UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)
HYDRON TECHNOLOGIES, INC.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
449020-10-6000
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(CUSIP Number)
Richard Banakus William A. Lauby
82 Verissimo Drive Hydron Technologies, Inc.
Novato, California 94947 2201 West Sample Road, Bldg 9, Suite 7B
(415) 897-9167 Pompano Beach, FL 33073
(954) 861-6400
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
October 15, 2003
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box
[ ].
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SCHEDULE 13D
CUSIP NO. 449020-10-6000
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
RICHARD BANAKUS (SOCIAL SECURITY NO. 077-38-0176)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
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(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER 3,488,500
NUMBER OF (see items 3 and 5)
SHARES -----------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER 0
EACH -----------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER 3,488,500
PERSON (see items 3 and 5)
WITH -----------------------------------------
10 SHARED DISPOSITIVE POWER 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(see items 3 and 5) 3,488,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
(see items 3 and 5) 33.4%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION.
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Item 1. Security and Issuer
This Amendment No. 5 to the Statement on Schedule 13D (as defined below) amends
and supplements the Statement on Schedule 13D (originally filed on January 13,
1998), relating to the event date of October 15, 2003 (as so amended and
supplemented, the "Schedule13D") by the Reporting Person relating to the common
stock, par value $.01 per share (the "Common Stock") of Hydron Technologies,
Inc., a New York corporation (the "Issuer"). The address of the principal
executive office of the Issuer is 2201 West Sample Road, Building 9, Suite 7B,
Pompano Beach, Florida 33073.
Item 3. Source and Amount of Funds and Other Consideration
Item 3 of the Schedule 13D is hereby amended to add new paragraphs at the end
thereof as follows:
The Reporting Person provided $100,000 of personal funds as an investment in
Private Placement Financing of the Company. The Company's Private Placement
Financing offered investors Units comprised of one share of Common Stock and a
Warrant to purchase one share of Common Stock exercisable in whole or in part at
any time or from time to time for a five year period ending on the fifth
anniversary of the date of the closing of the offering at an exercise price of
$1.00 per share. The purchase price of the Unit is $0.50.
Item 4. Purpose of the Transaction
Item 4 of the Schedule 13D is hereby amended to read in its entirety as follows:
The Reporting Person acquired the shares of Common Stock and Warrants for
purposes of investment. The Reporting Person may acquire additional shares of
Common Stock, from time to time, in open market transactions or in privately
negotiated transactions, or through the exercise of options, warrants, or other
derivative securities. The Reporting Person may also sell shares of Common Stock
based on market conditions and other conditions, which the Reporting Person may
deem relevant.
Item 5. Interest in Securities of the Issuer
Item 5 of the Schedule 13D is hereby amended to add a new paragraph at the end
to read as follows:
Following completion of the Subscription, the Reporting Person owned 1,790,000
shares of the 8,820,136 outstanding shares of common stock of the Issuer,
(approximately 20.3% of the total outstanding shares) and had the right to
acquire an additional 1,698,500 shares, bringing the Reporting Person's
beneficial ownership of shares to 3,488,500 shares (approximately 33.4%).
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
The Reporting Person, Chairman and CEO of the Issuer, entered into the
Subscription Agreement with the Issuer on October 15, 2003. Pursuant to the
Subscription Agreement, the reporting person acquired 200,000 Units for an
aggregate purchase price of $100,000 as part of a Private Placement of Units to
a limited number of accredited investors in a transaction exempt from
registration under the Securities Act of 1933, as amended. A copy of the
Subscription Agreement is file as Exhibit A hereto and incorporated herein and
made a part hereof. The foregoing description of the Subscription Agreement is
qualified in its entirety by reference to the copy of the Subscription Agreement
attached.
Item 7. Materials to be Filed as Exhibits
Description of Exhibit Exhibit No.
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Investment Letter and Subscription Agreement dated
September 3, 2003 A
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SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: November ___, 2003
/s/ RICHARD BANAKUS
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Richard Banakus
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EXHIBIT INDEX
Description of Exhibit Exhibit No. Page No.
---------------------- ----------- --------
Investment Letter and Subscription Agreement dated
September 3, 2003 A 6
5
September 3, 2003
Hydron Technologies, Inc.
