EXHIBIT 4.1
SUBSCRIPTION AGREEMENT
AND INVESTMENT LETTER
- ----------------
Date
To the Board of Directors
Belmac Corporation
One Urban Centre, Suite 550
4830 West Kennedy Boulevard
Tampa, Florida 33609-2517
Re: Subscription to Purchase Private
Placement Units of Belmac Corporation
-------------------------------------
Gentlemen:
This will acknowledge that the undersigned hereby agrees to irrevocably
purchase from Belmac Corporation (the "Company" or "Belmac"), a corporation
organized under the laws of the State of Florida in February 1974, ____________
unit(s) (collectively the "Units") at a price of $60,000 per Unit. The Unit(s)
to be purchased by the undersigned is (are) part of a private placement of
securities (the "Private Placement") by the Company of up to 12 Units which is
being effected on an best efforts basis by the Company. Accordingly, there is no
minimum number of Units that must be sold in order for the Private Placement to
become effective. The Company reserves the right to sell fractions of a Unit.
If all of the Units are sold, the Company will receive an aggregate of
$720,000 less the expenses of this Private Placement which management estimates
will approximate $100,000, including the fee payable to Coleman & Company
Securities, Inc. ("Coleman") described below. Coleman, a member of the New York
Stock Exchange, is acting as the placement agent for the Company in placing this
Private Placement. Coleman will receive a fee equal to 10% of the aggregate
purchase price of the Units sold plus an advance against future fees in an
amount equal to 10% of the aggregate purchase price of any additional Units
beyond the first eight which are sold. The Private Placement will terminate on
the sooner to occur of the sale of all of the Units or September 17, 1995,
unless extended for an additional 15 days by the mutual consent of the Company
and Coleman. The undersigned understands that the information provided to him
with respect to the Company has not been independently verified by Coleman.
Accordingly, there is no representation by Coleman as to the completeness or
accuracy of such information.
Initial ____
Page 1 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
Payment for the Units shall be made by check, payable to Citibank
N.A.-Belmac Corporation Escrow Account, and delivered to Coleman, together with
an executed copy of this Subscription Agreement and Investment Letter. Payment
may be made by wire transfer pursuant to instructions available on request from
Coleman.
Each Unit consists of a note (collectively, the "Notes") in the
principal amount of $60,000, bearing interest at the annual rate of 12% payable
quarterly, and 10,000 shares (the "Unit Shares") of the Company's common stock
(the "Common Stock"). The Notes and Unit Shares will be immediately detachable.
The undersigned understands that the Company is in the process of
effecting a one for ten reverse split of its Common Stock. Accordingly, the Unit
Shares and any shares of Common Stock into which the Note may be converted as
provided herein will be issued only upon completion of the reverse split and
listing such shares on the American Stock Exchange. All numbers of shares
referred to herein assume completion of the reverse split.
The principal of each Note is due and payable on the closing of a
Public Offering (as defined below). In the event that a Public Offering is not
completed by July 31, 1996, the principal of each Note will be converted
automatically into Common Stock at a price of $3.00 per share. The Company will
pay all accrued but unpaid interest to the Note holder on the conversion date.
The Notes will not be secured and will be subordinated to all "Senior
Debt" as that term is defined therein. The Notes will not be personally
guaranteed and there will be no sinking fund, trustee or indenture with respect
thereto.
The principal of each Note will be immediately convertible at the
option of the holder thereof into Common Stock at the price of $3.00 per share
upon 15 days notice to the Company. Interest accrued but unpaid at the time a
holder voluntarily converts his Note will be forgiven. The undersigned
understands that if a Public Offering is not completed by July 31, 1996, he will
be required to convert the principal of his Note into Common Stock at a price of
$3.00 per share. The conversion price is subject to adjustment in accordance
with the terms of the anti-dilution provisions set forth in the Notes.
