SUBSCRIPTION AGREEMENT


 


 



	
            TO:  
 	
            SYNTHEMED, INC.
 



 



	
            AND TO:
 	
            CLUBB CAPITAL LIMITED
 



 



	
            RE:
 	
            SUBSCRIPTION FOR SHARES
 



 


 



	
            1.
 	
            Subscription
 



The undersigned (the “Purchaser”) hereby subscribes for on and subject to the terms and conditions set forth herein, from SyntheMed, Inc., a Delaware corporation (the “Corporation”), the number of shares of common stock, par value of $0.001 per share (“Common Stock), set forth on the signature page hereof (the “Purchased Shares”).  The Purchased Shares are being sold to the Purchaser in consideration for $0.40 (US) per share (the “Subscription Price”), and as part of an offering (the “Offering”) of up to 12,500,000 shares of Common Stock (the “Shares”).  If the maximum number of Shares offered is sold, the Corporation will receive gross proceeds of $5,000,000 (US). There is no minimum number of Shares being offered, and the Corporation reserves the right to accept subscriptions as and when received. Clubb Capital
Limited (the “Agent”) is serving as a placement agent for the Offering pursuant to an agency agreement to be entered into with the Corporation (the “Agency Agreement”).


The Offering is being made to investors resident in the U.S., Europe, Canada and elsewhere pursuant to exemptions from local registration, prospectus or similar requirements.  The Offering is being made to US investors in reliance upon the exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) thereof and/or Regulation D promulgated thereunder and to overseas investors in reliance upon Regulation S promulgated under the Securities Act. 


 



	
            2.
 	
            Use of Proceeds
 



The proceeds of the Offering will be used by the Corporation to fund the Repel-CVTM pivotal clinical trial and other product development costs and for working capital and general corporate purposes.



	
            3.
 	
            Documents to be provided by Purchaser
 



The Purchaser must complete, sign and return two executed copies of: (i) this Subscription Agreement, (ii) the Investor Rights Agreement, a copy of which is included with this Subscription Agreement, and (iii) in the case of Purchasers resident in Ontario and Quebec, an accredited investor subscriber certificate as set out in Schedule “A” hereto, and the Subscription Price must be paid in U.S. dollars by wire transfer to the following account:


 






 


Bank of America NT & SA


New York, NY 10048-1191


Swiftcode: BOFAUS3N


ABA No. 026009593


 


For Further Credit to:


Canadian Imperial Bank of Commerce


Main Branch, Commerce Court West


Toronto, Ontario M5L 1A2


Transit No. 00002


Final Beneficiary: Blake Cassels & Graydon LLP, in Trust


Account No. 000020244414


Reference: JACK – 65283/14


 


or in such other manner as may be specified by the Agent.  At each Closing (as defined below), the Subscription Price will be released to the Corporation by Blake, Cassels & Graydon LLP on instructions from the Agent. In either case, such deliveries hereinafter referred to as the “Purchaser’s Closing Deliveries.”



	
            4.
 	
            Closing and Delivery of Share Certificates
 



Delivery and sale of the Purchased Shares will be completed (the “Closing”) at the offices of the Corporation (or such other place or places as the Corporation and the Agent may agree) at 10:00 a.m. (Eastern Standard Time) (the “Closing Time”) on such date or dates as the Corporation and the Agent may agree (the “Closing Date”). The Final Closing (as defined below) is expected to occur on or about February 15, 2006. As used herein, “Final Closing” means the date on which the full amount of the Offering is sold or the earlier termination of the Offering period as determined by mutual agreement of the Corporation and the Agent.


Certificates representing the Purchased Shares will be delivered at Closing against delivery by the Purchaser of the requisite funds by wire transfer.  To avoid the need to relegend the Shares following effectiveness of the planned resale registration  contemplated by the Investor Rights Agreement, the Purchaser agrees that delivery of the Share certificates may be made to counsel for the Agent, who will, upon effectiveness of the registration of the resale of the Shares, deliver the Share certificates in accordance with instructions received from the Purchaser.  Notwithstanding the foregoing, the Purchaser may at any time request physical delivery of a certificate for Purchased Shares, provided that any such certificate delivered prior to effectiveness of the resale registration statement will bear a restrictive legend as set out in Section
5(g) below.  Moreover, if the resale registration statement is not declared effective within 90 days of the date of the Final Closing (or 120 days if reviewed by the Securities and Exchange Commission (the “SEC”)), counsel for the Agent may, at the Agent’s option and in accordance with the Agent’s instructions, cause the Share certificates in its possession to be endorsed with such restrictive legend and delivered to the respective Purchasers.  The Purchaser, on its own behalf or on behalf of others for whom it is contracting hereunder, hereby appoints the Agent, with full power of substitution, as its true and lawful attorney and 


 






agent with the full power and authority in its place and stead to swear, execute, file and record any document necessary to give effect to the delivery and sale of the Purchased Shares, to terminate this subscription on its behalf in the event that any condition precedent to the Offering has not been satisfied, to execute a receipt for the Purchased Shares and all other documentation, and to modify or waive any conditions or grant any waivers on its behalf in connection with this Subscription Agreement and the transactions contemplated hereby.


