EXHIBIT 10.27
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement") made as of the date set
forth on the signature page hereof between Salix Pharmaceuticals, Ltd., a
British Virgin Islands corporation (the "Company"), and the undersigned (the
"Subscriber").
WITNESSETH:
WHEREAS, the Company is offering in a private placement to accredited
investors (the "Offering") up to 2,250,000 shares of its common stock, no par
value per share (the "Common Stock"), at a price equal to $6.25, and warrants to
purchase shares of Common Stock equal to ten percent (10%) of the total number
of shares sold to the Subscriber in the Offering at an exercise price per share
equal to $9.72 (the "Warrants"). The Warrants are issued for a five (5) year
period and are subject to be called if the last price of the Company's Common
Stock is at a level twice the closing price for any ten (10) consecutive trading
day period during the term of the Warrant. The shares of Common Stock and
Warrants offered hereby are sometimes referred to as the "Securities;"
WHEREAS, the Subscriber desires to purchase that number of Securities
set forth on the signature page hereof on the terms and conditions hereinafter
set forth;
WHEREAS, the Company has engaged Leerink Xxxxx & Company (the
"Placement Agent") as placement agent for the Offering on a "best-efforts"
basis; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto agree as
follows:
I. SUBSCRIPTION FOR SECURITIES AND REPRESENTATIONS BY SUBSCRIBER
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1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby irrevocably subscribes for and agrees to purchase from the
Company such Securities as is set forth upon the signature page hereof and the
Company agrees to sell such Securities to the Subscriber for said purchase
price. The purchase price is payable by personal or business check, wire
transfer of immediately available funds or money order made payable to Leerink
Xxxxx & Company, Escrow Agent for Salix Pharmaceuticals, Ltd. contemporaneously
with the execution and delivery of this Agreement by the Subscriber. All wires
should be sent to:
BBK: Citizens Bank
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
ABA: 000000000
Beneficiary: Leerink Xxxxx & Company, Escrow Agent for Salix
Pharmaceuticals, Ltd.
Beneficiary Account: 110953 558 6
Certificates for the shares of Common Stock and the Warrants will be
delivered by the Company to the Subscriber promptly following the Closing (as
herein defined).
1.2 The Subscriber recognizes that the purchase of Securities
involves a high degree of risk in that (i) the Company remains an early stage
business with a limited operating history and may require funds in addition to
the proceeds of the Offering; (ii) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company; (iii) the Subscriber may
not be able to liquidate its investment; (iv) transferability of the Securities
is extremely limited; and (v) in the event of a disposition, the Subscriber
could sustain the loss of its entire investment.
1.3 The Subscriber represents that the Subscriber is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended (the "Act"), as indicated by the
responses to the questions contained in Section VII hereof, and that the
Subscriber is able to bear the economic risk and illiquidity of an investment in
the Securities.
1.4 The Subscriber hereby acknowledges and represents that (i) the
Subscriber has prior investment experience, including investment in non-listed
and unregistered securities, or that the Subscriber has employed the services of
an investment advisor, attorney and/or accountant to read all of the documents
furnished or made available by the Company both to the Subscriber and to all
other prospective investors to evaluate the merits and risks of such an
investment on the Subscriber's behalf; (ii) the Subscriber recognizes the highly
speculative nature of an investment in the Securities; and (iii) the Subscriber
is able to bear the economic risk and illiquidity which the Subscriber assumes
by investing in the Securities.
1.5 The Subscriber (i) hereby acknowledges receipt and careful review
of the Memorandum dated October 30, 2000 (the "Memorandum"), and to the extent
that specific filings of the Company with the SEC (as herein defined) under the
Act or the Exchange Act (as herein defined) and exhibits thereto have not been
specifically included in such package, the Subscriber hereby acknowledges that
it has had a reasonable opportunity to review such filings on the SEC's XXXXX
database or otherwise (the Memorandum and all of the foregoing filings and
exhibits of the Company are referred to herein as the "Offering Package"); (ii)
hereby represents that the Subscriber has been furnished by the Company during
the course of this transaction with all information regarding the Company which
the Subscriber has requested or desired to know; (iii) has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering; and (iv) has received any additional information
which the Subscriber has requested.
1.6 (a) In making the decision to invest in the Securities, the
Subscriber has relied solely upon the information provided by the Company in the
Offering Package. To the extent necessary, the Subscriber has retained, at its
own expense, and relied upon the advice of appropriate professionals regarding
the investment, tax and legal merits and consequences of this
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Agreement and its purchase of the Securities hereunder. The Subscriber
acknowledges and agrees that the Placement Agent has not supplied any
information for inclusion in the Offering Package other than information
furnished in writing to the Company by the Placement Agent specifically for
inclusion in the Offering Package relating to the Placement Agent, that the
Placement Agent has no responsibility for the accuracy or completeness of the
Offering Package and that the Subscriber has not relied upon the independent
investigation or verification, if any, which may have been undertaken by the
Placement Agent.