The undersigned understands that the Company and Coleman
are contemplating a public offering (the "Public Offering") subsequent
to the completion of the Private Placement. Any
Initial ____
Page 2 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
registration statement ("Registration Statement") to be filed with the
Securities and Exchange Commission (the "Commission") will include provisions
for the registration of the Unit Shares and the shares of Common Stock
underlying the Nots (the "Underlying Shares"). The undersigned acknowledges that
no assurance can be given that the Registration Statement, if filed, will be
declared effective by the Commission or, if it is, that the Public Offering will
ever be successfully completed. Accordingly, he warrants and represents to the
Company that he is purchasing the Units without relying on the occurrence of the
Public Offering.
If the Registration Statement is not filed, or if filed and is not
declared effective, the holders of a majority of the Unit Shares and the
Underlying Shares will have the right, on one occasion only through December 31,
1997, to demand that the Company register the Unit Shares and Underlying Shares
with the Securities and Exchange Commission (the "Commission") and use its best
efforts to have such registration statement declared effective.
The undersigned is aware that the Company will use the net proceeds of
this Private Placement, which management estimates will approximate $620,000 if
all of the Units are sold, primarily for payment of general and administrative
expenses and working capital. To the extent that less than all of the Units are
sold, less money will be available for these purposes. The undersigned
understands and acknowledges that the Company will be required to obtain
additional financing, such as that contemplated by the Public Offering, in order
to continue to operate its business over the next 12 months.
The undersigned acknowledges that the Units, and the underlying Notes
and Unit Shares (the "Underlying Securities") he is purchasing, as well as any
Underlying Shares into which the Notes may be converted, have not been
registered under the Act or qualified under applicable state securities laws and
that the transferability thereof is restricted by the registration provisions of
the Act as well as such state laws. Based upon the representations and
agreements being made by him herein, the Units and Underlying Securities are
being sold to him pursuant to an exemption from such registration provided by
Sections 4(2) and 4(6) of the Act and applicable state securities law
qualification exemptions. The undersigned further acknowledges that the basis
for the exemption may not be available if, notwithstanding such representations,
he intends merely acquiring these securities for a fixed or determinable period
in the future, or for a market rise, or for sale if the market does not rise.
The undersigned represents and warrants that he does not have any such
intention. The undersigned agrees that the documentation representing the
Underlying Securities to be received by him, as well as the certificates
representing any Underlying Shares into which the Notes may be
Initial ____
Page 3 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
converted, will bear a legend indicating that transfer of these securities is
restricted by reason of the fact that they have not been so registered or
qualified.
The undersigned represents that he is acquiring the Units and
Underlying Securities solely for his own account as principal and not as a
nominee or agent, for investment purposes only and not with a view to resale or
other distribution or fractionalization thereof, nor with the intention of
selling,transferring or otherwise disposing of all or any part of such
securities for any particular event or circumstance, except selling,
transferring or disposing of them upon full compliance with all applicable
provisions of the Act, the Securities Exchange Act of 1934 (the "Exchange Act"),
the Rules and Regulations promulgated by the Commission thereunder, and any
applicable state securities laws. The undersigned further understands and agrees
that the securities may be sold only if they are subsequently registered under
the Act and qualified under any applicable state securities laws or, in the
opinion of the Company's counsel, an exemption from such registration and
qualification is available, and that any routine sales of securities made in
reliance upon Rule 144 promulgated by the Commission can be made only in the
amounts set forth in and pursuant to the other terms and conditions, including
applicable holding periods, of that Rule. He also understands that, except as
otherwise set forth herein, the Company is under no obligation to register the
Units or Underlying Securities on his behalf or to assist him in complying with
any exemption from registration under the Act.
The undersigned represents and warrants that he has received a copy of
the Note, the Company's Form 10-K for the year ended June 30, 1995, the
Company's Proxy statement for the Company's June 9, 1995 Annual Meeting, and the
Company's 1994 Annual Report, (collectively the "Information Documents") and
that he has read and understood these documents.
The undersigned also represents and warrants that he (i) has reviewed
such other documents as he deems necessary in order for him to make an informed
investment decision; and (ii) is fully aware of the Company's current business
prospects and weak financial condition as set forth below and in the Information
Documents. Except as may be provided in this Subscription Agreement and
Investment Letter and in the Information Documents, he warrants that no
representations, statements or inducements were made to him to purchase the
Units.