 



	
            5.
 	
            Certain Matters Relating to the Offering
 



The Purchaser, on its own behalf (or on behalf of others for whom it is contracting hereunder) acknowledges and agrees that:

 


	
            (a)
 	
            it (or others for whom it is contracting hereunder) has not been provided with a prospectus or an offering memorandum or any similar document in connection with its purchase of Shares;
 



 
 


	
            (b)
 	
            its decision to execute this Subscription Agreement and the Investor Rights Agreement and to subscribe for the Purchased Shares (on its own behalf or on behalf of others for whom it is contracting hereunder) has not been based upon any verbal or written representations as to fact or otherwise made by or on behalf of the Agent or the Corporation and that the Purchaser’s decision (or the decision of others for whom the Purchaser is contracting hereunder) is based entirely upon publicly available information concerning the Corporation (any such information having been delivered to the Purchaser without independent investigation or verification by the Agent);
 



 
 


	
            (c)
 	
            the Agent and its directors, officers, employees, agents and representatives assume no responsibility or liability of any nature whatsoever for the accuracy or adequacy of any such publicly available information or as to whether all information concerning the Corporation required to be disclosed by it has been generally disclosed;
 



 
 


	
            (d)
 	
            as at the Closing Date, the Shares have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), with the result that the Purchased Shares are “restricted securities” within the meaning of Regulation S and Rule 144 promulgated under the Securities Act and unless and until a resale registration statement is filed by the Corporation in accordance with the Investor Rights Agreement and declared effective by the SEC, may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person (as defined in Rule 902(o) of Regulation S promulgated under the Securities Act) except pursuant to an exemption from the registration requirements of the Securities Act;
 



 
 


	
            (e)
 	
            the Shares have not been receipted under a prospectus pursuant to provincial securities laws of Canada (the “Canadian Provincial Laws”) and may only be offered, sold, pledged or otherwise transferred in accordance with applicable Canadian Provincial Laws or any other applicable securities laws;
 



 
 


	
            (f)
 	
            the Purchaser (or others for whom the Purchaser is contracting hereunder) has been advised to consult its own legal advisors with respect to any applicable resale restrictions and the Purchaser (or others for whom the Purchaser is contracting 
 



 

 






hereunder) is solely responsible (and neither the Corporation nor the Agent is in any way responsible) for compliance with applicable resale restrictions;

 


	
            (g)
 	
            the Purchaser understands that if certificates for Purchased Shares are delivered to the Purchaser prior to effectiveness of a resale registration statement, each such certificate representing the Purchased Shares shall bear a legend in substantially the following form (in addition to any legend required under applicable state securities laws):
 



 

“THE SECURITIES REPRESENTED HEREBY WERE ORIGINALLY ISSUED WITHOUT REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE 1933 ACT OR (C) PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS, PROVIDED IN SUCH LATTER CASE THAT THE HOLDER UPON REQUEST PRIOR TO SUCH SALE FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.”

 


	
            (h)
 	
            the Purchaser understands that if certificates for Purchased Shares are delivered to the Purchaser following effectiveness of a resale registration statement, each such certificate representing the Purchased Shares shall bear the legend referred to in Section 5(g) above, together with a legend substantially in the following form:
 



 

“THE COMPANY COMMITTED ON THE DATE OF ISSUE OF THESE SHARES TO FILE A REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING RESALE OF THESE SHARES.  AS AT THE DATE OF DELIVERY OF THESE SHARES TO THE REGISTERED HOLDER, SUCH REGISTRATION STATEMENT HAS BEEN FILED WITH AND DECLARED EFFECTIVE BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.  ANY OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THESE SECURITIES PURSUANT TO SUCH REGISTRATION STATEMENT MAY ONLY BE MADE UPON SATISFACTION OF THE REQUIREMENT TO DELIVER A CURRENT PROSPECTUS.”


 






 



	
            6.
 	
            Representations, Warranties and Covenants of the Corporation
 



The Corporation represents, warrants and covenants to the Agent, the Purchaser (and to any others on whose behalf the Purchaser is contracting hereunder) as of the date hereof and as of the Closing Date, which representations, warranties and covenants shall survive any investigation made by the Agent, the Purchaser or such others for a period of two years after the Closing, that:

 


	
            (a)
 	
            the Corporation is a validly existing corporation in good standing under the laws of the jurisdiction in which it is incorporated, and the Corporation has no subsidiaries;
 



 
 


	
            (b)
 	
            the Corporation is duly qualified and authorized to do business in the jurisdiction(s) in which it carries on business or to own property where required under the laws of the jurisdiction(s) in which any such property is located;
 



 
 