2201 West Sample Road
Building 9, Suite 7B
Pompano Beach FL 33073
Attn: Mr. William A. Lauby
Chief Financial Officer
Re: Subscription Agreement
----------------------
Ladies and Gentlemen:
1.1 The Offering. The undersigned ("Subscriber") understands that Hydron
Technologies, Inc., a New York corporation (the "Company"), is offering for
purchase (the "Offering") on a limited and private basis to "accredited
investors," as such term is defined in Rule 501(a) under the Securities Act of
1933, as amended (the "Securities Act"), up to ___________ units ("Units") (each
a "Unit" and collectively, the "Units"), comprised of (i) one (1) share (each a
"Share" and collectively, the "Shares") of its Common Stock, $.01 par value per
share (the "Common Stock"), and (ii) a warrant to purchase one (1) share of
Common Stock (each a "Warrant" and collectively, the "Warrants"), exercisable in
whole or in part at any time or from time to time, for a five-year period ending
on the fifth anniversary of the date of the closing of the Offering (the
"Closing Date") at an exercise price of $1.00 per share. The purchase price for
each Unit shall be $0.50 and the maximum aggregate proceeds if all Units being
offered are purchased is $2,000,000. The offering period for the Offering will
commence on the date of this subscription agreement (the "Subscription
Agreement") and will end on September 30, 2003 at 5:00 P.M (unless extended by
the Company for up to ninety (90) additional days or earlier terminated by
reason of sale of the full offering amount or otherwise (the "Offering Period").
Subscribers must make a minimum investment of Fifty Thousand Dollars ($50,000)
(100,000 Units), subject to waiver by the Company in its sole discretion (the
"Minimum Commitment"). Investors may subscribe for Units in excess of the
Minimum Commitment.
1.2 Minimum Offering Condition. The Company will accept or reject
subscriptions for Units and will schedule one or more closings of the purchase
and sale of Units after 1,500,000 Units having a minimum aggregate purchase
price of $750,000 (the "Minimum Amount") have been accepted. Subscription
proceeds will be held in escrow, pursuant to the Company's Escrow Agreement with
the law firm of Ruden, McClosky, Smith, Schuster & Russell, P.A. dated as of
September 15, 2003 (the "Escrow Agreement"), a copy of which is attached as
Exhibit A hereto, and will only be released to the Company if the Company
receives and accepts subscriptions for the Minimum Amount ("Minimum Offering
Condition"). By execution of this Subscription Agreement, each Subscriber agrees
to be bound by the terms of the Escrow Agreement.
1.3 Closings. The Company will accept subscriptions for Units once the
Minimum Offering Condition is satisfied. Closings of sales of Units following
satisfaction of the Minimum Offering Condition will occur periodically on a
business day during the Offering Period that is designated by the Company, in
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its sole discretion. The final closing will occur not more than thirty (30) days
following the end of the Offering Period or earlier termination of the Offering
if all the Units have been sold. You will be notified of the satisfaction or
failure of the Minimum Offering Condition, the acceptance or rejection in whole
or part of your subscription and, if your subscription is accepted in whole or
part and the Minimum Offering Condition is satisfied, the date of closing by
notice in writing.
1.4 Issuance of Certificates. Following the closing of a purchase of Units,
the Company will issue to the undersigned certificates representing (i) such
number of fully-paid, validly issued and non-assessable shares of the Common
Stock of the Company and (ii) a Warrant representing the right to purchase such
number of shares of Common Stock as are included in the number of Units accepted
by the Company.
1.5 Securities Law Issues. None of the Units, the Shares, the Warrants or
the Warrant Shares (collectively, the "Securities") has been registered under
the Securities Act, nor any applicable state securities or "blue sky" laws. This
Offering is being made in reliance on Rule 506 of Regulation D under the
Securities Act, which pertains to private placements of securities, and/or
Regulation S under the Securities Act, which pertains to offerings to "non-U.S.
persons" in transactions occurring outside of the United States. Subscribers for
Units are required to make certain representations on which the Company will
rely in connection with these safe harbors from the registration requirements of
the Securities Act.
2.1 Subscription for Units. Subscriber hereby subscribes to purchase the
number of Units set forth on the signature page of this Subscription Agreement.
2.2 Payment of Purchase Price. The aggregate purchase price for the Units
subscribed as set forth on the signature page is hereby tendered herewith by (x)
delivery of a check payable to "Hydron Technologies, Inc." or (y) confirmation
of a wire transfer to the Company of immediately available funds through the
United States Federal Reserve System.
