CORTEX PHARMACEUTICALS, INC.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THE PREFERRED STOCK BEING SUBSCRIBED FOR HEREIN AND THE COMMON STOCK
ISSUABLE UPON CONVERSION OF THE PREFERRED STOCK (COLLECTIVELY THE "SECURITIES")
HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") OR THE
SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THEY ARE
BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
("REGULATION S") PROMULGATED UNDER THE ACT . THE SECURITIES MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH
TERM IS DEFINED IN REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS
ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THOSE LAWS, INCLUDING WITHOUT LIMITATION RULE 144A.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN SUCH SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE
RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED, APPROVED OR
DISAPPROVED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT REVIEWED, PASSED
UPON, CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS DOCUMENT OR
ANY INFORMATION PROVIDED BY THE COMPANY TO POTENTIAL INVESTORS. ANY
REPRESENTATION 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 10% Series C Convertible Preferred Stock
$.001 par value (the "Preferred Stock") of Cortex Pharmaceuticals, Inc., a
Delaware corporation (the "Company"). The Preferred Stock is being offered at a
purchase price of $25,000 per Preferred Share, in minimum subscription amounts
of at least 2 shares ($50,000) and increments of 1 share ($25,000) in excess
thereof, up to a maximum amount of 160 shares of Preferred Stock, or $4.0
million (the "Offering"). The terms of the Preferred Stock, including the terms
on which the Preferred Stock may be converted into common stock, $.001 par value
of the Company (the "Common Stock"), are set forth in the Certificate of
Designation of Series C convertible Preferred Stock (the "Certificate of
Designation"), in substantially the form attached hereto as Exhibit A. 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 Regulation S ("Regulation S") promulgated under the United States
Securities Act of 1933, as amended (the "Act"). The Preferred Stock, and the
Common Stock issuable upon conversion thereof (the "Shares"), are sometimes
referred to herein collectively as the "Securities." The Subscriber wishes to
subscribe for Preferred Stock in the amount set forth in Section 17 in
accordance with the terms and conditions of the form of Preferred Shares and
this Agreement. It is agreed as follows:
1. OFFER TO SUBSCRIBE; PURCHASE PRICE AND CLOSING
The Subscriber hereby offers to subscribe for and purchase Preferred Stock,
for the aggregate purchase price set out in Section 17 of this Agreement.
Subscriber agrees that Company may reduce the aggregate amount of Preferred
Stock subscribed for pursuant hereto if, in the Company's discretion, the
Offering is over-subscribed or such reduction is necessary to avoid seeking
shareholder approval of the Offering under NASDAQ rules. Assuming that the
minimum placement amount of $3 million (or less, if accepted by the Company) and
corresponding subscription agreements accepted by the Company are received into
the Company's designated escrow account for this Offering (the "Escrow Account")
by December 15, 1995 (the "Offering Termination Date"), the closing as to each
Subscriber (the"Closing") shall be deemed to occur when this Agreement has been
executed by both the Subscriber and the Company and payment shall have been
made by the Subscriber, by wire transfer, as directed in writing by the Company,
to the Company's designated escrow account, for payment in consideration for the
Company's delivery of certificates representing the Preferred Stock subscribed
for. If the Closing does not occur on or prior to the Offering Termination
Date, the Escrow Agent will be instructed to release to Subscriber its
subscription payment, with interest accrued from receipt of such payment into
the Escrow Account under the terms of the Escrow Account, as soon as practicable
thereafter in accordance with wire instructions provided by Subscriber.
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 (a copy of which definition is
attached as Exhibit B) including, without limitation if a business
organization, such as a corporation or partnership, (a) it is
organized under the laws of a jurisdiction other than the United
States and (b) if organized by a "U.S. Person" principally for the
purpose of investing in securities not registered under the Act, it
was organized and is owned by accredited investors (as defined in Rule
501(a) of Regulation D under the Act) who are not natural persons,
estates or trusts; (ii) the Securities were not offered to the
Subscriber in the United States and at the time of execution of this
Subscription Agreement and the time of any offer to the Subscriber to
purchase the Securities 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 and resale of the Securities have not
been
2
prearranged with any U.S. person or buyer in the United States; (iv)
the Subscriber agrees, and to the best knowledge of the Subscriber
each distributor, if any, participating in the offering of the
Securities, has agreed, that all offers and sales of the Securities
prior to the expiration of a period commencing on the date of the last
Closing of a sale and purchase of Preferred Stock (the "Last Closing")
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 distributor or dealer with respect
to the Securities.