	
            (c)
 	
            the Corporation is current with all material filings required to be made under the laws of any jurisdiction in which it carries on any material business, and the Corporation has all necessary licenses, leases, permits, authorizations and other approvals necessary to permit it to conduct its business as currently conducted, except where the failure to have any such license, lease, permit, authorization or approval would not have a material adverse effect on the Corporation and its business;
 



 
 


	
            (d)
 	
            the audited financial statements of the Corporation as at and for the year ended December 31, 2005 present fairly, in all material respects, the financial position of the Corporation as at that date, and the results of its operations and the changes in its financial position for the 12-month period then ended in accordance with generally accepted accounting principles,  and there has been no material adverse change in the business, affairs or financial or other condition of the Corporation or any of its subsidiaries, except as disclosed in the notes to the financial statements for the 12-month period then ended;
 



 
 


	
            (e)
 	
            the Corporation has all requisite power and authority to carry out its obligations under this Subscription Agreement and the Investor Rights Agreement including but not limited to its covenant to file with the U.S. Securities and Registration Commission, within 60 days after the Final Closing, a registration statement on Form SB-2 covering the resale of the Shares, subject to the terms and conditions of the Investor Rights Agreement;
 



 
 


	
            (f)
 	
            this Subscription Agreement has been, and the Investor Rights Agreement will be on the Closing Date, duly authorized, executed and delivered by the Corporation and constitute or on the Closing Date will constitute, legal, valid and binding obligations of the Corporation enforceable in accordance with their terms except that: (i) the enforcement hereof or thereof may be limited by bankruptcy, insolvency, reorganization and other laws affecting the enforcement of creditors’ rights generally, (ii) rights of indemnity thereunder may be limited under applicable law, and (iii) equitable remedies, including without limitation specific performance and injunctive relief, may be granted only in the discretion of a court of competent jurisdiction;
 



 

 


 






 



	
            (g)
 	
            the Shares are or on the Closing Date will be duly and validly authorized and, when issued and delivered against payment therefor, will be duly and validly issued, fully paid and non-assessable shares in the capital stock of the Corporation;
 



 
 


	
            (h)
 	
            the authorized capital of the Corporation consists of 100,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value of $0.01 per share.  Of the preferred stock, 500,000 shares have been designated as Series A Convertible Preferred Stock, 1,116,500 shares have been designated as Series B Convertible Preferred Stock and 663,000 shares have been designated as Series C Convertible Preferred Stock.  As of  March 28, 2006 there were 66,696,447 shares of Common Stock and no shares of preferred stock outstanding.  In addition, the Corporation has (i) outstanding a convertible note held by Dimotech, Ltd. (the “Convertible Note”) in the principal amount of $40,000 which is convertible, at the holder’s option, into Common Stock at a price of $1.00 per share or into any series of preferred shares at the
price paid by the purchasers thereof; provided, however, that if any such preferred shares are convertible into Common Stock, the holder would be entitled to receive no more than the number of preferred shares which, at the then existing conversion rate, would convert into 40,000 shares of Common Stock, (ii) outstanding a convertible note held by Polymer Technology Group, Inc. in the principal amount of $70,000 which is convertible, at the holder’s option, into Common Stock at a price of $1.00 per share and (iii) available for issuance pursuant to options which have been granted under its 2000 Stock Option Plan, 2001 Stock Option Plan and other agreements, an aggregate of  approximately 12,001,000 shares of Common Stock;  
 



 
 


	
            (i)
 	
            the Corporation is not, and at the Closing Date will not be: (i) in breach or violation of any of the terms or provisions of, or in default under, this Agreement, any other Subscription Agreement for the purchase of Shares, the Agency Agreement, any indenture, mortgage, deed of trust or loan agreement, (except as disclosed in the Corporation’s SEC filings), other agreement (written or oral) or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject, which breach or violation or the consequences thereof would result in a material adverse change to it or its business; or (ii) in violation of the provisions of its articles, by-laws, resolutions or any statute or any other rule or regulation of any court or governmental agency or body having jurisdiction over it or
any of its properties which violation or the consequences thereof would result in a material adverse change to it or its business;
 



 
 


	
            (j)
 	
            the issue and sale of the Purchased Shares and the performance and consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement (written or oral) or instrument to which the Corporation or any subsidiary is bound or to which any of the property or assets of the Corporation or any subsidiary is subject, which breach or violation or the consequences thereof would result in a material adverse change to the Corporation or its business, nor will any such action conflict with or result in any violation of the provisions of the articles, by-laws or resolutions of the Corporation or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Corporation or any subsidiary or any of its properties which violation or the consequences thereof would result in a material adverse change to the Corporation or its business;
 



 

 






 



	
            (k)
 	
            the Corporation has established on its books reserves which are adequate for the payment of all taxes not yet due and payable; there are no liens or other liabilities for taxes on the assets of the Corporation except for taxes not yet due; there are no audits of any of the tax returns of the Corporation which are known by the Corporation’s management to be pending and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any government or agency of any deficiency having a material adverse effect on the properties, business or assets of the Corporation;
 