(b) The Subscriber covenants that (i) the Subscriber was
contacted regarding the sale of the Securities by the Placement Agent (or an
authorized agent or representative thereof) with whom the Subscriber had a prior
substantial pre-existing relationship and (ii) no Securities were offered or
sold to it by means of any form of general solicitation or general advertising,
and in connection therewith the Subscriber did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit or generally available; or (B) attend any seminar, meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
1.7 The Subscriber hereby acknowledges that the Offering has not been
reviewed by the United States Securities and Exchange Commission (the "SEC")
because of the Company's representations that this Offering is intended to be
exempt from the registration requirements of Section 5 of the Act pursuant to
Sections 3(b), 4(2) and 4(6) thereof and Regulation D promulgated under the Act.
The Subscriber agrees that the Subscriber will not sell or otherwise transfer
the Securities unless they are registered under the Act or unless an exemption
from such registration is available.
1.8 The Subscriber understands that none of the Securities have been
registered under the Act by reason of a claimed exemption under the provisions
of the Act which depends, in part, upon the Subscriber's investment intention.
In this connection, the Subscriber hereby represents that the Subscriber is
purchasing the Securities for the Subscriber's own account for investment and
not with a view toward the resale or distribution thereof to others. The
Subscriber, if an entity, was not formed for the purpose of purchasing the
Securities. The Subscriber understands that Rule 144 promulgated under the Act
requires, among other conditions, a one-year holding period prior to the resale
(in limited amounts) of securities acquired in a non-public offering without
having to satisfy the registration requirements under the Act.
1.9 The Subscriber understands and hereby acknowledges that the
Company is under no obligation to register the Securities under the Act or any
state securities or "blue sky" laws other than as set forth in Section V. The
Subscriber consents that the Company may, if it desires, permit the transfer of
the Securities out of the Subscriber's name only when the Subscriber's request
for transfer is accompanied by an opinion of counsel reasonably satisfactory to
the Company that neither the sale nor the proposed transfer results in a
violation of the Act or any applicable state "blue sky" laws (collectively,
"Securities Laws").
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1.10 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities indicating that such
Securities have not been registered under the Act or any state securities or
"blue sky" laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement. The Subscriber is
aware that the Company will make a notation in its appropriate records and issue
"stop transfer" instructions to its transfer agent with respect to the
restrictions on the transferability of such Securities.
1.11 The Subscriber understands that the Company will review this
Agreement and, if such Subscriber is an individual, hereby gives authority to
the Company to call Subscriber's bank or place of employment (in a call in which
the Placement Agent participates) or otherwise review the financial standing of
the Subscriber; and it is further agreed that the Company reserves the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription, to accept subscriptions for
Securities and to close the Offering to the Subscriber at any time.
1.12 The Subscriber hereby represents that the address of the
Subscriber furnished by the Subscriber on the signature page hereof is the
Subscriber's principal residence if the Subscriber is an individual or its
principal business address if it is a corporation or other entity.
1.13 The Subscriber represents that the Subscriber has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Securities subscribed for hereby. This Agreement
constitutes the legal, valid and binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its terms.
1.14 If the Subscriber is a corporation, partnership, limited
liability company, trust, employee benefit plan, individual retirement account,
Xxxxx Plan, or other entity, then (a) it is authorized and qualified to become
an investor in the Company and the person signing this Agreement on behalf of
such entity has been duly authorized by such entity to do so, and (b) it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
1.15 The Subscriber acknowledges that if he or she is a registered
representative of a National Association of Securities Dealers, Inc. ("NASD")
member firm, he or she must give such firm the notice required by the NASD's
Rules of Fair Practice, receipt of which must be acknowledged by such firm in
Section 7.4 below.
1.16 The Subscriber represents and warrants that it has not engaged,
consented to nor authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Subscriber
shall indemnify and hold harmless the Company from and against all fees,
commissions or other payments owing to any such person or firm acting on behalf
of such Subscriber hereunder.
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1.17 The Subscriber acknowledges that (a) the Company has engaged,
consented to and authorized the Placement Agent in connection with the
transactions contemplated by this Agreement, (b) the Company shall pay the
Placement Agent a commission and reimburse the Placement Agent's expenses in
accordance with the Placement Agency Agreement (as defined in Section 5.1(c)
below), and the Company shall indemnify and hold harmless the Subscriber from
and against all fees, commissions or other payments owing by the Company to the
Placement Agent or any other person or firm acting on behalf of the Company
hereunder and (c) registered representatives of the Placement Agent and/or its
designees (including, without limitation, registered representatives of the
Placement Agent and/or its designees who participate in the Offering and sale of
the securities sold in the Offering) will be paid a portion of the commissions
paid to the Placement Agent including a portion of the Placement Warrants (as
defined in Section 5.1(c) below).
1.18 The Subscriber, whose name appears on the signature line below,
shall be the beneficial owner of the Securities for which such Subscriber
subscribes.
