ADM TRONICS UNLIMITED, INC.
and its majority-owned subsidiary
AA NORTHVALE MEDICAL ASSOCIATES, INC.
SUBSCRIPTION AGREEMENT
The undersigned (hereinafter "Subscriber") hereby confirms his/her/its
subscription for the purchase of Units of ADM Tronics Unlimited ("ADM"),
Inc., a Delaware corporation and AA Northvale Medical Associates, Inc.
("AAN"), a New Jersey corporation. ADM and AAN shall be collectively
referred to herein as the "Company." Each Unit consists of: one (1) $100,000
Unsecured 6% Joint and Several Convertible Promissory Note ("Note"); one (1)
Class A Warrant for ADM (the "ADM Warrant"); and one (1) Class A Warrant for
AAN (the "AAN Warrant"). The Units and the securities underlying the Units
are sometimes referred to collectively as the "Securities". Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
for such terms in the Company's Confidential Private Placement Memorandum,
dated as of May 20, 2004 (as amended or supplemented, and together with all
documents and filings attached thereto, the "Memorandum").
The Company and Subscriber are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule
506 of Regulation D ("Regulation D") as promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act") and Section 4(2) of the Act.
In connection with this subscription, Subscriber and the Company agree
as follows:
1. Purchase and Sale of the Securities.
(a) The Company hereby agrees to issue and to sell to Subscriber, and
Subscriber hereby agrees to purchase from the Company, a number of Units for
the aggregate subscription amount set forth on the signature page hereto.
Upon acceptance of this Subscription Agreement by the Company, the Company
shall issue and deliver to Subscriber a Note, and warrant certificates
evidencing each of the ADM Warrant and the AAN Warrant, subscribed for
against payment in U.S. Dollars of the Purchase Price (as defined below).
(b) Subscriber has hereby delivered and paid concurrently herewith
the purchase price (the "Purchase Price") set forth on the signature page
hereof required to purchase the Units subscribed for hereunder which amount
has been paid in U.S. Dollars by wire transfer or check, subject to
collection, to the order of "American Stock Transfer & Trust Company, ADM
Tronics Unlimited, Inc. Escrow Account."
(c) Subscriber understands and acknowledges that this subscription is
part of a proposed placement by the Company of up to $3,500,000 of Units,
which offering is being made on a "best efforts" basis for a maximum of 35
Units (the "Maximum Offering").
(d) At each closing of this transaction (the "Closing"), (1) the
Company shall deliver to or as directed by Subscriber (i) the Notes to be
acquired by Subscriber at the Closing, in the form attached as Exhibit A,
attached hereto, in the principal amount set forth beside Subscriber's name
below, (ii) a warrant certificate evidencing the ADM Warrants to be issued to
Subscriber, in the form attached as Exhibit B attached hereto, (iii) a
warrant certificate evidencing the AAN Warrants to be issued to Subscriber at
the Closing, in the form attached as Exhibit C attached hereto, and (iv) the
opinion of counsel to ADM and AAN of a legal opinion in form and substance
satisfactory to Subscriber's counsel, and (iv) all other instruments and
writings required to have been delivered at or prior to the Closing by the
Company pursuant to this Agreement; and (2) each Subscriber shall deliver or
cause to be delivered to the Company (1) by check or wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, its respective share of the aggregate of $3,500,000 for the
purchase of the Units, and (ii) all documents, instruments and writings
required to have been delivered at or prior to the Closing by Subscriber
pursuant to this Agreement.
2. Representations and Warranties of Subscriber. Subscriber represents
and warrants to the Company as follows:
(a) At the time Subscriber was offered the Securities, Subscriber
was, and on the date Subscriber receives the Securities will be, an
"accredited investor" as defined by Rule 501 under the Act, and Subscriber is
capable of evaluating the merits and risks of Subscriber's investment in the
Company and has the capacity to protect Subscriber's own interests.
(b) Subscriber understands that the Securities are not presently
registered, but Subscriber is entitled to certain rights with respect to the
registration of certain of the securities underlying the Units (see Section 6
below).
(c) Subscriber acknowledges and understands that the Securities are
being purchased for investment purposes and not with a view to distribution
or resale, nor with the intention of selling, transferring or otherwise
disposing of all or any part thereof for any particular price, or at any
particular time, or upon the happening of any particular event or
circumstances, except selling, transferring, or disposing the Securities made
in full compliance with all applicable provisions of the Act, the rules and
regulations promulgated by the SEC thereunder, and applicable state
securities laws; and that an investment in the Securities is not a liquid
investment.
(d) Subscriber acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an
exemption from such registration is available. Subscriber is aware of the
provisions of Rule 144 promulgated under the Act which permit limited resale
of common stock purchased in a private placement subject to the satisfaction
of certain conditions, including, among other things, the existence of a
public market for the common stock, the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and paid for the security to be sold, the
sale being effected through a "broker's transaction" or in transactions
directly with a "market maker" and the number of shares of common stock being
sold during any three-month period not exceeding specified limitations.
(e) Subscriber acknowledges that the Notes, ADM Warrants, AAN
Warrants and shares of AAN' s common stock issuable upon the exercise of the
AAN Warrants, in payment of interest on the Notes and upon conversion of the
Notes, as the case may be are not currently publicly trading.
(f) Subscriber acknowledges that Subscriber has had the opportunity
to ask questions of, and receive answers from the Company or any person
acting on its behalf concerning the Company and its business and to obtain
any additional information, to the extent possessed by the Company (or to the
extent it could have been acquired by the Company without unreasonable effort
or expense) necessary to verify the accuracy of the information received by
Subscriber. In connection therewith, Subscriber acknowledges that Subscriber
has had the opportunity to discuss the Company's business, management and
financial affairs with the Company's management or any person acting on its
behalf. Subscriber has received and reviewed the Memorandum, and all the
information, both written and oral, that it desires. Without limiting the
generality of the foregoing, Subscriber has been furnished with or has had
the opportunity to acquire, and to review, (i) copies of all of the Company's
publicly available documents, including but not limited to, those attached to
the Memorandum, and (ii) all information, both written and oral, that it
desires with respect to the Company's business, management, financial affairs
and prospects. In determining whether to make this investment, Subscriber
has relied solely on Subscriber's own knowledge and understanding of the
Company and its business based upon Subscriber's own due diligence
investigations and the information furnished pursuant to this paragraph.
Subscriber understands that no person has been authorized to give any
information or to make any representations which were not furnished pursuant
to this paragraph and Subscriber has not relied on any other representations
or information.
(g) Subscriber has all requisite legal and other power and authority
to execute and deliver this Subscription Agreement and to carry out and
perform Subscriber's obligations under the terms of this Subscription
Agreement. This Subscription Agreement constitutes a valid and legally
binding obligation of Subscriber, enforceable in accordance with its terms,
and 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 general principals of equity, whether such
enforcement is considered in a proceeding in equity or law.
(h) Subscriber has carefully considered and has discussed with the
Subscriber's professional legal, tax, accounting and financial advisors, to
the extent the Subscriber has deemed necessary, the suitability of this
investment and the transactions contemplated by this Subscription Agreement
for the Subscriber's particular federal, state, local and foreign tax and
financial situation and has determined that this investment and the
transactions contemplated by this Subscription Agreement are a suitable
investment for the Subscriber. Subscriber relies solely on such advisors and
not on any statements or representations of the Company or any of its agents.
