Exhibit 10.73
EXECUTION COPY
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "AGREEMENT") is made as of the date
set forth on the signature page hereof between Genta Incorporated, a Delaware
corporation (the "COMPANY"), and the undersigned (the "SUBSCRIBER").
W I T N E S S E T H:
WHEREAS, the Company is engaged in a private offering (the "OFFERING")
of the Company's common stock, par value $.001 per share (the "COMMON STOCK");
and
WHEREAS, the Company desires to issue up to 2,200,000 shares of Common
Stock at $13.00 per share upon the terms and conditions hereinafter set forth;
WHEREAS, the Subscriber desires to purchase that number of shares of
Common Stock set forth on the signature page hereof on the terms and conditions
hereinafter set forth;
WHEREAS, the Company intends to use the proceeds from the Offering for
general corporate purposes, including working capital and research and
development; and
WHEREAS, this Agreement is one of a series of Subscription Agreements
(the "SUBSCRIPTION AGREEMENTS") of like tenor entered into in connection with
this Offering between the Company and each of Franklin Small-mid Cap Growth
Fund, Franklin Biotechnology Discovery Fund and SF Capital Partners Ltd.
(collectively, the "SUBSCRIBERS"), respectively.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
1. SUBSCRIPTION FOR COMMON STOCK 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 shares of Common Stock and the Company agrees to sell such Common
Stock to the Subscriber as is set forth upon the signature page hereof at $13.00
per share. The purchase price is payable by wire transfer of immediately
available funds pursuant to the wire transfer instructions attached hereto as
APPENDIX I. The certificates representing the Common Stock will be delivered by
the Company within twenty (20) days following the Closing Date. The closing of
the sale of Common Stock hereunder (the "CLOSING") shall occur on November 26,
2001 (the "CLOSING DATE"), or on such other date as the parties may agree.
1.2 The Subscriber recognizes that the purchase of the Common
Stock involves a high degree of risk including, but not limited to, those set
forth in the Company's Annual Report on Form 10-K for the year ended December
31, 2000, the Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2001, and the following risks: (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 purchasing the Common Stock; (iii) the
Subscriber may not be able to liquidate its investment; (iv) the Subscriber
could sustain the loss of its entire investment; and (v) the Company has not
paid any dividends on its Common Stock since inception and does not anticipate
the payment of dividends in the foreseeable future.
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 the Subscriber's responses to the questions contained in Article 8
hereof.
1.4 The Subscriber hereby acknowledges and represents that (i) the
Subscriber has prior investment experience and, either by reason of the
Subscriber's business or financial experience or the business or financial
experience of the Subscriber's professional advisors (each of whom is a
"purchaser representative" as defined in Rule 501 of Regulation D promulgated
under the Act), is able to evaluate the merits and risks of this investment;
(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 of this Agreement
and all attachments to it and has received or obtained via ▇▇▇▇▇ the Company's
Annual Report on Form 10-K for the year ended December 31, 2000, and the
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2001,
and hereby represents that the Subscriber has been furnished by the Company
during the course of this transaction with all information regarding the Company
that the Subscriber, its investment advisor, attorney and/or accountant has
requested, 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 regarding the Company or the securities offered in the
Offering that the Subscriber has requested.
1.6 (a) The Subscriber has relied solely upon the information
provided by the Company in this Agreement and the Company's filings with the
Commission under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") in making the decision to invest in the Common
Stock. To the extent necessary, the Subscriber has retained, at its sole
expense, and relied upon appropriate professional advice regarding the purchase
of the Common Stock hereunder. The Company represents that it has not provided
any "material nonpublic information" to any Subscriber, as such is defined under
applicable law, rule and regulation.
(b) The Subscriber represents that no Common Stock has been
offered or sold to it by means of any form of general solicitation or general
advertising, and in connection with the Offering the Subscriber did not: (i)
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 through closed circuit or other restricted form of
transmission, or through generally available transmission; or (ii) attend any
seminar meeting or industry investor conference whose attendees were invited by
any general solicitation or general advertising.
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1.7 The Subscriber hereby acknowledges that the offering of the
Common Stock has not been reviewed by the United States Securities and Exchange
Commission (the "SEC" or the "COMMISSION") or any state securities regulatory
authority, since the Offering is intended to be exempt from the registration
requirements of Section 5 of the Act pursuant to Regulation D promulgated under
the Act.
1.8 The Subscriber understands that the Common Stock has not been
registered under the Act by reason of a claimed exemption under the provisions
of the Act that depends, in part, upon the Subscriber's investment intention. In
this regard, the Subscriber hereby represents that the Subscriber is purchasing
the Common Stock for the Subscriber's own account for investment and has no
current arrangements or understandings for the resale or distribution to others
and will only resell the Common Stock pursuant to an effective registration
statement or exemption therefrom. The Subscriber, if an entity, also represents
that it was not formed for the purpose of purchasing the Common Stock.
1.9 The Subscriber understands that, although there currently is a
public market for the Common Stock, the securities are "restricted securities"
within the meaning of Rule 144 promulgated under the Act ("RULE 144") and,
therefore, the Subscriber shall not sell or otherwise transfer the shares of
Common Stock unless they are registered under the Act or unless an exemption
from such registration is available. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register the Common
Stock under the Act or any state securities or "blue sky" laws other than as set
forth in Article 5.
