THE TERMS OF THIS SUBSCRIPTION AGREEMENT, AS SET FORTH BELOW, HAVE BEEN MODIFIED
IN ACCORDANCE WITH AN AGREEMENT BETWEEN THE PURCHASERS AND THE COMPANY.
EXHIBIT 10.68
COMPOSITECH LTD.
INVESTOR SUBSCRIPTION AGREEMENT
AND INVESTOR QUESTIONNAIRE
THE SECURITIES OFFERED HEREBY IN THE FORM OF SHARES OF COMMON STOCK OF
COMPOSITECH LTD. HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THE SHARES CANNOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON
TRANSFERABILITY CONTAINED IN THIS AGREEMENT AND APPLICABLE FEDERAL AND STATE
SECURITIES LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH
THIS AGREEMENT AND SUCH LAWS.
* * * * * * *
PLEASE REVIEW THIS SUBSCRIPTION AGREEMENT CAREFULLY. PLEASE NOTE THAT IN
ADDITION TO SIGNING AND COMPLETING PAGE 15 OF THIS SUBSCRIPTION AGREEMENT, YOU
ARE REQUIRED TO INITIAL THE APPLICABLE PARAGRAPHS OF SECTION 4.
* * * * * * *
Compositech Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
1. Subscription. Subject to the terms and conditions of this Subscription
Agreement, the undersigned hereby subscribes for and agrees to purchase
____________ shares of Common Stock, par value $.01 per share (the "Shares"), at
a price of $_________ per Share, of Compositech Ltd., a Delaware corporation
(the "Company"), a price agreed to between the undersigned and the Company on
the date of the purchase. The undersigned herewith delivers a certified or bank
check or wires funds, in accordance with the wire transfer instructions attached
hereto as Exhibit A, in the amount of $___________ which amount represents the
aggregate purchase price of the Shares.
Except to the extent provided by applicable state securities laws, the
undersigned agrees that this subscription shall be irrevocable and shall survive
the death or disability of the undersigned. The undersigned further understands
that if and to the extent that this subscription is not accepted, in whole or in
part, any amount received by the Company from the undersigned
will be returned to the undersigned without interest or deduction.
2. Access to Information. The undersigned acknowledges that the Company has
made available to the undersigned, or the undersigned's personal advisors, the
opportunity to obtain additional information to evaluate the merits and risks of
the undersigned's investment in the Company.
3. General Representations and Warranties. The undersigned hereby
represents and warrants to the Company and the other purchasers of Shares as
follows:
(a) The Company has answered all inquiries that the undersigned has made of
it concerning the Company, its business and financial condition or any other
matter relating to the operation of the Company and the offer and sale of the
Shares.
(b) The undersigned has such knowledge and experience in financial and
business matters in general, and financial and business matters of the type in
which the Company will engage in particular, that the undersigned is capable of
evaluating the merits and risks of an investment in the Company.
(c) The undersigned is familiar with the nature of and risks attendant to
an investment of this type, the undersigned is financially capable of bearing
the economic risk of this investment and the undersigned can afford the loss of
the total amount of the investment.
(d) If the undersigned is a corporation, partnership, trust or other
entity, it is duly organized and validly existing under the laws of the state
and country of its incorporation or formation and the person executing this
Subscription Agreement in a representative or fiduciary capacity has full power
and authority to execute and deliver this Subscription Agreement in such
capacity and on behalf of the subscribing corporation, partnership, trust or
other entity. Such entity has full right and power to perform its obligations
pursuant to this Subscription Agreement.
4. ACCREDITED INVESTOR STATUS REPRESENTATIONS AND WARRANTIES. PLEASE
INITIAL THE APPLICABLE REPRESENTATION BELOW ((A) OR (B)) REGARDING THE NATURE OF
YOUR STATUS AS AN "ACCREDITED INVESTOR" AS SUCH TERM IS DEFINED IN RULE 501(A)
OF REGULATION D ("REGULATION D") PROMULGATED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT").