1.19 The Subscriber agrees that from the time the Subscriber first
received the Offering Package until a point in time equal to the earlier of (i)
the date that the Registration Statement (as defined in Section 5.2(a)) is
declared effective by the SEC or (ii) four months from the date of the Offering
Package, the Subscriber has not and shall not, directly or indirectly, through
related parties, affiliates or otherwise, (A) sell "short" or "short against the
box" (as those terms are generally understood) any equity security of the
Company or (B) otherwise engage in any transaction that involves hedging of the
Subscriber's position in any equity security of the Company.
II. REPRESENTATIONS BY THE COMPANY
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The Company hereby represents and warrants to the Subscriber that:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the British Virgin Islands and has full corporate power and lawful authority
to conduct its business as described in the Offering Package. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in the State of North Carolina and in each jurisdiction in which the nature of
the business conducted, or as proposed to be conducted in the Offering Package,
by it or the properties owned, leased or operated by it, makes such
qualification or licensing necessary and where the failure to be so qualified or
licensed would have a material adverse effect upon the business, prospects or
financial condition of the Company other than North Carolina, where the Company
will be so qualified prior to the Closing (as defined in Section 3.2).
2.2 Capitalization and Voting Rights. The authorized, issued and
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outstanding capital stock of the Company is as set forth in the Offering
Package; all issued and outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable. Except as set forth in the
Offering Package, there are no outstanding options, warrants, agreements,
commitments, convertible securities, preemptive rights or other rights to
subscribe for or to
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purchase any shares of capital stock of the Company nor are there any
agreements, promises or commitments to issue any of the foregoing, or
discussions concerning same. Except as set forth in the Offering Package, in
this Agreement and as otherwise required by law, there are no restrictions upon
the voting or transfer of the Securities pursuant to the Company's Memorandum of
Association and Articles of Association or other governing documents or any
agreement or other instruments to which the Company is a party or by which the
Company is bound.
2.3 Authorization; Enforceability. The Company has all corporate
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right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Securities and the performance
of the Company's obligations hereunder has been taken. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy. The Securities have been duly and validly authorized and, upon
the issuance and delivery thereof and payment therefor as contemplated by this
Agreement, will be free and clear of liens, duly and validly authorized and
issued, fully paid and nonassessable. The issuance and sale of the Securities
contemplated hereby will not give rise to any preemptive rights or rights of
first refusal on behalf of any person.
2.4 No Conflict; Governmental Consents.
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(a) The execution and delivery by the Company of this Agreement, the
consummation of the transactions contemplated hereby and the offer and sale of
the Securities will not result in the violation of any law, statute, rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to or by which the Company is bound, or of any provision
of the Memorandum of Association and Articles of Association of the Company, and
will not conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute (with due notice or lapse of time or both) a
default under, any lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Company is a party or by
which it is bound or to which any of its properties or assets is subject, nor
result in the creation or imposition of any lien upon any of the properties or
assets of the Company.
(b) No consent, waiver, approval, authorization or other order of any
governmental authority or other third-party is required to be obtained by the
Company in connection with the authorization, execution and delivery of this
Agreement or with the authorization, issuance and sale of the Securities, except
such filings as may be required to be made, and which shall have been made at or
prior to the required time, with the SEC, the NASD and the Toronto Stock
Exchange and/or the National Association of Securities Dealers Automated
Quotation System SmallCap Market ("Nasdaq"), and with any state or foreign blue
sky or securities regulatory authority.
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2.5 Licenses. Except as may be set forth in the Offering Package,
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the Company has all licenses, permits and other governmental authorizations
currently required for the conduct of its business or ownership of properties
and is in all material respects complying therewith, except for any licenses,
permits or other governmental authorizations which would not materially
adversely affect the business, property, financial condition, results of
operations or prospects of the Company.
2.6 Litigation. The Company knows of no pending or threatened legal
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or governmental proceedings against the Company which could materially adversely
affect the business, property, financial condition, results of operations or
prospects of the Company.
2.7 Accuracy of Reports. All reports required to be filed by the
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Company within the three years prior to the date of this Agreement under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), have been duly
and timely filed with the SEC, complied at the time of filing in all material
respects with the requirements of their respective forms and, were complete and
correct in all material respects as of the dates at which the information was
furnished, and contained (as of such dates) no untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
2.8 Accuracy of Offering Package. No information set forth in the
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Offering Package contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
2.9 Investment Company. The Company is not an "investment company"
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within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
2.10 Listing. The Company has filed an application for listing with
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the Nasdaq SmallCap Market and the American Stock Exchange and hereby represents
and warrants to the Placement Agent and the Subscriber that it will take any
other necessary action in accordance with the rules of the Nasdaq SmallCap
Market or the American Stock Exchange to enable the Common Stock (and the Common
Stock issuable upon exercise of the Warrants, including the Warrants as defined
in Section 5.1 (c)) to trade on either of such exchanges.
2.11 No Material Adverse Change. Since the filing of the Company's
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most recent Quarterly Report on Form 10-Q, (i) there has not been any material
adverse change (financial or otherwise) in the assets, properties, financial
condition, operating results or business of the Company, and (ii) there has been
no event or condition of any character that might have a material adverse effect
(financial or otherwise) in the assets, properties, financial condition,
operating results or business of the Company.