3.1 PRIVATE PLACEMENT. THE OFFER AND SALE OF THE UNITS, COMPRISED OF THE
SHARES, THE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THE WARRANTS (COLLECTIVELY, THE "SECURITIES"), HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT, OR ANY STATE SECURITIES OR "BLUE SKY" LAWS (COLLECTIVELY,
"SECURITIES LAWS"), AND THE SECURITIES ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES LAWS. THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY,
NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF
THE OFFER AND SALE OF THE SECURITIES OR THE ACCURACY OR ADEQUACY OF ANY
INFORMATION PROVIDED TO THE SUBSCRIBER. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
3.2 RELIANCE BY COMPANY. THE SUBSCRIBER RECOGNIZES AND ACKNOWLEDGES THAT
THE RELIANCE BY THE COMPANY AND ITS OFFICERS AND DIRECTORS UPON SUCH EXEMPTIONS
FROM REGISTRATION ARE, IN PART, BASED UPON THE ACCURACY OF THE REPRESENTATIONS
AND AGREEMENTS OF THE SUBSCRIBER SET FORTH IN THIS SUBSCRIPTION AGREEMENT.
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4. Representations and Warranties of the Subscriber. The undersigned
acknowledges, represents and warrants to, and agrees with, the Company as
follows:
a. The undersigned has adequate means of providing for current
needs and possible contingencies, and anticipates no need now
or in the foreseeable future to sell the Securities;
b. The undersigned has such knowledge and experience in financial
and business matters that makes the undersigned capable of
evaluating the merits and risks of investment in the Company
and of making an informed investment decision;
c. The undersigned is aware that no federal or state agency has
passed upon the Units or any of the Securities or made any
finding or determination concerning the fairness of this
investment;
d. The undersigned has had an opportunity to ask questions of and
receive answers from representatives of the Company,
concerning the terms and conditions of this investment, and
all such questions have been answered to the full satisfaction
of the undersigned. Such representatives have not, however,
rendered any investment advice to the undersigned with respect
to the suitability of an investment in the Units;
e. The Units for which the undersigned hereby subscribes, the
Shares, the Warrants, and the Shares of Common Stock for which
such Warrants may be exercised (the "Warrant Shares") will be
acquired for the undersigned's own account, for investment
only and not with a view toward resale or distribution in a
manner which would require registration under the Securities
Act;
f. The undersigned has been made aware by the Company that
investment in the Units involves a high degree of risk and the
possible loss of the total amount invested;
g. The undersigned acknowledges that neither the Company nor any
representative of the Company has made any representations or
warranties in respect of the Company's business or
profitability;
h. The undersigned, if a corporation, partnership, trust or other
form of business entity is authorized and otherwise duly
qualified to purchase and hold the subscribed for Units. Such
entity has its principal place of business as set forth on the
signature page hereof and if such entity has been formed for
the specific purpose of acquiring the Units subscribed to
hereunder, it hereby agrees to supply any additional written
information that may be required by the Company;
i. All of the information that the undersigned has furnished in
this Subscription Agreement, including Section 5 or Section 6
(if a "Non-U.S. Person") hereof, and if an officer or director
of the Company, has furnished to the Company for inclusion in
reports of the Company filed with the Securities and Exchange
Commission ("SEC") pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
including without limitation, the Company's Annual Report on
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Form 10-K for the fiscal year ended December 31, 2002, is
correct and complete as of the date of this Subscription
Agreement. In the event that there is a material change in
such information prior to the time that the Company sells
Units to the Subscriber, the undersigned agrees to immediately
furnish revised or corrected information to the Company.