2.2 SUBSCRIBER'S INDEPENDENT INVESTIGATION. The Subscriber, in offering
to subscribe for the Securities hereunder, has relied solely 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 which have been filed
as exhibits to the Company's filings made under the Act and the
Securities Exchange Act of 1934, as amended. In making its investment
decision to purchase the Preferred Stock, the Subscriber is not
relying on any oral or written representations or assurances from the
Company or any other person or any representation of the Company or
any other person other than as set forth in this Agreement, or on any
information other than that contained or incorporated by reference in
the Company's (i) Annual Report as Form 10-KSB for the year ended June
30, 1995 and (ii) Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1995. 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 Subscriber is an accredited investor as defined in
Rule 501 of Regulation D, a copy of which definition is attached
hereto as Exhibit C.
2.3 SUBSCRIBER'S ECONOMIC RISK. The Subscriber understands and
acknowledges that an investment in the Securities involves a high
degree of risk. The Subscriber represents that the Subscriber is able
to bear the economic risk of an investment in the Securities, which
Subscriber acknowledges are currently illiquid and may remain
illiquid indefinitely, including a possible total loss of investment.
In making this statement the Subscriber hereby represents and warrants
to the Company that the Subscriber has adequate means of providing for
the Subscriber's current needs and contingencies; the Subscriber is
able to afford to hold the Securities for an indefinite period and the
Subscriber further represents that the Subscriber has such knowledge
and experience in financial and business matters that the Subscriber
is capable of evaluating the merits and risks of the investment in the
Securities to be received by the Subscriber. Further, the Subscriber
represents, as of the date of signing this Agreement, that the
Subscriber has no present need for liquidity in the Securities and the
Subscriber is willing to accept such investment risks.
3
2.4 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Subscriber understands
that no United States federal or state agency, or similar agency of
any other country, has reviewed, approved, passed upon or made any
recommendation or endorsement of the Company, the Offering or the
subscription of the Securities.
2.5 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 participating in the Offering, nor any
person acting for the Company or any such distributor, has conducted
any "directed selling efforts" in the United States as the term
"directed selling efforts" is defined in Rule 902 of Regulation S,
which in general, means any activity undertaken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning
the market in the United States for any of the Securities being
offered. Such activity includes, without limitation, the mailing of
printed material to investors residing in the United States, the
holding of promotional seminars in the United States, and the
placement of advertisements with radio or television stations
broadcasting in the United States or in publications with a general
circulation in the United States, which discuss the offering of the
Securities.
2.6 COMPANY'S RELIANCE ON REPRESENTATIONS OF SUBSCRIBERS. 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 reliance by his execution of this Agreement the Subscriber
hereby confirms.
2.7 SECURITIES NOT REGISTERED UNDER SECURITIES ACT. Subscriber
understands that the Preferred Stock and the Common Stock issuable
upon conversion of the Preferred Stock (the "Shares") have not been
registered under the Act or any state securities laws ("State Acts")
and are being offered and sold pursuant to Regulation S based in part
upon the representations of Subscriber contained herein. The Common
Stock does, however, carry certain registration rights as set forth in
the Registration Rights Agreement executed by the parties hereto.
2.8 NO PUBLIC SOLICITATION. Subscriber knows of no public solicitation or
advertisement of an offer in connection with the proposed issuance and
sale of the Securities.
