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EXHIBIT 4.1
EPOCH PHARMACEUTICALS, INC.
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT ("Agreement") is made as of _______ ___,
1996, between Epoch Pharmaceuticals, Inc., a Delaware corporation, with its
principal offices located at 1725 220th Street, S.E., Suite 104, Bothell,
Washington 98021 (the "Company"), and the undersigned purchaser (the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to issue up to 6,000,000 shares of its
Common Stock (the "Shares") at $1.00 per share (the "Offering"), and the
Purchaser desires to purchase the number of Shares set forth on the signature
page hereof, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:
1. Subscription. Subject to the terms and conditions hereinafter
set forth, the Purchaser, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase from the Company the number of Shares set
forth on the signature page hereof at a purchase price equal to $1.00 per
Share. Upon its execution and delivery of this Agreement, the Company agrees
to sell such Shares to the Purchaser for said purchase price.
2. Payment, Closings. (a) The purchase price for the
Shares purchased hereby is payable by cashier's check made payable to "The
Epoch Pharmaceuticals, Inc. Escrow Account" contemporaneously with the
execution and delivery of this Agreement. The Company may close the purchase
of the Shares at any time after subscriptions for at least Five Million
(5,000,000) Shares have been received (the "First Closing"). One or more
additional closings my occur if the Company receives additional subscriptions.
The certificates representing the Shares purchased by the Purchaser will be
delivered by the Company within fifteen (15) days following the consummation of
such closing.
(b) The purchase period will terminate at 11:59 P.M. on
May 15, 1996, unless extended by the Company for a period or periods not beyond
June 30, 1996 (the "Termination Date"). The Shares will be offered on a "best
efforts" basis.
(c) If the Company shall not have obtained subscriptions
(including this subscription) for purchases of a minimum of Five Million
(5,000,000) Shares on or before the Termination Date, then this purchase shall
be void and all funds paid hereunder by the Purchaser, without interest, shall
be promptly returned to the Purchaser.
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(d) David Blech will act as financial advisor for the
Company in connection with this offering. The Company has agreed to pay David
Blech certain consideration as set forth in the Memorandum of Terms of Private
Placement of Shares.
3. Acceptance of Subscription. The Purchaser understands and
agrees that the Company, in its sole discretion, reserves the right to accept
or reject this or any other subscription for Shares in whole or in part,
notwithstanding prior receipt by the Purchaser of notice of acceptance. If
this subscription is rejected in whole or in part, the Company shall promptly
return all funds received from the Purchaser without interest thereon or
deduction therefrom, and this Agreement shall thereafter be of no further force
or effect.
4. Representations and Warranties. The Purchaser acknowledges,
represents and warrants to, and agrees with, the Company as follows:
(a) The purchase of the Shares involves a high degree of
risk in that: (i) the Company is in the development stage, has sustained
continuous losses and has generated no significant revenues from its current
operations from inception, and currently has limited working capital; (ii) the
Company expects to sustain continuous losses from operations over the
foreseeable future, and currently has no salable services or products; (iii)
the Purchaser may not be able to liquidate his or her investment; (iv)
transferability of the Shares is extremely limited; and (v) the Purchaser could
sustain the loss of his entire investment.