j. The Subscriber understands that the Company has no obligation
to register the Securities, except as expressly hereinafter
set forth, and the Company may not be able to effect such
registration;
k. The Subscriber acknowledges that he has had the opportunity to
ask questions of, and receive answers from, the Company
concerning the business and financial condition of the
Company; and the opportunity to review the Company's Annual
Report on Form 10-K for fiscal year ended December 31, 2002,
together with all other reports filed by the Company pursuant
to Section 13 of the Exchange Act subsequent to the filing of
such Form 10-K through the date of the execution and delivery
of this agreement;
l. No warranties or representations have been made to the
Subscriber by any officer, director, employee or agent of the
Company, except as expressly set forth herein;
m. The Subscriber has evaluated the risks of purchasing the
Units; determined that the purchase of the Units is a suitable
investment; has adequate financial resources for an investment
of such character; the Subscriber alone or with his
representative, has such knowledge and experience in financial
and business matters that the Subscriber is capable of
evaluating the merits and risks of the purchase of the Units;
n. The warranties and representations made herein by the
Subscriber are accurate, true and correct, and may be relied
upon by the Company in connection with the issuance of the
Units hereunder to the Subscriber; and
o. The undersigned, if a corporation, partnership, trust or other
form of business entity, is authorized and otherwise duly
qualified to purchase and hold the subscribed for Units. Such
entity has its principal place of business as set forth on the
signature page hereof and if such entity has been formed for
the specific purpose of acquiring the Units subscribed to
hereunder, it hereby agrees to supply any additional written
information that may be required by the Company.
5. "Accredited Investor" Status. In accordance with paragraph i of Section
4 of this Subscription Agreement, the undersigned has placed an (X) in each of
the applicable spaces provided below:
________________ (a) The undersigned is an Institutional Investor (within
the list provided under Section 2(15)(i) of the Securities Act; e.g., a bank,
registered investment company, insurance company, business development company
or an employee benefit plan).
________________ (b) The undersigned is a natural person whose individual
net worth, or joint net worth with spouse, exceeds $1,000,000.
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________________ (c) The undersigned is a natural person who had an
individual income (less related expenses) in excess of $200,000 in each of the
last two years (2001 and 2002) or joint income with spouse in excess of $300,000
in each of those years and reasonably expects a net income in excess of $200,000
or $300,000, as the case may be, in the current year.
________________ (d) The undersigned is a director or executive officer of
the Company.
________________ (e) The undersigned is an entity owned entirely by any of
the persons described in subparagraphs (a) through (d) above.
________________ (f) None of the above.
6. Non-U.S. Person Subscribers. In accordance with paragraph i of Section
4 of this Subscription Agreement, the undersigned, if a "non-U.S. person", has
placed an (X) at the end of this sentence and hereby represents and warrants as
provided below _____________:
a. The Subscriber represents and warrants that it is not a "U.S.
person" (as defined in Schedule A attached hereto).
b. The Subscriber acknowledges that the offer and sale of the
Securities consisting of the Units, and including the Shares,
Warrant and the Warrant Shares comprised in the Units, is not
taking place within the United States. The offer and sale of
the Units is taking place in an "offshore transaction" within
the meaning of Regulation S, under the Securities Act. For
purposes of this Subscription Agreement, "United States" means
the United States of America, its territories and possessions
and any state of the United States and District of Columbia.
c. The Subscriber acknowledges that the none of the Securities
have been registered under the Act and cannot be offered or
sold or otherwise transferred in the United States or to, or
for the account or benefit of "U.S. Persons" (as defined on
Schedule A attached hereto) for a period of ---------- not
less than 40 days after the Closing Date (the "Restricted
Period") unless the Securities are registered under the
Securities Act or an exemption under the Securities Act is
available, and that any proposed transferee of Subscriber
during the Restricted Period will be required to execute and
deliver to the Company an instrument in form and substance
satisfactory to the Company agreeing to be bound by the
foregoing restrictions and to sell, transfer or otherwise
dispose of the any of the Securities only in accordance with
Regulation S, a registration statement under the Securities
Act covering the specific Security or otherwise in accordance
with an exemption from the registration requirements under the
Securities Act. Furthermore, if the Subscriber is acting on
behalf of an undisclosed principal, the Subscriber understands
that by purchasing Units the Subscriber represents and
warrants and agrees that the Securities cannot and will not be
offered, sold, resold or delivered in whole or part without
compliance with all applicable laws and regulations in force
in any jurisdiction to which such offer, sale, resale or
delivery of the Securities is subject, and that the Subscriber
will deliver to any person on behalf of which it is acting as
agent written notice to the foregoing effect.
d. The Subscriber has no present intent to offer, transfer or
sell any of the Securities in the United States or to any
"U.S. person" (as defined in Schedule A attached hereto) or in
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a transaction other than an "offshore transaction" (as defined
in Schedule B attached hereto) after the expiration of the
Restricted Period.