Subscriber understands that Subscriber (and not the Company) shall be
responsible for Subscriber's own tax liability that may arise as a result of
this investment or the transactions contemplated by this Subscription
Agreement.
(i) This Subscription Agreement and the Purchaser Questionnaire do
not contain any untrue statement of a material fact or omit any material fact
concerning Subscriber.
(j) There are no actions, suits, proceedings or investigations
pending against Subscriber or Subscriber's properties before any court or
governmental agency (nor, to Subscriber's knowledge, is there any threat
thereof) which would impair in any way Subscriber's ability to enter into and
fully perform Subscriber's commitments and obligations under this
Subscription Agreement or the transactions contemplated hereby.
(k) The execution, delivery and performance of and compliance with
this Subscription Agreement, and the issuance of the Securities will not
result in any material violation of, or conflict with, or constitute a
material default under, any of Subscriber's articles of incorporation or
bylaws, if applicable, or any of Subscriber's material agreements nor result
in the creation of any mortgage, pledge, lien, encumbrance or charge against
any of the assets or properties of Subscriber or the Securities.
(l) Subscriber acknowledges that the Securities are speculative and
involve a high degree of risk and that Subscriber can bear the economic risk
of the purchase of the Securities, including a total loss of his/her/its
investment.
(m) Subscriber acknowledges that he/she/it has carefully reviewed and
considered the risk factors discussed in the "Risk Factors" section of the
Memorandum.
(n) Subscriber recognizes that no federal, state or foreign agency
has recommended or endorsed the purchase of the Securities.
(o) Subscriber is aware that the Securities are and will be, when
issued, "restricted securities" as that term is defined in Rule 144 of the
general rules and regulations under the Act.
(p) Subscriber understands that any and all certificates representing
the Securities and any and all securities issued in replacement thereof or in
exchange therefor shall bear the following legend or one substantially
similar thereto, which Subscriber has read and understands:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH,
IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS
AVAILABLE."
(q) In addition, the certificates representing the Securities, and
any and all securities issued in replacement thereof or in exchange therefor,
shall bear such legend as may be required by the securities laws of the
jurisdiction in which Subscriber resides.
(r) Because of the restrictions imposed on resale, Subscriber
understands that the Company shall have the right to note stop-transfer
instructions in its stock transfer records, and Subscriber has been informed
of the Company's intention to do so. Any sales, transfers, or any other
dispositions of the Securities by Subscriber, if any, will be in compliance
with the Act.
(s) Subscriber acknowledges that Subscriber has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Securities and of making an
informed investment decision.
(t) Subscriber represents that (i) Subscriber is able to bear the
economic risks of an investment in the Securities and to afford the complete
loss of the investment; and (ii) (A) Subscriber could be reasonably assumed
to have the capacity to protect his/her/its own interests in connection with
this subscription; or (B) Subscriber has a pre-existing personal or business
relationship with either the Company or any affiliate thereof of such
duration and nature as would enable a reasonably prudent purchaser to be
aware of the character, business acumen and general business and financial
circumstances of the Company or such affiliate and is otherwise personally
qualified to evaluate and assess the risks, nature and other aspects of this
subscription.
(u) Subscriber further represents that the address set forth below is
his/her principal residence (or, if Subscriber is a company, partnership or
other entity, the address of its principal place of business); that
Subscriber is purchasing the Securities for Subscriber's own account and not,
in whole or in part, for the account of any other person; Subscriber is
purchasing the Securities for investment and not with a view to resale or
distribution; and that Subscriber has not formed any entity for the purpose
of purchasing the Securities.
(v) Subscriber understands that the Company shall have the
unconditional right to accept or reject this subscription, in whole or in
part, for any reason or without a specific reason, in the sole and absolute
discretion of the Company (even after receipt and clearance of Subscriber's
funds). This Subscription Agreement is not binding upon the Company until
accepted by an authorized officer of the Company. In the event that the
subscription is rejected, then Subscriber's subscription funds will be
returned without interest thereon or deduction therefrom.
(w) Subscriber has not been furnished with any oral representation or
oral information in connection with the offering of the Securities that is
not contained in the Memorandum and this Subscription Agreement.
(x) Subscriber represents that Subscriber is not subscribing for
Securities as a result of or subsequent to any advertisement, article, notice
or other communication published in any newspaper, magazine or similar media
or broadcast over the Internet, television or radio or presented at any
seminar or meeting.
(y) Subscriber has carefully read this Subscription Agreement and the
Memorandum, and Subscriber has accurately completed the Purchaser
Questionnaire which accompanies this Subscription Agreement.
(z) No representations or warranties have been made to Subscriber by
the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company contained herein, and
in subscribing for the Securities the Subscriber is not relying upon any
representations other than those contained in the Memorandum or in this
Subscription Agreement.
(aa) Subscriber represents and warrants, to the best of its knowledge,
that other than the Placement Agent, no finder, broker, agent, financial
advisor or other intermediary, nor any purchaser representative or any
broker-dealer acting as a broker, is entitled to any compensation in
connection with the transactions contemplated by this Subscription Agreement.
(bb) Subscriber represents and warrants that he/she/it will have no
open position in the Company's Common stock at the time a Registration
Statement is filed with the SEC to register the Securities (the "Registration
Statement") and is aware of the following Telephone Interpretation in the SEC
Manual of Publicly Available Telephone Interpretations (July 1997):
A.65. Section 5
An issuer filed a Form S-3 registration
statement for a secondary offering of common stock
which is not yet effective. One of the selling
shareholders wanted to do a short sale of common
stock "against the box" and cover the short sale with
registered shares after the effective date. The
issuer was advised that the short sale could not be
made before the registration statement becomes
effective, because the shares underlying the short
sale are deemed to be sold at the time such sale is
made. There would, therefore, be a violation of
Section 5 if the shares were effectively sold prior
to the effective date.
(cc) Subscriber represents and warrants that he/she/it has complied
with all applicable provisions of the Act, the rules and regulations
promulgated by the SEC thereunder, including Regulation M and applicable
state securities laws, and will comply at the time of sale pursuant to the
Registration Statement.
(dd) Subscriber represents and warrants that Subscriber has: (i) not
distributed or reproduced the Memorandum, in whole or in part, at any time,
without the prior written consent of the Company and the Placement Agent,
(ii) kept confidential the existence of the Memorandum and the information
contained therein or made available in connection with any further
investigation of the Company and (iii) refrained and shall refrain from
trading in the publicly-traded securities of the Company or any other
relevant company for so long as such recipient has been in possession of the
material non-public information contained in the Memorandum.
(ee) The obligations of each Subscriber under this Subscription
Agreement are several and not joint with the obligations of any other
Subscriber, and no Subscriber shall be responsible in any way for the
performance of the obligations of any other Subscriber under this
Subscription Agreement. Nothing contained herein, or in any other Agreement,
and no action taken by any Subscriber pursuant thereto, shall be deemed to
constitute the Subscribers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Subscribers are
in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by this Subscription Agreement. Each
Subscriber shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of the Subscription
Agreement or out of the other Offering documents, and it shall not be
necessary for any other Subscriber to be joined as an additional party in any
proceeding for such purpose.