Based on the foregoing, the undersigned acknowledges that he is aware
that Belmac is an international pharmaceutical and healthcare company based in
Tampa, Florida, engaged primarily in the research, development, marketing
and distribution of pharmaceutical and healthcare products.
Initial ____
Page 4 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
The Company has chemical and pharmaceutical operations in France and Spain as a
result of its 1991 acquisition of Chimos S.A. and the establishment of a French
pharmaceutical subsidiary, Laboratoires Belmac S.A. (these two French entities
have since been merged into one entity named and referred to herein as "Chimos")
and the 1992 acquisition of Rimafar S.A. (subsequently renamed and referred to
herein as "Laboratorios Belmac"), respectively. The Company's operations in
France consist of the brokerage of chemicals and the marketing of the drug
Ceredase, manufactured by the Boston, Massachusetts-based Genzyme Corporation.
Ceredase is used in the treatment of Gaucher's Disease. The Company uses its
facility in Spain to manufacture, package and distribute both its own and other
companies' pharmaceutical products. The Company has expanded its healthcare
product distribution business into the United States through the establishment
of Belmac Healthcare Corporation, Belmac Hygiene, Inc. and Belmac Health Corp.
Belmac Healthcare Corporation markets disposable linens to emergency health
services. Research and development activities are conducted both in the United
States and Europe. The undersigned is also aware of the following:
1. HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF
FUTURE FINANCIAL RESULTS. As of March 31, 1995, the Company had a cumulative
deficit of approximately $62,042,000. The Company has realized significant
losses in the past and could have quarterly and annual losses in the future. The
Company has only recently begun to generate significant revenue and has not
generated any profits from operations. The Company experiences quarter to
quarter fluctuations in revenues and profits and/or losses, some of which could
be significant. Consequently, the Company may continue to operate at a loss for
the foreseeable future and there can be no assurance that the Company's business
will ever operate on a profitable basis.
2. NO ASSURANCE OF SUCCESSFUL AND TIMELY DEVELOPMENT OF NEW PRODUCTS.
Although the Company was founded in 1974, it has only recently begun to generate
meaningful revenue from product-related sales. The Company has made significant
progress toward commercialization of specific products and has commenced
commercialization of others. The Company is now generating revenues from sales
of products of its subsidiaries Chimos and Laboratorios Belmac which, as noted
above, were acquired by the Company in August 1991 and February 1992,
respectively. Substantial amounts of time and financial and other resources will
be required to complete the development and clinical testing of the Company's
products currently under development including the tablet formulation of
Biolid(R), the Company's macrolide antibiotic. Although over the last several
months the Company has continued its existing limited research and development
program, due to its limited cash resources, it has suspended additional research
and development activities during such period pending receipt of additional
financing. There is no assurance that the Company will receive
Initial ____
Page 5 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
additional funding necessary to commence full research and development
activities or that it will otherwise succeed in developing any additional
products with commercially viable applications.
Although the Company has a number of products in various stages of
development, including pre-clinical and clinical trials, it has not yet
substantially marketed any of these products other than Biolid(R) in France, the
marketing of which has since been suspended (see "Risks Inherent in
Pharmaceutical Development; Dependence on Regulatory Approvals" below). There
can be no assurance that the Company will be able to develop large scale
production of any particular product for clinical trials or eventual commercial
production. The marketing of certain of the Company's products could be
adversely affected by delays in developing large-scale production processes,
developing or acquiring production facilities or obtaining regulatory approval
for such processes or facilities.
3. ADDITIONAL FINANCING REQUIREMENTS. Belmac's pharmaceutical products
being developed and which may be developed will require the investment of
substantial additional time as well as financial and other resources in order to
become commercially successful. Following the development period, the Company's
products will generally be required to undergo lengthy governmental approval
processes, including extensive clinical testing, followed by market development.
