORPORATIONS........................................12
5.1 Corporate Securities Law.........................................12
6. CONDITIONS OF SUBSCRIBER'S OBLIGATIONS AT CLOSING..............................12
6.1 Representations and Warranties...................................13
6.2 Performance......................................................13
6.3 Compliance Certificate...........................................13
6.4 Qualifications...................................................13
6.5 Proceedings and Documents........................................13
6.6 Opinion of Company Counsel.......................................13
6.7 Board of Directors...............................................13
6.8 Rights Agreement.................................................13
6.9 Minimum Subscriptions............................................13
6.10 Comfort Letter...................................................13
7. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING........................14
7.1 Representations and Warranties...................................14
7.2 California Qualification.........................................14
7.3 Rights Agreement.................................................14
8. COVENANTS OF THE COMPANY..................................................14
8.1 Delivery of Financial Statements.................................14
8.2 Inspection.......................................................14
8.3 Termination of Covenants.........................................15
9. MISCELLANEOUS.............................................................15
9.1 Survival of Representations and Warranties.......................15
9.2 Governing Law....................................................15
9.3 Counterparts.....................................................15
9.4 Titles and Subtitles.............................................15
9.5 Notices..........................................................15
9.6 Brokers..........................................................16
9.7 Expenses.........................................................16
9.8 Nondisclosure....................................................16
9.9 Third Parties....................................................16
9.10 Amendments and Waivers...........................................16
9.11 Severability.....................................................17
9.12 Entire Agreement.................................................17
10. NOTICE TO, AND REPRESENTATIONS AND COVENANTS OF CERTAIN STATE RESIDENTS............17
10.1 Pennsylvania Residents...........................................17
10.2 Texas Residents..................................................17
10.3 California Residents.............................................17
10.4 Florida Residents................................................17
(ii)
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11. CONFIDENTIAL INVESTOR QUESTIONNAIRE ...............................................18
11.1 Accreditation ...................................................18
11.2 Suitability .....................................................20
11.3 Manner in Which Title to be Held ................................21
11.4 NASD Affiliation ................................................22
11.5 Acknowledgment ..................................................22
(iii)
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made as of the date set
forth on the signature page hereof by and between RiboGene, Inc., a California
corporation (the "Company"), and the undersigned entities and/or persons
purchasing Units of the Company's securities (the "Subscribers").
WHEREAS, the Company has retained Paramount Capital, Inc. (the
"Placement Agent") as Placement Agent in a private placement offering (the
"Offering") of units (the "Units") of the Company;
WHEREAS, the Subscriber has been furnished with a copy of the Company's
Confidential Private Placement Memorandum dated November 5, 1996, as amended or
supplemented (the "Memorandum").
WHEREAS, the Subscriber desires to purchase that number of Units set
forth on the signature page hereof on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
1. Purchase and Sale of Premium Preferred Units.
1.1 Authorization. The Company shall adopt and file with the Secretary
of State of the State of California on or before the Closing (as defined below)
the Amended and Restated Articles of Incorporation in the form attached as
Exhibit A to the Memorandum (the "Restated Articles").
1 .2 Sale and Issuance of Units. Subject to the terms and conditions of
this Agreement, the Subscribers agree to purchase at the Closings (as defined
below) and the Company agrees to sell and issue to the Subscribers at the
Closings a minimum of 1,333,333 Units (the "Minimum Offering") and a maximum of
2,666,666 Units (the "Maximum Offering"), with an option in favor of the
Placement Agent, with the Company's prior consent, to offer up to an additional
1,777,777 Units to cover over-allotments, each Unit consisting of one share of
the Company's Series F Preferred Stock and one Class A Warrant to purchase one
share of the Company's Common Stock in substantially the form attached as
Exhibit B to the Memorandum (the "Warrants"), at a purchase price of $2.25 per
Unit. The shares of Series F Preferred Stock issued to the Subscriber's pursuant
to this Agreement shall be hereinafter referred to as the "Stock," the warrants
to purchase Common Stock issued in connection therewith shall be referred to as
the "Warrants," and each Warrant and share of Stock taken together shall be
referred to as a "Unit."
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2. Closing and Delivery.