(A) INITIAL IF (I) AND (II) BELOW ARE APPLICABLE ___________. ---
(i) The undersigned is an individual who is such an "Accredited
Investor" because: the undersigned is a director or executive officer of
the Company; or the undersigned has a net worth, or joint net worth with
the undersigned's spouse, in excess of $1,000,000 (which net worth includes
the value of homes, home furnishings and automobiles); or the undersigned
had an individual income in excess of $200,000 in each of the two most
recent years, or joint income
2
with the undersigned's spouse in excess of $300,000 in each of those years,
and has a reasonable expectation of reaching the same income level in the
current year; and
(ii) The undersigned represents that the undersigned: (A) does not
have an overall commitment to investments which are not readily marketable
that is disproportionate to the undersigned's net worth, and that the
undersigned's investment in the Shares will not cause such overall
commitment to become excessive; and (B) has adequate net worth and means of
providing for the undersigned's current needs and personal contingencies to
sustain a complete loss of the undersigned's investment in the Company at
the time of investment and has no need for liquidity in the undersigned's
investment in the Shares.
OR
(B) INITIAL IF THE FOLLOWING IS APPLICABLE: ___________.
The undersigned is a corporation, partnership, trust, plan or other
organization, entity or institution which is an "Accredited Investor," as
defined in Regulation D.
5. Investment Representations. The undersigned hereby represents and
warrants to the Company and the other purchasers of Shares as follows:
(a) The undersigned understands that the Shares have not been registered
under the Securities Act or the securities laws of any state and that the
undersigned is purchasing the Shares for investment only; the undersigned agrees
and represents that the undersigned will not sell, assign, pledge or otherwise
dispose of any Shares or any portion thereof unless, in the opinion of counsel
for the Company, the same may be legally sold or disposed of without
registration or qualification under the applicable state or federal statutes, or
the Shares shall have been so registered or qualified and an appropriate
registration statement shall then be in effect; the undersigned understands that
the certificates representing the Shares will bear a legend containing the
foregoing restriction; and the undersigned understands that the undersigned must
bear the economic risk of the investment for an indefinite period of time.
(b) The undersigned is fully aware that the Shares are being issued and
sold to the undersigned in reliance upon the exemption provided for in Section
4(2) of the Securities Act and Rule 506 promulgated thereunder and similar
exemptions provided under state securities laws on the grounds that no public
offering is involved and that the representations, warranties and agreements set
forth in this Subscription Agreement are essential to the claiming of such
exemptions.
(c) The undersigned is purchasing the Shares with the undersigned's
personal funds and not with the funds of any other person, firm or entity; the
undersigned is acquiring the
3
Shares for the undersigned's personal account for investment only, and without
any intention of selling or distributing all or any part thereof; the
undersigned has no reason to anticipate any change in personal circumstances,
financial or otherwise, which would cause the undersigned to sell, distribute,
or necessitate or require any sale or distribution of the Shares; and no person
other than the undersigned has any beneficial interest in the Shares.
(d) No representations, warranties or covenants have been made to the
undersigned by the Company or any officer, employee, agent, affiliate or
subsidiary of the Company, other than the representations, warranties and
covenants included in this Subscription Agreement.
6. Representations, Warranties and Covenants of the Company. The Company
represents, warrants and covenants that:
(a) The Company is duly organized, validly existing and in good standing as
a corporation under the laws of the State of Delaware.
(b) The Company is duly qualified to do business as a foreign corporation
in good standing in each jurisdiction in which its activities or the ownership
or leasing of property require such qualification or where the failure to so
qualify would have a material adverse effect on the business, operations,
condition (financial or otherwise) or results of operations of the Company.
(c) The outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable; none of such shares
has been issued in violation of the preemptive rights of any shareholder of the
Company. The Shares, when issued in accordance with the terms thereof, will be
duly authorized, validly issued, fully paid and nonassessable; and none of the
Shares will be issued in violation of the preemptive rights of any shareholder
of the Company.