 
 


	
            (l)
 	
            the Corporation has good and valid title to its properties, leaseholds and assets, including without limitation the properties, leaseholds and assets reflected in the balance sheet as of December 31, 2005 referred to in Section 6(d) above, except properties, leaseholds and assets disposed of since such date at fair market value in the ordinary course of business, and has good title to all its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, charge, rights of first refusal or options to purchase, whether or not relating to extensions of credit or the borrowing of money, other than as disclosed in such balance sheet except as incurred in the ordinary course of business since the date of such balance sheet, and except in any event (i) for a security interest in the Corporation’s tangible
assets to secure payment of the Convertible Note, and (ii) where the failure to hold good title or the existence of a mortgage, pledge, lien, lease, encumbrance, charge, right of first refusal or option to purchase would not have a material adverse effect on the Corporation or its business; there exists no condition which interferes with the economic value or use of such properties and assets and all tangible assets are in good working condition and repair (subject to ordinary wear and tear) except where the existence of any such condition would not have a material adverse effect on the Corporation or its business;
 



 
 


	
            (m)
 	
            the Corporation owns, or has applied for registration of, all patents, trade marks, service marks, trade names, and copyrights necessary for the conduct of its business, except where the failure to so own or apply for registration would not have a material adverse effect on the Corporation or its business; to the best of the knowledge, information and belief of the Corporation, none of the past or present activities of the Corporation or the products, services or assets of the Corporation infringe or constitute an unauthorized use of any proprietary rights of others, and the Corporation has not received any notice of infringement of, or conflict with, asserted rights of others with respect to any patent, trade mark, service mark, trade name, or copyright that, individually or in the aggregate, if the subject of an unfavorable
decision, ruling, or finding, would result in a material adverse change to the Corporation or its business;
 



 
 


	
            (n)
 	
            the Corporation has taken reasonable measures to protect and preserve the confidentiality of all trade secrets and other non-patented proprietary information of the Corporation, including without limitation the procurement of proprietary invention assignments and non-disclosure and non-competition agreements from employees, consultants, subcontractors, customers and other persons who have access to such information;
 



 
 


	
            (o)
 	
            the Corporation has filed all necessary federal, state and municipal property, income and franchise tax returns and has paid all taxes shown as due thereon or otherwise owed by it to any taxing authority except those contested in good faith and for which appropriate amounts have been reserved in accordance with generally accepted 
 



 

 






accounting principles; there is no tax deficiency which has been, or to the best of the knowledge, information and belief of the Corporation might be, asserted against the Corporation which would materially affect the business or operations of the Corporation; the Corporation has paid all applicable federal and state payroll and withholding taxes;

 


	
            (p)
 	
            there is no collective bargaining or other union agreement to which the Corporation is a party or by which it is bound, or which is currently being negotiated; the Corporation does not sponsor, maintain or contribute to any pension, retirement, profit sharing, incentive compensation, bonus or other employee benefit plan, including without limitation any employee benefit plan covered by Title 4 of the Employee Retirement Income Security Act of 1974 (“ERISA”) or any “multi-employer plan” as defined in Section 4001(a)(3) of ERISA, or any other employee benefit plan; to the best of the knowledge, information and belief of the Corporation, (i) no employee of the Corporation is a party to or bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with any previous employment of any such person, which would result in a material adverse change to the Corporation or its business, and (ii) no senior officer has any present intention of terminating his employment with the Corporation, and the Corporation has no present intention of terminating any such employment; and
 



 
 


	
            (q)
 	
            there is no adverse claim, action, proceeding or investigation pending or, to the knowledge, information and belief of the Corporation, threatened, which questions the validity of the issue or sale of the Shares or the validity of any action taken or to be taken by the Corporation in connection with this Subscription Agreement or the Investor Rights Agreement or which would result in any material adverse change in the financial condition, results of operations, business or prospects of the Corporation.
 



 


	
            7.
 	
            Representations, Warranties and Covenants of the Purchaser
 



The Purchaser hereby represents, warrants and covenants to the Agent and the Corporation (which representations, warranties and covenants shall survive the Closing) that:

 


	
            (a)
 	
            in the case of the subscription by the Purchaser for Shares as principal for its own account and not for the benefit of any other person, the Purchaser is purchasing the Purchased Shares as principal for its own account, and not for the benefit of any other person or company, and this Subscription Agreement and the Investor Rights Agreement have been authorized, executed and delivered by, and constitute legal, valid and binding agreements of the undersigned;
 



 
 


	
            (b)
 	
            in the case of the subscription by the Purchaser for Shares as agent for a disclosed principal, each beneficial purchaser of the Purchased Shares for whom the Purchaser is acting is purchasing as principal for its own account and not for the benefit of any other person and the Purchaser is an agent with due and proper authority to execute this Subscription Agreement, the Investor Rights Agreement and all other documentation in connection with the purchase of the Purchased Shares on behalf of the beneficial purchaser and this Subscription Agreement and the Investor Rights Agreement have been duly authorized, executed and delivered by or on behalf of, and constitute legal, valid and binding agreements of, the disclosed principal;
 