2.9 INVESTMENT INTENT (INCLUDING NO PRESENT INTENT TO SELL SECURITIES AT
PRE-DETERMINED TIME). Subscriber is acquiring the Preferred Stock to
be issued and sold hereunder (and the Shares issuable upon conversion
of the Preferred Stock) for his, her or its 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 Subscriber must bear the economic risk of this
investment indefinitely unless such Preferred Stock or such Shares are
registered pursuant to the Act and any applicable State Acts,
4
or an exemption from such registration is available, and that the
Company has no present intention of registering any such sale of the
Preferred Stock or such Shares. Subscriber represents and warrants to
the Company, as of the date of this Agreement, that it intends to hold
the Preferred Stock (and the Shares issued upon conversion of the
Preferred Stock) and that Subscriber has no present plan or intention
to sell the Preferred Stock or the Shares in the United States at any
predetermined time, and has made no predetermined arrangements to sell
the Preferred Stock or the Shares. Subscriber covenants that neither
Subscriber nor its affiliates nor any person acting on its or their
behalf has entered, has the intention of entering, or will enter into
any put option, short position or other similar instrument or position
in the U.S. with respect to the Preferred Stock or Common Stock of the
Company anytime after receipt of the term sheet concerning this
Regulation S Offering until the end of the Restricted Period, or for
purposes of lowering the price at which the Preferred Stock are
convertible into Shares and neither Subscriber nor any of its
affiliates nor any person acting on its or their behalf will at any
time use Shares acquired upon conversion of the Preferred Stock to
settle/cover any put option, short position or other similar
instrument or position.
2.10 SUBSCRIBER NOT TO SELL OR TRANSFER SECURITIES IN VIOLATION OF THE
SECURITIES LAWS. Subscriber covenants that he, she or it will not
make any sale, transfer or other disposition of the Preferred Stock
or the Shares in violation of the Act (including Regulation S), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
applicable State Acts or the rules and regulations of the Securities
and Exchange Commission (the "Commission") or of any state securities
commissions or similar state authorities promulgated under any of the
foregoing.
2.11 SUBSCRIBER'S POWER AND AUTHORITY. Subscriber has the full power and
authority to execute, deliver and perform this Agreement. This
Agreement, when executed and delivered by Subscriber, will constitute
a valid and legally binding obligation of Subscriber, enforceable in
accordance with its terms.
2.12 SIGNATORY'S REPRESENTATION. The signatory to this Agreement hereby
represents and warrants that he, she or it is
(a) the Subscriber, who is not a U.S. Person (as defined in
Regulation S), and is not located in the U.S. at the time of
signing this Agreement.
If the signatory to this Agreement does not meet the requirement
in sub-section (a) herein, signatory represents he, she or it is:
(b) a professional fiduciary of Subscriber (as described in Section
(o)(2) through (o)(4) of Rule 902 of Regulation S), acting solely
in his capacity as holder of such account, as a fiduciary,
executor or trustee,
5
and has completed and signed the accompanying Certificate
(Exhibit D) and forwarded it to Xxxxxx Investments, Inc.
2.13 NO TAX ADVICE FROM COMPANY. Subscriber has reviewed with his, her or
its own tax advisors the foreign, U.S. federal, state and local tax
consequences of this investment, 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.
2.14 NO LEGAL ADVICE FROM COMPANY. Subscriber acknowledges that he, she,
or it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his, or her or its
own legal 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, except for the
representations, warranties and covenants set forth herein and in the
opinion provided for in paragraph 7.3 herein.
2.15 OFFERING MATERIAL STATEMENTS. Subscriber acknowledges and agrees that
all offering materials and documents used in connection with the
offers and sales of the Securities to it included statements to the
effect of those contained in the first full capitalized paragraph of
this Agreement.
2.16 NO SCHEME TO EVADE REGISTRATION. Subscriber's acquisition of the
Securities is not a transaction (or any element of a series of
transactions) that is part of a plan or scheme to evade the
registration provisions of the Act.
3. RESALES OF SECURITIES BY SUBSCRIBER
Subscriber acknowledges, covenants and agrees that the Securities may and
will only be resold by it (a) in compliance with Regulation S and applicable
State Acts, if any; or (b) pursuant to an exemption from registration under the
Act and applicable State Acts, if any; or (c) pursuant to an effective and
current Registration Statement under the Act. In addition, in connection with
any resale of the Preferred Stock in accordance with clause (a) or (b), above,
the Subscriber will deliver to the Company and will cause the purchaser to
deliver to the Company the following documents:
3.1 DOCUMENTS TO BE DELIVERED FOR OFFSHORE REGULATION S RESALES. If the
Preferred Stock are being resold in compliance with Regulation S:
(i) Sales Agreement, executed by Subscriber and Purchaser (in
the form of Exhibit E);
(ii) Seller Representation Letter (in the form of Exhibit F);
6
(iii) Assignment Separate from Certificate (in the form of
Exhibit G)(or endorsed Certificates);
(iv) Resolution Authorizing Sale (in the form of Exhibit H), if
the Subscriber is an entity;
(v) Seller's Instruction Letter (in the form of Exhibit I);
and
(vi) Purchaser Representation Letter (in the form of
Exhibit J).