(b) The Purchaser understands that the offering and sale
of the Shares has not been reviewed by the United States Securities and
Exchange Commission (the "SEC") and is intended to be exempt from registration
under the Securities Act of 1933 (the "Securities Act"), by virtue of Section
4(2) of the Securities Act and the provisions of Regulation D promulgated
thereunder and, in accordance therewith and in furtherance thereof, the
Purchaser represents and warrants to and agrees with the Company as follows:
(i) The Purchaser has received the Company's
Memorandum of Terms for Private Placement of Shares and the attachments thereto
(the "Offering Documents"), and has carefully reviewed it and understands the
information contained therein;
(ii) The Purchaser has prior investment
experience, including investments in non-registered securities, or has employed
the services of an investment advisor, attorney or accountant to read all of
the documents furnished or made available by the Company to other prospective
purchasers of the Shares and to evaluate the merits and risks of such an
investment; that the Purchaser recognizes the highly speculative nature of this
investment; and that the Purchaser must be able to bear and is able to bear the
economic risk assumed by purchase of the Shares;
(iii) The Purchaser has been furnished by the
Company during the course of this transaction with all information regarding
the Company which the Purchaser has requested or desired to know; that all
documents which Purchaser requested which could be reasonably provided have
been made available for inspection and review; that Purchaser has been afforded
the opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the Company, its
business and financial condition and terms and conditions of the offering, and
any additional information which he or
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she requested, and all such questions have been answered and all such
additional information has been provided to the full satisfaction of the
Purchaser;
(iv) No oral or written representations have been
made other than as stated in the Offering Documents, and no oral or written
information furnished to the Purchaser or Purchaser advisor(s) in connection
with the offering of the Shares were in any way inconsistent with the
information stated in the Offering Documents;
(v) The Purchaser is not subscribing for the
Shares 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 television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person not previously known to the
Purchaser in connection with investments in securities generally;
(vi) The Purchaser either has a pre-existing
personal or business relationship with the Company or its officers or directors
or the Purchaser has such knowledge and experience in financial, tax, and
business matters so as to enable the Purchaser to utilize the information made
available to the Purchaser in connection with the offering of the Shares to
evaluate the merits and risks of an investment in the Shares and to make an
informed investment decision with respect thereto;
(vii) The Purchaser is not relying on the Company
with respect to the tax and other economic considerations of an investment in
the Shares, and has relied on the advice of, or has consulted with, only his
own advisors; and
(viii) The Purchaser is purchasing the Shares for
its own account, for investment and not with a view to resale or distribution
except in compliance with the Securities Act. The Purchaser is aware that Rule
144 promulgated under the Securities Act permits only routine sales of
restricted securities in limited amounts in accordance with the terms and
conditions of Rule 144.
(c) The Purchaser understands that the Securities have
not been registered under the Securities Act by reason of a claimed exemption
under the provisions of the Securities Act which depends, in part, upon the
investment intention of the Purchaser.
(d) The Purchaser meets the qualifications of one or more
of the subparagraphs listed below (please insert your initials in the
appropriate place(s) next to the description(s) applicable to you). If
Purchaser meets none of the qualifications listed below, initial here
____________________.
________ (i) A natural person who had individual
income of more than $200,000 in each of the two most
recent years or joint income with that person's
spouse in excess of $300,000 in each of the two most
recent years and who reasonably expects to reach that
same income level for the current year;
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________ (ii) A natural person whose individual
net worth, or joint net worth with that person's
spouse, is in excess of $1,000,000. For this
purpose, "net worth" means the excess of total assets
at fair market value, including home and personal
property, over total liabilities;
________ (ii) A trust, with total assets in excess
of $5,000,000, which is not formed for the purpose of
acquiring the Shares, and whose purchase is directed
by a person who has such knowledge and experience in
financial and business matters that he is capable of
evaluating the risks and merits of an investment in
the Shares;
________ (iv) A bank as defined in Section 3(a)(2)
of the Securities Act, or a savings and loan
association or other institution as defined in
Section 3(a)(5)(a) of the Securities Act whether
acting in its individual or fiduciary capacity; a
broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934; an insurance
company as defined in Section 2(13) of the Securities
Act; an investment company registered under the
Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of
the Investment Company Act of 1940; a small business
investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit
of its employees, if such plan has total assets in
excess of $5,000,000; or an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as
defined in Section 3(21) of the Employee Retirement
Income Security Act of 1974, which is either a bank,
savings and loan association, insurance company, or
registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000
or, if the employee benefit plan is a self-directed
plan and the investment decision is made solely by
persons who are accredited investors;
________ (v) A private business development
company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;
________ (vi) An organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as,
amended, a corporation, Massachusetts or similar
business trust, or partnership, not formed for the
specific purpose of acquiring the Shares, with total
assets in excess of $5,000,000;
________ (vii) A director or executive officer of
the Company; or
________ (viii) An entity in which all of the equity
owners meet the requirements of at least one of the
above subparagraphs.
