EXHIBIT 10.50
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement") made as of the date set
forth on the signature page hereof between Xytronyx, Inc., a Delaware
corporation with its principal offices at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx
Xxxxx, XX 00000 (the "Company") and the undersigned (the "Subscriber").
W I T N E S S E T H:
WHEREAS, the Company desires to issue a minimum (the "Minimum
Offering") of ten (10) units (the "Units") and a maximum (the "Maximum
Offering") of forty (40) Units, with an option in favor of the Placement Agent
to offer up to an additional twenty (20) Units to cover over-allotments, in a
private placement offering (the "Offering"), each Unit consisting of (a) 500
shares of Premium Preferred Stock of the Company, par value $25.00 per share and
stated value $200.00 per share, (the "Preferred Stock") and (b) Class A warrants
to purchase 15,000 shares of Common Stock of the Company, par value $.02 per
share (the "Common Stock") at an exercise price per underlying share of Common
Stock equal to $1.00, subject to adjustment pursuant to the terms of the
Warrants (the "Warrants," and collectively with the Preferred Stock and the
Common Stock underlying the Warrants and Preferred Stock, the "Shares"), and the
Subscriber desires to purchase that number of Units set forth on the signature
page hereof on the terms and conditions hereinafter set forth;
WHEREAS, the Company has engaged Paramount Capital, Inc. (the
"Placement Agent") as Placement Agent for the Offering on a "best-efforts"
basis.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units or fractions thereof and the Company agrees to sell such Units
to the Subscriber as is set forth upon the signature page hereof. The Units
will be offered at $100,000 per Unit (the "Initial Offering Price"). The
purchase price is payable by personal or business check, wire transfer of
immediately available funds or money order made payable to "Fleet Bank, NA,
Escrow Agent, F/B/O Xytronyx, Inc." contemporaneously with the execution and
delivery of this Agreement. The Units will be delivered by the Company within
ten (10) days following the consummation
of the Offering as set forth in Article III hereof.
1.2 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 Shares is extremely limited; and (v) in the event of a disposition, the
Subscriber could sustain the loss of his entire investment. Such risks are more
fully set forth in the Memorandum (as defined below) furnished by the Company to
the Subscriber.
1.3 The Subscriber represents that the Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended (the "Act"), as indicated by his
responses to the questions contained in Article VIII hereof, and that the
Subscriber is able to bear the economic risk of an investment in the Units.
1.4 The Subscriber hereby acknowledges and represents that (i) the
Subscriber has prior investment experience, including investment in non-listed
and unregistered securities, or 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.
1.5 The Subscriber hereby acknowledges receipt and careful review of
the Confidential Private Placement Memorandum the ("Memorandum") dated September
27, 1996, as supplemented and amended, and the following exhibits thereto:
Certificate of Designations of the Series C Convertible Preferred Stock; Form of
warrant agreement (the "Warrant Agreement") and Warrant; 1996 Annual Report,
including audited financial statements as of March 31, 1996 and for the fiscal
year ended March 31, 1996; Annual Report on Form 10-K for the fiscal year ended
March 31, 1996; Proxy statement for the 1996 Annual Meeting of Shareholders;
Quarterly report on Form 10-Q for the three months ended June 30, 1996; Reports
on Form 8-K issued subsequent to June 30, 1996; and Xytronyx, Inc. and Binary
Therapeutics, Inc. Pro Forma Financial Statements (unaudited), 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.
1.6 (a) The Subscriber has relied solely upon the information
provided by the Company in the Memorandum 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 other than information furnished in writing to the Company by the
Placement Agent specifically for inclusion in the Memorandum relating to the
Placement Agent, that the Placement Agent 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.
1.7 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 Shares unless they are registered under
the Act or unless an exemption from such registration is available.
1.8 The Subscriber understands that the Shares 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 Shares 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 Shares.
1.9 The Subscriber understands that although there currently is a
public market for the Common Stock, 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 Shares comprising the Units under the Act or any state securities or
"blue sky" laws other than as set forth in Article V. The Subscriber consents
that the Company may, if it desires, permit the transfer of the Shares
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, "Securities Laws").
1.10 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Shares that such Shares 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 Shares. The Subscriber understands that any
transfer agent of the Company will be issued stop-transfer instructions with
respect to the Shares and the Conversion Shares unless such transfer is
subsequently registered under the Securities Act and applicable state and other
securities laws or unless an exemption from such registration is available.