3. Representations, Warranties and Covenants of ADM and AAN. Each of ADM
and AAN represents, warrants and covenants to Subscriber as follows:
(a) Organization and Qualification. Each of ADM and AAN is a
corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the requisite
corporate power and authority to own and use its properties and assets and to
carry on its business as currently conducted. AAN has no subsidiaries, and
AAN does not own, directly or indirectly, any capital stock or other equity
ownership or proprietary interests in any other corporation, association,
trust, partnership joint venture or other entity. ADM has those subsidiaries
set forth in its Annual Report on Form 10-KSB for the year ended March 31,
2004 (the "Form 10-KSB"), collectively the "Subsidiaries" and each a
"Subsidiary". Each of the Subsidiaries is a corporation, duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Each of ADM, AAN and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually or
in the aggregate, (w) adversely affect the legality, validity or
enforceability of any of the Notes, the Warrants or this Agreement,
(collectively, the "Transaction Documents"), (x) have or result in a material
adverse effect on the results of operations, assets, prospects, or condition
(financial or otherwise) of ADM or AAN, (y) have or result in a material
adverse effect on the results of operations, assets, prospects, or condition
(financial or otherwise) of the Subsidiaries, taken as a whole with ADM, or
(z) adversely impair ADM or AAN's ability to perform fully on a timely basis
its obligations under any Transaction Document (any of (w), (x), (y) or (z),
a "Material Adverse Effect").
(b) Authorization; Enforcement. Each of ADM and AAN has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents, and otherwise
to carry out its obligations thereunder. The execution and delivery of each
of the Transaction Documents by each of ADM and AAN and the consummation by
it of the transactions contemplated thereby have been duly authorized by all
necessary action on the part of ADM and AAN and no further action is required
by ADM or AAN. Each of the Transaction Documents has been duly executed by
each of ADM and AAN and, when delivered in accordance with the terms thereof,
will constitute the legal, valid and binding obligation of each of ADM and
AAN enforceable against each of ADM and AAN in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to or affecting generally the enforcement of creditors' rights and remedies
or by other equitable principles of general application. Neither ADM, AAN
nor any Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, by-laws or other charter documents.
(c) Capitalization. The number of authorized, issued and outstanding
capital stock of each of ADM and AAN is set forth in the Memorandum. Except
as described in the Memorandum, no shares of common stock are entitled to
preemptive or similar rights, nor is any holder of common stock entitled to
preemptive or similar rights arising out of any agreement or understanding
with ADM or AAN by virtue of any of the Transaction Documents. Except as
disclosed in the Memorandum, there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or, except as a result of the purchase and sale of
the securities underlying the Units under this Agreement, securities, rights
or obligations convertible into or exchangeable for, or giving any Person any
right to subscribe for or acquire any shares of common stock, or contracts,
commitments, understandings, or arrangements by which ADM, AAN or any
Subsidiary is or may become bound to issue additional shares of common stock,
or securities or rights convertible or exchangeable into shares of common
stock. To the knowledge of ADM and AAN, except as specifically disclosed in
the Memorandum or Schedule 3(c) attached hereto, no Person or group of
related Persons beneficially owns (as determined pursuant to Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) or has the right to acquire by agreement with or by
obligation binding upon ADM or AAN beneficial ownership of in excess of 5% of
the common stock. A "Person" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
(d) Issuance of the Securities. The issuance, sale and delivery of
Securities have been duly authorized by all requisite corporate action of the
ADM and AAN. When so issued, sold and delivered in accordance with the terms
hereof, the Securities will be duly executed, issued and delivered and will
constitute valid and legal obligations of ADM and AAN enforceable in
accordance with their respective terms and, in each case, will not be subject
to preemptive or other similar rights, shall be free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively, "Liens").
ADM and AAN will at all times while the securities underlying the Units are
outstanding maintain an adequate reserve of duly authorized shares of common
stock equal to the number of shares of common stock issuable upon conversion
in full of the securities underlying the Units and in payment of interest
thereon. The shares of ADM common stock or AAN common stock, as the case may
be, when issued in accordance with the Notes, ADM Warrants or AAN Warrants,
as the case may be, shall have been duly authorized, validly issued, fully
paid and non-assessable, free and clear of all Liens.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by ADM and AAN and the consummation by ADM and AAN of
the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of ADM or AAN's certificate of incorporation, bylaws
or other charter documents (each as amended through the date hereof), or (ii)
subject to obtaining the Required Approvals (as defined below), conflict
with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, bond, debenture, note, lease,
contract, mortgage, deed of trust, loan agreement, credit facility, indenture
or instrument (evidencing an ADM or AAN debt or otherwise) to which ADM, AAN
or any Subsidiary is a party or by which any property or asset of ADM, AAN or
any Subsidiary is bound or affected, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which ADM or AAN is
subject (including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the common
stock is listed or traded), or by which any property or asset of ADM or AAN
is bound or affected, except in the case of each of clauses (ii) and (iii),
as could not, individually or in the aggregate, have or result in a Material
Adverse Effect. The business of each of ADM and AAN is not being conducted
in violation of any law, ordinance or regulation of any governmental
authority, except for violations, which, individually or in the aggregate,
could not have, or result in a Material Adverse Effect.
(f) Consents and Approvals. Neither ADM, AAN nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than the filing of (i) one or more registration
statements with the SEC meeting the requirements set forth in this Agreement
and covering the resale of the shares of common stock of either ADM or AAN
common stock, as the case may be, (ii) the applications to a securities
exchange, market or other quotation system for the listing therewith of the
ADM or AAN common stock, as the case may be, (iii) applicable blue sky
filings and (iv) in all other cases where the failure to obtain such consent,
waiver, authorization or order, or to give such notice or make such filing or
registration could not have or result in, individually or in the aggregate, a
Material Adverse Effect (the consents, waivers, authorizations, orders,
notices and filings referred to in (i)-(v) of this Section are, collectively,
the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed in the
Disclosure Materials (as hereinafter defined) or as otherwise disclosed on
Schedule 3(g) attached hereto, there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any
of their respective properties before or by any court, governmental or
administrative agency or regulatory authority (federal, state, county, local
or foreign) which (i) adversely affects or challenges the legality, validity
or enforceability of any Transaction Document or the Securities or (ii)
could, individually or in the aggregate, have or result in a Material Adverse
Effect.
(h) No Default or Violation. Except as specifically disclosed in the
Form 10-KSB or as otherwise disclosed in Section 3(h) attached hereto,
neither ADM, AAN nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred which has not been waived which, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has ADM, AAN or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound, (ii) is
in violation of any order of any court, arbitrator or governmental body, or
(iii) is in violation of any statute, rule or regulation of any governmental
authority, except as could not, individually or in the aggregate, have or
result in a Material Adverse Effect or, except in the case of clause (i)
above as has not been waived pursuant to an effective waiver.
(i) Private Offering. Assuming the accuracy of the representations
and warranties of Subscriber set forth in Section 2, the offer, issuance and
sale of the Securities to Subscriber as contemplated hereby are exempt from
the registration requirements of the Act. Neither the Company nor any Person
acting on its behalf has taken any action that could subject the offering,
issuance or sale of the Securities to the registration requirements of the
Act.