2.1 Initial Closing Date. Upon receipt of the Minimum Offering amount,
the Placement Agent may conduct, in its sole discretion, an initial closing (the
"Initial Closing"). The Initial Closing and any subsequent closings shall take
place at the offices of Paramount Capital, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 12:00 p.m., or at such other place as the Company and the
Placement Agent mutually agree upon, orally or in writing. At the Initial
Closing, the Company shall deliver to each Subscriber instruments representing
the Stock and Warrants to be purchased in the Closing by the Subscribers. The
purchase price for the Units is payable by check, money order or wire transfer
payable to "Fleet Bank, N.A., Escrow Agent f/b/o RiboGene, Inc." in an
amount equal to $2.25 multiplied by the number of Units being purchased by such
Subscriber. Each Subscriber hereby authorizes and directs the Company to deliver
the Stock and Warrants comprising the Units to be issued to the Subscriber
pursuant to this Agreement directly to the Subscriber's account maintained by
the Placement Agent, if any, or, if no such account exists, to the residential
or business address indicated on the signature page hereto.
2.2 Subsequent Closings. At any time on or before May 30, 1997, subject
to extension by the Placement Agent for a period of up to an additional 15 days
(as may be extended, the "Final Closing Date"), the Placement Agent may conduct
subsequent closings on an interim basis (each referred to as a "Closing"), until
the Maximum Offering and, if applicable, any over-allotment amount has been
reached. All such sales shall be made on the terms and conditions set forth in
this Agreement. Any securities sold pursuant to this Section 2.2 shall be deemed
to be "Stock," "Warrants" or "Units," as the case may be, for all purposes under
this Agreement, and any Subscribers thereof shall be deemed to be "Subscribers"
for all purposes under this Agreement and such Subscribers shall become parties
to the Investor Rights Agreement (the "Rights Agreement").
2.3 Escrow Arrangements. Pending the sale of the Units, all funds paid
hereunder shall be deposited by the Company in escrow with Fleet Bank, N.A.,
having a branch at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. If the Company shall not
have obtained subscriptions (including this subscription) for purchases of
1,333,333 Units on or before the Termination Date, then this subscription shall
be void and all funds paid hereunder by the Subscriber shall be promptly
returned to the Subscriber. The Subscriber hereby authorizes and directs the
Company to return any funds for unaccepted subscriptions to the same account
from which the funds were drawn, including any customer account maintained with
the Placement Agent.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Subscribers that, except as set forth on the
Schedule of Exceptions which shall be provided to the Placement Agent in
connection with the Final Closing (the "Schedule of Exceptions"), which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
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3.1 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 California 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 so to qualify would have a material adverse
effect on its business or properties.
3.2 Capitalization. The authorized capital of the Company consists, or
will consist, immediately prior to the Initial Closing, of
(i) Preferred Stock 18,932,344 shares of Preferred Stock,
of which (A) 138,269 shares have been designated Series A Preferred Stock,
138,268 of which are issued and outstanding, (B) 800,000 shares have been
designated Series B Preferred Stock, 580,061 of which are issued and
outstanding, (C) 2,950,000 shares have been designated Series C Preferred Stock,
2,805,519 of which are issued and outstanding, (D) 270,222 shares have been
designated Series D Preferred Stock, all of which are issued and outstanding,
(E) 8,500,000 shares have been designated Series E Preferred Stock, 8,300,862
of which are issued and outstanding, and (F) 5,555,554 shares have been
designated Series F Preferred Stock, none of which are issued and outstanding
prior to the Initial Closing. The rights, privileges and preferences of the
Series A, Series B, Series C, Series D, Series E and Series F Preferred Stock
(collectively, the "Preferred Stock") are as stated in the Restated Articles. As
of the Final Closing Date, each outstanding share of Preferred Stock will be
convertible into one share of Common Stock, subject to any subsequent
adjustments following the Final Closing Date pursuant to the conversion ratio
adjustment provisions set forth in the Restated Articles.
(ii) Common Stock. 50,000,000 shares of Common Stock, of
which 1,143,031 shares are issued and outstanding.