1.11 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.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished by the Subscriber on the signature page hereof is the
Subscriber's principal residence if the Subscriber is an individual or its
principal business address if it is a corporation or other entity.
1.13 The Subscriber represents that 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.
1.14 If the Subscriber is a corporation, company, trust, employee
benefit plan, individual retirement account, Xxxxx 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.
1.15 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 8.4 below.
1.16 The Subscriber acknowledges that at such time, if ever, as the
Shares are registered, sales of the Shares will be subject to state securities
laws, including those of the State of New Jersey which requires any securities
sold in New Jersey to be sold through a registered broker-dealer or in reliance
upon an exemption from registration.
1.17 Subject to the proviso below, the Subscriber hereby agrees that
from the date hereof and continuing for a period (the "Lock-Up Period") of nine
(9) months from the Effective Date (as defined below), Subscriber will not,
without the prior written consent of Placement Agent, offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, 75% of the Registrable Securities (as defined in Section
5.1) purchased by the Subscriber, PROVIDED, HOWEVER, that, following each three
month period after the Effective Date, an amount of Registrable Securities equal
to 25% of the Registrable Securities purchased by the Subscriber shall become
exempt from the lock-up provisions contained in this sentence. For the sake of
clarity, 25% of the Registrable Securities purchased by the Subscriber will not
be subject to any lock-up. In addition, the Subscriber agrees that during the
sixty (60) days prior to the Final Closing Date and while it holds any
Registrable Securities, the Subscriber will not directly or indirectly, through
related parties, affiliates or otherwise sell "short" or "short against the box"
(as those terms are generally understood) any equity security of the Company;
PROVIDED, HOWEVER, that it shall not be a violation of this Section 1.17, if the
Subscriber places a sell order for Class A Warrants or for Common Stock
underlying Preferred Stock or Class A Warrants prior to the conversion or
exercise thereof, in reliance on the Company delivering such Registrable
Securities in accordance with Section 5.4(h) and completes the sale of such
Registrable Securities before the Company delivers the Registrable Securities to
the Subscriber. In addition, the Subscriber agrees that during any applicable
Lock-Up Period it will not exercise any Class A Warrants which are subject to
such Lock-Up Period.
REPRESENTATIONS BY AND COVENANTS OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
EXHIBIT A, the Company hereby represents and warrants to the Subscriber that, as
of the date of the Memorandum and as of the date on which the Subscriber's
subscription is accepted by the Company:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business as described in the Memorandum. The Company is duly qualified to
do business as a foreign corporation and is in good standing in the State of
California.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Memorandum under
"Capitalization"; all issued and outstanding shares of the Company are validly
issued, fully paid and nonassessable.
The Shares comprising the Units have been duly and validly authorized and, when
issued and paid for pursuant to this Agreement and, with respect to the Common
Stock underlying the Warrants, the Warrant Agreement, will be validly issued,
fully paid and nonassessable. Except as set forth in the Memorandum, there are
no outstanding options, warrants, agreements, convertible securities, preemptive
rights or other rights to subscribe for or to purchase any shares of capital
stock of the Company. Except as set forth in the Memorandum and in this
Agreement and as otherwise required by law, there are no restrictions upon the
voting or transfer of the Shares pursuant to the Company's Certificate of
Incorporation, By-Laws or other governing documents or any agreement or other
instruments to which the Company is a party or by which the Company is bound.
2.3 AUTHORIZATION; ENFORCEABILITY. The Company has all corporate
right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Preferred Stock and Warrants
contemplated hereby and the Shares underlying such securities and the
performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. Upon the issuance and delivery of the
Preferred Stock and Warrants as contemplated by this Agreement, such securities
will be validly issued, fully paid and nonassessable. Upon the issuance and
delivery of the Shares underlying such securities or upon conversion or
exercise, as the case may be, of such Shares, the Shares will be validly issued,
fully paid and nonassessable. The issuance and sale of the Preferred Stock and
Warrants contemplated hereby and the conversion or exercise, as the case may be,
of the Shares underlying such securities, will not give rise to any preemptive
rights or rights of first refusal on behalf of any person.