1.10 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Common Stock, to the effect that
such Common Stock has 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 or otherwise
mandated by law. The Subscriber is aware that the Company will make a notation
in its records with respect to the restrictions on the transferability of the
Common Stock.
1.11 The Subscriber understands that the Company reserves the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription, to accept subscriptions for
fractional shares and, subject to Section 3.1, to close the Offering to the
Subscriber at any time.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished by Subscriber on the signature page hereof is the
Subscriber's principal residence if Subscriber is an individual or its principal
business address if it is a corporation or other entity.
1.13 The Subscriber represents that the Subscriber has full power,
authority (corporate, statutory and otherwise) and capacity to execute and
deliver this Agreement and to purchase the Common Stock. This Agreement
constitutes the legal, valid and binding obligation of the Subscriber,
enforceable against the Subscriber 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.
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1.14 If the Subscriber is a corporation, partnership, limited
liability company, trust, employee benefit plan, individual retirement account,
▇▇▇▇▇ Plan, or other entity (i) 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 and (ii) it is duly
organized, validly existing and, if a corporation, in good standing under the
laws of the jurisdiction of its organization.
1.15 The Subscriber acknowledges that if he or she is a Registered
Representative of an NASD (as defined in Section 2.6) member firm, he or she
must give such firm the notice required by the NASD Rules of Fair Practice,
receipt of which must be acknowledged by such firm in Section 7.4 below.
1.16 The Company acknowledges and agrees that to its knowledge each
of the Subscribers is acting solely in the capacity of an arm's length purchaser
with respect to this Agreement and the transactions contemplated hereby and that
each Subscriber has separately negotiated the terms of this Agreement.
2. REPRESENTATIONS BY AND COVENANTS OF THE COMPANY.
The Company hereby represents and warrants to the Subscriber that:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to own,
lease and operate its properties and to conduct its business as currently
conducted. The Company is duly qualified to do business as a foreign corporation
in each jurisdiction in which the character of its properties or the nature of
its activities makes such qualification necessary, except where the failure to
be so qualified could not reasonably be expected to have a material adverse
effect on the Company's business, properties, financial corporation, results of
operations or prospects. The Company is eligible to file a Registration
Statement on Form S-3 under the Act and is current in its filings with the
Commission under Section 13(a) of the Exchange Act.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital stock
of the Company consists of (i) 95,000,000 shares of Common Stock of which
63,059,799 shares are issued and outstanding as of September 30, 2001, and (ii)
5,000,000 shares of Preferred Stock, $.001 par value per share, 600,000 of which
have been designated Series A Preferred Stock and 261,200 of which shares are
issued and outstanding as of September 30, 2001 (which are convertible, as of
September 30, 2001, into 1,932,018 shares of Common Stock). All outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
non-assessable and are not subject to any preemptive or other similar rights. As
of September 30, 2001, of the 15,107,388 shares of Common Stock reserved for
issuance under the Company's stock option plans, of which options to purchase
9,949,634 shares have been granted and are currently outstanding. As of
September 30, 2001, warrants to purchase 5,865,293 shares of Common Stock have
been granted and are currently outstanding. Except (i) as set forth above, or
(ii) in the Company's filings with the Commission under Section 13(a) of the
Exchange Act, or (iii) for the other Subscription Agreements executed in
connection with this Offering, or (iv) for employee stock options issued in the
normal course of business since September 30, 2001, there are no options,
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warrants or other rights or arrangements to issue any of the Company's capital
stock or other securities convertible into or exchangeable for capital stock of
the Company. Except as set forth in this Agreement and as otherwise required by
law, there are no restrictions upon the voting or transfer of the Common Stock
pursuant to the Company's Certificate of Incorporation, as amended (the
"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. Except as set forth on SCHEDULE 2.2 and except as set forth in
Article 5, no shareholder, other than the Subscribers, has any right, that has
not been waived, has not expired or has not been previously exercised through a
registration statement with no further right to exercise, to require the Company
to register the sale of any securities owned by such shareholder in a
registration statement.
2.3 ISSUANCE. The Common Stock purchased by the Subscriber under
this Agreement has been duly and validly authorized and, when issued and paid
for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable. Subject to the Subscriber's representations and warranties
contained in Article 1, the offer, sale and issuance of such Common Stock
pursuant hereto constitute transactions exempt from the registration
requirements of Section 5 of the Act or any state securities laws.
2.4 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 Common Stock contemplated
herein 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. The issuance and sale
of the Common Stock contemplated hereby will not give rise to any preemptive
rights or rights of first refusal, co-sale rights or other similar rights on
behalf of any person.
2.5 LICENSES. The Company has all licenses, permits and other
governmental and regulatory consents, approvals and authorizations
(collectively, the "LICENSES") required for the conduct of its business or
ownership of its properties, other than where the failure to obtain any of such
Licenses could not reasonably be expected to have a material adverse effect on
the Company's business, property, financial condition, results of operations or
prospects. The Company is in material compliance with all of its Licenses and
has not received any notice of any proceedings relating to the modification or
revocation of such Licenses.
2.6 NO CONFLICT; GOVERNMENTAL AND OTHER CONSENTS.
(a) 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
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Incorporation or the By-Laws of the Company, each as amended through the date
hereof, 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, license, deed, trust, note, loan agreement,
mortgage, security agreement, 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. The Company is not
currently in breach or violation of or default in any material respect under any
of the foregoing.