(e) The Purchaser acknowledges, represents and warrants
to the Company:
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(i) The Purchaser, if executing this Agreement in
a representative or fiduciary capacity, has full power and authority to execute
and deliver this Agreement in such capacity and on behalf of the subscribing
individual, ward, partnership, trust, estate, corporation, or other entity for
whom the Purchaser is executing this Agreement, and such individual, ward,
partnership, trust, estate, corporation, or other entity has full right and
power to perform pursuant to this Agreement and make an investment in the
Company; and
(ii) The representations, warranties, and
agreements of the Purchaser contained herein shall survive the execution and
delivery of this Agreement and the purchase of the Shares.
5. Indemnification. The Purchaser agrees to indemnify and hold
harmless the Company and its officers, directors, employees, agents, and
affiliates against any and all loss, liability, claim, damage, and expense
whatsoever (including, but not limited to, any and all expenses reasonably
incurred in investigating, preparing, or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the Purchaser to
comply with any covenant or agreement made by the Purchaser herein or in any
other document furnished by the Purchaser to any of the foregoing in connection
with this transaction.
6. Irrevocability; Binding Effect. The Purchaser hereby
acknowledges and agrees that the subscription hereunder is irrevocable by the
Purchaser, that, except as required by law, the Purchaser is not entitled to
cancel, terminate, or revoke this Agreement or any agreements of the Purchaser
hereunder, and that this Agreement and such other agreements shall survive the
death or disability of the Purchaser and shall be binding upon and inure to the
benefit of the parties and their heirs, executors, administrators, successors,
legal representatives, and permitted assigns. If the Purchaser is more than
one person, the obligations of the Purchaser hereunder shall be joint and
several and the agreements, representations, warranties, and acknowledgments
herein contained shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors, legal
representatives, and permitted assigns.
7. Restrictions on Transfer.
(a) The Shares shall not be transferable, except upon the
conditions specified in this Agreement, which conditions are intended, in part,
to insure compliance with the provisions of the Securities Act, or, in the case
of Section 8 hereof, to assist in an orderly distribution. The Purchaser will
cause any proposed transferee of Shares held by the Purchaser to agree to take
and hold those securities subject to the provisions and upon the conditions
specified in this Section 7.
(b) Each certificate representing Shares or any other
securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted or unless the securities evidenced by such
certificate have been registered under the Securities Act) be stamped or
otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR UNDER ANY
STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 AND ANY
APPLICABLE STATE SECURITIES LAW OR (ii) EPOCH PHARMACEUTICALS,
INC. ("THE COMPANY") RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES WHICH
COUNSEL IS REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
THE COMPANY'S SUBSCRIPTION AGREEMENT DATED _________ ___, 1996
WITH THE HOLDER CONTAINS ADDITIONAL PROVISIONS RESTRICTING THE
TRANSFER OF THESE SECURITIES. A COPY OF SUCH AGREEMENT IS
AVAILABLE FOR INSPECTION AT THE COMPANY'S OFFICE."
8. Registration Rights.
(a) Between sixty (60) and ninety (90) days of the First
Closing, the Company shall file a registration statement pursuant to the
Securities Act, to the end that the Shares may be sold under the Securities Act
and the Company will use its best efforts to cause such registration to become
effective and continue to be effective (current) (including the taking of such
steps as are necessary to obtain the removal of any stop order) until the first
to occur of (i) three years following the First Closing, (ii) the holder has
advised that all of the Shares so registered have been sold or (iii) until the
Shares so registered are saleable without restriction pursuant to Rule 144
under the Securities Act or otherwise.