2.4 CERTIFICATE OF DESIGNATIONS OF PREFERRED STOCK. The Preferred
Stock has the rights, preferences and privileges substantially as set forth in
the Form of Certificate of Designations attached as Exhibit A to the Memorandum
with the initial conversion rate corresponding to a conversion price equal to
the lesser of (i) $2.00 and (ii) 80% of the average closing bid price of the
Common Stock on the AMEX for the 30 consecutive trading days immediately
preceding (a) the initial closing date, (b) any interim closing date and (c) the
Final Closing Date, whichever is lowest (the "Initial Conversion Price").
2.5 NO CONFLICT; GOVERNMENTAL CONSENTS.
(i) The execution and delivery by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the violation of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority to or by
which the Company is bound, or of any provision
of the Certificate of Incorporation or By-Laws of the Company, and will not
conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute (with due notice or lapse of time or both) a
default under, any lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Company is a party or by
which it is bound or to which any of its properties or assets is subject, nor
result in the creation or imposition of any lien upon any of the properties or
assets of the Company.
(ii) No consent, approval, authorization or other order of
any governmental authority is required to be obtained by the Company in
connection with the authorization, execution and delivery of this Agreement or
with the authorization, issue and sale of the Units or the Shares comprising the
Units, except such filings as may be required to be made with the SEC and the
American Stock Exchange ("AMEX") and with any state or foreign blue sky or
securities regulatory authority.
2.6 LICENSES. Except as set forth in the Memorandum, the Company
has sufficient licenses, permits and other governmental authorizations currently
required for the conduct of its business or ownership of properties and is in
all material respects complying therewith.
2.7 LITIGATION. Except as set forth in the Memorandum, the Company
knows of no pending or threatened legal or governmental proceedings against the
Company which could materially adversely affect the business, property,
financial condition or operations of the Company.
2.8 ACCURACY OF REPORTS. All material reports required to be filed
by the Company within the two years prior to the date of this Agreement under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), have been
duly filed with the SEC, complied at the time of filing in all material respects
with the requirements of their respective forms and, except to the extent
updated or superseded by the Memorandum or any subsequently filed report, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
2.9 MEMORANDUM; DISCLOSURE. No information set forth in the
Memorandum contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
2.10 INVESTMENT COMPANY. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the SEC thereunder.
2.11 OPEN MARKET PURCHASES. The Company (a) has not during the 60
days prior to the date hereof, directly or indirectly, through related parties
or otherwise, purchased
any equity securities of the Company and (b) will not, directly or indirectly,
through related parties or otherwise, purchase any equity securities of the
Company during the 30 trading days prior to the (x) Reset Date, (y) any date of
mandatory conversion (as more fully described in the Certificate of
Designations) or (z) any date of redemption (as more fully described in the
Warrant Agreement).
TERMS OF SUBSCRIPTION
3.1 The Company shall issue a minimum of ten (10) Units and a
maximum of forty (40) Units. The Placement Agent, at its sole option, may offer
and sell up to an additional twenty (20) Units to cover over-allotments. The
Offering Period shall begin September 27, 1996. Upon receipt of the Minimum
Offering amount, the Placement Agent may conduct a closing (the "Initial Closing
Date") and may conduct subsequent closings on an interim basis (each a
"Closing") until the Maximum Offering amount (including any over-allotment
amount) has been reached (the "Final Closing Date"). The Offering Period shall
terminate on November 26, 1996, subject to an extension, at the sole option of
the Placement Agent, for an additional sixty (60) days. The Units will be
offered on a "best efforts" basis. The purchase price is payable by personal or
business check, wire transfer of immediately available funds or money order made
payable to "Fleet Bank, NA, Escrow Agent, F/B/O Xytronyx, Inc."
3.2 Placement of the Units will be made by the Placement Agent, who
will receive certain compensation as described in the Memorandum.
3.3 Pending the sale of the Units, all funds paid hereunder shall
be deposited by the Company in escrow with Fleet Bank, NA, having a branch at
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000. If the Company shall not have obtained
subscriptions (including this subscription) for purchases of 10 Units on or
before the Final Closing Date, then this subscription shall be void and all
funds paid hereunder by the Subscriber shall be promptly returned to the
Subscriber, with interest, subject to paragraph 3.5 hereof.
3.4 The Subscriber hereby authorizes and directs the Company to
deliver the Shares 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.
3.5 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.
CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS
4.1 The Subscribers' obligation to purchase the Units at the
Closing is subject to the fulfillment on or prior to each Closing Date of the
following conditions, which
conditions may be waived at the option of each Subscriber to the extent
permitted by law:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Company in Section 2 hereof shall be true and correct
in all material respects when made, and shall be true and correct in all
material respects on each Closing Date with the same force and effect as if they
had been made on and as of said date.
(b) COVENANTS. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to such
purchase shall have been performed or complied with in all material respects.
(c) LISTING. The Company will promptly file an Application for
Listing of Additional Shares with AMEX in accordance with Rule 10b-7 under the
Securities Exchange Act of 1934 and hereby represents and warrants to the
Placement Agent and to the Subscribers that it will take all action reasonably
necessary to list all Shares (excluding the Preferred Stock but including the
Common Stock into which the Preferred Stock is convertible) in accordance with
the rules of AMEX.
(d) NO LEGAL ORDER PENDING. There shall not then be in effect
any legal or other order enjoining or restraining the transactions contemplated
by this Agreement.
(e) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale or requiring any consent or approval of any person which shall not have
been obtained to issue the Shares (except as otherwise provided in this
Agreement).
(f) MINIMUM SUBSCRIPTIONS. The Company shall have received
binding subscriptions for at least 10 Units.
(g) LEGAL OPINION. On each Closing Date, Counsel to the Company
shall have delivered to the Placement Agent for the benefit of the Placement
Agent and the Subscribers, legal opinions to such effect with respect to legal
matters relating to this Agreement and the Memorandum as the Placement Agent may
require.
(h) COMFORT LETTER. On the Closing Date, the Company's auditors
shall have delivered to the Agent for the benefit of the Placement Agent and the
Subscribers, a comfort letter to such effect as the Agent may require.
REGISTRATION RIGHTS
5.1 As used in this Article V of this Agreement, the following terms
shall have the following meanings:
(a) "AFFILIATE" shall mean, with respect to any person, any
other person controlling, controlled by or under direct or indirect common
control with such person
(for the purposes of this definition "control," when used with respect to any
specified person, shall mean the power to direct the management and policies of
such person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing).
(b) "BUSINESS DAY" shall mean a day Monday through Friday on
which banks are generally open for business in New York.
(c) "HOLDERS" shall mean the Subscribers and any person holding
Registrable Securities to whom the rights under Section 5 have been transferred
in accordance with Section 5.9 hereof.
(d) "PERSON" shall mean any person, individual, corporation,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).
(e) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer
to the registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(f) "REGISTRABLE SECURITIES" shall mean (A) the Shares of Common
Stock issuable upon the conversion of the Preferred Stock , (B) the Warrants,
(C) the shares of Common Stock underlying the Warrants and (D) any shares of
Common Stock issued as (or issuable upon the conversion of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to or in replacement of the Shares; provided, however, that securities shall
only be treated as Registrable Securities if and only for so long as they (I)
have not been disposed of pursuant to a registration statement declared
effective by the SEC, (II) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale or (III) are held by a Holder or a
permitted transferee pursuant to subsection 5.9.
(g) "REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in complying with Section 5.2 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses (for a
reasonable number of states) and the expense of any special audits incident to
or required by any such registration (but excluding the fees of legal counsel
for any Holder).
(h) "REGISTRATION STATEMENT" shall have the meaning ascribed to
such term in Section 5.2.
(i) "REGISTRATION PERIOD" shall have the meaning ascribed to
such term in Section 5.4.
(j) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of legal counsel for any Holder.
5.2 No later than 30 days after the Final Closing Date (the "Filing
Date"), the Company will file a registration statement (the "Registration
Statement") with the SEC and use its reasonable best efforts to effect the
registration, qualifications or compliances (including, without limitation, the
execution of any required undertaking to file post-effective amendments,
appropriate qualifications or exemptions under applicable blue sky or other
state securities laws and appropriate compliance with applicable securities
laws, requirements or regulations) as may be so reasonably requested and as
would permit or facilitate the sale and distribution of all Registrable
Securities. Notwithstanding the foregoing, the Company will not be obligated to
enter into any underwriting agreement for the sale of any of the Shares.