(b) No consent, approval, authorization or other order of any
governmental authority or other third party 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 Common Stock, except
such filings as may be required to be made with the SEC, the National
Association of Securities Dealers, Inc. (the "NASD") and the Nasdaq National
Market ("NASDAQ") and with any state blue sky or securities regulatory
authority, which filings shall be made in a timely manner in accordance with all
applicable laws, rules, regulations, statutes, ordinances and orders.
2.7 LITIGATION. Except as set forth in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000, and the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2001,
each as filed with the Commission, there is no action, suit, claim or proceeding
by or before any Court or governmental agency pending or, to the Company's
knowledge, threatened against or affecting the Company or its assets where the
Company is a named party that could reasonably be expected to adversely affect
the business, property, financial condition, results of operations or prospects
of the Company, nor, to the Company's knowledge, is there any reasonable basis
therefor.
2.8 ACCURACY OF REPORTS; NASDAQ LISTING.
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 and all subsequently filed material reports
required to be filed by the Company under the Exchange Act, including any update
or amendment to any such reports, have been duly and timely filed with the
Commission, 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 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 statements of a material fact nor omitted
to state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(b) The Company's common stock is listed on the Nasdaq
National Market (the "NASDAQ STOCK MARKET"), and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the common stock under the Exchange Act or
delisting the common stock from the Nasdaq Stock Market. The Company has not
received any notification that, and has no knowledge that, the SEC or the NASD
is contemplating terminating such listing or registration. The issuance of the
shares pursuant to the
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Offering does not require shareholder approval, including, without limitation,
pursuant to the Nasdaq Marketplace Rules.
2.9 INVESTMENT COMPANY. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder.
2.10 ENVIRONMENTAL LAWS. Except as set forth in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 2001, each as filed with the Commission, the Company is not in violation of
any applicable statute, law, rule, regulation, ordinance or order (i) relating
to the environment, health, safety or (ii) which otherwise prohibits, limits or
regulates the exposure of any chemical, material or substance (collectively,
"ENVIRONMENTAL LAWS"). The Company has all permits, authorizations and approvals
required pursuant to Environmental Laws and is in material compliance therewith.
There are no actions, suits, claims, proceedings or investigations pending or,
to the Company's knowledge, threatened against or affecting the Company or its
assets with respect to any Environmental Law, nor, to the Company's knowledge,
is there any reasonable basis therefor.
2.11 FINANCIAL STATEMENTS; ACCOUNTING CONTROLS.
(a) The financial statements of the Company set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000, and the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2001, each as filed with the Commission, fairly present the
financial condition and results of operations of the Company as of and for the
periods set forth therein, in accordance with generally accepted accounting
principles as recognized in the U.S. applied on a consistent basis (except as
otherwise disclosed therein, and except in respect of the financial statements
included in the Report on Form 10-Q for the fiscal quarter ended September 30,
2001, each of which omits certain information in accordance with accounting
regulations of the SEC).
(b) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles as
recognized in the U.S. and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
2.12 NO MATERIAL CHANGE. Since September 30, 2001:
(a) except for conditions affecting the Company's industry as
a whole and except for political and international economic conditions, there
has been no material adverse change in or affecting the condition, financial or
otherwise, or in the earnings, assets, business affairs or business prospects of
the company, whether or not arising in the ordinary course of business;
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(b) except as otherwise included in the Company's filings with
the Commission under the Exchange Act, there have been no transactions entered
into by the Company other than those in the ordinary course of business, which
are material with respect to the Company; and
(c) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
The Company has no material contingent obligations.
2.13 LABOR MATTERS. No labor dispute with the employees of the
Company exists or, to the best knowledge of the Company, is imminent. With
respect to any employee benefit plans, the Company is in compliance with the
applicable provisions of the Employee Retirement Income Security Act of 1974,
except where the failure to so comply would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
Company.
2.14 INTELLECTUAL PROPERTY.
(a) The Company, to the best of its knowledge in the course of
diligent inquiry, owns or is licensed to use all patents, patent applications,
inventions, trademarks, trade names, applications for registration of
trademarks, service marks, service ▇▇▇▇ applications, copyrights, know-how,
manufacturing processes, formulae, trade secrets, licenses and rights in any
thereof and any other intangible property and assets (the "PROPRIETARY RIGHTS")
that are used in connection with the business of the Company as now conducted or
is seeking, or will seek, to obtain rights to use such Proprietary Rights that
are material to the business of the Company as proposed to be conducted.
(b) No action, suit, arbitration, or legal, administrative or
other proceeding, or investigation is pending or, to the Company's knowledge,
threatened, which involves any Proprietary Rights and names the Company as a
party, nor, to the Company's knowledge, is there any reasonable basis therefor.
(c) The Company is not subject to any judgment, order, writ,
injunction or decree of any court or governmental agency or any arbitrator, and
has not entered into or is not a party to any contract which restricts or
impairs the use of any such Proprietary Rights in a manner which could
reasonably be expected to have a material adverse effect on the intended use of
any of the Proprietary Rights. The Company has not entered into any consent,
indemnification, forbearance to ▇▇▇ or settlement agreement with respect to
Proprietary Rights.