The Company's operating revenues and cash resources may not be sufficient over
the next several years for the commercialization by itself of all products
currently in development. Consequently, the Company may require additional
licenses or partners and/or additional financing. The Company believes that
careful management of its research and development activities, together with the
net proceeds from this Offering and the proposed Public Offering, will provide
sufficient liquidity to enable it to conduct its existing operations through the
end of 1995. Belmac further believes, however, that by controlling and managing
its expenses, the funds on hand together with the proceeds of this Offering and
the proposed Public Offering, the sale or license of certain of its assets which
are no longer a part of its strategic plan, or the entering into joint ventures
with other entities will be sufficient for it to continue its operations for the
foreseeable future. There can be no assurance, however, that the Company can
conclude such commercial arrangements or obtain additional capital when needed
on acceptable terms, if at all.
4. INDEPENDENT AUDITORS' REPORT. Because Belmac continues to sustain
losses, the opinion of its independent auditors with respect to its financial
statements will include an explanatory paragraph as to the uncertainty
of the Company's ability to continue as a going concern without
Initial ____
Page 6 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
additional funds. The ability of Belmac to continue as a going concern is
dependent upon the successful completion of this Private Placement and the
Public Offering and/or receiving sufficient revenue from its operations.
5. RISKS INHERENT IN PHARMACEUTICAL DEVELOPMENT; DEPENDENCE ON
REGULATORY APPROVALS. The process of creating, scaling-up, manufacturing and
marketing any new human pharmaceutical is inherently risky. There can be no
assurance that any drug under development will be safe and effective. Moreover,
pharmaceutical products are subject to significant regulation. Any human
pharmaceutical product developed by the Company would require the approval of
the Food and Drug Administration ("FDA") in the United States and similar
agencies in other countries. The process of obtaining these approvals is costly
and time-consuming, and there can be no assurance that such approvals will be
granted. In general, only a small percentage of new pharmaceutical products
achieve commercial success. Such governmental regulation may prevent or
substantially delay the marketing of the Company's products and may cause Belmac
to undertake costly procedures with respect to its research and development and
clinical testing operations which may furnish a competitive advantage to more
substantially capitalized companies which compete with the Company. In addition,
the Company is required in connection with a number of its activities, to comply
with local, state and federal regulations. Non-compliance with these regulations
could have a material adverse effect on the Company and/or prevent the
commercialization of the Company's products.
In 1994 the French regulatory authority requested further documentation
regarding the chemical process/characteristics of Belmac's sachet formulation of
Biolid(R). Until this additional information has been reviewed and approved, the
regulatory authority has requested that marketing of the product be suspended.
Although the Company regards this administrative action as unwarranted in view
of the existing safety and efficacy experience to date in France, it has
determined not to challenge the administrative decision in light of its
previously announced decision to develop the tablet formulation for Biolid(R).
The Company believes that the actions of the French regulatory agency should
have no bearing on the development of and approval process for a Biolid(R)
tablet formulation elsewhere, of which there can be no assurance. Once it
receives regulatory clearance, the Company intends to again evaluate its
alternatives regarding the sachet formulation, including the possibility of
seeking a licensee or buyer for the product's rights in France.
6. DEPENDENCY ON OTHERS. The Company relies on outside sources to
supply certain raw materials such as erythromycin ethyl succinate. The
Company relies on outside contractors for manufacturing of its products
in France and expects to rely at least partially on contract
Initial ____
Page 7 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
manufacturing in Spain and in other countries. The Company may also need to
utilize third parties for distribution of its products.
7. UNCERTAINTY OF PHARMACEUTICAL PRICING, PROFITABILITY AND RELATED
MATTERS. The levels of revenues and profitability of pharmaceutical companies
may be affected by the continuing efforts of governmental and third party payors
to contain or reduce the costs of health care through various means. For
example, in certain foreign markets pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States there
have been, and the Company expects that there will continue to be, a number of
federal and state proposals to implement similar government control. While
Belmac cannot predict whether any such legislative or regulatory proposals will
be adopted, the adoption of such proposals could have a material adverse effect
on the Company's business, financial condition and profitability. In addition,
in both the United States and elsewhere, sales of prescription pharmaceuticals
are dependent in part on the availability of reimbursement to the consumer from
third party payors, such as government and private insurance plans. Third party
payors are increasingly challenging the prices charged for medical products and
services. If the Company succeeds in bringing one or more products to the
market, there can be no assurance that these products will be considered cost
effective and that reimbursement to the consumer will be available or will be
sufficient to allow the Company to sell its products on a competitive basis.