(j) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law to file
such material) (the foregoing materials being collectively referred to herein
as the "SEC Reports" and, together with the other written disclosures to
Subscriber, the "Disclosure Materials"); on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their respective filing
dates, the SEC Reports complied in all material respects with the
requirements of the Act and the Exchange Act and, the rules and regulations
promulgated thereunder, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Reports is currently
required to be updated or amended under applicable law (except for such
statements as have been amended or updated by subsequent SEC Reports prior to
the date of this Subscription Agreement). All material agreements to which
the Company is a party or to which the property or assets of the Company are
subject have been filed as exhibits to the SEC Reports to the extent
required. The financial statements of the Company included in the SEC
Reports have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP"), consistently applied, and the rules and
regulations of the SEC with respect thereto as in effect at the time of
filing (except as may be otherwise specified in such financial statements or
the notes thereto), and fairly present, in all material respects the
financial position of ADM and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Since March 31, 2004, except as
specified in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could have or result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required
to be disclosed in filings made with the SEC, in each case that, individually
or in the aggregate, are not material to the financial condition, business,
operations, properties, operating results or prospects of ADM or AAN, (iii)
the Company has not altered its method of accounting or the identity of its
auditors and (iv) the Company has not declared or made any payment or
distribution of cash or other property to its stockholders or officers or
directors (other than in compliance with existing Company stock option plans)
with respect to its capital stock, or purchased, redeemed (or made any
agreements to purchase or redeem) any shares of its capital stock or debt
convertible into shares of common stock.
(k) Investment Company. ADM and AAN are not, and are not an
Affiliate (as defined in Rule 405 under the Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. Except as disclosed in the Disclosure Materials,
Subscribers shall have no obligation with respect to any fees or commissions
or with respect to any claims made by or on behalf of any Person for any fees
or commissions that may be due in connection with the transactions
contemplated by this Agreement to any broker, adviser, consultant, finder,
placement agent, banker or other Person. As among ADM, AAN and the
Subscribers (including, for such purposes, Affiliates and agents of
Subscriber), the each of ADM and AAN shall be jointly and severally solely
responsible for all such fees and amounts and each of ADM and AAN shall
jointly and severally indemnify and hold harmless each Subscriber, its
employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including
the costs of preparation and attorney's fees) and expenses suffered in
respect of any such claimed or existing fees or amounts, as such fees and
expenses are incurred. Other than as set forth on Section 3(l) attached
hereto, Subscriber shall be responsible for the payment of any fees or costs
incurred by their own legal counsel or other advisors in connection with this
transaction.
(m) Patents and Trademarks. Each of ADM and AAN owns, or has
sufficient rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
rights (collectively, the "Intellectual Property Rights") which are described
or referred to in the SEC Reports as owned or possessed by it or that are
necessary for use in connection with its business, except where the failure
to currently own or possess will not have a Material Adverse Effect. AAN
owns, and has the exclusive right to commercialize the SofPulse Device. ADM
and AAN are not infringing, or have not received any notice of, nor has any
knowledge of, any asserted infringement by ADM or AAN or, any rights of a
third party with respect to any Intellectual Property rights. ADM and AAN
have not received any notice of, or have any knowledge of, infringement by a
third party with respect to any Intellectual Property Rights of ADM or AAN.
(n) Registration Rights; Rights of Participation. Except as set
forth in the Disclosure Materials, neither ADM nor AAN has granted or agreed
to grant to any Person any rights (including "piggy-back" registration
rights) to have any securities of ADM or AAN registered with the SEC or any
other governmental authority which has not been satisfied. No Person has any
right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the
Transaction Documents.
(o) Regulatory Permits. ADM, AAN and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the failure to
possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect ("Material Permits"), and neither ADM,
AAN nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
(p) Disclosure. The Company confirms that it has not provided
Subscriber or his/her/its respective agents or counsel with any information
that constitutes or might constitute material non-public information. The
Company understands and confirms that Subscriber shall be relying on the
foregoing representation in effecting transactions in securities of the
Company. All information relating to or concerning the Company or its
Subsidiaries set forth in the Transaction Documents and the Disclosure
Materials is true and correct and does not fail to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(q) Reliance on Placement Agency Agreement Representations. In
addition to the foregoing, Subscriber shall be entitled to rely on all of the
representations and warranties made by the Company to the Placement Agent in
that certain Placement Agency Agreement ("Placement Agency Agreement"), as
the same may be amended, entered into between the Placement Agent and the
Company in connection with the Offering, as if such representations and
warranties were made directly to the Subscriber. The form of Placement
Agency Agreement is attached hereto as Exhibit E.
(r) No Manipulation of Stock. Neither ADM nor AAN has not taken and
will not, in violation of applicable law, take any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the common stock to facilitate the sale or
resale of the Securities.
(s) No Integrated Offering. Neither ADM, AAN nor any of its
Subsidiaries, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers
to buy any security under circumstances that would prevent the parties hereto
from consummating the transactions contemplated hereby pursuant to an
exemption from registration under the Securities Act pursuant to the
provisions of Regulation D or cause the offering of Securities to be
integrated with any other offering of securities by ADM and AAB for the
purpose of any stockholder approval provision applicable to ADM, AAN or their
securities. The transactions contemplated hereby are exempt from the
registration requirements of the Securities Act, assuming the accuracy of the
representations and warranties herein contained of the Subscriber to the
extent relevant for such determination.
(t) Foreign Corrupt Practices. Neither ADM, AAN nor any Subsidiaries
has, nor any director, officer, agent, employee or other person acting on
behalf of ADM, AAN or any Subsidiary has in the course of his actions for or
on behalf of ADM or AAN, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee. Without limiting the generality of
the foregoing, ADM, AAN and the Subsidiaries have not directly or indirectly
made or agreed to make (whether or not said payment is lawful) any payment to
obtain, or with respect to, sales other than usual and regular compensation
to its or their employees and sales representatives with respect to such
sales.
(u) Solvency. Each of ADM and AAN (both before and after giving
effect to the transactions contemplated by the Agreements) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to pay
its probable liabilities on its existing debts as they become absolute and
matured), and currently ADM and AAN has no information that would lead it to
reasonably conclude that ADM or AAN would not have the ability to, nor does
it intend to take any action that would impair its ability to, pay its debts
from time to time incurred in connection therewith as such debts mature.
(v) Legends. Except for the legend contemplated by Section 2(p), the
Securities shall bear no other legend.
(w) No General Solicitation. Neither ADM, AAN nor any person acting
on behalf of ADM or AAN has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to any of the
Securities being offered hereby.
(x) Internal Accounting Controls. Each of ADM and AAN and the
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance 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
conformity with generally accepted accounting principles 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.
(y) Compliance with Patriot Act. Neither ADM, AAN nor any
Subsidiaries (i) is or will become a Person whose property or interests in
property are blocked pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)) or (ii) knowingly engages or will knowingly engage in any
dealings or transactions, or be otherwise knowingly associated, with any such
person. Neither ADM, AAN nor any Subsidiaries is or will be in violation of
the Uniting and Strengthening America By Providing Appropriate Tools Required
To Intercept And Obstruct Terrorism (USA Patriot Act of 2001).
(z) Accountants. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Co., LLP, who expressed
their opinion with respect to the consolidated financial statements from the
ADM's Annual Report on Form 10-K from the year ended March 31, 2004, have
advised ADM that they are, and to the best knowledge of ADM they are,
independent accountants as required by the Securities Act and the rules and
regulations promulgated therunder.