(d) This Subscription Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable in accordance with its terms.
(e) The Company is not in violation of any term or provision of (i) any of
its charter documents, including its certificate of incorporation or by-laws,
(ii) any material term or provision of any indenture, mortgage, deed of trust,
note agreement, or other agreement or instrument to which it is a party or by
which it is or may be bound or to which any of its assets, property or business
is or may be subject, (iii) any material term of any indebtedness or (iv) to the
best of the Company's knowledge, any statute or any judgment, decree, order,
rule or regulation of any court, regulatory body or administrative agency or
other federal, state or other governmental body, domestic or foreign, having
jurisdiction over its assets, property or business, which violation or
violations, either in any case or in the aggregate, might result in any material
4
adverse change, financial or otherwise, in its assets, properties, condition,
business, earnings or prospects, and the execution and delivery by the Company
of this Subscription Agreement, the consummation by the Company of the
transactions herein contemplated and compliance by the Company with the terms of
this Subscription Agreement will not result in any such violation.
7. Indemnification. The undersigned agrees to indemnify and hold harmless
the Company, its officers, directors, employees, stockholders and affiliates,
and any person acting on behalf of the Company, from and against any and all
damage, loss, liability, cost and expense (including attorney's fees) which any
of them may incur by reason of the failure by the undersigned to fulfill any of
the terms and conditions of the Subscription Agreement, or by reason of any
breach of the representations, warranties and covenants made by the undersigned
herein, or in any other document provided by the undersigned to the Company. All
representations, warranties and covenants contained in this Subscription
Agreement, and the indemnification contained in this Section 7, shall survive
the acceptance of this Subscription Agreement by the Company.
8. Transferability; Binding Effect. The undersigned hereby agrees that this
Subscription Agreement may not be sold, assigned, pledged, transferred or
otherwise disposed of, except as otherwise provided for herein, in any manner,
by the purchaser, without the prior written consent of the Company. This
Subscription Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and the undersigned's heirs, personal
representatives, successors and permitted assigns.
9. Acceptance of Subscription. The Company shall have the right to accept
or reject this Subscription Agreement, in whole or in part, and this
Subscription Agreement shall be deemed to be accepted only when the acceptance
attached hereto is signed by the Company.
10. No Waiver. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the undersigned, the undersigned
does not thereby or in any other manner waive any of the rights granted to the
undersigned under federal or state securities laws.
11. Registration Rights
(a) As used in this Section 11, the following terms shall have the
following meanings:
(i) "Affiliate" shall mean, with respect to any person, any other
person controlling, controlled by or under direct or indirect common
control with such person (for the purposes of this definition "control,"
when used with respect to any specified person, shall mean the power to
direct the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise;
and the terms
5
"controlling" and "controlled" shall have meanings correlative to the
foregoing).
(ii) "Business Day" shall mean a day Monday through Friday on which
banks are generally open for business in New York.
(iii) "Holders" shall mean the undersigned and any person holding
Registrable Securities to whom the rights under Section 11 have been
transferred in accordance with Section 11(i).
(iv) "Person" shall mean any person, individual, corporation,
partnership, trust or other nongovernmental entity or any governmental
agency, court, authority or other body (whether foreign, federal, state,
local or otherwise).
(v) The terms "register," "registered" and "registration" refer to the
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(vi) "Registrable Securities" shall mean the Shares and any shares of
common stock of the Company issued as a dividend or other distribution with
respect to or in replacement of Shares; provided, however, that such
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 SEC, (B) have not been sold in a
transaction exempt from the registration requirements of the Securities Act
so that all transfer restriction and restrictive legends with respect
thereto are removed upon the consummation of such sale or (C) are held by a
Holder or a permitted transferee pursuant to Section 11(i).
(vii) "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 11(b) 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 expense (for a reasonable number of states) and the expenses
of any special audits incident to or required by any such registration (but
excluding the fees of legal counsel for any Holder).