(iii) Except for (a) the conversion privileges of the
Preferred Stock, (b) warrants to purchase up to 22,344 shares of Series B
Preferred Stock, 15,000 shares of Series C Preferred Stock, and 17,777 shares of
Series E Preferred Stock each issued to Dominion Ventures, Inc. (and the
conversion privileges of the Preferred Stock issuable upon exercise thereof),
(c) warrants to purchase up to an aggregate of 1,313,000 shares of Common Stock
issued to Hyline Laboratories, Inc. and another entity formerly related thereto,
(d) warrants for the purchase of up to 33,333 shares of Series E Preferred Stock
issued to Silicon Valley Bank, (e) warrants to purchase up to 52,850 shares of
Common Stock issued to SBC Capital Markets and an individual previously
affiliated therewith, (f) outstanding options issued under the Company's equity
incentive plan(s) described below, and (g) certain warrants to purchase (1)
shares of Series F Preferred Stock and (2) Common Stock, to be issued to the
Placement Agent in connection with its services with respect to the Offering
contemplated by this Agreement as well as pursuant to a financial advisory
agreement, which warrants are described in the Memorandum, there are no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements, orally or in writing, for the purchase or acquisition
from the Company of any shares of its capital stock except as set forth in or
contemplated by the
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Memorandum. The Company has from time to time reserved up to an aggregate of
2,835,000 shares of Common Stock for issuance, at the discretion of the Board of
Directors, to officers, directors, employees and consultants pursuant to the
Company's 1993 Stock Plan, of which as of the date of this Agreement (a) 848,291
shares were outstanding pursuant to stock purchases or stock option exercises,
(b) 1,913,145 shares are currently subject to outstanding stock options or
committed for issuance pursuant to pending stock purchase grants, and (c)
173,564 shares were reserved for future stock option or purchase grants. The
Company has also reserved 4,000 shares of Common Stock for issuance upon the
exercise of a single outstanding stock option pursuant to the Company's 1990
Stock Option Plan. Except as set forth in the Memorandum, the Company has
obtained written waivers of all anti-dilution provisions of any existing
securities that would otherwise be triggered by this Offering, and has provided
such waivers to the Placement Agent.
3.3 Subsidiaries. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity.
3.4 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 Rights Agreement, the Placement Warrants and
the issuance of the Unit, the Stock, the Warrants and the Common Stock issuable
upon conversion of the Stock or upon exercise of the Warrants and the Placement
Warrants (collectively, the "Securities"), the performance of all obligations of
the Company hereunder and thereunder has been taken or will be taken prior to
the Closing, and this Agreement, the Rights Agreement, the Stock, the Warrants
and the Placement Warrants constitute valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms.
3.5 Valid Issuance of Securities.
(a) The Stock and the Warrants, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued and, in the case of the Stock,
fully-paid and nonassessable. Based in part upon the representations of the
Subscribers in this Agreement and subject to the completion of the filings
referenced in Section 3.6 below, (i) the Units will be issued in compliance with
all applicable federal and state securities laws and (ii) the Common Stock
issuable upon conversion of the Stock and upon exercise of the Warrants has been
duly and validly reserved for issuance, and upon issuance in accordance with the
terms of the Restated Articles and the Warrants (if applicable), shall be duly
and validly issued, fully paid and non-assessable and will be issued in
compliance with all applicable federal and state securities laws.
(b) The outstanding shares of Common Stock and Preferred
Stock are all duly and validly authorized and issued, fully-paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
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3.6 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for the federal and state securities law filings to be
made by the Company as set forth on the Schedule of Exceptions.
3.7 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against the Company that questions the validity
of this Agreement, or the right of the Company to enter into this Agreement, or
to consummate the transactions contemplated hereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.8 Employee Agreement. Each employee and officer of the Company has
executed an agreement with the Company regarding confidentiality and proprietary
information. The Company, after reasonable investigation, is not aware that any
of its employees are in violation thereof, and the Company will use its best
efforts to prevent any such violation and to maintain and enforce such agreement
with its employees.
3.9 Patents and Trademarks. Except as set forth in the Memorandum, as of
the Closing, the Company has or will have sufficient title and ownership of all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now
conducted and as proposed to be conducted in the Memorandum without any conflict
with or infringement of the rights of others. Except as set forth in the
Memorandum, there are no outstanding options, licenses, or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. The Company is not aware
that any of its employees are obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his best efforts to promote the interests of the
Company or
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that would conflict with the Company's business as proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed, will, to the Company's knowledge, conflict with
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company.
3.10 Compliance with Other Instruments.
(a) The Company is not in violation or default of any
provisions of its Articles of Incorporation, as amended, or Bylaws or of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company. The execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument, judgment, order, writ,
decree or contract or an event which results in the creation of any lien, charge
or encumbrance upon any assets of the Company.
(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any license, distribution or other agreement material to
its business as now conducted and as proposed to be conducted as set forth in
the Memorandum.
3.11 Agreements; Action.
(a) Except for the agreements set forth under the captions
"Certain Transactions" and "Principal Shareholders" in the Memorandum and/or on
the Schedule of Exceptions, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof.