3.2 DOCUMENTS TO BE DELIVERED FOR RESALES INTO THE UNITED STATES. If the
Preferred Stock are being resold pursuant to an exemption from
registration under the Act other than Regulation S:
(i) Sales Agreement, executed by both Subscriber and Purchaser
(in the form of Exhibit E);
(ii) Seller Representation Letter (in the form of Exhibit K);
(iii) Assignment Separate from Certificate (in the form of
Exhibit G) (or endorsed Certificates);
(iv) Resolution Authorizing Sale (in the form of Exhibit H), if
the Subscriber is an entity;
(v) Seller's Instruction Letter (in the form of Exhibit I);
and
(vi) Purchaser Representation Letter (in the form of
Exhibit J).
Upon receipt of the executed documents listed above, the Company will
effect the transfer of the Preferred Stock on the Company's books and will
issue and deliver new Preferred Stock in the purchaser's name within three
(3) business days of such receipt. The provisions of this Section 3 shall
not apply to subsequent resales of Preferred Stock that have been sold by
Subscriber in compliance with this Section 3.
4. LEGENDS; SUBSEQUENT SALE OF SECURITIES
4.1 The certificates representing the Preferred Stock shall bear the first
legend set forth on the first page of this Agreement and any other
legend or legends as reasonably required to comply with the state,
U.S. federal or foreign law.
4.2 Assuming that there are no changes in the material facts set forth in
Section 2 of this Agreement or applicable law from the date hereof
until the Date of Conversion of the Preferred Stock by Subscriber and
sale of the Shares obtained upon conversion, the Shares so obtained
shall not bear any restrictive legend, nor shall any stop order be
placed on the books of the transfer agent, provided the Subscriber
shall deliver to the Company a Seller Representation Letter (in the
form of Exhibit K). Upon the submission, at any time after the
expiration of 40 days after the Last Closing, by Subscriber of a
written request for legend removal together with the certificate(s)
representing the Preferred Stock for which legend removal is being
requested and a Certificate in the form of Exhibit L, the Company
shall immediately re-issue the Preferred Stock certificate without any
restrictive legend, and the Company shall instruct its transfer agent
to do so, assuming that there are no changes in the material
7
facts set forth in Section 2 of this Agreement or applicable law from
the date hereof until the date of such submission.
5. NOTICE OF ISSUANCE OF SECURITIES
The Company will not issue any debt or equity securities for cash in public
or private capital raising transactions ("Future Offerings") for a period
of seventy five (75) days after the Closing without obtaining the prior
written approval of Subscribers holding a majority of the purchase price
of Preferred Stock then outstanding. Furthermore, the Company will not
conduct any Future Offerings for a period of two hundred and forty (240)
days after the Closing without delivering to the Subscriber, at least seven
(7) days prior to the closing of such issuance, written notice describing
the proposed issuance and the terms upon which such securities are being
issued, and providing the Subscriber the option during such seven (7) day
period to purchase the securities being offered in the Offerings on the
same terms as contemplated by such Offerings and in the amount set forth
below (the limitations referred to in this and the immediately preceding
sentence are collectively referred to as the "Capital Raising Limitation").