 

 






 



	
            (c)
 	
            in the case of the subscription by the Purchaser of Shares as trustee or as agent for a principal which is undisclosed or identified by account number only, this Subscription Agreement and the Investor Rights Agreement have been duly authorized, executed and delivered by, and constitute legal, valid and binding agreements of, the undersigned acting in such capacity;
 



 
 


	
            (d)
 	
            if the Purchaser is a corporation, the Purchaser is a valid and subsisting corporation, has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement and the Investor Rights Agreement and to observe and perform its covenants and obligations hereunder and thereunder and has taken all necessary corporate action in respect thereof or, if the Purchaser is a partnership, syndicate or other form of unincorporated organization, the Purchaser has the necessary legal capacity and authority to execute and deliver this Subscription Agreement and the Investor Rights Agreement and to observe and perform its covenants and obligations hereunder and thereunder and has obtained all necessary approval in respect thereof and, in either case, upon execution by the Corporation, this Subscription Agreement and
the Investor Rights Agreement constitute legal, valid and binding contracts of the Purchaser enforceable against the Purchaser in accordance with their respective terms;
 



 
 


	
            (e)
 	
            if the Purchaser is an individual, the Purchaser has attained the age of majority and is legally competent to execute this Subscription Agreement and the Investor Rights Agreement and to take all actions required pursuant hereto and thereto;
 



 
 


	
            (f)
 	
            If the Purchaser is a US Person within the meaning of Rule 902(o) of Regulation S promulgated under the Securities ("US Person"), the Purchaser (1) has read carefully the definition of "Accredited Investor" contained in Schedule 1 attached hereto and (2) meets the standards of an "Accredited Investor" set forth under Rule 501(a) of Regulation D under the Act and has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of an investment in the Corporation’s securities. The Purchaser will promptly notify the Corporation in the event that prior to the issuance of any securities to the Purchaser the foregoing representation ceases to be accurate.
 



 
 


	
            (g)
 	
            If the Purchaser is not a US Person, the Purchaser makes the representations and warranties set forth on Schedule 2 hereto. 
 



 

 



	
            (h)
 	
            if required by applicable securities legislation, policy or order of a securities regulatory authority or other regulatory authority, the Purchaser will execute, deliver, file and otherwise assist the Corporation in filing such reports and other documents with respect to the issue of the Purchased Shares as may be reasonably required;
 



 
 


	
            (i)
 	
            in the case of a purchase of Shares by a resident of Ontario or Quebec, the Purchaser is an accredited investor, as defined in National Instrument 45-106 – Prospectus and Registration Exemptions, and has completed, executed and delivered as principal or, if the Purchaser is contracting hereunder as agent or trustee for one or more beneficial purchasers, on behalf of each such beneficial purchaser, an accredited investor subscriber certificate as set out in Schedule “A” to this Subscription Agreement;
 



 

 






 



	
            (j)
 	
            the Purchaser has had access to the Corporation’s public filings with the SEC and has had an opportunity to ask questions of the Corporation’s management;
 



 
 


	
            (k)
 	
            the Purchaser is capable of assessing the proposed investment as a result of the Purchaser’s financial or investment experience or as a result of advice received from a registered person other than the Corporation or an affiliate thereof, and is able to bear the economic loss of its investment.  The Purchaser recognizes that its purchase of Purchased Shares involves a high degree of risk in that: (i) the Corporation has incurred losses since inception; at December 31, 2005, the Corporation had an accumulated deficit of approximately $44,249,000; and the Corporation requires substantial funds in addition to the proceeds of this Offering to continue its plan of operations; (ii) an investment in the Corporation is highly speculative and only investors who can afford the loss of their entire investment should consider
investing in the Corporation and the Purchased Shares; (iii) the Purchaser may not be able to liquidate the Purchaser’s investment; and (iv) transferability of the securities comprising the Purchased Shares is extremely limited. Furthermore, the proceeds of this Offering are projected to last only a limited period of time. The Purchaser has read the Risk Factors section of the Corporation’s Annual Report on Form 10-KSB for the year ended December 31, 2005;
 



 
 


	
            (l)
 	
            the address of the Purchaser (or others for whom the Purchaser is contracting hereunder) furnished by the Purchaser on the Purchaser’s signature page of this Subscription Agreement is such person’s principal residence if such person is an individual or its principal business address if it is a corporation or other entity; and
 



 
 


	
            (m)
 	
            the Purchaser (or others for whom the Purchaser is contracting hereunder) agrees that it will not disclose the terms of the Offering or any information it may have acquired from the Corporation in the course of executing this Subscription Agreement which the Corporation has identified as material non-public information, except to the extent (i) that such terms or other information becomes generally available to the public other than by disclosure in violation of this Subscription Agreement, (ii) that such information was properly within the Purchaser’s possession prior to being furnished by the Corporation, (iii) that such information becomes available to the Purchaser on a non-confidential basis, such as through disclosure by third parties who have the right to disclose the information, and (iv) that
disclosure of such information is compelled by judicial process, provided that in the event of compulsion by judicial process the Purchaser will inform the Corporation promptly upon its receipt of notice of judicial process compelling such disclosure.
 