(b) Except as set forth in the Memorandum, there are no
agreements, understandings, instruments, contracts or proposed transactions to
which the Company is a party or by which it is bound that involve (i) current or
future obligations of or payments to the Company in excess of $50,000, or (ii)
the license of any patent, copyright, trade secret or other proprietary right to
or from the Company.
(c) Except as set forth in the Memorandum, the Company has
not (i) declared or paid any dividends, or authorized or made any distribution
upon or with respect to any class or series of its capital stock, (ii) incurred
indebtedness for money borrowed or incurred any other liabilities individually
in excess of $10,000 or in excess of $50,000 in the aggregate, including
guarantees for such amounts, which amounts have not yet been fully repaid, (iii)
made
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any loans or advances to any person, other than ordinary advances for travel
expenses, which loans or advances have not been fully repaid, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Articles of Incorporation, as amended, or Bylaws, which adversely affects its
business as now conducted or as proposed to be conducted, its properties or its
financial condition.
(e) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the merger of the Company with or into any such corporation or
corporations, (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Company or a transaction or
series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of, or (iii) regarding any other form of
liquidation, dissolution or winding up of the Company.
3.12 Disclosure. The Company has fully provided the Subscribers with all
information which the Company believes is reasonably necessary to enable the
Subscribers to decide whether to acquire the Units, including the Memorandum. No
representation or warranty of the Company contained in this Agreement and the
exhibit attached hereto, any certificate furnished or to be furnished to the
Subscribers at the Closing, or the Memorandum (when read together) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
3.13 Rights of Registration and First Offer. Except as set forth in the
Memorandum, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
3.14 Corporate Documents. The Articles of Incorporation, as amended,
immediately prior to the Closing will be in the form attached as Exhibit A to
the Memorandum and the Bylaws of the Company are in due and proper form.
3.15 Title to Property and Assets. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances.
3.16 Financial Statements. As part of the Memorandum, the Company has
delivered to the Subscribers its unaudited financial statements (balance sheet
and statements of
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operations and cash flows) as at June 30, 1996 and its audited financial
statements (balance sheet and statements of operations and cash flows) for the
years ended December 31, 1995 and December 31, 1994 and the period from
inception (May 5, 1989) to December 31, 1995 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated and with each other, except that unaudited
Financial Statements may not contain all footnotes required by generally
accepted accounting principles. The Financial Statements fairly present the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein, subject to normal year-end audit
adjustments, which are neither individually nor in the aggregate material.
Except as set forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to June 30, 1996 in an amount less than
$25,000 in the aggregate, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Financial Statements,
which, in both cases, individually or in the aggregate, are not material to the
financial condition or operating results of the Company. The Company maintains
and will continue to maintain standard system of accounting established and
administered in accordance with generally accepted accounting principles.
3.17 Employee Benefit Plans. Except as set forth in the Memorandum the
Company does not have any Employee Benefit Plan as defined in the Employee
Retirement Income Security Act of 1974.
3.18 Tax Returns and Payments. The Company has filed all tax returns and
reports as required by law. These returns and reports are true and correct in
all material respects. The Company has paid all taxes and other assessments due,
except those contested by it in good faith which are listed in the Schedule of
Exceptions.
3.19 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
3.20 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention
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to terminate the employment of any of the foregoing. The employment of each
officer and employee of the Company is terminable at the will of the Company,
subject to the employment agreements set forth in the Memorandum.
4. Representations and Warranties of the Subscribers. Each Subscriber hereby
severally and not jointly represents and warrants to the Company that:
4.1 Risk. The Subscriber recognizes that the purchase of Units involves
a high degree of risk in that (i) the Company remains a development stage
business with limited operating history and requires substantial 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 and the Units; (iii) the
Subscriber may not be able to liquidate his investment; (iv) transferability of
the Stock and the Warrants and any underlying securities is extremely limited;
(v) in the event of a disposition, the Subscriber could sustain the loss of his
entire investment and other such risks as are more fully set forth in the
Memorandum furnished by the Company to the Subscriber.
4.2 Accredited Investor. 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 his responses to the questions contained in Section 11 hereof, and
that the Subscriber is able to bear the economic risk of an investment in the
Units.
4.3 Investment Experience. The Subscriber hereby acknowledges and
represents that (i) the Subscriber has prior investment experience, including
investment in nonlisted and unregistered securities, or 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 in the Units and to evaluate
the merits and risks of such an investment on the Subscriber's behalf, (ii) the
Subscriber recognizes the highly speculative nature of this investment; and
(iii) the Subscriber is able to bear the economic risk which the Subscriber
hereby assumes.