2.12 Financial Statements. The financial statements included in the
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Company's most recent Annual Report on Form 10-K405/A for the fiscal year ended
December 31, 1999 and all other reports filed by the Company pursuant to the
Exchange Act since the filing of such
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Annual Report on Form 10-K405/A and prior to the date hereof (collectively, the
"SEC Filings") present fairly and accurately in all material respects the
financial position of the Company as of the dates shown and its results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis. Except as set forth in the financial statements
of the Company included in the SEC Filings filed prior to the date hereof, to
the Company's knowledge, the Company has no liabilities, contingent or
otherwise, except those which individually or in the aggregate are not material
to the financial condition or operating results of the Company.
2.13 Compliance with Laws. Neither the Company nor, to the Company's
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knowledge, any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D of
the Act) in connection with the offer or sale of the Securities. Neither the
Company nor any of its Affiliates, nor, to the Company's knowledge, any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would adversely affect reliance by the Company on Section
4(2) of the Act for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
Act.
III. TERMS OF SUBSCRIPTION
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3.1 The Offering is for up to 2,250,000 shares of Common Stock and
Warrants. The Securities are offered on a "best efforts" basis.
3.2 Upon the mutual consent of the Company and the Placement Agent,
this Offering may close (the "Closing") prior to the sale of all 2,250,000
shares of Common Stock and there is no assurance that all 2,250,000 shares of
Common Stock will be sold. The Closing shall occur no later than January 31,
2001, subject to change at the discretion of the Company and the Placement Agent
(the "Closing Date"). The purchase price is payable by personal or business
check, wire transfer of immediately available funds or money order made payable
as provided in Section 1.1.
3.3 The Subscriber hereby authorizes and directs the Company to
deliver the Securities to be issued to the Subscriber pursuant to this Agreement
directly to the Subscriber's account maintained by the Placement Agent or, if no
such account exists, to the residential or business address indicated on the
signature page hereto.
3.4 The Subscriber hereby authorizes and directs the Company to
return any funds related to unaccepted subscriptions to the same account from
which the funds were drawn, including any customer account maintained with the
Placement Agent.
IV. CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBERS AND THE COMPANY
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4.1 The Subscribers' obligation to purchase the Securities at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions, which conditions may be waived at the option of each
Subscriber to the extent permitted by law:
(a) Representations and Warranties. The representations and
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warranties made by the Company in Section II hereof shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
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this Agreement to be performed by the Company on or prior to such purchase shall
have been performed or complied with in all material respects.
(c) No Legal Order Pending. There shall not then be in effect any
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legal or other order enjoining or restraining the transactions contemplated by
this Agreement.
(d) No Law Prohibiting or Restricting Such Sale. There shall not be
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in effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of any person to issue the Securities which
consent or approval shall not have been obtained (except as may otherwise be
provided in this Agreement).
(e) Legal Opinion. Upon the Closing, counsel to the Company shall
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have delivered to the Placement Agent for the benefit of the Subscribers a legal
opinion with respect to such legal matters relating to this Agreement and the
Offering Package as the Placement Agent may reasonably require.
4.2 The Company's obligation to sell the Securities at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, which conditions may be waived at the option of the Company to the
extent permitted by law:
(a) Acknowledgements, Representations and Warranties. The
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acknowledgements, representations and warranties made by the Subscriber in
Section I hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date. If
any such representations, warranties or acknowledgements shall not be true and
accurate in any respect prior to the Closing, the undersigned shall give
immediate written notice of such fact to the Company, to the Placement Agent,
and to his representatives, if any, specifying which representations, warranties
or acknowledgements are not true and accurate and the reason therefor.
(b) Covenants. All covenants, agreements and conditions contained in
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this Agreement to be performed by the Subscriber on or prior to such purchase
shall have been performed or complied with in all material respects.
(c) No Legal Order Pending. There shall not then be in effect any
----------------------
legal or other order enjoining or restraining the transactions contemplated by
this Agreement.
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(d) No Law Prohibiting or Restricting Such Sale. There shall not be
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in effect any law, rule or regulation prohibiting or restricting such sale or
requiring any consent or approval of any person to issue the Securities which
consent or approval shall not have been obtained (except as may otherwise be
provided in this Agreement).
V. REGISTRATION RIGHTS
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5.1 As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as
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defined below), any other Person controlling, controlled by, or under direct or
indirect common control with, such Person (for the purposes of this definition
"control," when used with respect to any specified Person, shall mean the power
to direct the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day, Monday through Friday, on
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which banks are generally open for business in each of New York, New York;
Boston, Massachusetts; and Raleigh, North Carolina.
(c) "Holders" shall mean the Subscriber and any person holding
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Registrable Securities as defined below (including the Registrable Securities
underlying the warrants to be issued to the Placement Agent (the "Placement
Warrants") to be granted to the Placement Agent and/or their designees pursuant
to the engagement letter between the Company and the Placement Agent (the
"Placement Agency Agreement")), a holder of the Placement Warrants, or any
person to whom the rights under Section V have been transferred in accordance
with Section 5.10 hereof, and who, if known by the Company, shall be
specifically named by the Company as selling stockholders in the Registration
Statement (as defined below).