The Capital Raising Limitation shall not apply to any transaction
involving the Company's commercial banking arrangements or issuances of
securities in connection with a merger, consolidation or sale of assets, or
in connection with or as part of the same transaction as a joint venture or
other acquisition or disposition of a business, a product or a license by
the Company or exercise of options by employees, consultants or directors
or any transaction with a strategic corporate partner. The Capital Raising
Limitation also shall not apply to the issuance of securities upon exercise
or conversion of the Company's options, warrants or other convertible
securities outstanding as of November 24, 1995, or to the grant of
additional options or warrants, or the issuance of additional securities,
under any Company stock option or restricted stock plan. The amount of
securities which a Subscriber is entitled to purchase in such a Future
Offering shall be a number obtained by multiplying the aggregate amount of
securities being offered in the Future Offering by a fraction, the
numerator of which is the purchase price of the Preferred Stock purchased
by the Subscriber pursuant to this Agreement and the denominator of which
is the aggregate dollar amount of Preferred Stock placed in the Offering.
6. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Subscriber as follows:
6.1 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, USA 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
8
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 6.5 below.
6.2 CORPORATE CONDITION. The Company's condition was, in all material
respects, as described in the Company's reports filed pursuant to the
Exchange Act and provided to Subscriber in accordance with Section 2.2
above as of the dates of such reports. There have been no material
adverse changes in the Company's financial condition or business since
the date of the latest report, except as described in the Company's
press releases, copies of which have been provided to Subscriber.
6.3 AUTHORIZATION. All corporate action on the part of the Company by 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 issuance of the Common Stock obtainable on
conversion of the Preferred Stock have been taken, and this Agreement
and the Registration Rights Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its
terms.
6.4 VALID ISSUANCE OF PREFERRED STOCK AND COMMON STOCK. 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 U.S. federal and state securities laws.
The Common Stock issuable upon conversion of the Preferred Stock when
issued in accordance with the terms of the Preferred Stock shall be
duly and validly issued and outstanding, 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 U.S. federal and state securities laws.
6.5 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 it has a class of securities
registered under Section 12(b) or 12(g) of the Exchange Act or is
required to file reports pursuant to Section 15(d) of the Exchange
Act, and has filed all the materials 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), and all such filings have
been made on a timely basis. The Company undertakes to furnish the
Subscriber with copies of such information as may be reasonably
requested by the Subscriber prior to consummation of this Offering.
9
6.6 NO SECURITIES OFFERED IN U.S. OR TO ANY U.S. PERSON. The Company
represents that it has not offered the Preferred Stock 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 (as defined in
Regulation S).
6.7 CAPITALIZATION STRUCTURE OF THE COMPANY. The capitalization of
Company, as of the date of the Closing, as set forth in Exhibit M.
6.8 TERMINATION DATE OF OFFERING. In no event shall the Last Closing of a
sale of a Preferred Stock occur later than December 15, 1995.
6.9 USE OF PROCEEDS. As of the date hereof, the Company expects to use
the proceeds from this Offering (less fees and expenses) for the
purposes and in the approximate amounts set forth in Exhibit N hereto.
These purposes and amounts are estimates and are subject to change.
6.10 LIQUIDATED DAMAGES FOR LATE CONVERSION. As set forth in the
Certificate of Designation, the Company shall use all reasonable
efforts to issue and deliver, within three (3) business days after the
Subscriber has fulfilled all conditions and submitted all necessary
documents duly executed and in proper form, required for conversion
(the "Deadline"), to such Holder of Series C Preferred Stock at the
address of the Holder on the books of the Company, a certificate or
certificates for the number of shares of Common Stock to which the
Holder shall be entitled upon submission of a notice of conversion.
The Company understands that a delay in the issuance of the Shares of
Common Stock beyond the Deadline could result in economic loss to the
Holder. As compensation to the Holder for such loss, the Company
agrees to pay liquidated damages to the Holder for late issuance of
Shares upon Conversion in accordance with the following schedule
(where "No. Business Days Late" is defined as the number of business
days beyond 5 business days from the date of receipt by the Company of
a notice of conversion and the transfer agent of all necessary
documentation duly executed and in proper form required for
conversion, including the original certificate representing the
Preferred Shares to be converted, all in accordance with the
subscription documents and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
10
9 $4,500
10 $5,000
>10 $5,000 + $1,000
for each Business Day Late beyond
10 days
The Company shall pay any liquidated damages incurred under this Section by
check within 7 business days from the date of issuance of Shares.