(d) To the Company's knowledge, no Proprietary Rights used by
the Company, and no services or products sold by the Company, conflict with or
infringe upon any proprietary rights of any third party. The Company has not
received written notice of any pending conflict with or infringement upon such
third-party proprietary rights. To the Company's knowledge, no claims have been
asserted by any person with respect to the validity of the Company's ownership
or right to use the Proprietary Rights, nor, to the Company's knowledge, is
there any reasonable basis therefor.
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(e) The Company has complied in all material respects with its
obligations relating to the protection of the Proprietary Rights which are
material to the Company. To the best knowledge of the Company, no person is
infringing on or violating the Proprietary Rights.
2.15 PROPERTIES. The Company has good and marketable title to its
properties, free and clear of all material security interests, mortgages,
pledges, liens, charges, encumbrances and claims of record. The properties of
the Company are, in the aggregate, in good repair (reasonable wear and tear
excepted), and suitable for their respective uses. Any real property held under
lease by the Company is held under valid, subsisting and enforceable leases;
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, and assuming due authorization and execution on the part of the other
party or parties thereto. The Company owns or leases all such properties as are
necessary to its business or operations as now conducted.
2.16 COMPLIANCE. The Company has conducted and is conducting its
business in compliance with all applicable statutes, laws, rules, regulations,
ordinances and orders, except where the failure to do so could not reasonably be
expected to have a material adverse effect on the Company's business, property,
financial condition, results of operations or prospects.
2.17 PRIOR OFFERINGS. All offers and sales of capital stock of the
Company before the date of this Agreement were at all relevant times duly
registered or exempt from the registration requirements of the Act and were duly
registered or subject to an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
2.18 TAXES. The Company has filed all material tax returns required
to be filed, which returns are true and correct in all material respects, and
the Company is not in default in the payment of any taxes, including penalties
and interest, assessments, fees and other charges, shown thereon due or
otherwise assessed, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without interest
which were payable pursuant to said returns or any assessments with respect
thereto.
2.19 NON-COMPETITION AGREEMENTS. To the knowledge of the Company,
each employee of the Company who has entered into any non-competition,
non-disclosure, confidentiality or other similar agreement is neither in
violation of nor is expected to be in violation of that agreement as a result of
the business currently conducted or expected to be conducted by the Company or
such person's performance of his or her obligations to the Company.
2.20 TRANSFER TAXES. On the Closing Date, all stock transfer or
other taxes (other than income taxes) that are required to be paid in connection
with the sale and transfer of the Common Stock to be sold to the Subscribers
under this Agreement will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been fully
complied with.
2.21 INSURANCE. The Company maintains insurance of the type and in
the amount that the Company reasonably believes is adequate for its business,
including, but not limited to,
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insurance covering all real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
2.22 NO INTEGRATION. The Company has not, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Act) which is or will be
integrated with the shares sold pursuant to this Offering in a manner that would
require the registration of the Common Stock under the Act.
2.23 RELIANCE. The Company understands that the Subscriber will
rely upon the representations set forth in this Agreement, including for
purposes of the Subscriber's decision to invest in the Company and enter into
this Agreement.
3. TERMS OF SUBSCRIPTION.
3.1 In connection with the Offering, the Company may sell a
maximum of 2,200,000 shares of Common Stock.
3.2 The Company may elect to pay one or more financial
institutions (the "Advisors") for their services in connection with the
Offering. The Advisors may receive compensation in the aggregate amount of up to
6.25% as a result of the investments made by the Subscribers in the Offering.
The Company represents and warrants that it has not engaged, consented to nor
authorized any broker, finder or intermediary to act on its behalf, directly or
indirectly, in connection with the transactions contemplated by this Agreement,
other than the Advisors. The Company hereby agrees to indemnify and hold
harmless the Subscriber from and against any fee, commission or other
compensation or payment owing to any broker, finder or intermediary in
connection with the transactions contemplated by this Agreement, other than any
amounts to whom payment would violate the representation of the Subscriber
contained in the following sentence. The Subscriber represents and warrants that
it has not engaged, consented to nor 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. The Subscriber hereby 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 the Subscriber hereunder.
3.3 The Subscriber hereby (i) understands that the Company will
rely upon the representations set forth in this Agreement, including for
purposes of the Company's reliance on an exception from the registration
requirements of Section 5 of the Act or any state securities laws, and (ii)
authorizes and directs the Company to deliver the Common Stock to be issued to
the Subscriber to the address indicated on the signature page hereto.
3.4 The undersigned agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Common Stock except in compliance with this Agreement. Notwithstanding
anything else contained in this Agreement, any transfer of the Common Stock
which either (i) will not result in any change in beneficial ownership,
including, but not limited to, pro rata partnership distributions, transfers
into trusts for the benefit of the original holder and transfers to affiliates
(provided that such distributions and transfers do
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not violate the registration requirements of the Act), or (ii) constitute bona
fide gifts of such shares, are not prohibited and will not require the Company's
approval.
3.5 The Company will forthwith file an Application for Listing of
Additional Securities with the Nasdaq and/or take all other actions necessary to
enable the Common Stock to trade on the Nasdaq.
4. CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS AND THE COMPANY.
4.1 The Subscriber's obligation to purchase the Common Stock is
subject to the fulfillment on or prior to the Closing of the following
conditions, which conditions may be waived at the option of the Subscriber to
the extent permitted by law:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Company in Article 2 hereof shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date (it being understood that
those representations and warranties which address matters only as of a
particular date need be true and correct only as of such date); provided that,
in determining whether such representations and warranties are true and correct
for the purposes of this Section 4.1(a), no effect shall be given to any
exception in such representations and warranties relating to knowledge,
materiality or material adverse effect.
(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;
provided that, in determining whether such covenants, agreements and conditions
have been performed or complied with for the purposes of this Section 4.1(b), no
effect shall be given to any exception in such covenants, agreements and
conditions relating to knowledge, materiality or material adverse effect.
(c) CLOSING CERTIFICATE. The Company shall have delivered to
the Subscriber a certificate executed by the chief executive officer or
President and the Chief Financial Officer of the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Subscriber, as to the
matters contained in Sections 4.1(a) and (b) and certifying that the Company has
executed Subscription Agreements for not less than 2,200,000 shares pursuant to
the Offering.
(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 the
Company's sale of the Common Stock to the Subscriber in the Offering or
requiring any consent or approval of any person in connection therewith which
shall not have been obtained (except as otherwise provided in this Agreement).
4.2 The Company's obligation to sell and deliver the Common Stock
is subject to the fulfillment on or prior to the Closing of the following
conditions, which conditions may be waived at the Company's option to the extent
permitted by law:
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(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Subscriber in Article 1 hereof shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date (it being understood that
those representations and warranties which address matters only as of a
particular date need be true and correct only as of such date); provided that,
in determining whether such representations and warranties are true and correct
for the purposes of this Section 4.2(a), no effect shall be given to any
exception in such representations and warranties relating to knowledge,
materiality or material adverse effect.
(b) COVENANTS. All covenants, agreements and conditions
contained in this Agreement to be performed by the Subscriber on or prior to
such purchase shall have been performed or complied with in all material
respects; provided that, in determining whether such covenants, agreements and
conditions have been performed or complied with for purposes of this Section
4.2(b), no effect shall be given to any exception in such covenants, agreements
and conditions relating to knowledge, materiality or material adverse effect.
(c) 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.
(d) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall
not be in effect any law, rule or regulation prohibiting or restricting the
Company's sale of the Common Stock to the Subscriber in the Offering or
requiring any consent or approval of any person in connection therewith which
shall not have been obtained, provided that the Company has used best efforts to
obtain such consent or approval (except as otherwise provided in this
Agreement).
5. REGISTRATION RIGHTS.
5.1 As used in this Agreement, the following terms shall have the
following meanings:
(a) "BUSINESS DAY" shall mean a day Monday through Friday on
which banks are generally open for business in the State of New York.
(b) "HOLDERS" shall mean the Subscribers and any person
holding Registrable Securities or any person to whom the rights under Article 5
have been transferred in accordance with Section 5.9 hereof.
(c) "PERSON" shall mean any person, individual, corporation,
limited liability company, partnership, trust or other nongovernmental entity or
any governmental agency, court, authority or other body (whether foreign,
federal, state, local or otherwise).
(d) The terms "REGISTER," "REGISTERED" and "REGISTRATION"
refer to the registration effected by preparing and filing a registration
statement in compliance with the Act, and the declaration or ordering of the
effectiveness of such registration statement.
(e) "REGISTRABLE SECURITIES" shall mean (i) the Common Stock
purchased hereunder, and (ii) any shares of Common Stock which are issued as a
dividend or other
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distribution with respect to or in replacement of the Common Stock; PROVIDED,
HOWEVER, that securities shall only be treated as Registrable Securities if and
only for so long as they (A) have not been disposed of pursuant to a
registration statement declared effective by the Commission, (B) have not been
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Act so that all transfer restrictions and restrictive
legends with respect thereto are removed upon the consummation of such sale, or
(C) have not become eligible for sale pursuant to Rule 144(k) (or any successor
thereto) under the Act.
(f) "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 and the expense of any special audits incident to or required by any
such registration (but excluding Selling Expenses).
(g) "REGISTRATION STATEMENT" shall have the meaning ascribed
to such term in Section 5.2.
(h) "REGISTRATION PERIOD" shall have the meaning ascribed to
such term in Section 5.2.
(i) "SELLING EXPENSES" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities, if
any, and all fees and expenses of legal counsel for any Holder.
(j) "SUBSCRIBERS" shall mean, collectively, the Subscriber and
all other Persons who purchase shares of Common Stock in the Offering.
5.2 The Company will, as soon as practicable, but not later than
30 days after the Closing Date (the "OUTSIDE FILING DATE"), (a) file with the
SEC a shelf registration statement on Form S-3 (the "REGISTRATION STATEMENT")
with respect to the resale of the shares of Common Stock sold in the Offering to
enable the resale of such Common Stock via the Nasdaq Stock Market or in
privately negotiated transactions and shall cause such Registration Statement to
be declared effective by the SEC prior to the date which is 90 days after the
date on which the Registration Statement is filed (the "OUTSIDE EFFECTIVE
DATE"), and (b) shall cause such Registration Statement to remain effective
until the earlier of (i) such date as the holders of the securities have
completed the distribution described in the Registration Statement, or (ii) at
such time that such shares are eligible for sale pursuant to Rule 144(k) under
the Act. 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."