(viii) "Registration Statement" shall have the meaning ascribed to
such term in Section 11(b).
(ix) "Registration Period" shall have the meaning ascribed to such
term in Section 11(c).
6
(x) "SEC" shall mean the U.S. Securities and Exchange Commission.
(xi) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and
all fees and expenses of legal counsel for any Holder.
(b) No later than 60 days after the purchase of Shares pursuant to this
Subscription Agreement (the "Filing Date"), the Company will file a registration
statement (the "Registration Statement") with the SEC and use its reasonable
best efforts to effect the registration, qualifications or compliances
(including, without limitation, the execution of any required undertaking to
file post-effective amendments, appropriate qualifications or exemptions under
applicable blue sky or other state securities laws and appropriate compliance
with applicable securities laws, requirements or regulations) as may be so
reasonably requested and as would permit or facilitate the sale and distribution
of all Registrable Securities. Notwithstanding the foregoing, the Company will
not be obligated to enter into any underwriting agreement for the sale of any of
the Shares.
(c) All Registration Expenses incurred in connection with any registration,
qualification, exemption or compliance pursuant to Section 11(b) shall be borne
by the Company. All Selling Expenses relating to the sale of securities
registered by or behalf of Holders shall be borne by such Holders pro rata on
the basis of the number of securities so registered.
(d) In the case of the registration, qualification, exemption or compliance
effected by the Company pursuant to this Subscription Agreement, the Company
will, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company will:
(i) use its reasonable best efforts to keep such registration, and any
qualification, exemption or compliance under state securities laws which
the Company determines to obtain, continuously effective until at least the
second anniversary of the Closing Date or until the Holders have completed
the distribution described in the registration statement relating thereto,
whichever first occurs. The period of time during which the Company is
required hereunder to keep the Registration Statement effective is referred
to herein as "the Registration Period." Notwithstanding the foregoing at
the Company's election, the Company may cease to keep such registration,
qualification or compliance effective with respect to any Registrable
Securities and the registration rights of a Holder shall expire, at such
time as the Holder may sell under Rule 144 under the Securities Act (or
other exemption from registration acceptable to the Company) in a
three-month period all Registrable Securities then held by such Holder;
7
(ii) advise the Holders:
(A) when the Registration Statement or any amendment thereto has
been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(B) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus included therein or for
additional information;
(C) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceeding for such purpose;
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares included
therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(E) of the happening of any event that requires the making of any
changes in the Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the prospectus, in the
light of the circumstances under which they were made) not misleading;
(iii) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the
earliest possible time;
(iv) during the Registration Period deliver to each Holder, without
charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may
reasonably request; and the Company consents to the use, consistent with
the provisions hereof, of the prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable Securities in
connection with the offering and sale of the Registrable Securities covered
by the prospectus or any amendment or supplement thereto;
(v) prior to any public offering of the Registrable Securities
pursuant to any Registration Statement, register or qualify or obtain an
8
exemption for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holders reasonably request in writing, provided
that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in
any such jurisdiction, and do any and all other acts or things reasonably
necessary or advisable to enable the offer and sale in such jurisdictions
of the Registrable Securities covered by such Registration Statement;
(vi) cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to any Registration Statement free of any restrictive legends to
the extent not required at such time and in such denomination and
registered in such names as Holders may request at least three business
days prior to sales of Registrable Securities pursuant to such Registration
Statement; and
(vii) upon the occurrence of any event contemplated by Section
11(d)(ii)(E) above, the Company shall promptly prepare a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus, or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities included therein not
misleading, 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 not misleading in the light of the circumstances under
which they were made.
(e) The Holders shall have no right to take any action to restrain, enjoin
or otherwise delay any registration pursuant to Section 11(b) hereof as a result
of any controversy that may arise with respect to the interpretation or
implementation of this Subscription Agreement.