4.4 Due Diligence. The Subscriber hereby acknowledges receipt and
careful review of the Memorandum, as supplemented and amended, and the
attachments and exhibits thereto all of which constitute an integral part of the
Memorandum and hereby represents that the Subscriber has been furnished by the
Company during the course of this transaction with all information regarding the
Company which the Subscriber has requested or desired to know, 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 has received any additional information which
Subscriber has requested.
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4.5 Offering.
(a) The Subscriber has relied solely upon the information
provided by the Company in the Memorandum, in this Agreement and its exhibit and
as otherwise requested by the Subscriber in making the decision to invest in the
Units. To the extent necessary, the Subscriber has retained, at the expense of
the Subscriber, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and its
purchase of the Units hereunder. The Subscriber acknowledges and agrees that the
Placement Agent has not supplied any information for inclusion in the
Memorandum, has no responsibility for the accuracy or completeness of the
Memorandum and that the Subscriber has not relied upon the independent
investigation or verification, if any, which may have been undertaken by the
Placement Agent.
(b) To the best of its knowledge, (i) the Subscriber was
contacted regarding the sale of the Units 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 Units were offered or sold to
it by means of any form of general solicitation or 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.
4.6 Protection of Interests; Exempt Offering. The Subscriber hereby
represents that the Subscriber either by reason of the Subscriber's business or
financial experience or the business or financial experience of the Subscriber's
professional advisors (who are unaffiliated with and who are not compensated by
the Company or any affiliate or selling agent of the Company, including the
Placement Agent, directly or indirectly) has the capacity to protect the
Subscriber's own interests in connection with the transaction contemplated
hereby. 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 is intended to be exempt from
the registration requirements of Section 5 of the Act pursuant to Sections 4(2)
of the Act and Regulation D promulgated thereunder. The Subscriber agrees that
the Subscriber will not sell or otherwise transfer the Stock or the Warrants
unless they are registered under the Act or unless an exemption from such
registration is available.
4.7 Investment Intent. The Subscriber understands that the Securities
comprising the Units have not 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 comprising the Units
for the Subscriber's own account for investment and not with a view toward the
resale or distribution to others. The Subscriber, if an entity, was not formed
for the purpose of purchasing the Units.
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15
4.8 Restricted Securities. The Subscriber understands that there
currently is no public market for any of the securities comprising the Units and
that even if such market existed, Rule 144 promulgated under the Act requires,
among other conditions, a two-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. The Subscriber
understands and hereby acknowledges that the Company is under no obligation to
register the Units or any of the Stock or the Warrants comprising the Units
under the Act or any state securities or "blue sky" laws other than as set forth
in the Rights Agreement. The Subscriber consents that the Company may, if it
desires, permit the transfer of the Stock or the Warrants comprising the Units
under or issuable upon exercise thereof 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, the "Securities Laws"). The Subscriber agrees to hold the
Company and its directors, officers, employees, controlling persons and agents
(including the Placement Agent and its officers, directors, employees and
controlling persons) and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of any
misrepresentation made by the Subscriber contained in this Agreement (including
the Confidential Investor Questionnaire contained in Section II herein) or any
sale or distribution by the Subscriber in violation of the Securities Laws.
4.9 Legends. The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities 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 with respect to the
restrictions on the transferability of such Securities.
4.10 Background and Rejection. The Subscriber understands that the
Company will review this Agreement and is hereby given authority by the
Subscriber to call Subscriber's bank or place of employment or otherwise review
the financial standing of the Subscriber; and it is further agreed that the
Company reserves the unrestricted right to reject or limit any subscription, to
accept subscriptions for fractional Units and to close the Offering to the
Subscriber at any time.
4.11 Address. 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.
4.12 Authority. The Subscriber represents that he or it has full power
and authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Units. This Agreement constitutes the legal, valid
and binding obligation of the Subscriber, enforceable against the Subscriber in
accordance with its terms.
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16
4.13 Entity. If the Subscriber is a corporation, company, trust,
employee benefit plan, individual retirement account, ▇▇▇▇▇ Plan, or other
tax-exempt entity, 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.
4.14 NASD. The Subscriber acknowledges that if he is a Registered
Representative of an NASD member firm, he must give such firm the notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section II.4 below.