5.3 All Registration Expenses incurred in connection with
compliance pursuant to Section 5.2 shall be borne by the Company. Each Holder
shall bear its own Selling Expenses.
5.4 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon request, inform each Holder as to the status of such registration,
qualification, exemption and compliance. At its expense the Company shall:
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(a) cause such registration, and any necessary qualification,
exemption or compliance under all applicable state securities laws, to remain
continuously effective until the Holders have completed the distribution
described in the registration statement relating thereto; provided that, at the
Company's election, the Company may cease to keep such registration,
qualification, exemption or compliance effective with respect to any Registrable
Securities that are eligible for sale without registration or without regard to
any volume limitations pursuant to Rule 144(k) of the Act;
(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) following the effectiveness of the Registration
Statement, 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 Registrable
Securities 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 (but without the
obligation to disclose the nature of the 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 commercially 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, but other than those documents available via ▇▇▇▇▇, 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
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and sale of the Registrable Securities covered by the prospectus or any
amendment or supplement thereto;
(f) during the Registration Period, deliver to each Holder,
without charge, (i) as soon as practicable one copy of the following documents:
(A) its annual report to its stockholders, if any (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
request, all exhibits excluded by the parenthetical to the immediately preceding
clause (D), and all other communications from the Company to its stockholders
generally;
(g) prior to any sale of Registrable Securities by a Holder
pursuant to the 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, 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, provided that the Company shall not for any such purpose
be required to (i) qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified, (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general service
of process in any such jurisdiction;
(h) 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, 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
(i) use its best efforts to comply with all applicable rules
and regulations of the Commission.
5.5 (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 with such supplement or amendment,
such prospectus shall 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
the offer or 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 (which the Company covenants
to deliver promptly to the Holder), or until advised in writing by the Company
that the current prospectus may be used, 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
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at the time of receipt of such notice. Subject to Section 5.5(b) below, the
Company shall prepare and deliver to each Holder as promptly as reasonably
practicable, but no later than thirty (30) days after delivery of such notice by
the Company, an amended or supplemented prospectus, which, as so amended or
supplemented, shall no longer contain any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(b) Each Holder shall suspend, upon request of the Company,
any disposition of Registrable Securities pursuant to the Registration Statement
and prospectus contemplated by Section 5.2, for a period not to exceed 30 days
and for no more than two such 30 day periods (which may be consecutive) in the
aggregate within any one 12-month period, in the event 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, might interfere with any
significant primary underwritten offering of equity securities being
contemplated by the Company, or is otherwise inadvisable.
(c) As a condition to the inclusion of its Registrable
Securities, each Holder shall furnish to the Company a completed copy of the
Registration Statement Questionnaire included herein as APPENDIX II hereto and
such other information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and which shall be
required in connection with any registration, qualification or compliance
referred to in this Article 5.
(d) Each Holder hereby covenants with the Company not to make
any sale of the Registrable Securities unless they are registered under the Act
(and the Holder complies with the prospectus delivery requirements of the Act)
or unless an exemption from such registration is available with regard to such
sale, and the Holder supplies an opinion of counsel in form and substance
reasonably satisfactory to the Company (other than in cases where the exemption
is clearly available, such as under Rule 144 of the Act).
(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, in the form attached hereto as APPENDIX III, to
the effect that (i) the Registrable Securities have been sold in accordance with
such Registration Statement or pursuant to Rule 144 of the Act, and (ii) such
sale complies with the requirement of delivering a current prospectus pursuant
to the Act.
(f) Each Holder agrees not to take any action with respect to
any distribution deemed to be made pursuant to such registration statement which
would constitute a violation of Regulation M under the Act and the Exchange Act
or any other applicable rule, regulation or law.
(g) At the end of the Registration Period, 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
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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 promptly upon receipt of such notice from the
Company.
5.6 With a view to making available to the Holders the benefits of
certain rules and regulations of the Commission which at any time permit the
sale of the Registrable Securities to the public without registration, the
Company shall use its best efforts to: (a) make and keep available adequate
public information available, as required under paragraph (c) of Rule 144 under
the Act, at all times;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under Section 13, 14 and 15(d) of
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 the current public
information requirements of paragraph (c) of Rule 144 under the 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
Commission allowing a Holder to sell any such securities without registration.
5.7 In the event that the Registration Statement is not declared
effective within 90 days after the date of filing of the Registration Statement,
the Company shall pay to each Subscriber liquidated damages in an amount equal
to 0.25% of the number of shares of Common Stock purchased by such Subscriber
pursuant to this Agreement for each week after such date that the Registration
Statement is not declared effective. Such liquidated damages shall be the
Subscriber's sole and exclusive remedy in the event that the Registration
Statement is not declared effective within 90 days after the filing date of the
Registration Statement and shall be paid through the issuance of additional
Common Stock at such time as the Registration Statement is declared effective. A
Registration Statement with respect to such additional Common Stock shall also
be filed within 30 days of issuance under the terms and conditions set forth in
this Article 5.