(f) (i) To the extent permitted by law, the Company will indemnify each
Holder, each underwriter of the Registrable Securities and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which any registration, qualification or compliance has been
effected pursuant to this Subscription Agreement, against losses, damages and
liabilities (or action in respect thereof), including any of the incurred in
settlement of any litigation, commenced or threatened (subject to Section
11(f)(iii) below), arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any Registration Statement,
prospectus or offering circular, or any amendment or supplement thereof,
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances in
9
which they were made, and will reimburse each Holder, each underwriter of the
Registrable Securities and each person controlling such Holder, for reasonable
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action as
incurred; provided that the Company will not be liable in any such case to the
extent that any untrue statement or omission or allegation thereof is made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder and stated to be specifically for use in
preparation of such registration statement, prospectus or offering circular;
further provided that the indemnity contained in this Section 11(f)(i) shall not
apply to amounts paid in settlement of any such claim, loss, damages, liability,
action or proceeding if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case where the claim, loss, damage or liability
arises out of or is related to the failure of the Holder to comply with the
covenants and agreements contained in this Agreement with respect to the sales
of Registrable Securities, and except that the foregoing indemnity agreement is
subject to the conditions that insofar as it relates to (A) any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the preliminary prospectus but eliminated or remedied in the amended prospectus
filed with the SEC pursuant to Rule 424(b) or in the prospectus subject to
completion and term sheet under Rule 434 of the Securities Act, which together
meet the requirements of Section 10(a) of the Securities Act (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
such Holder, any such underwriter or any such controlling person, if a copy of
the Final Prospectus was not furnished to person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act, and (B) any such untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished to
the Company by such Holder, such indemnity agreement shall not inure to the
benefit of any such Holder, any such underwriter or any such controlling person;
(ii) Each Holder will severally, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each
of its directors and officers, each underwriter of the Shares and each
person who controls the Company within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened (subject to Section
11(f)(iii) below), arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus or offering circular, or any amendment or supplement
thereof, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material
fact
10
required to be stated therein or necessary to make the statements therein
not misleading, in light of the circumstances in which they were made, and
will reimburse the Company, such directors and officers, each underwriter
of the Shares and each person controlling the Company for reasonable legal
and any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action as incurred,
in each case to the extent, but only to the extent, that such untrue
statement or omission or allegation thereof is made in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Holder and stated to be specifically for use in preparation
of such registration statement, prospectus or offering circular; provided
that the indemnity shall not apply to the extent that such claim, loss,
damage or liability results from the fact that a current copy of the
prospectus that was made available to the Holder was not sent or given to
the person asserting any such claim, loss, damage or liability at or prior
to the written confirmation of the sale of the Registrable Securities
confirmed to such person if such current copy of the prospectus would have
cured the defect giving rise to such loss, claim, damage or liability.
Notwithstanding the foregoing, in no event shall a Holder be liable for any
such claims, losses, damages or liabilities in excess of the proceeds
received by such Holder in the offering, except in the event of fraud by
such Holder;
(iii) Each party entitled to indemnification under this Section 11(f)
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such Indemnified Party's expense, and
provided further that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
obligations under this Subscription Agreement, unless such failure is
prejudicial to the Indemnifying Party in defending such claim or
litigation. An Indemnifying Party shall not be liable for any settlement of
an action or claim effected without its written consent (which consent will
not be unreasonably withheld);
(iv) If the indemnification provided for in this Section 11(f) is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party thereunder, shall contribute to the amount paid or
payable by
11
such Indemnified Party as a result of such loss, liability, claim, damage
or expense in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense as well as any
other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(g) (i) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiring the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus will not contain 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, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement contemplated by Section 11(b) until its receipt of
copies of the supplemented or amended prospectus from the Company and, if so
directed by the Company, each Holder shall deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice;