(b) The Purchaser hereby covenants with the Company not
to make any sale of the Shares without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied, and the
Purchaser acknowledges and agrees that such Shares are not transferable on the
books of the Company unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate certificate: (i) in the
form of Appendix A hereto, (ii) executed by an officer of, or other authorized
persons designated by, the Purchaser, and (iii) to the effect that (A) the
Shares have been sold in accordance with such registration statement and (B)
the requirement of delivering a current prospectus has been satisfied. The
Purchaser acknowledges that there may occasionally be times when the Company
must suspend the use of the prospectus forming a part of the registration
statement until such time as an amendment to the registration statement has
been filed by the Company and declared effective by the SEC, or until such time
as the Company has filed an appropriate report with the SEC pursuant to the
Securities Exchange Act of 1934, as amended. The Purchaser hereby covenants
that it will not sell any Shares pursuant to said prospectus during the period
commencing at the time at which the Company gives the Purchaser notice of the
suspension of the use of said prospectus and ending at the time the Company
gives the Purchaser notice that the Purchaser may thereafter effect sales
pursuant to said prospectus.
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(c) The following provisions of this Section 8 shall also
be applicable:
(1) Following the effective date of such
registration statement, the Company shall upon the request of any holder of
Shares supply such holder a number of prospectuses meeting the requirements of
the Securities Act, as shall be requested by such holder to permit such holder
to make a public offering of all Shares from time to time offered or sold by
such holder, provided that such holder shall from time to time furnish the
Company with such appropriate information (relating to the intentions of such
holder) in connection therewith as the Company shall request in writing. The
Company shall also use its best efforts to qualify the Shares for resale in
such states as the holder shall reasonably designate.
(2) The Company shall bear the entire cost and
expense of the registration of securities under this Section 8. Any holder
whose Shares are included in any such registration statement pursuant to this
Section 8 shall, however, bear the fees of his own counsel, any registration
fees, transfer taxes or underwriting discounts or commissions applicable to the
Shares sold by him pursuant thereto.
(3) The Company shall indemnify and hold harmless
each such holder and each underwriter, within the meaning of the Securities
Act, who may purchase from or sell for any such holder any Shares from and
against any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material act contained in any
registration statement under the Act or any prospectus included therein
required to be filed or furnished by reason of this Section 8 or caused by 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 such losses, claims, damages or liabilities are caused by any
such untrue statement or alleged untrue statement or omission or alleged
omission based upon information furnished or required to be furnished in
writing to the Company by such holder or underwriter within the meaning of such
Act; provided, however, that the Company shall not be obliged so to indemnify
any such holder or underwriter or controlling person unless such holder or
underwriter shall at the same time indemnify the Company, its directors, each
officer signing the related registration statement and each person, if any, who
controls the Company within the meaning of such Act, from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or any prospectus required to be filed or furnished by reason of this
Section 8 or caused by any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, insofar as such losses, claims, damages or liabilities are caused
by any untrue statement or alleged untrue statement or omission based upon
information furnished in writing to the Company by any such holder or
underwriter expressly for use therein.
9. Representations by and Covenants of the Company.
(a) The Company represents and warrants to the Purchaser
that prior to the consummation of this offering and at the First Closing and,
if applicable to such Purchaser, at any subsequent closing:
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(i) The Company is a corporation duly organized,
existing and in good standing under the laws of the State of Delaware, and has
the corporate power to conduct the business which it conducts and proposes to
conduct.
(ii) The execution, delivery and performance of
this Agreement by the Company will have been duly approved by the Board of
Directors of the Company.
(iii) The Shares have been duly and validly
authorized and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable.
(iv) The Company has obtained all licenses,
permits and other governmental authorizations necessary to the conduct of its
business; such licenses, permits and other governmental authorizations obtained
are in full force and effect; and the Company is in all material respects
complying therewith.
(v) Except as set forth in the Offering Materials
the Company knows of no pending or threatened legal or governmental proceedings
to which the Company is a party which could materially adversely affect the
business, property, financial condition or operations of the Company.