5.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 5.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
5.4 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company will,
upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company will:
(a) use its reasonable best efforts to keep such registration,
and any qualification, exemption or compliance under state securities laws which
the Company determines to obtain, continuously effective until at least the
third anniversary of the Closing Date or until the Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs. The period of time during which the Company is required hereunder
to keep the Registration Statement effective is referred to herein as "the
Registration Period." Notwithstanding the foregoing at the Company's election,
the Company may cease to keep such registration, qualification or compliance
effective with respect to any Registrable Securities, and the registration
rights of a Holder shall expire, at such time as the Holder may sell under Rule
144 under the Securities Act (or other exemption from registration acceptable to
the Company) in a three-month period all Registrable Securities then held by
such Holder; and
(b) advise the Holders:
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the registration statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares included therein
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and
(v) of the happening of any event that requires the making
of any changes in the Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;
(d) furnish to each Holder, without charge, at least one copy of
such Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference) in the form filed with
the Commission;
(e) during the Registration Period, deliver to each Holder,
without charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use, consistent with the provisions
hereof, of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the prospectus or any amendment or
supplement thereto. In addition, upon the reasonable request of the Subscriber
and subject in all cases to confidentiality protections reasonably acceptable to
the Company, the Company will meet with a Subscriber or a representative thereof
at the Company's headquarters to discuss all information relevant for disclosure
in the Registration Statement covering the Registrable Securities, and will
otherwise cooperate with any Subscriber conducting an investigation for the
purpose of reducing or eliminating such Subscriber's exposure to liability under
the Securities Act, including the reasonable production of information at the
Company's headquarters;
(f) during the Registration Period, deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of: (A) its annual report to its stockholders
(which annual report shall contain financial statements
audited in accordance with generally accepted accounting principles in the
United States of America by a firm of certified public accountants of recognized
standing); (B) if not included in substance in its annual report to
stockholders, its annual report on Form 10-K (or similar form); (C) each of its
quarterly reports to its stockholders, and, if not included in substance in its
quarterly reports to stockholders, its quarterly report on Form 10-Q (or similar
form), and (D) a copy of the full Registration Statement (the foregoing, in each
case, excluding exhibits); and (ii) upon reasonable request, all exhibits
excluded by the parenthetical to the immediately preceding clause (D), and all
other information that is generally available to the public;
(g) prior to any public offering of Registrable Securities
pursuant to any Registration Statement, register or qualify or obtain an
exemption for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holders reasonably request in writing, provided that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction, and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Registration Statement;
(h) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Registration Statement free of any restrictive legends
to the extent not required at such time and in such denominations and registered
in such names as Holders may request at least three business days prior to sales
of Registrable Securities pursuant to such Registration Statement;
(i) upon the occurrence of any event contemplated by Section
5.4(b)(v) above, the Company shall promptly prepare a post-effective amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and
(j) use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and will make generally available to
the Holders not later than 45 days (or 90 days if the fiscal quarter is the
fourth fiscal quarter) after the end of its fiscal quarter in which the first
anniversary date of the effective date of the Registration Statement occurs, an
earnings statement satisfying the provisions of Section 11(a) of the Act.
5.5 The Holders shall have no right to take any action to restrain,
enjoin or otherwise delay any registration pursuant to Section 5.2 hereof as a
result of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
5.6 (a) To the extent permitted by law, the Company will indemnify
each Holder, each underwriter of the Registrable Securities and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which any registration,
qualification or compliance has been effected pursuant to this Agreement,
against all claims, losses, damages and liabilities (or action in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse each Holder, each
underwriter of the Registrable Securities and each person controlling such
Holder, for reasonable legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action as incurred; provided that the Company will not be liable in
any such case to the extent that any untrue statement or omission or allegation
thereof is made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Holder and stated to be
specifically for use in preparation of such registration statement, prospectus
or offering circular; further provided that the indemnity contained in this
Section 5.6(a) shall not apply to amounts paid in settlement of any such claim,
loss, damages, liability, action or proceeding if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case where the claim,
loss, damage or liability arises out of or is related to the failure of the
Holder to comply with the covenants and agreements contained in this Agreement
respecting sales of Registrable Securities, and except that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any such untrue statement or alleged untrue statement or omission or alleged
omission made in the preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
becomes effective or in the amended prospectus filed with the SEC pursuant to
Rule 424(b) or in the prospectus subject to completion and term sheet under Rule
434 of the Securities Act, which together meet the requirements of Section 10(a)
of the Securities Act (the "Final Prospectus"), such indemnity agreement shall
not inure to the benefit of any such Holder, any such underwriter or any such
controlling person, if a copy of the Final Prospectus was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act.