8. ACCOUNTS PAYABLE DELINQUENCIES. A significant number of the
Company's accounts payable have been or are delinquent. As of March 31, 1995,
the Company had total accounts payable in the amount of $5,681,000, of which
approximately 5% or $300,000 was overdue. The Company will utilize a portion of
the proceeds of this Offering to make some of these payments.
9. UNPREDICTABILITY OF PATENT PROTECTION; PROPRIETARY TECHNOLOGY.
Belmac has filed numerous patent applications and has been granted a number of
patents. However, there can be no assurance that its pending applications will
be issued as patents or that any of its issued patents will afford adequate
protection to the Company or its licensees. Other private and public entities
have also filed applications for, or have been issued, patents and are expected
to obtain patents and other proprietary rights to technology which may be
harmful to the commercialization of the Company's products. The ultimate scope
and validity of patents which are now owned by or may be granted to third
parties in the future, the extent to which the Company may wish or be required
to acquire rights under such patents, and the cost or availability of such
rights cannot be determined by the Company at this time. In addition, Belmac
also relies on unpatented proprietary technology in the development
Initial ____
Page 8 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
and commercialization of its products. There is no assurance that others may not
independently develop the same or similar technology or obtain access to the
Company's proprietary technology.
Belmac also relies upon trade secrets, unpatented proprietary know-how
and continuing technological innovations to develop its competitive position.
All of the Company's employees with access to the Company's proprietary
information have entered into confidentiality agreements and have agreed to
assign the Company any inventions relating to the Company's business made by
them while in the Company's employ. However, there can be no assurance that
others may not acquire or independently develop similar technology or, if
patents in all major countries are not issued with respect to the Company's
products, that the Company will be able to maintain information pertinent to
such research as proprietary technology or trade secrets.
10. TECHNOLOGICAL CHANGE AND COMPETITION. The pharmaceutical industry
has undergone rapid and significant technological change. The Company expects
the technology to continue to develop rapidly, and the Company's success will
depend significantly on its ability to maintain a competitive position. Rapid
technological development may result in actual and proposed products or
processes becoming obsolete before the Company recoups a significant portion of
related research and development and commercialization expenses.
Belmac competes with other pharmaceutical companies, biotechnology
firms and chemical companies which have substantially greater financial,
marketing and human resources than those of the Company (including, in some
cases, substantially greater experience in clinical testing, production and
marketing of pharmaceutical products). The Company also experiences competition
in the development of its products and processes from individual scientists,
hospitals, universities and other research institutions and, in some instances,
competes with others in acquiring technology from these sources.
11. ATTRACTION AND RETENTION OF KEY PERSONNEL. The Company believes
that it has been successful in attracting skilled and experienced management and
scientific personnel. There can be no assurance, however, that Belmac will
continue to attract and retain personnel of high caliber. Since January 1994 two
individuals who have each served as chief executive officer and a member of its
board of directors and an additional member of its board have resigned from
their respective positions. The loss of key management or scientific personnel
could have an adverse impact on the Company. The Company has not entered into
non competition agreements with its key employees and such employees
would therefore be able to leave and compete with the Company.
Initial ____
Page 9 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
12. RISK OF PRODUCT LIABILITY. The Company faces an inherent business
risk of exposure to product liability claims in the event that the use of its
technology or prospective products is alleged to have resulted in adverse
effects. While it has taken, and will continue to take, what it believes are
appropriate precautions, there can be no assurance that it will avoid
significant liability exposure. Belmac maintains product liability insurance in
the amount of $5 million. However, there is no assurance that this coverage will
be adequate in terms and scope to protect the Company in the event of a product
liability claim. In connection with the Company's clinical testing activities,
the Company may, in the ordinary course of business, be subject to substantial
claims by, and liability to, subjects who participate in its studies.