e. The Subscriber is not a resident of any country or
jurisdiction where the offer or sale of the Securities
prohibited or requires registration or qualification. The
Subscriber acknowledges and agrees that it must comply with
all applicable laws and regulations in force in any
jurisdiction in which it purchases, offers or sells the
Securities or possesses or distributes this Subscription
Agreement or any of the related Offering materials and must
obtain any consent, approval or permission required by it for
the purchase, offer or sale by it of the Securities under the
laws and regulations in force in any jurisdiction to which it
is subject or in which it makes such purchases, offers or
sales, and the Company shall not have any responsibility
therefor. The Subscriber further acknowledges and agrees that
it will comply with all U.S. federal and state or "blue sky"
laws applicable to any resale of any of the Securities, as
applicable, after the Restricted Period.
7. No Advertising or Representations. The Subscriber hereby represents and
warrants that the Subscriber is not acquiring the Units as a result of any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media, any seminar or any solicitation by a
person not previously known to the Subscriber. The Subscriber acknowledges and
agrees that no representations or warranties have been made to the Subscriber by
the Company, or any agent, Director, officer, employee or affiliate of the
Company, regarding the Company's capital stock or the Company's future financial
performance, and in subscribing for the Units, the Subscriber is not relying
upon any representation or warranty, verbal or written. Although the Subscriber
may have had access to projections and predictive, and forward looking
information prepared by the Company for its internal use and Subscriber may have
received copies of that information, Subscriber acknowledges and agrees that
Subscriber cannot rely upon any such projections, or predictive or forward
looking information in making a decision to purchase Units, and the Company
expressly disclaims responsibility for the accuracy or completeness of all such
information.
8. No Commission or Brokerage Fee. The Subscriber represents that the
Subscriber has no knowledge of any commission, brokerage fee or other
remuneration being paid or to be paid directly or indirectly related to the sale
or solicitation of the sale of the Units.
9. Reliance on Representations. The Subscriber understands the Company and
its officers and directors will be relying on the accuracy and completeness of
all representations and agreements of the Subscriber set forth in this
Subscription Agreement, and the Subscriber represents and warrants to the
Company and its officers and directors that the information, representations,
warranties, acknowledgments and all other matters with respect to the Subscriber
set forth herein are complete, true and correct and may be relied upon by the
Company and its officers and directors in determining whether the offer and sale
of the Common Stock to the Subscriber is exempt from registration under the
Securities Laws. The Subscriber agrees to notify the Company immediately of any
change in any representations and agreements of the Subscriber made herein that
occurs prior to the closing of the purchase of the Units.
10. Consultation with Independent Counsel and Tax Advisor. Subscriber has
been advised that Subscriber should consult with his or her own legal and tax
advisors prior to executing this Subscription Agreement and consummating the
transactions contemplated hereby. Subscriber understands that the law firm of
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Ruden McClosky Smith Schuster & Russell, P.A. represents only the Company in
connection with the transactions contemplated by this Subscription Agreement,
does not represent the Subscriber, and makes no representation regarding the
Company or this investment.
11. Registration of Securities.
a. The Company shall, for the benefit of holders of "Registrable
Securities" (as defined below), at the Company's cost, (A)
prepare and, as soon as practicable but not later than 90 days
following the date of closing of the Offering (the "Closing
Date"), file with the SEC a registration statement on an
appropriate form under the Act with respect to the
registration of the Shares, the Warrants and the Warrant
Shares, and (B) use its reasonable efforts to cause the
registration statement to be declared effective under the
Securities Act within 180 days of the Closing Date.
b. For purposes of this Section 11, "Registrable Securities"
means (x) all Shares, Warrants or Warrant Shares acquired by a
Subscriber [or such Subscriber's "Permitted Transferee" (as
defined below)] in connection with the Offering contemplated
by this Subscription Agreement and (y) all (i) outstanding
shares of common stock of the Company, and (ii) shares
issuable upon (1) exercise of options to purchase shares of
common stock, (2) exercise of warrants to purchase shares of
Common Stock and (3) conversion of debt obligations of the
Company, in each case, in each case, as set forth on Schedule
1 to this Subscription Agreement. For purposes of this Section
11, a "Permitted Transferee" is a spouse, sibling, parent or
child of a Subscriber, or any entity in which the Subscriber
has the right to vote and dispose of the Registrable
Securities owned by such entity.