6.11 PAYMENT OF ACCRUED INTEREST ON FUNDS IN ESCROW. The Company shall pay
interest to each Subscriber for the use of Subscriber's funds prior to
the Last Closing in an amount equal to 10% of the Original Series C
Issue Price (which is $25,000 per share) per annum for the period
commencing on the date that, in connection with the consummation of
the initial purchase by Subscriber of its shares of Series C Preferred
Stock from the Company, the escrow agent first had in its possession
funds representing full payment for such shares of Series C Preferred
Stock and ending on the Last Closing Date. Such payment shall be made
by the Company to Subscriber, by check, within 7 days of the date of
the Last Closing.
7. COVENANTS OF COMPANY
7.1 INDEPENDENT AUDITORS. The Company shall, until at least December 6,
1997, maintain as its independent auditors an accounting firm
authorized to practice before the SEC.
7.2 CORPORATE EXISTENCE AND TAXES. The Company shall, until at least the
earlier of December 6, 1997, or the conversion or redemption of the
Preferred Stock purchased pursuant to this Agreement maintain its
corporate existence in good standing (provided, however, that the
foregoing covenant shall not prevent the Company from entering into
any merger or corporate reorganization as long as the surviving entity
in such transaction, if not the Company, assumes the Company's
obligations with respect to the Preferred Stock) and shall pay all its
taxes when due except for taxes which the Company disputes.
7.3 OPINION OF COUNSEL. Subscriber shall, upon purchase of the Preferred
Stock, receive an opinion letter from outside counsel to the Company,
to the effect that (i) the Company is duly incorporated and validly
existing under the laws of Delaware; (ii) this Agreement, the
Registration Rights Agreement, the issuance of the Preferred Stock,
and (assuming there are sufficient authorized shares) the issuance of
the Common Stock upon conversion of the Preferred Stock have been duly
authorized by all required corporate action, and that all such Shares,
upon delivery, shall be validly issued and outstanding, fully paid and
nonassessable; (iii) this Agreement and the Registration Rights
Agreement constitutes valid and binding obligations of the Company,
enforceable in accordance with their terms, except as enforceability
of any indemnification
11
provisions may be limited by principles of public policy, and subject
to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of laws governing specific performance
and other equitable remedies; and (iv) based upon the representations
and warranties of the Subscribers contained in the Regulation S
Subscription Agreements entered into in connection with the Offering,
and assuming that no Subscriber is engaged in a plan or scheme to
evade the registration requirements of the Act, the issuance of the
Preferred Stock has been effected in compliance with Regulation S, and
the issuance of the Shares upon conversion of the Preferred Stock in
accordance with their terms by the holders of the Preferred Stock
(assuming that no commission or other remuneration is paid or given,
directly or indirectly, for soliciting such conversion) will not be
subject to the registration provisions of the Act.
7.4 REGISTRATION RIGHTS. The Company will grant Subscriber the
registration rights covering the Common Stock issuable on conversion
of the Preferred Stock on substantially the terms of the Registration
Rights Agreement attached hereto as Exhibit O.
7.5 NOTIFICATION OF FINAL CLOSING DATE & RESTRICTED PERIOD BY COMPANY.
Within three (3) business days after the final closing (the date of
the final Closing of this Offering), the Company shall notify the
Subscriber in writing that the final Closing has occurred, the date of
the final Closing, the date upon which the 40 day Restricted Period
will terminate with respect to the Securities, and the value of the
fixed strike price, as that term is defined in the Preferred Shares.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined only in either a federal or
state court sitting in the County of Orange in the State of California, U.S.A.
9. ENTIRE AGREEMENT; WRITTEN AMENDMENTS REQUIRED
This Agreement, the Preferred Stock, 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.
12
10. WRITTEN 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 by facsimile
(with a hard copy to follow by two day courier), addressed to the parties at the
addresses and/or facsimile telephone number 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.
11. EXECUTION IN COUNTERPARTS PERMITTED
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.
12. SEVERABILITY OF AGREEMENT
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.
13. TITLES AND SUBTITLES; GENDER
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.
The use in this Agreement of a masculine, feminine or neither pronoun shall be
deemed to include a reference to the others.