5.8 The rights to cause the Company to register Registrable
Securities granted to the Holders by the Company under Section 5.2 may be
assigned in full by a Holder in connection with a transfer by such Holder of its
Registrable Securities, provided, however, that (i) such transfer may otherwise
be effected in accordance with applicable securities laws; (ii) such Holder
gives written notice thereof to the Company within a reasonable time after such
assignment; (iii) such transferee agrees to comply with the terms and provisions
of this Agreement; and (iv) such transfer is otherwise in compliance with this
Agreement. Except as specifically permitted hereby, 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 be void.
6. INDEMNIFICATION.
6.1 BY THE COMPANY.
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(a) To the extent permitted by law, the Company shall
indemnify each Holder of the Registrable Securities and each person controlling
such Holder within the meaning of Section 15 of the Act 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 6.3), arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement or prospectus, or any amendment or supplement thereof, in connection
with the sale of Common Stock by such Holder, 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, and will reimburse
each Holder and each person controlling such Holder for reasonable legal and
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 the claim, loss,
damage or liability arises out of or is based upon (i) any untrue statement or
omission or allegation thereof made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder
specifically for use in preparation of such registration statement, prospectus
or offering circular, and (ii) the failure of the Holder to comply with the
covenants and agreements contained in this Agreement respecting sales of
Registrable Securities; PROVIDED FURTHER that the foregoing indemnity agreement
of the Company 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 a preliminary prospectus but eliminated or remedied in (i) the
amended prospectus on file with the Commission at the time the registration
statement is ordered effective, or (ii) in the amended prospectus filed with the
Commission pursuant to Rule 424(b) (each a "FINAL PROSPECTUS"), such indemnity
agreement shall not inure to the benefit of any such Holder or any such
controlling person, if a copy of the Final Prospectus was furnished by the
Company to the Holder for delivery, but not furnished by the Holder to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Act and the Final Prospectus would
have cured the defect giving rise to such loss, liability, claim or damage.
(b) The Company agrees to hold the Subscriber and its
directors, officers, employees, controlling persons and agents and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all claims, losses, damages, liabilities, actions, costs
and expenses incurred by them that relate to any inaccuracy in the
representations and warranties of the Company contained in this Agreement, or
any failure of the Company to perform its obligations under this Agreement or
under law in connection herewith.
6.2 BY THE SUBSCRIBER/HOLDERS.
(a) Each Holder will severally and not jointly indemnify the
Company, each of its directors and officers and each person who controls the
Company within the meaning of Section 15 of the 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 6.3), arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement or prospectus, or any amendment or supplement thereof in connection
with the sale of Common Stock by such Holder 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, and will reimburse
the
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Company, such directors and officers 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 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 (i) the fact
that a current copy of the prospectus was not made available to the Holder and
such current copy of the prospectus would have cured the defect giving rise to
such loss, claim, damage or liability, or (ii) the Holder has delivered to the
Company in writing a correction to such untrue statement or alleged untrue
statement or omission or alleged omission before the occurrence of the event
from which such loss was incurred. Notwithstanding the foregoing, in no event
shall a Holder be liable for any such claims, losses, damages, liabilities or
expenses in excess of the proceeds received by such Holder from sales incident
to such registration or qualification, except in the event of fraud by such
Holder.
(b) The Subscriber agrees to hold the Company and its
directors, officers, employees, controlling persons and agents and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by the Subscriber contained in this
Agreement (including the Investor Questionnaire contained in Article 8 herein).
6.3 INDEMNIFICATION PROCEDURE. Each party entitled to
indemnification under this Article 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, delayed or conditioned), 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 materially 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, delayed or
conditioned).
6.4 CONTRIBUTION. If the indemnification provided for in this
Article 6 is held by a court of competent jurisdiction to be applicable by its
terms but is 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, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying Party
on the one hand and by the Indemnified Party on the other hand from the
placement of the Common Stock, or (ii) if the allocation provided by clause (i)
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the
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relative benefits referred to in clause (i), but also 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 respective relative benefits received by the indemnifying
Party and the Indemnified Party shall be deemed to be in the same proportion as
the amount paid by the Subscriber to the Company pursuant to this Agreement for
the Common Stock purchased by such Subscriber that was sold pursuant to the
Registration Statement bears to the difference (the "DIFFERENCE") between the
amount such Subscriber paid for such Common Stock that was sold pursuant to the
Registration Statement and the amount received from such sale. 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 or alleged 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.
Notwithstanding the provisions of this Section 6.4, no Holder shall be required
to contribute any amount in excess of the amount by which the Difference exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 6.4 are several and not
joint.
7. MISCELLANEOUS.
7.1 Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Subscriber in this Agreement and in the certificates for the
Common Stock delivered pursuant to this Agreement shall survive the execution of
this Agreement, the delivery of the Subscriber of the Common Stock being
purchased and the payment therefor.
7.2 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 therefore,
addressed to Genta Incorporated, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attn: Chief Financial Officer, and to the Subscriber at the Subscriber's
address indicated on the signature page of this Agreement, or to such other
address as may be furnished to the other party in writing. 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.
7.3 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; provided that any term contained in
Article 5 of this Agreement may be amended, waived or terminated with the
written consent of the Company and the Holders of a majority of the then
outstanding shares of Registrable Securities.
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7.4 Subject to the provisions of Section 5.7 and 7.12, 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.
7.5 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. IN
THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE EXCLUSIVE FORUMS FOR
RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT ARE EITHER THE
STATE OR FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, AND ALL RELATED
APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF
SUCH COURTS AND AGREE TO SAID VENUE.
