Exhibit 10.18
SUBSCRIPTION AGREEMENT
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The purpose of this Subscription Agreement is to set forth the terms
and conditions whereby a Pennsylvania general partnership consisting of Xxxxx
Xxxxx, Xxxxx X. Xxxxxx, Xxxx Xxxx and Xxxxxxx Xxxxxxx ("Associates") will make
an investment in Nocopi, Inc. ("Nocopi"). It is the parties' intention to be
legally bound by the terms hereof upon its execution by Associates and Nocopi.
Specifically, the parties, intending to be legally bound, agree as follows:
1. Associates will acquire three million three hundred thousand three
hundred thirty-three (3,333,333) shares of the fully paid non-assessable common
stock of Nocopi (par value $.01) at $.06 per share, for a total investment of
$200,000.00 (the initial shares and any after acquired shares are referred to as
the "Shares"). Upon issuance of the initial Shares, the total outstanding shares
of common stock will be 45,972,241, with an additional 29,027,759 remaining
authorized but unissued shares.
2. Associates will invest the sum of Two Hundred Thousand Dollars
($200,000.00) in Nocopi in consideration of issuance of the initial Shares. The
investment will be utilized for working capital and other normal course of
business expenses. The proceeds shall not be directly used to retire, in whole
or in part, nor pay interest on, any existing indebtedness of Nocopi to Xxxxxxx
Xxxxxxxxx or Xxxx Xxxxxxxx and Xxxxxxxx X. Xxxxxxx for advances made by such
persons prior to the date hereof. In addition, Nocopi shall not pay its
executives compensation beyond the level of compensation being paid as of
October 1, 2002, until such time as Nocopi has attained breakeven after allowing
for the additional executive compensation.
3. Associates will also have the right to acquire up to forty million
(40,000,000) additional Shares of the common capital stock in Nocopi (the
"Future Shares"). Inasmuch Nocopi has insufficient shares authorized to allow
the issuance of the Future Shares, Nocopi shall obtain the approval of the
current members of the Board of Directors to authorize additional shares.
Further, Nocopi will use its best efforts to obtain shareholder approval for the
authorization of the additional shares as soon as practicable. The Future Shares
will be subject to acquisition by Associates based on the following schedule and
pricing:
Exercise Date No. of Future Shares Price
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On or before :
12/31/03 10,000,000 $.10 per share
12/31/04 10,000,000 $.15 per share
12/31/05 10,000,000 $.20 per share
12/31/06 10,000,000 $.25 per share
4. In the event Associates does not exercise the right to purchase any
installment of the Future Shares in accordance with the timeframes set forth
above, Associates will have the right to roll-over twenty-five percent (25%) of
the Future Shares to the next period and to continue rolling over twenty-five
percent (25%) of the then-available unexercised Future Shares at the end of any
period to the subsequent period at the price prescribed for said subsequent
period. By way of illustration, if on or before 12/31/03 Associates only
acquires 6,000,000 of Future Shares for $.10 per share, Associates can rollover
2,500,000 of the remaining 4,000,000 Future Share rights to the following
periods (the other 1,500,000 Future Share rights are thereafter no longer
available to Associates). Therefore, Associates can acquire 12,500,000 of Future
Shares in the next period for $.15 per share, or rollover 3,125,000 (i.e., 25%)
to subsequent periods.
5. In addition, Associates shall have the right to accelerate the
purchase of any of the Future Shares at any time provided that the purchase
price for said Future Shares shall be at the stated price set forth above. Thus,
by way of illustration, if on 12/31/05 Associates wanted to purchase the full
20,000,000 of remaining Future Shares (assuming there were then no rollover
rights), the purchase price would be $.20 for 10,000,000 of the Future Shares,
and $.25 for the other 10,000,000 of Future Shares.
6. Until 12/31/06, and for so long as Associates shall not have sold or
transferred any of the securities hereby subscribed for, it shall have the right
to designate a person for nomination and election to Nocopi's board of
directors. During such period, Nocopi's board (1) shall nominate the designated
person and support such person's election in any vote of its stockholders for
the board of directors, and (2) shall not take any action to increase the size
of its board of directors without the consent of Associates.
7. Xxxx Xxxx shall be retained on a regular but half-time basis for a
period of six (6) months from the date immediately following the investment by
Associates hereunder to consult with the Company and assist in sales and
marketing. In consideration, Xxxx Xxxx shall be paid Six Thousand Dollars
($6,000.00) per month during this consulting engagement. The foregoing
notwithstanding, Xxxx (but not Nocopi)shall have the right at any time after the
initial three (3) months to terminate the consulting engagement upon at least 10
days' written notice to Nocopi. The parties may mutually agree to extend the
engagement. In addition, Nocopi recognizes that the other members of Associates
are available for periodic consultations regarding the management and operations
of Nocopi, as may be agreed between them.
8. Associates' rights with respect to the Future Shares under Sections
3, 4 and 5 above shall be subject to, in addition to the shareholder approval
referred to in Section 3, the parties' negotiation of, and agreement on, the
terms and conditions of customary common stock purchase warrants, which warrants
shall contain standard anti-dilution adjustments for the number of Future
Shares.
9. The parties agree that Associates will make the total investment
within one (1) week of receipt by Associates of a fully signed copy of this
Agreement. Upon such investment, Nocopi shall issue Associates the initial
Shares, along with a copy of its resolutions confirming the authorization of
Nocopi to enter into this Agreement.
10. Associates represents and warrants that (a) each of its members is
an accredited investor and has such knowledge of securities and investments,
including access to all public information concerning Nocopi, as to be able,
with assistance, to evaluate the risks and merits of making the investment
contemplated hereby, and (b) it is purchasing the securities for its own account
and has no present agreement, arrangement or understanding to sell the
securities to another person.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the
22nd day of November, 2002.
NOCOPI, INC.
By:/s/ Xxxxxxx Xxxxxxxxx, M.D.
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Title: Chairman
ASSOCIATES
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/ Xxxx Xxxx
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Xxxx Xxxx
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