(vi) The Company is not in violation of or
material default under, nor will the execution and delivery of this Agreement
and the consummation of the transactions herein contemplated result in a
violation of or constitute a material default under, its Certificate of
Incorporation or by-laws, in the performance or observance of any material
obligations, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture or other agreement or instrument
to which it or any of its properties may be bound or in violation of any
material order, rule, regulation, writ, injunction, or decree of any
government, governmental instrumentality or court, domestic or foreign.
(vii) The Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995, and the other Offering Documents,
taken as a whole, are accurate in all material respects and do not contain any
untrue statement of a material fact required to be stated therein or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(viii) As of the date hereof, there has been no
material adverse change in the financial condition or results of operation of
the Company since December 31, 1995.
(b) The Company will use the proceeds from the Shares for
repayment of debt, research and development and for general working capital
purposes.
10. Termination. All provisions of this Agreement shall terminate
five years after the date of the First Closing.
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11. Modification and Waiver. Neither this Agreement nor any
provisions hereof shall be waived, modified, discharged, or terminated except
by an instrument in writing signed by the party against whom any such waiver,
modification, discharge, or termination is sought. A waiver by either party of
a breach of any provision of this Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.
12. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail or delivered by hand to the party to whom it is to be given (a)
if to the Company, at the address set forth above, or (b) if to the Purchaser,
at the address set forth on the signature page hereof (or, in either case, to
such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 12), and shall be deemed given at the time
of certification or delivery thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington applicable to
agreements made and to be performed in that state.
14. Severability. The holding of any provision of this Agreement
to be invalid or unenforceable by a court of competent jurisdiction shall not
affect any other provision of this Agreement, which shall remain in full force
and effect.
15. Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and shall be
binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, heirs, distributees, and permitted successors
and assigns.
16. Further Assurances. The parties agree to execute and deliver
all such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
17. Section Headings. The Section headings appearing in this
Agreement are for purposes of easy reference and shall not be considered a part
of this Agreement or in any way modify, amend or affect its provisions.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
EPOCH PHARMACEUTICALS, INC.
By:
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Fred Craves
Chief Executive Officer
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Signature of Purchaser Number of Shares
Being Purchased
- --------------------------------
Name of Purchaser (Please Print)
- --------------------------------
Address of Purchaser
- --------------------------------
Social Security or Taxpayer I.D.
Number of Purchaser
PURCHASER:
PLEASE INSERT YOUR INITIALS IN THE APPROPRIATE PARAGRAPH(S) IN SECTION
4(d) ON PAGES 3 AND 4.
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EXHIBIT A
Attention:
CERTIFICATE OF SUBSEQUENT SALE
------------------------------
The undersigned, [and officer of, or other person duly authorized by]
______________________________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the holder of the shares
evidenced by the attached certificate, and as such, sold such shares
on _______________________ in accordance with registration statement number
[date]
33-__________________ of Epoch Pharmaceuticals, Inc. and the requirement of
delivering a current prospectus has been complied with in connection with such
sale.
Print or Type:
Name of Holder
(Individual or
Institution):
-----------------------------------
Name of Individual
representing
Holder (if an
Institution):
-----------------------------------
Title of Individual
representing
Holder (if an
Institution):
-----------------------------------
Signature by:
Individual Holder
or Individual
representing Holder:
-----------------------------------
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ADDENDUM TO EPOCH PHARMACEUTICALS, INC.
SUBSCRIPTION AGREEMENT
JUNE 7, 1996
Pursuant to this addendum to Epoch Pharmaceuticals, Inc. Subscription
Agreement, the Offering consists of 6,000,000 Units, each Unit consisting of
one share and a warrant to purchase .5 shares of Common Stock, as described in
the Memorandum of Terms, at a purchase price of $1.00 per Unit. All references
in this Subscription Agreement to shares shall be deemed to refer to Units.
Please acknowledge that you have received this Addendum by executing the
acknowledgement at the bottom of this letter and returning it to the Company by
fax (206-486-8336) and mailing the original to Epoch Pharmaceuticals, Inc.,
1725 220th St. SE, #104, Bothell, WA 98021.
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Print Name Date
- --------------------------------------
Signature