(aa) Form S-3 Eligibility. ADM is currently eligible to register the
resale of the applicable ADM Securities on a registration statement on Form
S-3 under the Securities Act. There exist no fact or circumstances that
would prohibit or delay the preparation and filing of a registration
statement on Form S-3 with respect to the applicable ADM Securities within
the time periods referred to herein.
4. Covenants of the Company.
(a) Certain Securities Law Disclosures. The Company shall: (i) issue
a press release accurately describing and disclosing the transactions
contemplated hereby on the Closing Date, (ii) file with the SEC a report on
Form 8-K or Form 10-QSB disclosing the transactions contemplated hereby
within ten (10) days after the Closing Date, and (iii) timely file with the
SEC a Form D promulgated under the Act as required under Regulation D and
provide a copy thereof to Subscriber promptly after the filing thereof.
(b) Furnishing of Information. So long as Subscriber owns any of the
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. If at any time while Subscriber owns any
of the Securities, the Company is not required to file reports pursuant to
Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to
Subscriber and make publicly available in accordance with Rule 144(c)
promulgated under the Act annual and quarterly financial statements, together
with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to
be included in reports required by Section 13(a) or 15(d) of the Exchange
Act, as well as any other information required thereby, in the time period
that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any holder of the Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell the Common
Shares without registration under the Exchange Act under Rule 144 promulgated
under the Act. Upon the request of any such holder, the Company shall
deliver thereto a written certification of a duly authorized officer as to
whether it has complied with such requirements.
(c) Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than the number of shares of common stock which are
issuable upon conversion of the Notes, in connection with the payment of
interest on the Notes, upon exercise of the ADM Warrants or upon exercise of
the AAN Warrants.
(d) Listing. The Company shall promptly seek the listing of all
additional Registrable Securities not previously listed as such shares are
issued on the securities exchange, market or other quotation system on which
the common stock is then listed or traded and shall maintain, so long as any
other shares of common stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. Once listed, the Company shall maintain the common stock's
authorization for listing on a securities exchange, market or other quotation
system on which the common stock is then listed or traded. The Company shall
promptly provide to Subscriber copies of any notices it receives from a
securities exchange, market or other quotation system on which the common
stock is then listed or traded regarding the continued eligibility of the
common stock for listing on such a securities exchange, market or other
quotation system. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section.
(e) Notice of Breaches. Each of the Company and Subscriber shall
give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof,
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained in the
Transaction Document to be incorrect or breached as of and after the Closing
Date. However, no disclosure by any party pursuant to this Section shall be
deemed to cure any breach of any representation, warranty or other agreement
contained in any Transaction Document. No breach, default or other action by
or claim against one Subscriber will be deemed a breach, default or action of
or claim against of any other Subscriber or in any way adversely affect the
rights of the other Subscribers.
(f) Integration. The Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Act) that would be integrated with the offer or sale of
the Securities in a manner that would require the registration under the Act
of the issue, offer or sale of the Securities to Subscriber.
(g) Acknowledgment of Dilution. The Company acknowledges that the
issuance of common stock will result in dilution of the outstanding shares of
common stock, which dilution may be substantial under certain market
conditions. The Company further acknowledges that its obligation to issue
shares of common stock in accordance with the terms of and with respect to
the Notes, the ADM Warrants and the AAN Warrants is unconditional and
absolute regardless of the effect of any such dilution.
(h) Intentional Acts or Omissions. The Company shall not
intentionally perform any act that if performed, or intentionally omit to
perform any act that, if omitted to be performed, would prevent or excuse the
performance of the Transaction Agreements or any of the transactions
contemplated hereby or thereby or the benefits intended to be secured thereby
by the Investor.
(i) Use of Proceeds. ADM and AAN shall use the proceeds from the
sale of the Securities as described in the Memorandum. Without limiting the
generality of the foregoing, the ADM and AAN shall not use such proceeds to
make a loan to any employee, officer, director or stockholder of ADM or AAN,
to repay any loan or other obligation of ADM or AAN to any such person, or to
repurchase or pay a dividend on shares of common stock or other securities of
ADM or AAN, other than any such payment explicitly required or permitted by
the terms of the Transaction Agreements.
(j) Transactions with Affiliates. Each of ADM, AAN and the
Subsidiaries will not enter into any agreement or arrangement, written or
oral, directly or indirectly, with an affiliate, or provide services or sell
goods to, or for the benefit of, or pay or otherwise distribute monies, goods
or other valuable consideration to, an affiliate, except upon fair and
reasonable terms under circumstances as determined by ADM or AAN, as
applicable, in good faith, taking into account all of the facts and
circumstances of such agreement or arrangement, and except for existing
intercompany debt or transaction with or between ADM or AAN and any of the
Subsidiaries and payments and benefits to officers and directors in their
capacities as such in the ordinary course of business, consistent with past
practices.
(k) Legend Removal. Notwithstanding anything contained herein to the
contrary, upon the earlier of (i) the effectiveness of the Registration
Statement for either ADMT or AAN and receipt by ADMT or AAN, as the case may
be, of a holder's written confirmation that ADMT common stock or AAN common
stock, as the case may be, will not be disposed of except in compliance with
the prospectus delivery requirements of the Securities Act or (ii) Rule
144(k) under the Securities Act becoming available to a holder, ADMT or AAN,
as the case may be, shall, upon such holder's written request and delivery of
all required documentation by the Company's securities counsel, promptly
cause certificates evidencing the ADMT common stock or the AAN common stock,
as the case may be, to be replaced with certificates that do not bear such
restrictive legends. When ADMT or AAN, as the case may be, is required to
cause unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to such holder
within three (3) business days following submission by such holder of
legended certificate(s) to ADMT or AAN's transfer agent, as applicable,
together with a representation letter in customary form, ADMT or AAN, as the
case may be, shall be liable to such holder for liquidated damages in an
amount equal to 1% of the aggregate purchase price of the ADMT common stock
or AAN common stock, as the case may be, evidenced by such certificate(s) for
each thirty (30) day period) beyond such three (3) business day period that
the unlegended certificates have not been so delivered. ADMT or AAN's
obligation to issue unlegended certificates pursuant to this paragraph shall
be excused if (i) the SEC promulgates any rule or interpretation expressly
prohibiting removal of legends in such circumstances; (ii) the SEC or other
regulatory authority instructs ADMT or AAN, as applicable, or their
respective transfer agent not to remove such legends, or (iii) the SEC makes
it a condition to the effectiveness of the Registration Statement so that
ADMT or AAN, as applicable, continues to keep such legends in place.
5. Indemnification.
(a) Each of ADM and AAN agrees to indemnify and hold harmless the
Subscriber, its respective officers, directors, employees, stockholders and
affiliates, and any person acting on behalf of the Subscriber, from and
against any and all damage, loss, liability, cost and expense (including
reasonable attorneys' fees) which any of them may incur by reason of the
failure by ADM or AAN to fulfill any of the terms and conditions of this
Subscription Agreement, or by reason of any breach of the representations and
warranties made by ADM or AAN herein, or in any other document provided by
the Company to the Subscriber. All representations, warranties and covenants
of each of Subscriber and ADM and AAN contained herein shall survive the
acceptance of this subscription.