4.15 Blue Sky Laws. The Subscriber acknowledges that at such time, if
ever, as any of the Securities are registered, sales of such Securities will be
subject to state securities laws, including those of states which may require
any securities sold therein to be sold through a registered broker-dealer or in
reliance upon an exemption from registration.
4.16 Foreign Investors. If the Subscriber is not a United States person,
such Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase; (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale, or transfer of the Securities. Such Subscriber's
subscription and payment for, and his or her continued beneficial ownership of
the Securities, will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
5 . California Commissioner of Corporations.
5.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT IS THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA. THE ISSUANCE OF SUCH SECURITIES OR THE
PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100,25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
6. Conditions of Subscribers' Obligations at Closing. The obligations of the
Subscribers to the Company under this Agreement are subject to the fulfillment,
on or before the Closing, of each of the following conditions:
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17
6.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing.
6.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
6.3 Compliance Certificate. The Chief Executive Officer of the Company
shall deliver to the Subscribers at the Closing a certificate certifying that
the conditions specified in Sections 6.1 and 6.2 have been fulfilled.
6.4 Qualifications. The Commissioner of Corporations of the State of
California shall have issued a permit qualifying the offer and sale of the
Securities to the Subscribers pursuant to this Agreement, or such offer and sale
shall be exempt from such qualification under the California Corporate
Securities Law of 1968, as amended.
6.5 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Subscriber, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
6.6 Opinion of Company Counsel. The Subscribers and Paramount Capital,
Inc. shall have received from Venture Law Group and Bachner, Tally, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsels for the Company, opinions, dated as of the Final Closing,
in substantially the form agreed to by the Placement Agent.
6.7 Board of Directors. The Board of Directors of the Company as of the
Closing Date shall be comprised of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Digby ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D., ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, with one vacancy.
6.8 Rights Agreement. The Company and the Subscribers shall have
executed and delivered the Rights Agreement.
6.9 Minimum Subscriptions. With respect to the Initial Closing, the
Company shall have received binding subscriptions for at least 1,333,333 Units.
6.10 Comfort Letter. On each Closing Date, if requested by the Placement
Agent, the Corporation's auditors shall have delivered to the Agent for the
benefit of the Placement Agent a comfort letter to such effect as the Placement
Agent may require.
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18
7. Conditions of the Company's Obligations at Closing. The obligations of
the Company to the Subscribers under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions:
7.1 Representations and Warranties. The representations and warranties
of the Subscribers contained in Section 4 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.
7.2 California Qualification. The Commissioner of Corporations of the
State of California shall have issued a permit qualifying the offer and sale to
the Subscribers of the Securities or such offer and sale shall be exempt from
such qualification under the California Corporate Securities Law of 1968, as
amended.
7.3 Rights Agreement. The Company and the Subscribers shall have
executed and delivered the Rights Agreement.
8. Covenants of the Company.
8.1 Delivery of Financial Statements. The Company shall deliver to each
Subscriber:
(a) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, an income statement for
such fiscal year, a balance sheet of the Company as of the end of such year, and
a schedule as to the sources and applications of funds for such year, such
year-end financial reports to be in reasonable detail, prepared in accordance
with generally accepted accounting principles ("GAAP"), and audited and
certified by independent public accountants of nationally recognized standing
selected by the Company;
(b) As soon as practicable after a request by such Subscriber to
the Company's Chief Financial Officer, an unaudited profit or loss statement and
schedule as to the sources and application of funds for the preceding fiscal
quarter (applicable to the first three quarters of each fiscal year only) and an
unaudited balance sheet as of the end of such fiscal quarter in reasonable
detail; and
(c) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the Subscriber or any
assignee of the Subscriber may from time to time request, provided, however,
that the Company shall not be obligated to provide information which it deems in
good faith to be proprietary or confidential.
8.2 Inspection. The Company shall permit the Subscribers, at the
Subscribers' expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Subscribers; provided, however, that the Company
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19
shall not be obligated pursuant to this Section 8.2 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.
8.3 Termination of Covenants. The covenants set forth in Sections 8.1
and 8.2 shall terminate as to the Subscribers and be of no further force or
effect immediately upon the consummation of the Company's sale of its Common
Stock in a bona fide, firm commitment underwriting pursuant to a registration
statement under the Act generating aggregate gross proceeds to the Company in
excess of $7,500,000 (other than a registration statement relating either to the
sale of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction).