 


	
            8.
 	
            Reliance Upon Representations, Warranties and Covenants
 



The Purchaser acknowledges that the representations, warranties and covenants contained in this Subscription Agreement are made with the intent that they may be relied upon by the Agent and by the Corporation to, among other things, determine the Purchaser’s eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to subscribe for the Purchased Shares.  The Purchaser further agrees that by accepting the Purchased Shares, the Purchaser shall be representing and warranting that the foregoing representations and warranties are true as at the Closing Time with the same force and effect as if they had been made by the Purchaser at the Closing Time and that they shall survive the purchase by the Purchaser of the 


 






Purchased Shares and shall continue in full force and effect notwithstanding any subsequent disposition by it of any Purchased Shares.



	
            9.
 	
            Agent’s Commission, Fees and Expenses  
 



The Purchaser understands that on the Closing Date, the Agent will receive from the Corporation a commission equal to 10% of the gross proceeds raised by the Agent (payable at the election of the Agent in cash or Shares (at the issue price thereof) or a combination thereof) and broker warrants (the “Broker Warrants”) to purchase, at an exercise price of $0.60 (US) per share, that number of shares of Common Stock equal to 10% of the number of Purchased Shares issued in respect of proceeds raised by the Agent, as more particularly described and subject to the exclusions contained in the Agency Agreement.  The Purchaser further understands that the Agent has retained or will retain a broker/dealer or broker/dealers registered in the relevant US state jurisdictions for the solicitation and sale of Purchased Shares to US investors, and that the Agent may share a portion of its fee
with such other registered broker/dealer(s); it being understood that the Agent has agreed not to retain any fee in respect of Purchased Shares sold to US investors to the extent prohibited by applicable state law. No other fee or commission is payable by the Corporation in connection with the sale of the Purchased Shares.  However, the Corporation will also pay on the Closing Date those expenses of the Agent in connection with the Offering as are set out in the Agency Agreement, including reasonable legal fees and expenses of the Agent’s counsel as stipulated in the Agency Agreement.



	
            10.
 	
            Costs
 



The Purchaser acknowledges and agrees that all costs and expenses incurred by the Purchaser (including any fees and disbursements of any counsel retained by the Purchaser) relating to the purchase of the Purchased Shares shall be borne by the Purchaser.



	
            11.
 	
            Appointment of Agent
 



The Purchaser, on its own behalf and (if applicable) on behalf of others for whom the Purchaser is contracting hereunder, hereby:

 


	
            (a)
 	
            irrevocably authorizes the Agent to negotiate and settle the form of any agreement to be entered into in connection with this Subscription Agreement and to waive on its own behalf and on behalf of the purchasers of Shares, in whole or in part, or extend the time for compliance with, any of the closing conditions in such manner and on such terms and conditions as the Agent may determine, acting reasonably, without in any way affecting materially the Purchaser’s obligations or the obligations of such others hereunder; and
 



 
 


	
            (b)
 	
            acknowledges and agrees that the Agent and the Corporation may vary, amend, alter or waive, in whole or in part, one or more of the conditions set forth in the Agency Agreement in such manner and on such terms and conditions as they may determine, acting reasonably, without in any way affecting materially the Purchaser’s obligations or the obligations of such others hereunder.
 



 

 






 



	
            12.
 	
            Governing Law
 



This Subscription Agreement shall be governed by the laws of the State of New York without reference to its rules as to conflicts of laws. 



	
            13.
 	
            Survival
 



This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the Purchaser for a period of two years following the completion of the Offering by the Corporation, notwithstanding the completion of the subscription for the Purchased Shares by the Purchaser pursuant hereto, and any subsequent disposition by the Purchaser of any Purchased Shares. 



	
            14.
 	
            Assignment
 



This Subscription Agreement is not transferable or assignable by the parties hereto.



	
            15.
 	
            Counterparts
 



This Subscription Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same document.  The Corporation and the Agent shall be entitled to rely upon delivery by facsimile of an executed copy of this Subscription Agreement and acceptance by the Corporation of such facsimile copies will be legally effective to create a valid and binding agreement between the Purchaser and the Corporation in accordance with the terms hereof.


[Remainder of page intentionally left blank]






 






 


 



	
            16.
 	
            Subscription Particulars
 	
             

	
            The aggregate number of Shares subscribed for is   
 	
            .
 