c. The Company agrees (x) to prepare and file with the SEC such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a
period of not less than five years from the Closing Date (or
such lesser time as necessary to permit each seller of
Registrable Stock to complete the distribution described in
such registration statement); and (y) to comply with the
provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement during such period in accordance with the intended
methods of distribution by the sellers thereof set forth in
such registration statement. In connection therewith, the
Company will as expeditiously as possible:
(i) furnish to each seller of Registrable Stock such
number of copies of such registration statement, each
amendment and supplement thereto, the prospectus
included in such registration statement (including
each preliminary prospectus) and such other documents
as such seller may reasonably request in order to
facilitate the disposition of the Registrable Stock
owned by such seller;
(ii) use its reasonable best efforts to register or
qualify such Registrable Stock under the securities
or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition
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in such jurisdictions of the Registrable Stock owned
by such seller, provided that the Company will not be
required (A) to qualify generally to do business in
any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (B) to
subject itself to taxation in any such jurisdiction
or (C) to consent to general service of process in
any such jurisdiction;
(iii) notify each seller of such Registrable Stock, at any
time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the
happening of any event as a result of which the
prospectus included in such registration statement
contains an untrue statement of a material fact or
omits any fact necessary to make the statements
therein not misleading, and, at the request of any
such seller, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable
Stock, such prospectus will not contain an untrue
statement of a material fact or omit to state any
fact necessary to make the statements therein not
misleading;
(iv) cause all such Registrable Stock to be listed on each
securities exchange on which similar securities
issued by the Company are then listed and to be
qualified for trading on each system on which similar
securities issued by the Company are from time to
time qualified;
(v) provide a transfer agent and registrar for all such
Registrable Stock not later than the effective date
of such registration statement and thereafter
maintain such a transfer agent and registrar;
(vi) use its reasonable best efforts promptly to obtain
the withdrawal of any stop order that is issued
suspending the effectiveness of such registration
statement, or of any order suspending or preventing
the use of any related prospectus or suspending the
qualification of any Registrable Stock included in
such registration statement for sale in any
jurisdiction; and
(vii) indemnify holders of the Registrable Stock against
any liability based on material misstatements or
omissions in the registration statement, other than
with respect to information provided for inclusion in
the registration statement by holders of the
Registrable Stock.
d. As a condition to inclusion of the Registrable Stock in the
registration statement, the holders of the Registrable Stock
agree to (x) provide the Company with such information as the
Company may reasonably request for inclusion in the
registration statement and (y) indemnify the Company, its
officers, directors and shareholders against any liability
based on material misstatements or omission in the information
provided by the holders of Registrable Stock for inclusion in
the registration statement.
12. Limitation on Transfer of Shares. THERE ARE SUBSTANTIAL RESTRICTIONS ON
THE TRANSFERABILITY OF THE SHARES, THE WARRANTS AND THE WARRANT SHARES, AND THE
SUBSCRIBER MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THE INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. The undersigned acknowledges that the Shares, the
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Warrants and the Warrant Shares may not be sold unless such sale is registered
or exempt from registration under the Securities Act. The undersigned further
agree to be responsible for compliance with all conditions on transfer imposed
by any applicable state Blue Sky or securities law. Each certificate
representing Shares shall bear a legend in the form of Annex A hereto stating
that such shares are subject to restrictions on transfer pursuant to applicable
federal and state securities law.
13. Call Option and Transfer Restrictions. The Warrants shall be subject to
a right to repurchase by the Company at any time after the price of a share of
Common Stock equals or exceeds the "Call Price" (as such term is defined in the
Warrant, a copy of which is attached as Exhibit B hereto and made a part
hereof).
14. Indemnification. The undersigned understands the meaning and legal
consequences of the representations and warranties in this Subscription
Agreement, and hereby agrees to indemnify and hold harmless the Company, its
officers, directors, attorneys and agents, from and against any and all loss,
damage or liability due to or arising out of a breach of any such
representations or warranties.