(d) "Person" shall mean any person, individual, corporation,
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limited liability company, partnership, trust or other nongovernmental entity or
any governmental agency, court, authority or other body (whether foreign,
federal, state, local or otherwise).
(e) The terms "register," "registered" and "registration" refer
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to the registration effected by preparing and filing with the SEC a registration
statement in compliance with the Act, and the declaration or ordering by the SEC
of the effectiveness of such registration statement.
(f) "Registrable Securities" shall mean (i) the Common Stock
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(ii) the shares of Common Stock issuable upon the exercise of the Warrants, and
(iii) shares of Common Stock issuable upon the exercise of the Placement
Warrants; provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
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disposed of pursuant to a registration statement declared effective by the SEC,
(B) and all other otherwise Registrable Securities held by one person have not
been, or are not all eligible to be immediately, sold in a transaction exempt
from the registration and prospectus delivery requirements of the Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale, and (C) are held by a Holder or a
permitted transferee pursuant to Section 5.10.
(g) "Registration Expenses" shall mean all expenses incurred by
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the Company in complying with Section 5.2 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to, or required by, any such registration
(but excluding the aggregate fees of legal counsel for all Holders).
(h) "Registration Statement" shall have the meaning ascribed to
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such term in Section 5.2 (a).
(i) "Registration Period" shall have the meaning ascribed to
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such term in Section 5.4 (a).
(j) "Selling Expenses" shall mean all underwriting discounts and
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selling commissions applicable to the sale of Registrable Securities and the
aggregate fees and expenses of legal counsel for all Holders.
5.2 (a) The Company shall, as soon as practicable, but not later
than thirty (30) business days after the Closing Date (the "Filing Date"), (i)
use its best efforts to file with the SEC a registration statement (the
"Registration Statement") with respect to the resale of the Registerable
Securities and use its best efforts to have such Registration Statement declared
effective by the SEC as soon thereafter as is practical and (ii) cause such
Registration Statement to remain effective for the Registration Period.
(b) If, within 30 days from the Closing, the Company has not
filed a Registration Statement for the Shares with the SEC, or, within 120 days
from Closing, the Shares are not freely trading on a U.S. stock market or
exchange, then the Company shall pay to each Subscriber, in cash, as liquidated
damages and not as a penalty, equal to 1% of the aggregate purchase price
previously paid by such Subscriber for Securities for the first 30 day period
thereafter, and 2% for each successive 30 day period thereafter during which
both of the above-stated conditions are not met; provided, however, such
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Subscriber shall not be entitled to such cash payment if and to the extent that
such delays are the result of the failure of such Subscriber to provide the
Company with written information necessary to complete the Registration
Statement by the Filing Date.
5.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 5.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
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5.4 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company shall:
(a) use its best efforts to keep such registration, and any
qualification, exemption or compliance under state securities laws which the
Holders reasonably request the Company to obtain, continuously effective as to
all Registrable Securities until the Holders have completed the distribution
described in the registration statement relating thereto. The period of time
during which the Company is required hereunder to keep the Registration
Statement effective is referred to herein as "the Registration Period."
Notwithstanding the foregoing, at the Company's election, the Company may cease
to keep such registration, qualification, exemption or compliance effective with
respect to any Registrable Securities, and the registration rights of a Holder
with respect to such Registrable Securities shall expire, at such time as the
Holder may sell all Registrable Securities then held by such Holder under Rule
144 under the Act in a three-month period, but this sentence shall not relieve
the Company of any obligation to comply with this Section V as to any shares of
Common Stock issuable upon exercise of the Placement Warrants;
(b) advise the Holders (or in the case of (ii) below, to advise
the Placement Agent):
(i) when the Registration Statement or any amendment
thereto has been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) subject to the limitations set forth in Section
5.7(b)(ii) hereof, of the happening of any event that requires the making of any
changes in the Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
12
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;
(d) furnish to each Holder, without charge, at least one copy of
such Registration Statement and any post-effective amendment or supplement
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits (excluding those incorporated by reference) in
the form filed with the SEC;
(e) during the Registration Period, deliver to each Holder,
without charge, a reasonable number of copies of the prospectus included in such
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use, consistent with the
provisions hereof, of the prospectus and any amendment or supplement thereto by
each of the selling Holders of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by the prospectus and
any amendment or supplement thereto;
(f) during the Registration Period, deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of: (A) its annual report to its stockholders, if
any (which annual report shall contain financial statements audited in
accordance with generally accepted accounting principles in the United States of
America by a firm of certified public accountants of recognized standing); (B)
if not included in substance in its annual report to stockholders, its annual
report on Form 10-K (or similar form); (C) a copy of the full Registration
Statement (excluding exhibits); (ii) upon reasonable request, all exhibits
excluded by the parenthetical to the immediately preceding clause (C); and (iii)
such other documents as may be reasonably requested.