(b) Each Holder will severally, if Registrable Securities held
by such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter of the Shares and each person who
controls the Company within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse the
Company, such directors and officers, each underwriter of the Shares and each
person controlling the Company for reasonable legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred, in each case to the
extent, but only to the extent, that such untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder and stated to
be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a current copy of the prospectus that was made available to the Holder was not
sent or given to the person asserting any such claim, loss, damage or liability
at or prior to the written confirmation of the sale of the Registrable
Securities confirmed to such person if such current copy of the prospectus would
have cured the defect giving rise to such loss, claim, damage or liability.
Notwithstanding the foregoing, in no event shall a Holder be liable for any such
claims, losses, damages or liabilities in excess of the proceeds received by
such Holder in the offering, except in the event of fraud by such Holder.
(c) Each party entitled to indemnification under this Section
5.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such failure
is prejudicial to the Indemnifying Party in defending such claim or litigation.
An Indemnifying Party shall not be liable for any settlement of an action or
claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) If the indemnification provided for in this Section 5.6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
5.7 (a) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiring the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement contemplated by Section 5.2 until its receipt of
copies of the supplemented or amended prospectus from the Company and, if so
directed by the Company, each Holder shall deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
(b) Each Holder agrees to suspend, upon request of the Company,
any disposition of Registrable Securities pursuant to the registration statement
and prospectus contemplated by Section 5.2 during (A) any period not to exceed
two 30-day periods within any one 12-month period the Company requires in
connection with a primary underwritten offering of equity securities and (B) any
period, not to exceed one 30-day period per circumstance or development, when
the Company determines in good faith that offers and sales pursuant thereto
should not be made by reason of the presence of material undisclosed
circumstances or developments with respect to which the disclosure that would be
required in such a prospectus is premature, would have an adverse effect on the
Company or is otherwise inadvisable.
(c) As a condition to the inclusion of its Registrable
Securities, each Holder shall furnish to the Company such information regarding
such Holder and the distribution proposed by such Holder as the Company may
request in writing or as shall be required in connection with any registration,
qualification or compliance referred to in this Article V.
(d) Each Holder hereby covenants with the Company (1) not to
make any sale of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Securities Act to be satisfied, and
(2) if such Registrable Securities are to be sold by any method or in any
transaction other than on AMEX (or other national securities exchange), in the
over-the-counter market, in privately negotiated transactions, or in a
combination of such methods, to notify the Company at least five business days
prior to the date on which the Holder first offers to sell any such Shares.
(e) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the registration statement described in this Section
are not transferable on the books of the Company unless the stock certificate
submitted to the transfer agent evidencing such Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (A) the Registrable Securities have been sold in accordance with
such registration statement and (B) the requirement of delivering a current
prospectus has been satisfied.
(f) Each Holder agrees not to take any action with respect to
any
distribution deemed to be made pursuant to such registration statement, that
constitutes a violation of Rule 10(b)-6 under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the period during which the Company is
obligated to keep the registration statement current and effective as described
above, the Holders of Registrable Securities included in the registration
statement shall discontinue sales of shares pursuant to such registration
statement upon receipt of notice from the Company of its intention to remove
from registration the shares covered by such registration statement which remain
unsold, and such Holders shall notify the Company of the number of shares
registered which remain unsold immediately upon receipt of such notice from the
Company.
5.8 With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, the Company
agrees to use its reasonable best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) so long as a Holder owns any unregistered Registrable
Securities, furnish to such Holder upon any reasonable request a written
statement by the Company as to its compliance with Rule 144 under the Securities
Act, and of the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as
such Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing a Holder to sell any such securities without registration.
5.9 The rights to cause the Company to register Registrable
Securities granted to the Holders by the Company under Section 5.1 may be
assigned in full by a Holder, provided, that such transfer may otherwise be
effected in accordance with applicable securities laws; (ii) such Holder gives
prior written notice to the Company; and (iii) such transferee agrees to comply
with the terms and provisions of this Agreement, and such transfer is otherwise
in compliance with this Agreement. Except as specifically permitted by this
Section 5.9, the rights of a Holder with respect to Registrable Securities as
set out herein shall not be transferable to any other Person, and any attempted
transfer shall cause all rights of such Holder therein to be forfeited.