15. Miscellaneous.
a. This Agreement and the Warrant constitutes the entire
agreement and understanding of the parties hereto with respect
to the subject matter hereof and no amendment, modification of
waiver of any provision herein shall be effective unless in
writing, executed by the party charged therewith.
b. This Agreement shall be construed, interpreted and enforced in
accordance with and shall be governed by the laws of the State
of Florida without regard to the principles of conflicts of
laws.
c. No party has incurred, nor will incur any liability for
brokerage fees or commissions in connection with the
transactions contemplated hereby, and all parties warrant that
no third party was instrumental in consummating this
transaction so as to earn any such fee.
d. Any notice or other communication under the provisions of this
Agreement shall be in writing, and shall be given by postage
prepaid, registered or certified mail, return receipt
requested, by hand delivery with an acknowledgement copy
requested, or by the Express Mail service offered by the
United States Post Office, directed to the addresses set forth
herein, or to any new address of which any party hereto shall
have informed the others by the giving of notice in the manner
provided herein. Such notice or communications shall be
effective, if sent by mail, three (3) days after it is mailed
within the continental United States; if sent by Express Mail
Service, one (1) day after it is mailed; or by hand delivery,
upon receipt.
[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement
for the following number of Units:
Number of Units subscribed for: __________________
Total purchase price (number of shares x $0.50): $_________________
__________________________________________________
(Signature of Subscriber)
__________________________________________________
(Please print name, if signing for
corporation or other entity, please
also print title of signature and name of entity)
__________________________________________________
(Social Security or Tax Identification
Number, if applicable)
Execution Date:_____________________, 2003
Mailing address of Subscriber (please print):
__________________________________________________
__________________________________________________
__________________________________________________
(City) (State) (Zip Code)
__________________________________________________
(Telephone Number)
(If less than the entire subscription is accepted)
Number of Units accepted: __________________
Total purchase price (number of Units x $0.50) $_________________
HYDRON TECHNOLOGIES, INC.
By: /s/ WILLIAM A. LAUBY
----------------------------------------------
Name: William A. Lauby
Title: Chief Financial Officer
15
SCHEDULE 1
Registrable Securities
Executive Number of Number of Shares
Officer or Number of Warrants/ under Warrants/
Name of Holder Director Shares Options (A) /Options in (A)
-------------- ---------- --------- ----------- ---------------
Life International Products Inc. No 325,000 0 0
Richard Banakus Yes 1,250,000 1,250,000 1,250,000
Ronald J. Saul and Antonette G. Saul Yes 125,000 125,000 125,000
Andrew A. Darmstadter No 250,000 250,000 250,000
Regis Synan No 125,000 125,000 125,000
Ronald J. Saul Yes 0 125,000 125,000
Richard Banakus Yes 0 125,000 125,000
--------- --------- ---------
2,075,000 2,000,000 2,000,000
16
ANNEX A
RESTRICTIVE STOCK LEGEND
The number of units (each a "Unit" and collectively, the "Units") set
forth on the signature page of this Subscription Agreement comprised of (i) one
(1) share (each a "Share" and collectively, the "Shares") of the Common Stock,
$0.01 par value per share ("Common Stock"), of Hydron Technologies, Inc., a New
York corporation (the "Company"), and (ii) a Warrant to purchase one (1) share
of Common Stock (each and "Warrant" and, collectively, the "Warrants") at any
time or from time to time exercisable in whole or in part for a [five (5)] year
period ending on the [fifth] anniversary of the date of this letter agreement at
an exercise price of $1.00 per share, are subject to certain restrictions on
transfer under federal and applicable state securities law. Certificates
evidencing Shares, Warrants and shares of Common Stock to be issued upon
exercise of the Warrants shall each bear one (if a U.S. subscriber) or both of
the following restrictive legends with respect to such restrictions:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES
LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF A REGISTRATION IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS OR, IF REASONABLY REQUESTED BY
THE COMPANY, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED."
NON-U.S. SUBSCRIBER:
--------------------
THESE SECURITIES ARE BEING OFFERED IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED IN REGULATION S) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE. THESE
SECURITIES ARE SUBJECT RESTRICTIONS ON TRANSFER AND RESALE AND MY NOT
BE OFFERED, TRANSFERRED OR RESOLD UNLESS THE SECURITIES ARE REGISTERED
UNDER THE SECURITIES ACT, OR AN EXEMPTION FROM THE REGISTRATION
REQUIRMENTS OF THE SECURITIES ACT IS AVAILABLE.