13. VOLATILITY OF SHARE PRICE. The market price of the Company's shares
since Belmac's initial public offering in February 1988 has been volatile.
Factors such as announcements of technological innovations or new commercial
products by the Company or its competitors, the results of clinical testing,
patent or proprietary rights, developments or other matters may have a
significant impact on the market price of the Common Stock.
14. POSSIBLE DELISTING OF COMMON STOCK FROM AMERICAN STOCK EXCHANGE.
The Company currently does not satisfy some of the American Stock Exchange's
financial guidelines for continued listing of its Common Stock. While there can
be no assurance that listing on the American Stock Exchange will be continued,
management of the Company believes that the Company's business prospects are
improving and that it will be able to maintain continued listing. If the Common
Stock were delisted, an investor could find it more difficult to dispose of or
to obtain accurate quotations as to the price of the Common Stock.
15. LACK OF DIVIDENDS; INABILITY TO FUND DIVIDEND PAYMENTS. Belmac has
not paid dividends on its Common Stock since its inception and does not intend
to pay any dividends on its Common Stock in the foreseeable future. The holders
of the Company's outstanding Series A Preferred Stock have been entitled to
receive cumulative dividends, payable annually on October 15, since 1992, out of
funds legally available therefor at the rate of $2.25 per year on each share of
Series A Preferred Stock. The Company has not paid dividends to holders of
Series A Preferred Stock due on October 15, 1994. These arrearages currently
have the effect of limiting the payment of cash dividends to holders of Common
Stock. There can be no assurance that cash flow from Belmac's future operations
will be sufficient to meet these obligations.
Initial ____
Page 10 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
16. BROAD DISCRETION IN APPLICATION OF PROCEEDS. Approximately all of
the estimated net proceeds from this Offering has been allocated to working
capital. Accordingly, the Company's management will have broad discretion as to
the application of such funds.
17. CERTAIN FLORIDA LEGISLATION. The State of Florida has enacted
legislation that may deter or frustrate takeovers of Florida corporations. The
Florida Control Share Act generally provides that shares acquired in excess of
certain specified thresholds will not possess any voting rights unless such
voting rights are approved by a majority vote of a corporation's disinterested
shareholders. The Florida Affiliated Transactions Act generally requires
supermajority approval by disinterested shareholders of certain specified
transactions between a public corporation and holders of more than 10% of the
outstanding voting shares of the corporation (or their affiliates). Florida law
also authorizes the Company to indemnify the Company's directors, officers,
employees and agents.
18. UNCERTAINTY OF ORPHAN DRUG DESIGNATION. Under the Orphan Drug Act,
the FDA may designate a product or products as having Orphan Drug status to
treat a rare disease or condition, which is a disease or condition that affects
populations of less than 200,000 individuals in the United States or, if victims
of a disease number more than 200,000, the sponsor establishes that it does not
realistically anticipate its product sales will be sufficient to recover its
costs. If a product is designated an Orphan Drug, then the sponsor is entitled
to recover its costs and receive certain incentives to undertake the development
and marketing of the product, including limited tax credits and high-priority
FDA review of a New Drug Application ("NDA"). In addition, the sponsor that
obtains the first marketing approval for a designated Orphan Drug for a given
indication is eligible to receive marketing exclusivity for a period of seven
years. There may be multiple designations of Orphan Drug status for a given drug
and for different indications. However, only the sponsor of the first approved
NDA for a given drug for its use in treating a given rare disease may receive
marketing exclusivity. While it may be advantageous to obtain Orphan Drug status
for eligible products, there can be no assurance that the precise scope of
protection that is currently afforded by Orphan Drug status will be available in
the future or that the current level of exclusivity and tax credits will remain
in effect. Currently, Congress is considering legislation that would amend the
Orphan Drug Act and may limit the scope of marketing exclusivity granted to
Orphan Drug products. Moreover, the Orphan Drug Act tax credits expired on June
30, 1992. Although legislation has been introduced to renew these tax benefits,
there can be no assurance that they will be renewed.