(b) Subscriber agrees to indemnify and hold harmless the Company and
the Placement Agent, its respective officers, directors, employees,
stockholders and affiliates, and any person acting on behalf of the Company
or the Placement Agent, from and against any and all damage, loss, liability,
cost and expense (including reasonable attorneys' fees) which any of them may
incur by reason of the failure by Subscriber to fulfill any of the terms and
conditions of this Subscription Agreement, or by reason of any breach of the
representations and warranties made by Subscriber herein, or in any other
document provided by Subscriber to the Company. All representations,
warranties and covenants of each of Subscriber and ADM and AAN contained
herein shall survive the acceptance of this subscription.
6. Registration Rights. Subscriber shall have the registration rights set
forth on Annex A attached hereto.
7. Miscellaneous.
(a) Subscriber agrees not to transfer or assign this Subscription
Agreement or any of Subscriber's interest herein and further agrees that the
transfer or assignment of the Securities acquired pursuant hereto shall be
made only in accordance with all applicable laws.
(b) Subscriber agrees that Subscriber cannot cancel, terminate, or
revoke this Subscription Agreement or any agreement of Subscriber made
hereunder, and this Subscription Agreement shall survive the death or legal
disability of Subscriber and shall be binding upon Subscriber's heirs,
executors, administrators, successors, and permitted assigns.
(c) Subscriber has read and has accurately completed this entire
Subscription Agreement.
(d) This Subscription Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and may be
amended only by a written execution by all parties.
(e) Subscriber acknowledges that it has been advised to consult with
his/her/its own attorney regarding this subscription and Subscriber has done
so to the extent that Subscriber deems appropriate.
(f) Any notice or other document required or permitted to be given or
delivered to the Subscriber shall be in writing and sent (i) by fax if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or
(g) by registered or certified mail with return receipt requested
(postage prepaid) or (c) by a recognized overnight delivery service (with
charges prepaid).
If to the Company, at:
ADM Tronics Unlimited, Inc.
▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as it shall have specified to the Subscriber in
writing, with a copy (which shall not constitute notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇; Fax: ▇▇▇.▇▇▇.▇▇▇▇
If to the Subscriber, at its address set forth on the signature page to this
Subscription Agreement, or such other address as it shall have specified to
the Company in writing, with a copy (which shall not constitute notice) to
each of the following:
Maxim Group LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇; Fax: ▇▇▇.▇▇▇.▇▇▇▇
and
Ellenoff ▇▇▇▇▇▇▇▇ & Schole LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ 100 17-6503
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Tel: ▇▇▇.▇▇▇.▇▇▇▇; Fax: ▇▇▇.▇▇▇.▇▇▇▇
(h) Failure of the Company to exercise any right or remedy under this
Subscription Agreement or any other agreement between the Company and the
Subscriber, or otherwise, or delay by the Company in exercising such right or
remedy, will not operate as a waiver thereof. No waiver by the Company will
be effective unless and until it is in writing and signed by the Company.
(i) This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of New
York, as such laws are applied by the New York courts to agreements entered
into and to be performed in New York by and between residents of New York,
and shall be binding upon the Subscriber, the Subscriber's heirs, estate,
legal representatives, successors and assigns and shall inure to the benefit
of the Company, its successors and assigns.
(j) Any legal suit, action or proceeding arising out of or relating
to this Subscription Agreement or the transactions contemplated hereby shall
be instituted exclusively in New York Supreme Court, County of New York, or
in the United Stated District Court for the Southern District of New York.
The parties hereto hereby: (i) waives any objection which they may now have
or hereafter have to the venue of any such suit, action or proceeding, and
(ii) irrevocably consents to the jurisdiction of the New York Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The parties
further agree to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the New York Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agree that service of process upon a party
mailed by certified mail to such party's address shall be deemed in every
respect effective service of process upon such party in any such suit, action
or proceeding.
(k) If any provision of this Subscription Agreement is held to be
invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed modified to conform to such statute or rule of
law. Any provision hereof that may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provisions
hereof.
(l) The parties understand and agree that money damages would not be
a sufficient remedy for any breach of the Subscription Agreement by the
Company or the Subscriber and that the party against which such breach is
committed shall be entitled to equitable relief, including injunction and
specific performance, as a remedy for any such breach. Such remedies shall
not be deemed to be the exclusive remedies for a breach by either party of
the Subscription Agreement but shall be in addition to all other remedies
available at law or equity to the party against which such breach is
committed.
(m) All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, singular or plural, as identity
of the person or persons may require.
(n) This Subscription Agreement may be executed in counterparts and
by facsimile, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
Signature Page for Individuals:
IN WITNESS WHEREOF, Subscriber has caused this Subscription Agreement
to be executed as of the date indicated below.
$
Purchase Price
Print or Type Name
Signature
Date
Social Security Number (if
applicable)
Address
Please check if applicable and include co-owner's information below (name,
address, social security number):
_____ Joint Tenancy _____ Tenants in Common
Partnerships, Corporations or Other Entities:
IN WITNESS WHEREOF, Subscriber has caused this Subscription Agreement
to be executed as of the date indicated below.
$
Purchase Price
Print or Type Name of Entity
Address
______________________________________
Taxpayer I.D. No. (if applicable)
______________________________________
Date
______________________________________
Signature
______________________________________
Print or Type Name and Indicate
Title or Position with Entity
IN WITNESS WHEREOF, the Company has caused this Subscription Agreement
to be executed, and the foregoing subscription accepted, as of the date
indicated below.
ADM TRONICS UNLIMITED, INC.
By:
Name:
Title:
Date:
, 2004
AA NORTHVALE MEDICAL ASSOCIATES,
INC.
By:
Name:
Title:
Date:
, 2004
Annex A
Registration Rights
ADM Tronics Unlimited, Inc. and AA Northvale Medical Associates, Inc.
hereby grant to the Subscriber the following registration rights.
1. Definitions.
Capitalized terms used herein without definition shall have the
respective meanings given such terms as set forth in the Subscription
Agreement between ADM Tronics Unlimited, Inc., AA Northvale Medical
Associates, Inc. and the subscriber signatory thereto (the "Subscription
Agreement") or in the Company's Confidential Private Placement Memorandum,
dated as of May 20, 2004 (as amended or supplemented, and together with all
documents and filings attached thereto, the "Memorandum"). As used herein,
the following terms shall have the following meanings:
Business Day: Any day other than a day on which banks are
authorized or required to be closed in the State of New York.
Commission: The United States Securities and Exchange
Commission.
Common Stock: The common stock, par value $.0005 per share, of
ADM Tronics Unlimited, Inc. and AA Northvale Medical
Associates, Inc., no par value.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated
thereunder.
Holder or Holders: Any holder of the Registrable Securities.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other
amendments and supplements to the prospectus, including post-
effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such prospectus.
Registrable Securities: The shares of common stock issuable upon
conversion of the Notes, the common stock issuable upon the
payment of interest of the Notes, the common stock issuable upon
the exercise of ADM Warrants and the common stock issuable upon
the exercise of AAN Warrants, until such time as (1) a
Registration Statement covering such Registrable Securities has
been declared effective by the Commission and such Registrable
Securities have been disposed of pursuant to such effective
Registration Statement or (2) such Registrable Securities are
saleable pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act, without any restriction,
whichever is earlier.