17
SCHEDULE A
The term "U.S. Person" means:
1. Any natural person resident in the United States;
2. Any partnership or corporation organized or incorporated under the laws
of the United States;
3. Any estate of which any executor or administrator is a U.S. person;
4. Any trust of which any trustee is a U.S. person;
5. Any agency or branch of a foreign entity located in the United States;
6. Any non-discretionary account or similar account (other than estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
person;
7. Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a U.S.
person;
8. Any partnership or corporation if: (A) organized or incorporated under
the laws of any foreign jurisdiction; and (B) formed by a U.S. person
principally for the purpose of investment in securities not registered under the
Securities Act, unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) under the Securities Act) who are not
natural persons, estates or trusts.
9. Notwithstanding paragraphs 1-8 above, any discretionary account or
similar account (other than an estate or trust) held for the benefit or account
of a non-U.S. person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United States shall not be
deemed a "U.S. person."
10. Notwithstanding paragraphs 1-8 above, any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person
shall not be deemed a U.S. person if:
(i) an executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect
to the assets of the estate; and
(ii) the estate is governed by foreign law.
11. Notwithstanding paragraphs 1-8 above, any trust of which any
professional fiduciary acting as trustee is a U.S. person shall not be deemed a
U.S. person if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settler if the trust is revocable) is a U.S. person.
18
12. Notwithstanding paragraphs 1-8 above, any employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
13. Notwithstanding paragraphs 1-8 above, any agency or branch of a U.S.
person located outside the United States shall not be deemed a "U.S. person" if:
(i) the agency or branch operates for valid business reasons; and
(ii) the agency or branch is engaged in the business of insurance
or banking and is subject to subject to substantive insurance
or banking regulation, respectively, in the jurisdiction where
located.
14. The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United States, and their
agencies, affiliates and pension plans, and any other similar international
organizations; their agencies, affiliates and pension plans shall not be deemed
"U.S. person."
15. For the purposes of this Schedule A, the term "United States" means the
United States of America, its territories and possessions, any state of the
United States and the District of Columbia.
19
SCHEDULE B
1. An offer or sale of securities is made in an "offshore transaction" if:
(i) the offer is not made to a person in the United States; and
(ii) either:
(a) at the time the buy order is originated the buyer is
outside the United States, or the seller and any
person acting on its behalf reasonably believes that
the buyer is outside the United States; or
(b) the transaction is executed in, on or through the
facilities of a designated offshore securities market
described in paragraph 4 below, and neither the
seller nor any person acting on its behalf knows that
the transaction has been pre-arranged with a buyer in
the United States.
2. Notwithstanding paragraph 1 above, offers and sales of securities
specifically targeted at identifiable groups of U.S. citizens abroad, such as
members of the U.S. armed forces serving overseas, shall not be deemed to be
made in "offshore transactions."
3. Notwithstanding paragraph 1 above, offers and sales of securities to
persons excluded from the definition of "U.S. person" pursuant to paragraph 14
of Schedule A or person holding accounts excluded from the definition of "U.S.
person" pursuant to paragraph 9 of Schedule A, solely in their capacities as
holders of such accounts, shall be deemed to be made in "offshore transactions."
4. The term "designated offshore securities market" means:
(i) the Eurobond market, as regulated by the Association of
International Bond Dealers; the Amsterdam Stock Exchange; the
Australian Stock Exchange Limited; the Bourse de Bruxelles;
the Frankfurt Stock Exchange; The Stock Exchange of Hong Kong
Limited; The International Stock Exchange of the United
Kingdom and the Republic of Ireland, Ltd.,; the Johannesburg
Stock Exchange; the Bourse de Luxembourg; the Borsa Valori di
Milan; the Montreal Stock Exchange; the Bourse de Paris; the
Stockholm Stock Exchange; the Tokyo Stock Exchange; the
Toronto Stock Exchange; the Vancouver Stock Exchange; and the
Zurich Stock Exchange; and
(ii) any foreign securities exchange or non-exchange market
designated by the Securities and Exchange Commission.
Attributes to be considered in determining whether to
designate such a foreign securities market, among others,
include:
(a) organization under foreign law;
(b) association with a generally recognized community of
brokers, dealers, banks or other professional
intermediaries with an established operating history;
(c) oversight by a governmental or self-regulatory body;
20
(d) oversight standards set by an existing body of law;
(e) reporting of securities transactions on a regular
basis to a governmental or self-regulatory body;
(f) a system for exchange of price quotations through
common communications media; and
(g) an organized clearance and settlement system.
21