Initial ____
Page 11 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
The undersigned understands that, because of the Company's financial
condition and acute working capital problem as well as the other risk factors
referred to herein and in the Information Documents, he could lose his entire
investment.
The undersigned also understands the following:
THE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THESE LAWS. THE UNITS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES REGULATORY
AUTHORITY NOR HAS THE COMMISSION OR ANY SUCH AUTHORITY PASSED UPON OR ENDORSED
THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION
AGREEMENT AND INVESTMENT LETTER AND/OR THE INFORMATION DOCUMENTS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
In connection with the subscription being made hereby the undersigned
also warrants and represents that:
(a) He has not received any general solicitation or
advertising regarding the Private Placement or been furnished with any oral
representation or oral information in connection with the Private Placement
which is not set forth herein or in the Information Documents;
(b) He has sufficient knowledge and experience of financial
and business matters so that he is able to evaluate the merits and risks of
purchasing the Units and has determined that the Units are a suitable investment
for him;
(c) He has the means to provide for his personal needs,
possesses the ability to bear the economic risk hereunder indefinitely, and can
afford a complete loss of his investment;
(d) He has carefully read and reviewed this Subscription
Agreement and Investment Letter, the form of Note, and the Information
Documents, and has asked such questions of the Company's management and received
from them such information as he deems necessary in order for him to make an
informed decision with respect to the purchase of the Units;
Initial ____
Page 12 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
(e) He understands the meaning of the twelfth and thirteenth
paragraphs of this Subscription Agreement and Investment Letter and that the
Company will prohibit the transfer of the undersigned's Units and Underlying
Securities absent full compliance with the Act, the Exchange Act and all
applicable state securities laws;
(f) He has had substantial experience in previous private and
public purchases of speculative securities and is not relying on the Company or
its affiliates with respect to economic considerations involved in this
investment; and
(g) He has reviewed carefully the definition of Accredited
Investor as set forth below and is an Accredited Investor within that
definition. The particular subparagraph or subparagraphs by which the
undersigned qualifies as such is (are) filled in by him below.
DEFINITION OF ACCREDITED INVESTOR
The term "accredited investor" is defined in Rule 501(a) of
Regulation D Promulgated under the Act as follows:
(a) Certain banks, savings and loan institutions, broker-dealers,
investment companies and other entities including an employee
benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 with total assets in
excess of $5,000,000;
(b) Certain banks, savings and loan institutions, broker-dealers,
investment companies and other entities including an employee
benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 with total assets in
excess of $5,000,000;
(c) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(d) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, not formed for the specific purpose of
acquiring the Units, with total assets in excess of
$5,000,000;
Initial ____
Page 13 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
(e) Any director, executive officer or general partner of the
issuer of the securities being offered or sold, or any
director, executive officer or general partner of a general
partner of that issuer;
(f) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(g) Any natural person who had an individual income in excess of
$200,000 or, with that person's spouse a joint income in
excess of $300,000 in each of the two most recent years and
who reasonably expects an income in excess of $200,000, or
$300,000 with that person's spouse, in the current year;
(h) Any trust with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as
described in Section 230.506(b)(2)(ii) of Regulation D; or
(i) Any entity in which all of the equity owners are accredited
investors under any of the paragraphs above.
THE UNDERSIGNED SUBSCRIBER IS AN ACCREDITED INVESTOR BY REASON OF
SUBPARAGRAPH(S) _____________ SET FORTH IN THE DEFINITION ABOVE.
In connection with the foregoing representations the undersigned has
appended hereto as EXHIBIT A, a Purchaser Questionnaire which he has completed
and executed. He represents and warrants that the information set forth therein
as well as all other information which he is furnishing to the Company with
respect to his financial condition and business experience is accurate and
complete as of the date hereof and he covenants that, in the event a material
change should occur in such information, he will immediately provide the Company
with such revised or corrected information.