14. EXACT REGISTERED NAME OF SECURITY HOLDER; OFFSHORE DELIVERY INSTRUCTIONS
Subscriber agrees to provide Company with the exact name in which it wishes
the Securities to be registered by providing that information on the
accompanying signature page of this Agreement. Additionally, Subscriber also
agrees to provide Company with detailed delivery instructions to an offshore
addressee and will also provide that information on the accompanying signature
page of this Agreement.
15. SUBSCRIBER TO FORWARD ORIGINAL SIGNED SUBSCRIPTION AGREEMENT TO COMPANY
Subscriber agrees to courier to Company his, her or its original inked
signed Subscription Agreement within 2 days of faxing said signed agreement to
placement agent, Xxxxxx Investments, Inc.
13
16. ASSIGNMENT.
Subscriber may not assign this Agreement without the written consent of
Company (which may be withheld for any reason). This provision does not limit
the Subscriber's right to transfer the Securities pursuant to the terms of the
Preferred Shares and this Agreement.
[See following page for provisions regarding the amount of your
subscription, the exact name in which the security is to be issued, and offshore
delivery instructions.]
17. AMOUNT
The undersigned hereby subscribes for $________________ purchase price of
Preferred Stock, and pays herewith funds in the amount of
____________________________ U.S Dollars ($______________U.S.).
14
The undersigned acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the Company as
indicated below.
Dated this _____ day of ___, 1995.
_________________________________ _______________________________________
Your Signature EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
(Please PRINT Exact Registered Name)
_________________________________ OFFSHORE DELIVERY INSTRUCTIONS:
Name: Please Print
Please type or print address where your
security is to be delivered
ATTN:___________________________________
________________________________ ________________________________________
Title/Representative Capacity Street Address
(if applicable)
________________________________ ________________________________________
Name of Company You Represent Street Address
(if applicable)
________________________________ ________________________________________
Place of Execution of this Agreement City, State or Province, Country
________________________________________
Offshore Postal Code
________________________________________
Phone Number (For Federal Express)
________________________________________
Facsimile Number (re: Notice)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE ____ DAY OF
________________ 1995.
15
CORTEX PHARMACEUTICALS, INC.
By:________________________________
(Your Signature)
Print Name:________________________
Title:_____________________________
16
EXHIBIT D
FIDUCIARY, EXECUTOR OR TRUSTEE CERTIFICATE
NATURE OF SIGNATORY. The signatory to this Agreement hereby represents and
warrants that he, she or it is either
(a) the Subscriber, who is not a U.S. Person (as defined in Regulation S)
and is not located in the U.S. at the time of signing this Agreement,
_____________________________________________
(signature)
OR
(b) a professional fiduciary of Subscriber (as described in Section o(2)
through (o)(4) of Rule 902 of Regulation S), acting solely in his capacity as
holder of such account, in which case:
(i) After due inquiry the Subscriber is not a U.S. Person (as defined
in Regulation S); and
(ii) either (sign either A, B or C, as applicable):
A. The account for which the Securities are being purchased by
Subscriber is a discretionary account which the undersigned
manages and holds for the benefit or account of Subscriber
and the Subscriber is not located in the U.S. at the time of
signing this Agreement;
_____________________________________________
(signature)
OR
B. The account for which the Securities are being purchased by
Subscriber is the account of an estate of which the
undersigned acts as executor, provided that an executor or
administrator who is not a U.S. person has sole or shared
investment discretion with respect to the assets of the
estate, and the estate is governed by foreign law and
provided further that the Subscriber is not located in the
U.S. at the time of signing this Agreement;
_____________________________________________
(signature)
17
OR
C. The account for which the securities are being purchased by
Subscriber is the account of a trust of which the undersigned
acts as trustee, provided that a trustee who is not a U.S. Person
(as defined in Regulation S) has sole or shared investment
discretion with respect to the trust assets, and no beneficiary
of the trust (and no settlor if the trust is revocable) is a U.S.
Person (as defined in Regulation S) and provided further that the
Subscriber is not located in the U.S. at the time of signing this
Agreement.
_____________________________________________
(signature)
______________________________ _____________________________________________
Print Your Name Person or Entity for Whom You are Signing
18