(g) prior to any public offering of Registrable Securities
pursuant to any Registration Statement, register or qualify or obtain an
exemption for the offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holders reasonably request in writing, provided that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction, and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Registration Statement;
(h) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Registration Statement free of any restrictive legends
to the extent not required at such time and in such denominations and registered
in such names as Holders may request at least five (5) business days prior to
sales of Registrable Securities pursuant to such Registration Statement;
(i) upon the occurrence of any event contemplated by Section
5.4(b)(v) above, the Company shall promptly prepare a post-effective amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities included
13
therein, the prospectus will not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
(j) use its best efforts to comply with all applicable rules and
regulations of the SEC, and make generally available to the Holders not later
than 45 days (or 90 days if the fiscal quarter is the fourth fiscal quarter)
after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings statement
satisfying the provisions of Section 11(a) of the Act.
5.5 The Holders shall have no right to take any action to restrain,
enjoin or otherwise delay any registration pursuant to Section 5.2 hereof as a
result of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
5.6 (a) To the extent permitted by law, the Company shall indemnify
each Holder, each underwriter of the Registrable Securities and each person
controlling such Holder and each such underwriter within the meaning of Section
15 of the Act, with respect to which any registration, qualification or
compliance has been sought pursuant to this Agreement, against all claims,
losses, expenses, costs, damages and liabilities (or action in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 5.6(c) below), arising out of or
based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus or offering circular,
or any amendment or supplement thereof, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in which
they were made, or (ii) any violation or alleged violation by the Company of the
Act, the Exchange Act, or any rule or regulation promulgated under the Act or
the Exchange Act, and shall reimburse each Holder, each underwriter of the
Registrable Securities and each person controlling such Holder and each such
underwriter, for reasonable legal and other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action as incurred; provided that the Company shall not be liable
in any such case to the extent that any untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder or
underwriter and stated to be specifically for use in preparation of such
registration statement, prospectus or offering circular; provided that the
Company shall not be liable in any such case where the claim, loss, damage or
liability arises out of or is related to the failure of the Holder to comply
with the covenants and agreements contained in Section 5.7 hereof, and except
that the foregoing indemnity agreement is subject to the condition that, insofar
as it relates to any such untrue statement or alleged untrue statement or
omission or alleged omission made in the preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the SEC at the time the
registration statement becomes effective or in the amended prospectus filed with
the SEC pursuant to Rule 424(b) of the Act or in the prospectus subject to
completion under Rule 434 of the Act, which together meet the requirements of
Section 10(a) of the Act (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of any such Holder, any such underwriter or any
such controlling person, if a copy of the Final Prospectus furnished by the
Company to the Holder for delivery was not furnished to the
14
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Act and the Final Prospectus would
have cured the defect giving rise to such loss, liability, claim or damage.
Notwithstanding any provision herein to the contrary, the Company shall
reimburse each Holder, upon such Holder's demand, for all reasonably necessary
expenses and costs which are incurred by such Holder as a result of the
indemnification claims described in this Section 5.6(a). Such demand may be made
from time to time prior to resolution of the claim. In no event shall the
Company be liable for the expenses and costs of more than one attorney on behalf
of the Holders unless in the reasonable judgement of a Holder, based upon
written advice of its counsel, a conflict of interest exists between the Holders
with respect to such claims, in which case the Company shall reimburse the
Holders for additional attorneys.
(b) Each Holder will severally, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter of the Registrable Securities and
each person who controls the Company and each underwriter of the Registrable
Securities within the meaning of Section 15 of the Act, against all claims,
losses, expenses, costs, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, each underwriter of the Registrable Securities and each
person controlling the Company and each underwriter of the Registrable
Securities for reasonable legal and any other expenses or costs reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred, in each case to the extent, but only to
the extent, that such untrue statement or omission or allegation thereof is made
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of the Holder and stated to be specifically for use in
preparation of such registration statement, prospectus or offering circular;
provided that the indemnity shall not apply to the extent that such claim, loss,
damage or liability results from the fact that a current copy of the prospectus
or offering circular was not made available to the Holder and such current copy
of the prospectus or offering circular would have cured the defect giving rise
to such loss, claim, expense, costs, damage or liability. Notwithstanding the
foregoing, in no event shall a Holder be liable for any such claims, losses,
expenses, costs, damages or liabilities in excess of the proceeds received by
such Holder in that offering, except in the event of fraud by such Holder.
(c) Each party entitled to indemnification under this Section 5.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved
15
by the Indemnified Party (whose approval shall not unreasonably be withheld),
and the Indemnified Party may participate in such defense with its own counsel
at such Indemnified Party's expense unless the named parties to any proceeding
covered hereby (including any impleaded parties) include both the Company or any
others the Company may designate and one or more Indemnified Persons, and
representation of the Indemnified Persons and such other parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them, and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement, unless such failure is materially prejudicial
to the Indemnifying Party in defending such claim or litigation. An Indemnifying
Party shall not be liable for any settlement of an action or claim effected
without its written consent (which consent will not be unreasonably withheld).