Registration Statement: Any registration statement of the
Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statements,
including post effective amendments, all exhibits, and all
material incorporated by reference or deemed to be incorporated
by reference in such registration statement.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Units: The units of the Company sold pursuant to the
Subscription Agreement consisting of Notes, ADM Warrants and AAN
Warrants.
2. Registration Rights.
(a) Spin Off and Demand Registration.
AAN agrees to file a registration statement covering the resale of the
shares of AAN common stock issuable upon the conversion of the Notes and
payment of interest on the Notes, and the exercise of the AAN Warrants in
conjunction with a pro rata distribution to ADM's stockholders ("Spin Off")
or an initial public offering ("IPO") of the shares of AAN Common Stock. The
Company will file a registration statement on Form SB-2 or other appropriate
form (the "Registration Statement") with the SEC no later than sixty (60)
days following the Closing. ADM shall use its best-efforts to have the
Registration Statement declared effective by the SEC by no later than ninety
(90) days following the filing thereof. In the event that the Registration
Statement has not been declared effective by the SEC on or before March 1,
2005, then the number of shares of AAN Common Stock issuable upon the
conversion of the Notes and the exercise of the AAN Warrants shall be
increased by two percent (2%) for each 30 day period (or partial period, as
the case may be) following March 1, 2005.
In addition, the Company shall grant to the holders of Units a demand
registration right to the effect that in the event that if, by March 1, 2005:
(i) the Spin Off or IPO is not effected, or (ii) the Registration Statement
has not been declared effective by the SEC, then ADM shall register with the
SEC all of the shares of ADM common stock issuable upon the conversion of the
Notes and the exercise of the ADM Warrants. ADM shall use its best efforts
to have such securities registered within 30 days of the demand made by the
holders thereof. In the event that the registration statement covering all
of such securities is not declared effective by the SEC within 90 days of the
demand for registration or the registration does not remain effective for 60
consecutive days, then the number of shares of ADM Common Stock issuable upon
the conversion of the Notes and the exercise of the ADM Warrants shall be
increased by one percent (1%) for each 30 day period (or partial period, as
the case may be) following such 90 day period. ADM covenants to maintain the
effectiveness of such ADM registration statement until the third (3rd)
anniversary of the date of such effectiveness.
(b) Piggyback Registration.
If, at any time after the closing of the Offering, the Company
proposes to register any of its securities under the Securities Act for sale
to the public for its own account or for the account of other security
holders (or registration statements on Forms S-4 or S-8 or another form not
available for registering the Registrable Securities for sale to the public),
each such time it will give written notice thereof to Holders of its
intention so to do (such notice to be given at least fifteen (15) days prior
to the filing thereof). Upon the written request of any such Holder (which
request shall specify the number of Registrable Securities intended to be
disposed of by such Holder and the intended method of disposition thereof),
received by the Company within ten (10) days after giving of any such notice
by the Company, to register any of such Holder's Registrable Securities, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Purchaser requests to be registered ("Piggyback
Registration Rights").
3. Registration Procedures.
In connection with the registration obligations of the Company pursuant
to the terms and conditions of this Agreement, the Company shall:
(a) prior to filing a Registration Statement or Prospectus or any
amendments or supplements thereto, including documents incorporated by
reference after the initial filing of the Registration Statement, the Company
will furnish to the Holders covered by such Registration Statement (the
"Selling Holders"), Holders' legal counsel and the underwriters, if any,
draft copies of all such documents proposed to be filed at least three (3)
Business Days prior thereto, which documents will be subject to the review of
such Holders' Counsel and the underwriters, if any, and the Company will not,
unless required by law, file any Registration Statement or amendment thereto
or any Prospectus or any supplement thereto (including such documents
incorporated by reference) to which Selling Holders of at least a majority of
the Registrable Securities (the "Objecting Party") shall object, pursuant to
notice given to the Company prior to the filing of such amendment or
supplement (the "Objection Notice"). The Objection Notice shall set forth
the objections and the specific areas in the draft documents where such
objections arise. The Company shall have five (5) Business Days after
receipt of the Objection Notice to correct such deficiencies to the
satisfaction of the Objecting Party, and will notify each Selling Holder of
any stop order issued or threatened by the Commission in connection therewith
and take all reasonable actions required to prevent the entry of such stop
order or to remove it if entered;
(b) as promptly as practicable prepare and file with the
Commission such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep such Registration Statement effective
for the period required pursuant to Section 2; cause the Prospectus to be
supplemented by any required Prospectus supplement, and, as so supplemented,
to be filed pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act applicable to it with respect to the
disposition of all Registrable Securities covered by such Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the Selling Holders set forth in such Registration
Statement or supplement to the Prospectus;
(c) as promptly as practicable furnish to any Selling Holder and
the underwriters, if any, without charge, such number or conformed copies of
such Registration Statement and any post-effective amendment thereto and such
number of copies of the Prospectus (including each preliminary Prospectus)
and any amendments or supplements thereto, and any documents incorporated by
reference therein, as such Selling Holder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable Securities
being sold by such Selling Holder (it being understood that the Company
consents to the use of the Prospectus and any amendment or supplement thereto
by each Selling Holder and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or
any amendment or supplement thereto); provided, that before filing a
Registration Statement or Prospectus relating to the Registrable Securities
or any amendments or supplements thereto, the Company will furnish to
Holders' Counsel copies of all documents proposed to be filed at least three
(3) Business Days prior to the filing thereof, which documents will be
subject to the review of such counsel;
(d) on or prior to the date on which the Registration Statement is
declared effective, register or qualify such Registrable Securities under
such other securities or "blue sky" laws of such jurisdictions as any Selling
Holder, Holders' Counsel or underwriter reasonably requests and do any and
all other acts and things which may be necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdictions of such
Registrable Securities owned by such Selling Holder; keep each such
registration or qualification (or exemption therefrom) effective during the
period which the Registration Statement is required to be kept effective; and
do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided that the Company
shall not be required to (i) qualify to do business as a foreign corporation
or as a broker-dealer in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process
or to taxation in any jurisdiction where it is not then so subject;
(e) cause the Registrable Securities covered by such Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Company to enable the Selling Holders to consummate the
disposition of such Registrable Securities;
(f) as promptly as practicable notify each Selling Holder,
Holders' Counsel and any underwriter and (if requested by any such Person)
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission or any other federal
or state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information to
be included in any Registration Statement or Prospectus or otherwise, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of a Registration Statement or the initiation or threatening of
any proceedings for that purpose, (iv) of the issuance by any state
securities commission or other regulatory authority of any order suspending
the qualification or exemption from qualification of any of the Registrable
Securities under state securities or "blue sky" laws or the initiation of any
proceedings for that purpose and (v) of the happening of any event which
makes any statement made in a Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated by reference therein
untrue or which requires the making of any changes in such Registration
Statement, Prospectus or documents so that they will not contain any 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;
and, as promptly as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such Prospectus so that,
as thereafter deliverable to the purchasers of such Registrable Securities,
such Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(g) make generally available to the Holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act no later
than thirty (30) days after the end of the 12-month period beginning with the
first day of the Company's first fiscal quarter commencing after the
effective date of a Registration Statement;
(h) use its reasonable efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement, and, if one
is issued, to obtain the withdrawal of any order suspending the effectiveness
of a Registration Statement at the earliest possible moment;
(i) as promptly as practicable after filing with the Commission of
any document which is incorporated by reference into a Registration
Statement, deliver a copy of such document to Holders' legal counsel;
(j) cooperate with the Selling Holders and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (which shall not bear any restrictive legends and
shall be in a form eligible for deposit with the Depository Trust Company)
representing securities sold under such Registration Statement, and enable
such securities to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or such Selling Holders may
request and make available prior to the effectiveness of such Registration
Statement a supply of such certificates;
Each Selling Holder, upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection (f) of this
Section 3, shall forthwith discontinue disposition of the Registrable
Securities until such Selling Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by subsection (f) of this
Section 3 or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, such Selling Holder will, or
will request the managing underwriter or underwriters, if any, to, deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Selling Holder's possession, of the Prospectus covering
such Registrable Securities current at the time of receipt of such notice.