7.6 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 as
determined in a court of competent jurisdiction in a final, non-appealable order
(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 reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefore.
7.7 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.
7.8 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.
7.9 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.
7.10 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.
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7.11 (a) The Subscriber agrees not to issue any public statement
with respect to the Subscriber's 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 issue any press release or other
public statement with respect to the transactions contemplated hereby naming the
Subscriber without the Subscriber's prior written consent, which shall not be
unreasonably withheld so long as the Company gives the Subscriber a reasonable
opportunity to comment, except as may be required by law.
(c) The Company agrees not to disclose the names, addresses or
any other information about the Subscriber without the Subscriber's prior
written consent, except as required by law.
7.12 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 for (a)
the holders of Registrable Securities and (b) the Advisors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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8. INVESTOR QUESTIONNAIRE.
8.1 The Subscriber represents and warrants that he, she or it is
an accredited investor within the meaning of Rule 501(a) under the Act, because
the Subscriber satisfies the criteria set forth in one or more categories marked
below, and that for any category marked, he, she or it has truthfully set forth,
where applicable, the factual basis or reason the Subscriber comes within that
category. 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 or other entity.) 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 or other entity) 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.
Category D _____ The undersigned is a bank; a savings and loan
association; registered broker dealer; 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 (c) is a self directed plan with
investment decisions made solely by persons that are
accredited investors (describe entity).
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Category E _____ The undersigned is a private business development
company as defined in section 202(a)(22) of the
Investment Placement Agents Act of 1940 (describe
entity).
-----------------------------------------------------
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Category F _____ The undersigned is either a corporation, partnership,
Massachusetts or similar business trust, or
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 Common
Stock and with total assets in excess of $5,000,000
(describe entity).
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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 Common Stock, where the
purchase is directed by a "sophisticated investor" as
defined in Regulation 506(b)(2)(ii) under the Act.
Category H _____ The undersigned is an entity (other than a trust) in
which all of the equity owners 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).
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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 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
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* If Common Stock is being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
8.3 NASD AFFILIATION.
Are you affiliated or associated with an NASD member firm (please check one):
Yes _________ No __________
If Yes, please describe:
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* 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
Rule 3050 of the NASD Conduct Rules.
__________________________________
Name of NASD Member Firm
By: ______________________________
Authorized Officer
Date: ____________________________
8.4 The undersigned is informed of the significance to the Company
of the foregoing representations and answers contained in the Investor
Questionnaire contained in this Article 8 and such answers have been provided
under the assumption that the Company will rely on them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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\
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
"PURCHASE PRICE" = $13.00 X ______ Shares of Common Stock = $________
_________________________________________________________
If purchasing jointly:
------------------------------ ------------------------------
Signature Signature
------------------------------ ------------------------------
Name Typed or Printed Name Typed or Printed
------------------------------
Entity Name
------------------------------ ------------------------------
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: _______________, 2001
* * * * *
This Subscription Agreement is agreed to and accepted as of _____________, 2001.
GENTA INCORPORATED
By:____________________________________
Name:
Title:
CERTIFICATE OF SIGNATORY
(To be completed if Common Stock is
being subscribed for by a corporation, partnership or other entity)
I,____________________________, am the____________________________ of
__________________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity, on
behalf of the Entity, to execute and carry out the terms of the Subscription
Agreement and to purchase and hold the Common Stock, and certify further that
the Subscription Agreement constitutes a legal and binding obligation of the
Entity.
IN WITNESS WHEREOF, I have set my hand this ________ day of
_________________, ______.
_________________________________
(Signature)
APPENDIX I
WIRE TRANSFER INSTRUCTIONS
State Street Bank & Trust Company
ABA Routing #: ▇▇▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ Bovarnik for the Benefit of :
Account Number DE0125 Account Name GENTA, INC.
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APPENDIX II
GENTA INCORPORATED
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please provide
us with the following information (a draft of the Registration Statement has
been previously provided to you):
1. Pursuant to the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly as it should
appear in the Registration Statement:
--------------------------------------------------------------------------------
2. Please provide the number of shares that you or your organization will
own immediately after Closing, including those shares purchased by you or your
organization pursuant to this Purchase Agreement and those shares purchased by
you or your organization through other transactions:
--------------------------------------------------------------------------------
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Prospectuses included in the
Registration Statement?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
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APPENDIX III
SUBSCRIBER'S CERTIFICATE OF SUBSEQUENT SALE
ATTENTION:
The undersigned, [an officer of, or other person duly authorized by]
________________________________________________________________________________
[fill in official name of individual or institution]
hereby certified that he/she [said institution] is the purchaser of the shares
evidenced by the attached certificate, and as such, sold such shares on
____________ pursuant to and in accordance with registration statement number
[date]
________________________________________________________________________and the
[fill in the number of or otherwise identify registration statement]
requirement of delivering a current prospectus by the Company has been complied
with in connection with such sale.
Print or Type:
Name of Purchaser
(Individual or Institution): _________________________________
Name of Individual
Representing Purchaser
(if an Institution): _________________________________________
Title of Individual
Representing Purchaser
(if an Institution): _________________________________________
Signature by:
Individual Purchaser or
Individual representing
Purchaser: ___________________________________________________