(d) If the indemnification provided for in this Section 5.6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage, cost or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, cost or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions which resulted in such loss,
liability, claim, damage, cost or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied or which
should have been supplied by the Indemnifying Party or by the Indemnified Party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
5.7 (a) Subject to the limitations set forth in Section 5.7(b)(ii)
below, upon receipt of any notice from the Company of the happening of any event
requiring the preparation of a supplement or amendment to a prospectus relating
to Registrable Securities so that, as thereafter delivered to the Holders, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, each Holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
contemplated by Section 5.2 until its receipt of copies of the supplemented or
amended prospectus from the Company and, if so directed by the Company, each
Holder shall deliver to the Company all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
(b) Any Holder which owns five percent (5%) or more (and with respect
to 5.7(b)(ii), "any Holder") of the Company's outstanding Common Stock shall
suspend, upon request of the Company, any disposition of Registrable Securities
pursuant to the Registration Statement and prospectus contemplated by Section
5.2 during (i) any period not to exceed one 120-day period within any one 12-
month period the Company requires in connection with a primary underwritten
offering of equity securities and (ii) any period, not to exceed two 45-day
periods within any twelve month period, when the Company determines in good
faith
16
that offers and sales pursuant thereto should not be made by reason of the
presence of material undisclosed circumstances or developments with respect to
which the disclosure that would be required in such a prospectus is premature,
would have an adverse effect on the Company or is otherwise inadvisable.
(c) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such Holder,
the securities of the Company owned beneficially or of record by such Holder and
the distribution proposed by such Holder as the Company may request in writing
because it is required in connection with any registration, qualification or
compliance referred to in this Section V.
(d) With respect to any sale of Registrable Securities pursuant to a
Registration Statement filed pursuant to this Section V, each Holder hereby
covenants with the Company not to make any sale of the Registrable Securities
without effectively causing the prospectus delivery requirements under the Act
to be satisfied.
(e) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement described in this Section
are not transferable on the books of the Company unless the stock certificate
submitted to the transfer agent evidencing such Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company to the
effect that (i) the Registrable Securities have been sold in accordance with
such Registration Statement and (ii) the requirement of delivering a current
prospectus has been satisfied.
(f) Each Holder shall not take any action with respect to any
distribution deemed to be made pursuant to such registration statement, which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the Registration Period, the Holders of Registrable
Securities included in the Registration Statement and the shares underlying the
Placement Warrants shall discontinue sales of shares pursuant to such
Registration Statement upon receipt of notice from the Company of its intention
to remove from registration the shares covered by such Registration Statement
which remain unsold.
5.8 With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, the Company shall
use its reasonable best efforts:
(a) to make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times;
(b) to file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
17
(c) so long as a Holder owns any Registrable Securities, to furnish
to such Holder upon any reasonable request a written statement by the Company as
to its compliance with Rule 144 under the Act, and of the Exchange Act, and a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as such Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing a Holder to
sell any such securities without registration.
5.9 With the written consent of the Company and the Holders holding at
a majority of the Registerable Securities that are then outstanding, any
provision of this Section V may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended. Upon the effectuation of each such
waiver or amendment, the Company shall promptly give written notice thereof to
the Holders, if any, who have not previously received notice thereof or
consented thereto in writing.
5.10 The rights and obligations of the Holders under this Section V may
not be assigned or transferred to or assumed by any transferee or assignee
except (i) to a transferee that acquires at least 20% of such Holder's
Registerable Securities or (ii) to an Affiliate or limited or general partner of
a Holder; provided that such transfer was not in violation of this Agreement or
the Securities Laws.
VI. MISCELLANEOUS
-------------
6.1 Any notice or other communication given hereunder shall be deemed
sufficient in writing and sent by (a) telecopy or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received); or (b) registered or certified mail,
return receipt requested, or delivered by hand against written receipt therefor,
addressed to Salix Pharmaceuticals, Ltd., 0000 Xxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, XX 00000, Facsimile: (000) 000-0000, Attention: Xxxxxx X. Xxxxxxx, with
a copy to Leerink Xxxxx & Company, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX
00000, Facsimile (000) 000-0000, Attention: Xxxxxx X. Xxxxxx. Notices shall be
deemed to have been given or delivered on the date of mailing, except notices of
change of address, which shall be deemed to have been given or delivered when
received.
6.2 Except as set forth in Section 5.9, this Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3 Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Securities as herein provided, subject to
acceptance by the Company and the Placement Agent; subject, however, to the
right hereby reserved to the Company to enter into the same agreements with
other subscribers and to add and/or delete other persons as subscribers.
6.4 Notwithstanding the place where this Agreement may be executed by
any of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be
18
construed in accordance with and governed by the laws of the State of Delaware
without regard to principles of conflicts of law.
6.5 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
6.6 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.7 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.8 This Agreement may be executed in two or more counterparts each
of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
6.9 The Subscriber agrees not to issue any public statement with
respect to the Subscriber's investment or proposed investment in the Company or
the terms of any agreement or covenant between them and the Company without the
Company's prior written consent, except such disclosures as may be required
under applicable law or under any applicable order, rule or regulation.
6.10 Nothing in this Agreement shall create or be deemed to create
any rights in any person or entity not a party to this Agreement, except for the
holders of Registrable Securities.