All notices, requests, demands and other communications under this
Subscription Agreement shall be in writing and shall be deemed to have been
given only when delivered in person or, if mailed, when mailed by certified or
registered mail prepaid, to the parties at their respective addresses set forth
herein, or at such other address as may be given in writing in future by either
party to the other.
Initial ____
Page 14 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
The undersigned acknowledges and agrees that:
(a) He has full power and authority to enter into this
Agreement which, upon his execution, will constitute a valid and legally binding
obligation by him;
(b) The Company may, in its sole discretion (i) reject this
Subscription Agreement in whole or in part; and (ii) accept subscription
agreements other than in the order received;
(c) If for any reason this Private Placement does not close or
the undersigned's subscription is not accepted by the Company, the undersigned
shall have no claims against the Company, Coleman, or their respective officers,
directors, employees or affiliates and shall have no interest in the Units,
Underlying Securities or the Company;
(d) He shall indemnify and hold harmless the Company, Coleman,
and their respective officers, directors, employees and affiliates against any
loss, liability, claim, damage or expense (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) arising out of or
based upon any false representation or warranty or breach or failure by the
undersigned to comply with any covenant or agreement made by him herein or in
any other document provided by him to any of the foregoing in connection with
this transaction;
(e) The representations, warranties and agreements made by the
undersigned set forth herein shall survive the closing of the Private Placement;
(f) Neither this Subscription Agreement nor any provisions
hereof shall be modified, discharged or terminated except by an instrument in
writing signed by the party against whom any waiver, change, discharge or
termination is sought;
(g) The laws of the State of New York shall govern the
interpretation and enforcement of this Subscription Agreement. In the event of a
dispute, the undersigned agrees that any law suit brought to enforce or
interpret the provisions hereof shall be brought in state or federal courts, as
appropriate, in New York County, New York, and the undersigned agrees to submit
to the personal jurisdiction of such court;
Initial ____
Page 15 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
(h) This Subscription Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument; and
(i) This Subscription Agreement constitutes the entire
agreement of the parties hereto, and supersedes all prior understandings with
respect to the subject matter hereof.
The undersigned hereby agrees to purchase ______ Unit(s) as
set forth in the first paragraph of this Subscription Agreement and Investment
Letter, and is tendering herewith his check therefor in the amount of
$______________, made payable to Citibank N.A. - Belmac Corporation Escrow
Account.
Very truly yours,
DATE:____________________
_________________________
(Signature)
_________________________
(Please print name)
ADDRESS: ______________________ TELEPHONE NUMBER:___________
______________________ SOCIAL SECURITY OR
IRS IDENTIFICATION
______________________ NUMBER: ____________________
DATE: ______________________
ACCEPTED:
BELMAC CORPORATION
By _____________________
Initial ____
Page 16 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
ACKNOWLEDGMENT FORM FOR
INDIVIDUAL OR JOINT OWNERS
STATE OF _____________
COUNTY OF _____________
I HEREBY CERTIFY that _____________________________, whose
name(s) (is) (are) signed to the foregoing instrument acknowledged the same
before me in my aforesaid jurisdiction on this _____ day of ________________,
19____
____________________ Notary Public
My Commission Expires _______________
ACKNOWLEDGMENT FORM FOR
PARTNERSHIP OR TRUST
I HEREBY CERTIFY that ____________________________, (general
partner of the partnership) (trustee of the trust) executed the foregoing
instrument, acknowledged the same as the act and deed of said (partnership)
(trust) before me in my aforesaid jurisdiction on this _____ day of
_____________ 19___.
____________________ Notary Public
My Commission Expires _______________
Initial ____
Page 17 of 18 Pages
Subscription Agreement and Investment Letter
for investment in Units of Belmac Corporation dated
_________ __, ____.
ACKNOWLEDGMENT FORM FOR CORPORATIONS
STATE OF _____________
COUNTY OF _____________
I HEREBY CERTIFY that _______________________, President and _________,
Secretary of the corporation that executed the foregoing instrument acknowledged
as the act and deed of said corporation before me in my aforesaid jurisdiction
on this ______ day of __________, 19___.
____________________ Notary Public
My Commission Expires _______________
Page 18 of 18 Pages