(ii) Each Holder agrees to suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to the Registration
Statement and prospectus contemplated by Section 11(b) during (A) any
period not to exceed two 30-day periods within any one 12-month period the
Company requires in connection with a primary underwritten offering of
equity securities and (B) any period, not to exceed one 30-day period per
circumstance or development, when the Company determines in good faith that
offers and sales pursuant thereto should not be made by reason of the
presence of material undisclosed circumstances or developments with respect
to which the disclosure that would be required in such a prospectus is
premature, would have an adverse effect on the Company or is otherwise
inadvisable;
(iii) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
request in writing or as shall be required in connection with any
registration, qualification or compliance referred to in this Section 11;
12
(iv) Each Holder hereby covenants with the Company (A) not to make any
sale of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Securities Act to be satisfied,
and (B) if such Registrable Securities are to be sold by any method or in
any transaction other than on a national securities exchange, in the
over-the-counter market, in privately negotiated transactions, or in a
combination of such methods, to notify the Company at least five business
days prior to the date on which the Holder first offers to sell any such
Shares;
(v) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to a Registration Statement are not transferable
on the books of the Company unless the stock certificate submitted to the
transfer agent evidencing such Registrable Securities is accompanied by a
certificate reasonably satisfactory to the Company to the effect that (A)
the Registrable Securities have been sold in accordance with such
Registration Statement and (B) the requirement of delivering a current
prospectus has been satisfied;
(vi) Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such Registration Statement,
that constitutes a violation of Regulation M under the Exchange Act or any
other applicable rule, regulation or law;
(vii) At the end of the period during which the Company is obligated
to keep the Registration Statement current and effective as described
above, the Holders of Registrable Securities included in the Registration
Statement shall discontinue sales of shares pursuant to such Registration
Statement upon receipt of notice from the Company of its intention to
remove from registration the shares covered by such Registration Statement
which remain unsold, and such Holders shall notify the Company of the
number of shares registered which remain unsold immediately upon receipt of
such notice from the Company.
(h) With a view to making available to the Holders the benefits of certain
rules and regulations of the SEC which at any time permit the sale of the
Registrable Securities to the public without registration, the Company agrees to
use its reasonable best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
13
(iii) so long as a Holder owns any unregistered Registrable
Securities, furnish to such Holder upon any reasonable request a written
statement by the Company as to its compliance with Rule 144 under the
Securities Act, and of the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of
the Company as such Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a Holder to sell any such securities
without registration.
(i) The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under Section 11(a) may be assigned in
full by a Holder, provided that such transfer may otherwise be effected in
accordance with applicable securities laws; (ii) such Holder gives prior written
notice to the Company; and (iii) such transferee agrees to comply with the terms
and provisions of this Subscription Agreement, and such transfer is otherwise in
compliance with this Subscription Agreement. Except as specifically permitted by
this Section 11(i), the rights of a Holder with respect to Registrable
Securities as set out herein shall not be transferable to any other Person, and
any attempted transfer shall cause all rights of such Holder therein to be
forfeited.
(j) With the written consent of the Company and the Holders holding at
least a majority of the Registrable Securities that are then outstanding, any
provision of this Section 11 may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended. Upon the effectuation of each such
waiver or amendment, the Company shall promptly give written notice thereof to
the Holders, if any, who have not previously received notice thereof or
consented thereto in writing.
12. Acknowledgment. The undersigned acknowledges that the undersigned has
carefully read and fully understands this Subscription Agreement and its
representations.
13. Governing Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York with the
exception of the choice of law provisions thereof.
14. Counterparts. This Subscription Agreement shall be executed through the
use of separate signature pages or in any number of counterparts, and each of
such counterparts shall, for all purposes, constitute one agreement binding on
all parties.
14
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this day ______ of ____________, _____.
--------------------------------
(Purchaser's Name)
--------------------------------
(Purchaser's Signature)
--------------------------------
--------------------------------
--------------------------------
(Purchaser's Address)
--------------------------------
(Purchaser's Social Security or
Taxpayer Identification Number)
$-------------------------
Subscription Amount
--------------------------------
(Purchaser's Telephone Number)
15
ACCEPTANCE
The undersigned hereby accepts the foregoing Subscription Agreement this
_____ day of _____________, _______.
Compositech Ltd.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
16