				



The Shares are to be registered in the name of: 


 



	
            (if space is insufficient, attach a list)
 



The certificates representing the Shares are to be delivered to:


 


                         


at its office at:


 


                 



	
            Contact Name and Number:
 



 


If the Purchaser is signing as agent for a principal and not as agent for a fully managed account, the name and address of the beneficial purchaser is:


 


                 



	
            (if space is insufficient, attach a list)
 



 



	
            DATED at   
 	
            this   
 	
            day of   
 	
            , 2006.
 



 


 



	
            Name of Purchaser (please type or print)
 



 



	
            By:
 	
             

	
             
	
            (Signature of Authorized Representative)
 
			



 


 



	
            (Name of Person Signing)
 



 



	
            Office or Title
 



 


                       


Address of Purchaser



 






 


ACCEPTANCE


 


 


This Subscription Agreement is hereby accepted and agreed to by SyntheMed, Inc.


 


 



	
            DATED at Little Silver, New Jersey, the ____ day of _____________ 2006.
 



 


 



	
            SYNTHEMED, INC.
 



 


 



	
            By:
 	
             

	
             
	
            Authorized Signing Officer
 
			




 






 


SCHEDULE “A”


 


SUBSCRIBER CERTIFICATE FOR RESIDENTS OF ONTARIO AND QUéBEC


 



	
            TO:
 	
            SYNTHEMED, INC. (the "Issuer")
 	
             

	
            AND TO:
 	
            CLUBB CAPITAL LIMITED (the "Agent")
 



Reference is made to the subscription agreement between the Issuer and the undersigned (referred to herein as the "Purchaser") dated as of the date hereof (the "Subscription Agreement"). Upon execution of this Subscriber Certificate by the Purchaser, this Subscriber Certificate shall be incorporated into and form a part of the Subscription Agreement.  Terms not otherwise defined herein have the meanings attributed to them in the Subscription Agreement and in National Instrument 45-106 – Prospectus and Registration Exemptions ("NI 45-106")1. All monetary references in this Schedule “A” are in Canadian dollars.


In connection with the purchase of the Purchased Shares by the Purchaser, the Purchaser represents, warrants and covenants (on its own behalf or, if applicable, on behalf of those for whom the Purchaser is contracting under the Subscription Agreement) and certifies to the Issuer and to the Agent and acknowledges that the Issuer and the Agent are relying thereon that:


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            A.                                                
 	
            the Purchaser or, if the Purchaser is contracting hereunder as agent or trustee for one or more beneficial purchasers, each beneficial purchaser, is purchasing the Purchased Shares as principal and the Purchaser or each such beneficial purchaser, as the case may be, is resident in the Province of Ontario or in the Province of Québec and is an "Accredited Investor" under NI 45-106 in the category checked below:
 
	
            [   ]
 	
            (a)                         a Canadian financial institution, or a Schedule III bank;
 
	
            [   ]
 	
            (b)                         the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);
 
	
            [   ]
 	
            (c)                         a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;
 



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_________________________


1        NI 45-106 defines the term (i) "financial assets" as cash, securities, or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislations, (ii) "related liabilities" as liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or liabilities that are secured by financial assets, (iii) "fully managed account" as account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction, and (iv) "spouse" as an individual who (a) is married to another individual and is not living separate and apart within the meaning of the Divorce Act
(Canada), from the other individual, or (b) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender.  Terms used herein which are defined in National Instrument 14-101 – Definitions ("NI 14-101") have the meaning given to them in NI 14-101.  Reference should be made to NI 45-106 itself for its complete text, including other definitions, and to the Companion Policy to the NI 45-106 for matters of interpretation and application.


 


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            [   ]
 	
            (d)                         a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);
 
	
            [   ]
 	
            (e)                         an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);
 
	
            [   ]
 	
            (f)                          the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada;
 
	
            [   ]
 	
            (g)                         a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;
 
	
            [   ]
 	
            (h)                         any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;
 
	
            [   ]
 	
            (i)                          a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada;
 
	
            [   ]
 	
            (j)                          an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
 
	
            [   ]
 	
            (k)                         an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
 
	
            [   ]
 	
            (l)                          an individual who, either alone or with a spouse, has net assets of at least $5,000,000;
 
	
            [   ]
 	
            (m)                        a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;
 



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            [   ]
 	
            (n)                         an investment fund that distributes or has distributed its securities only to: (i) a person that is or was an accredited investor at the time of the distribution, or (ii) a person that acquires or acquired securities as principal and at an acquisition cost of not less than $150,000 paid in cash at the time of the trade;
 
	
            [   ]
 	
            (o)                         an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;
 
	
            [   ]
 	
            (p)                         a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;
 
	
            [   ]
 	
            (q)                         a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund;
 
	
            [   ]
 	
            (r)                          a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;
 
	
            [   ]
 	
            (s)                          an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;
 
	
            [   ]
 	
            (t)                          a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,
 
	
            [   ]
 	
            (u)                         an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; or
 
	
            [   ]
 	
            (v)                         a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as (i) an accredited investor, or (ii) an exempt purchaser in Alberta or British Columbia after this Instrument comes into force.
 