9. Miscellaneous.
9.1 Survival of Representations and Warranties. Except as set forth in
Section 8.3 above, the warranties, representations and covenants of the Company
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing and shall in no way be affected by
any investigation of the subject matter thereof made by or on behalf of the
Subscriber.
9.2 Governing Law. 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 NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4 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.
9.5 Notices.
(a) All notices, requests, demands and other communications under
this Agreement or in connection herewith shall be given to or made upon the
respective parties as follows: if to the Subscribers, to the addresses set forth
on the signature page hereto, or, if to the Company, to RiboGene, Inc., ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: President.
(b) All notices, requests, demands and other communications given
or made in accordance with the provisions of this Agreement shall be in writing,
and shall be sent
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by airmail, return receipt requested, or by telex or telecopy (facsimile) with
confirmation of receipt, and shall be deemed to be given or made when receipt is
so confirmed.
(c) Any party may, by written notice to the other, alter its
address or respondent, and such notice shall be considered to have been given
ten (10) days after the airmailing, telexing or telecopying thereof.
9.6 Brokers.
(a) Each Subscriber severally represents and warrants that it has
not engaged, consented to or 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. Each
Subscriber hereby severally agrees to 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.
(b) The Company has engaged, consented to and authorized the
Placement Agent in connection with the transactions contemplated by this
Agreement. The Company hereby agrees to pay the Placement Agent a commission and
to reimburse expenses in accordance with the Placement Agency Agreement dated as
of August 1, 1996, as amended (the "Placement Agency Agreement"), and the
Company agrees to indemnify and hold harmless the Subscribers from and against
all fees, commissions or other payment owing by the Company to any other person
or firm acting on behalf of the Company hereunder.
9.7 Expenses. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
9.8 Nondisclosure. The Company agrees not to disclose the names,
addresses or any other information about the Subscribers, except as required by
law; provided, that the Company may use the name (but not the address) of the
Subscriber in any registration statement under the Act with respect to the Stock
and Warrants.
9.9 Third Parties. 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 (a) for the holders of Registrable Securities and (b) for the Placement
Agent pursuant to Sections 4.5 and 9.6(b) hereof.
9.10 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and Subscribers holding a majority in
interest of the Units purchased hereunder. Any amendment or waiver effected in
accordance with this Section shall be binding upon each
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transferee of any Securities, each future holder of all such Securities, and the
Company, provided, however, that none of the conditions set forth in Section 6
hereof may be waived with respect to a particular Subscriber unless it consents
thereto.
9.11 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9.12 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements existing between the parties hereto are
expressly cancelled.
10. NOTICE TO AND REPRESENTATIONS AND COVENANTS OF CERTAIN STATE RESIDENTS.
10.1 Pennsylvania Residents: The undersigned hereby acknowledges that
the Company is relying upon the exemption from registration of securities set
forth in Section 203(d) of the Pennsylvania Securities Act of 1972, as amended
(the "Pennsylvania Act") in connection with the sale of the Units to the
undersigned.
In accordance with the requirements of Section 203(d) of the
Pennsylvania Act, the undersigned hereby agrees not to sell his Units within
twelve (12) months from the date of purchase except pursuant to Section 204.01
of the Blue Sky Regulations of the Pennsylvania Securities Act of 1972.
Additionally, the undersigned is aware of the right of withdrawal under Section
207(m) of the Act described in the introductory pages of the Memorandum.
10.2 Texas Residents: The undersigned hereby acknowledges that the Units
cannot be sold unless they are subsequently registered under the Securities Act
of 1933, as amended and the Texas Securities Act, or an exemption from
registration is available. The undersigned further acknowledges that because the
Units are not readily transferable, he must bear the economic risk of his
investment for an indefinite period of time.
10.3 California Residents: If the undersigned is a natural person, he or
she represents that his or her investment in these Units does not exceed 10% of
his or her net worth or joint net worth with spouse (excluding principal
residence and its furnishings).
10.4 Florida Residents: The undersigned acknowledges that the Units have
not been registered under the Florida Securities and Investor Protection Act
(the "Florida Act") in reliance upon exemption provisions contained therein.
Section 517.061 (II)(a)(5) of the Florida Act provides that any Subscriber of
securities in Florida which are exempted from registration under Section 5
17.061 (II) of the Florida Act may withdraw his subscription agreement and
receive a full refund of all monies paid, within three business days after he
tenders consideration for such securities. Therefore, any Florida resident who
purchases securities is entitled to
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exercise the foregoing statutory rescission right within three business days
after tendering consideration for the investment packages by telephone, telegram
or letter notice to the Company. Any telegram or letter should be sent or
postmarked prior to the end of the third business day. A letter should be mailed
by certified mail, return receipt requested, to ensure its receipt and to
evidence the time of mailing. Any oral requests should be confirmed in writing.