5.10 With the written consent of the Company and the Holders holding
at least a majority of the Registrable Securities that are then outstanding, any
provision of this Article V may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended. Upon the effectuation of each such
waiver or amendment, the Company shall promptly give written notice thereof to
the Holders, if any, who have not previously received notice thereof or
consented thereto in writing.
6. MISCELLANEOUS
6.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed to Xytronyx, Inc. 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX
00000, Attn: President, and to the Subscriber at his address indicated on the
signature page of this Agreement. Notices shall be deemed to have been given or
delivered on the date of mailing, except notices of change of address, which
shall be deemed to have been given or delivered when received.
6.2 This Agreement shall not be changed, modified or amended except
by a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
6.3 Subject to the provisions of Section 5.9, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and to their
respective heirs, legal representatives, successors and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
6.4 Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided; subject, however, to
the right hereby reserved to the Company to enter into the same agreements with
other subscribers and to add and/or delete other persons as subscribers.
6.5 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.
6.6 In order to discourage frivolous claims the parties agree that
unless a claimant in any proceeding arising out of this Agreement succeeds in
establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.
6.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If
any provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being
enforced in whole or in part, such provision shall be interpreted so as to
remain enforceable to the maximum extent permissible consistent with applicable
law and the remaining conditions and provisions or portions thereof shall
nevertheless remain in full force and effect and enforceable to the extent they
are valid, legal and enforceable, and no provisions shall be deemed dependent
upon any other covenant or provision unless so expressed herein.
6.8 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.9 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.10 This Agreement may be executed in two or more counterparts each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
6.11 (a) The Subscribers severally agree not to issue any public
statement with respect to the Subscribers' investment or proposed investment in
the Company or the terms of any agreement or covenant between them and the
Company without the Company's prior written consent, except such disclosures as
may be required under applicable law or under any applicable order, rule or
regulation.
(b) 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 the Registration Statement.
6.12 (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 September 27, 1996 (the "Placement Agency Agreement"), and the Company
agrees to indemnify and hold harmless the Subscribers from and against all fees,
commissions or other payments owing by the Company to any other person or firm
acting on behalf of the Company hereunder.
6.13 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 1.6(a) and 6.12(b) hereof.
6.14 The Company acknowledges and agrees that irreparable damage
would occur in the event that any of the provisions of Article V of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached and that such damage would not be compensable in money
damages and that it would be extremely difficult or impracticable to measure the
resultant damages. It is accordingly agreed that any Subscriber shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof,
in addition to any other remedy to which it may be entitled at law or in equity,
and the Company expressly waives any defense that a remedy in damages would be
adequate and expressly waives any requirement in an action for specific
performance for the posting of a bond by the Subscriber bringing such action.
STATE RESIDENTS
7.1 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 (11)(a)(5) of the Florida Act provides
that any Purchaser of securities in Florida which are exempted from
registration under Section 517.061(11) 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
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.
8. CONFIDENTIAL INVESTOR QUESTIONNAIRE
8.1 The Subscriber represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he or she
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 principal 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 losses 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 1 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 $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.
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.
8.2 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:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
____________________________________________________
(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________
(c) For all subscribers, please types of prior investments:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________
(d) For all Subscribers, please state whether you have you 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:
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_______
8.3 MANNER IN WHICH TITLE IS 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.
8.4 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: ____________________________
8.5 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 8 and such answers have been
provided under the assumption that the Company will rely on them.
SIGNATURE PAGE
NUMBER OF UNITS ___________ X $100,000 = _____________ (THE "PURCHASE PRICE")
______
Signature Signature (if purchasing jointly)
______
Name Typed or Printed Name Typed or Printed
______
Address Address
______
City, State and Zip Code City, State and Zip Code
______
Telephone-Business Telephone--Business
______
Telephone-Residence Telephone--Residence
______
Facsimile-Business Facsimile--Business
______
Facsimile-Residence Facsimile--Residence
______
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should be issued:
Dated: , 1996.
This Subscription Agreement is agreed to and accepted as of ______________,
1996.
XYTRONYX, INC.
By: _______________________________________
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer and President
CERTIFICATE OF SIGNATORY
(To be completed if Units are
being subscribed for by an entity)
I,___________________________________, am
the_______________________________ of
_____________________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute
and carry out the terms of the Subscription Agreement and to purchase and hold
the Units, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ________day of
_________________, 1996.
_______________________________________
(Signature)