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            Dated:  _________________________, 2006.
 
	
             
	
             
 
	
             
	
            Print name of Purchaser
 
	
             
	
             
 	
             
 
	
             
	
            By:
 	
             
 
	
             
	
             
 	
            Signature
 
	
             
	
             
 	
             
 
	
             
	
             
 	
             
 
	
             
	
             
 	
            Print name of Signatory

(if different from Purchaser)
 
	
             
	
             
 	
             
 
	
             
	
             
 	
             
 
	
             
	
             
 	
            Title
 
			



 


 


 


 


 


 


 


 


 


 






 


 


Schedule 1


ACCREDITED INVESTOR


 


An "accredited investor" is defined as:


 



	
            1.
 	
            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 that Act; a Small Business Investment Company licensed by the United States 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; an employee benefit plan within the meaning of the Employee Retirement Income Preferred Stock Act of 1974 ("ERISA"), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, is a self-directed plan, with the investment decisions made solely by persons that are accredited investors;
 



 
 


	
            2.
 	
            A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
 



 
 


	
            3.
 	
            An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities, with total assets in excess of $5,000,000;
 



 
 


	
            4.
 	
            A director or executive officer of the Corporation;
 



 
 


	
            5.
 	
            A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of such person's investment exceeds $1,000,000;
 



 
 


	
            6.
 	
            A natural person who had an individual income in excess of $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 those years and which has a reasonable expectation of reaching the same income level in the current year;
 



 
 


	
            7.
 	
            A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; or
 



 

 






 



	
            8.
 	
            An entity in which all of the equity owners are "accredited investors" under one or more of the foregoing categories.
 



 





 






 


Schedule 2


NON-US PERSON REPRESENTATIONS


 


Each Purchaser who is not a US Person represents and warrants to the Corporation that:

 


	
            1.
 	
            Purchaser is neither a U.S. Person (as defined in Rule 902(o) of Regulation S promulgated under the Securities Act) nor is Purchaser committing to purchase securities for the account of a U.S. Person or for resale in the United States and the undersigned confirms that the securities have not been offered to the Purchaser in the United States.
 



 
 


	
            2.
 	
            Purchaser:
 



 
 


	
             
 	
            (a)
 	
            is not a "distributor" of securities as such term is defined in Regulation S nor a dealer in securities, and
 



 
 


	
             
 	
            (b)
 	
            acknowledges that it has not engaged, and agrees that it will not engage during any period in which US securities laws prohibit such activity, in any hedging transactions with regard to the Corporation’s Common Stock.
 



 
 


	
            3.
 	
            The investment commitment by the Purchaser does not contravene any of the applicable securities legislation in the jurisdiction in which the Purchaser is resident and does not trigger (other than as agreed by the Corporation pursuant to the Investor Rights Agreement):
 



 
 


	
             
 	
            (a)
 	
            any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase, and
 



 
 


	
             
 	
            (b)
 	
            any registration or other obligation on the part of Purchaser, the Corporation or the Agent.
 



 





 






 


 


Supplement to Subscription Agreement


 


March 3, 2006


____________________________


 


SyntheMed, Inc. 


_____________________________


 


This Supplement amends and supplements the Subscription Agreement (the “Subscription Agreement”), which has been provided by SyntheMed, Inc. (the “Company”) in connection with an offering by the Company of shares of common stock at a purchase price of $0.40 per share (the “Offering”).


 


Each of the items referred to below shall be deemed to modify the representations and warranties of the Company contained in, and other terms and conditions of, the Subscription Agreement and related transaction documents to the extent relevant. 


 


Each investor in the Offering is kindly requested to sign, date and return via facsimile (+44 20 7 349 3140) or email (joerg.gruber@attglobal.net) a copy of this Supplement to Clubb BioCapital Limited, placement agent for the Offering, which will acknowledge receipt of this Supplement and agreement by the investor to the revised Offering terms and disclosure as set forth herein. 


 


Increase in Offering Size


 


The Offering size has been increased from $5 million to $6.5 million.  If the Offering is fully subscribed, the Company will issue and sell 16,250,000 shares of common stock for gross proceeds of $6.5 million.  The Offering price remains unchanged at $.40 per share.


 


Annual Report on Form 10-KSB/Proxy Statement


 


The Company recently filed with the United States Securities and Exchange Commission  its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, and intends to file in the beginning of this month prior to closing of the Offering a proxy statement for its annual stockholder meeting scheduled to be held at the end of April.  These documents, which contain material information about the Company, its business, management and financial condition, may be viewed upon filing under the Company’s name at the SEC’s EDGAR Archives located on the internet at www.sec.gov.  


 


Acknowledged and Agreed:


 


____________________________________________________


[Print name of investor as it appears in the Subscription Agreement]


 


By: _______________________________


Print name:


Print title:


Date:______________________________