11. Confidential Investor Questionnaire.
11.1 Accreditation. The Subscriber represents and warrants that he, she
or it comes within one category marked below, and that for any category marked,
he, she or it has truthfully set forth, where applicable, the factual basis or
reason the Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO
THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below.
Category A The undersigned is an individual (not a partnership, corporation,
etc.) whose individual net worth, or joint net worth with his or
her spouse, presently exceeds $1,000,000.
Explanation: In calculating net worth you may include: equity in
personal property and real estate, including your principle
residence, cash, short-term investments, stock and securities.
Equity in personal property and real estate should be based on
the fair market value of such property less debt secured by such
property.
Category B The undersigned is an individual (not a partnership, corporation,
etc.) who had an income in excess of $200,000 in each of the two
most recent years, or joint income with his or her spouse in
excess of $300,000 in each of those years (in each case including
foreign income, tax exempt income and full amount of capital
gains and loses but excluding any income of other family members
and any unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the current
year.
Category C The undersigned is a director or executive officer of the Company
which is issuing and selling the Units.
Category D The undersigned is a bank, a savings and loan association;
insurance company; registered investment company; registered
business development company; licensed small business investment
company ("SBIC"); or employee benefit plan within the meaning of
Title I of ERISA and (a) the investment decision is made by a
plan fiduciary which is either a bank, savings and loan
association, insurance company or registered investment advisor,
or (b) the plan has total assets in excess of
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$5,000,000 or is a self directed plan with investment decisions
made solely by persons that are accredited investors.
-------------------------------
-------------------------------
(describe entity)
Category E The undersigned is a private business development company as
defined in Section 202(a)(22) of the Investment Advisors Act of
1940.
-------------------------------
-------------------------------
(describe entity)
Category F The undersigned is either a corporation, partnership,
Massachusetts business trust, or non-profit organization within
the meaning of Section 501 (c)(3) of the Internal Revenue Code,
in each case not formed for the specific purpose of acquiring
the Units and with total assets in excess of $5,000,000.
-------------------------------
-------------------------------
(describe entity)
Category G The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Units, where the purchase is directed by a "sophisticated person"
as defined in Regulation 506(b)(2)(ii).
Category H The undersigned is an entity (other than a trust) all the equity
owners of which are "accredited investors" within one or more of
the above categories. If relying upon this Category alone, each
equity owner must complete a separate copy of this Agreement.
-------------------------------
-------------------------------
(describe entity)
Category I The undersigned is not within any of the categories above and is
therefore not an accredited investor.
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The undersigned agrees that the undersigned will notify the Company at
any time on or prior to the Closing Date in the event that the representations
and warranties in this Agreement shall cease to be true, accurate and complete.
11.2 Suitability. (please answer each question)
(a) For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:
--------------------------------------------------------------------------------
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(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(c) For all Subscribers, please list types of prior investments:
--------------------------------------------------------------------------------
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(d) For all Subscribers, please state whether you have participated in other
private placements before:
Yes No
--- --
(e) For all Subscribers, please indicate frequency of such prior participation
in private placements of
Public Private Public or Private
Companies Companies Biotechnology Companies
--------- --------- -----------------------
Frequently --------- --------- -----------------------
Occasionally --------- --------- -----------------------
Never --------- --------- -----------------------
(f) For individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:
Yes No
--- --
(g) For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future:
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Yes No
--- --
(h) For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:
Yes No
--- --
(i) For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?
Yes No
--- --
(j) For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
Yes No
--- --
11.3 Manner in Which Title to be Held. (circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of Survivorship (both parties must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(G) Trust*
(h) Other
*If Units are being subscribed for by an entity, the attached Certificate of
Signatory must also be completed.
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11.4 NASD Affiliation
Are you affiliated or associated with an NASD member firm? (please check one):
Yes No
--- --
If Yes, please describe:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
*If Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
-------------------------------
Name of NASD Member Firm
By:----------------------------
Authorized Officer
Date:--------------------------
11.5 Acknowledgment. The undersigned is informed of the significance to
the Company of the foregoing representations and answers contained in the
Confidential Investor Questionnaire contained in this Section II and such
answers have been provided under the assumption that the Company will rely on
them.
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