In the event that the Company shall give any such notice, the time periods
for which a Registration Statement is required to be kept effective pursuant
to Section 2 hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice to and including the
date when each Selling Holder shall have received (i) the copies of the
supplemented or amended Prospectus contemplated by Section 3(f) or (ii) the
Advice.
4. Registration Expenses.
(a) All expenses incident to the Company's performance of, or
compliance with, the provisions hereof, including without limitation, all
Commission and securities exchange or NASD registration and filing fees, fees
and expenses of compliance with securities or "blue sky" laws (including fees
and disbursements of counsel in connection with "blue sky" qualifications of
the Registrable Securities), printing expenses, messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of the Company's officers and employees performing legal or
accounting duties), fees and expenses incurred in connection with the listing
of the securities to be registered, if any, on each securities exchange on
which similar securities issued by the Company are then listed, fees and
disbursements of counsel for the Company and its independent certified public
accountants (including the expense of any special audit or "cold comfort"
letters required by, or incident to, such performance), Securities Act
liability insurance (if the Company elects to obtain such insurance),
reasonable fees and expenses of any special experts retained by the Company
in connection with such registration, fees and expenses of other Persons
retained by the Company in connection with each registration hereunder (but
not including the fees and expense of legal counsel retained by a Holder or
Holders, or any underwriting fees, discounts or commissions attributable to
the sale of Registrable Securities) are herein called "Registration
Expenses."
(b) The Company will pay all Registration Expenses in connection
with each Registration Statement filed pursuant to Section 2 except as
otherwise set forth therein. Other than as specifically provided for in
Section 2(a) hereto, all expenses to be borne by the Holders in connection
with any Registration Statement filed pursuant to Section 2 (including,
without limitation, all underwriting fees, discounts or commissions
attributable to such sale of Registrable Securities) shall be borne by the
participating Holders pro rata in relation to the number of Units of
Registrable Securities to be registered by each Holder.
5. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each
Holder, its officers, directors and each Person who controls such Holder
(within the meaning of the Securities Act), and any agent or investment
adviser thereof, against all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and costs of investigation)
arising out of or based upon any untrue or alleged untrue statement of
material fact contained in any Registration Statement, any amendment or
supplement thereto, any Prospectus or preliminary Prospectus or 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, except
insofar as the same arise out of or are based upon any such untrue statement
or omission based upon information with respect to such Holder furnished in
writing to the Company by or on behalf of such Holder expressly for use
therein; provided that, in the event that the Prospectus shall have been
amended or supplemented and copies thereof as so amended or supplemented,
shall have been furnished to a Holder prior to the confirmation of any sales
of Registrable Securities, such indemnity with respect to the Prospectus
shall not inure to the benefit of such Holder if the Person asserting such
loss, claim, damage or liability and who purchased the Registrable Securities
from such holder did not, at or prior to the confirmation of the sale of the
Registrable Securities to such Person, receive a copy of the Prospectus as so
amended or supplemented and the untrue statement or omission of a material
fact contained in the Prospectus was corrected in the Prospectus as so
amended or supplemented.
(b) Indemnification by Holders of Registrable Securities. In
connection with any Registration Statement in which a Holder is
participating, each such Holder will furnish to the Company in writing such
information with respect to the name and address of such Holder and such
other information as may be reasonably required for use in connection with
any such Registration Statement or Prospectus and agrees to indemnity, to the
full extent permitted by law, the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses resulting
from any untrue statement of a material fact in the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue or alleged untrue statement relates to any
information with respect to such Holder so furnished in writing by such
Holder specifically for inclusion in any Prospectus or Registration
Statement; provided, however, that such Holder shall not be liable in any
such case to the extent that prior to the filing of any such Registration
Statement or Prospectus or amendment thereof or supplement thereto, such
Holder has furnished in writing to the Company information expressly for use
in such Registration Statement or Prospectus or any amendment thereof or
supplement thereto which corrected or made not misleading information
previously furnished to the Company. In no event shall the liability of any
Selling Holder hereunder be greater in amount than the dollar amount of the
proceeds received by such Selling Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled
to indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such Person will claim indemnification or
contribution pursuant to the provisions hereof and, unless in the judgment of
counsel of such indemnified party a conflict of interest may exist between
such indemnified party and the indemnifying party with respect to such claim,
permit the indemnifying party to assume the defense of such claim. Whether
or not such defense is assumed by the indemnifying party, the indemnifying
party will not be subject to any liability for any settlement made without
its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a claim, it will
not be obligated to pay the fees and expenses of more than one counsel (plus
such local counsel, if any, as may be reasonably required in other
jurisdictions) with respect to such claim, unless in the judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim,
in which event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels. For the purposes of this
Section 5(c), the term "conflict of interest" shall mean that there are one
or more legal defenses available to the indemnified party that are different
from or additional to those available to the indemnifying party or such other
indemnified parties, as applicable, which different or additional defenses
make joint representation inappropriate.
(d) Contribution. If the indemnification from the indemnifying
party provided for in this Section 5 is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 5(c),
any reasonable legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 5(a) and (b) without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 5.
6. Transfer of Rights.
The rights to cause the Company to register Registrable Securities
granted pursuant to the provisions hereof may be transferred or assigned by
any Holder to a transferee or assignee; provided; however, that the
transferee or assignee of such rights assumes the obligations of such
transferor or assignor, as the case may be, hereunder.
7. Amendment
Except as otherwise provided herein, the provisions hereof may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of at least a majority of the aggregate number of
the Registrable Securities then outstanding.
SUBSCRIPTION AGREEMENT
Please review, sign on page S-1, and return to:
Maxim Group LLC
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SUBSCRIPTION AGREEMENT
ADM TRONICS UNLIMITED, INC.
And its majority-owned subsidiary
AA NORTHVALE MEDICAL ASSOCIATES, INC.
Offering of up to
$3,500,000 worth of Units consisting of
Private Placement of Units Consisting of:
one (1) $100,000 Unsecured 6% Joint Convertible Promissory Note;
one (1) Class A Warrant for ADM Tronics Unlimited, Inc.; and
one (1) Class A Warrant for AA Northvale Medical Associates, Inc.
Minimum Amount: 20 Units ($2,000,000)
Maximum Amount: 35 Units ($3,500,000)
$100,000 per Unit
Return by mail or overnight delivery to:
Maxim Group LLC
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