6.11 Any pronoun herein shall include all genders and/or the plural
or singular as appropriate from the context.
19
VII. CONFIDENTIAL INVESTOR QUESTIONNAIRE
-----------------------------------
7.1 The Subscriber represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he, she or
it has truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION VII WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below.
Category A__ The undersigned is an individual (not a partnership, corporation,
etc.) whose individual net worth, or joint net worth with his or
her spouse, presently exceeds $1,000,000.
Explanation. In calculating net worth you may
include equity in personal property and real
estate, including your principal residence, cash,
short-term investments, stock and securities.
Equity in personal property and real estate should
be based on the fair market value of such property
less debt secured by such property.
Category B__ The undersigned is an individual (not a partnership, corporation,
etc.) who had an individual income in excess of $200,000 in each
of the two most recent years, or joint income with his or her
spouse in excess of $300,000 in each of those years (in each case
including foreign income, tax exempt income and full amount of
capital gains and losses but excluding any income of other family
members and any unrealized capital appreciation) and has a
reasonable expectation of reaching the same income level in the
current year.
Category C__ The undersigned is a director or executive officer of the
Company.
Category D__ The undersigned is a bank; a savings and loan association;
insurance company; registered investment company; registered
business development company; licensed small business investment
company or "SBIC"; or employee benefit plan within the meaning of
Title 1 of Employee Retirement Income Security Act or "ERISA" and
(a) the investment decision is made by a plan fiduciary which is
either a bank, savings and loan association, insurance company or
registered investment advisor, or (b) the plan has total assets
in excess of $5,000,000 or is a self-directed plan with
investment decisions made solely by persons that are accredited
investors.
__________________________________________________
__________________________________________________
(describe entity)
20
Category E__ The undersigned is a private business development company as
defined in section 202(a)(22) of the Investment Advisors Act of
1940.
__________________________________________________
__________________________________________________
(describe entity)
Category F__ The undersigned is either a corporation, partnership,
Massachusetts business trust, or nonprofit organization within
the meaning of Section 501(c)(3) of the Internal Revenue Code, in
each case not formed for the specific purpose of acquiring the
Securities and with total assets in excess of $5,000,000.
__________________________________________________
__________________________________________________
(describe entity)
Category G__ The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Securities where the purchase is directed by a "sophisticated
person" as defined in Regulation 506(b)(2)(ii) under the Act.
Category H__ The undersigned hereby certifies that it is an accredited
investor because all of its equity owners are accredited
investors. The Company, in its sole discretion, may request
information regarding the basis on which such equity owners are
accredited.
Category I__ The undersigned hereby certifies that it is an accredited
investor because it has total assets in excess of $5,000,000 and
was not formed for the specific purpose of acquiring the
Securities.
Category J__ The undersigned is not within any of the categories above and is
therefore not an accredited investor.
The Company will notify a prospective Subscriber whether such Subscriber is
eligible to purchase Securities pursuant to this Agreement (and the Company, in
its sole discretion, retains the right to accept or reject all such purchases).
The undersigned agrees that it will notify the Company at any time on or prior
to the Closing Date in the event that the representations and warranties in this
Investor Questionnaire shall cease to be true, accurate and complete.
21
7.2 SUITABILITY (please answer each question)
-----------
(a) For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(c) For all Subscribers, please list types of prior investments:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(d) For all Subscribers, please state whether you have participated in other
private placements before:
YES_______ NO_______
(e) If your answer to question (d) above was "YES", please indicate frequency of
such prior participation in private placements of:
------------------
Biotechnology,
Pharmaceutical and
Public Private Other Life Science
Companies Companies Companies *
--------- --------- -----------
Frequently _________ _________ _________
Occasionally _________ _________ _________
Never _________ _________ _________
*indicate how many companies, whether public or private, are in the
biotechnology, pharmaceutical or other life sciences sectors.
22
(f) For an individual Subscriber, do you expect your current level of income to
significantly decrease in the foreseeable future?
YES_______ NO_______
(g) For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future?
YES_______ NO_______
(h) For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you?
YES_______ NO_______
(i) For all Subscribers, are you familiar with the risk aspects and the non-
liquidity of investments such as the securities for which you seek to subscribe?
YES_______ NO_______
(j) For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
YES_______ NO_______
7.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)
-----------------------------------
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of
Survivorship (both parties
must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
*If Securities are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
23
7.4 NASD AFFILIATION.
----------------
Are you affiliated or associated with an NASD member firm (please check one)?
YES _________ NO __________
If Yes, please describe:**
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
**If Subscriber is a Registered Representative with an NASD member firm,
have the following acknowledgment signed by the appropriate party:
The undersigned NASD member firm acknowledges receipt of the notice
required by Article 3, Sections 28(a) and (b) of the Rules of Fair
Practice.
_____________________________________
Name of NASD Member Firm
By: _________________________________
Authorized Officer - Signature
_________________________________
Authorized Officer - Printed Name
Date: ____________________________ , 2000
7.5 COMPANY RELIANCE ON THIS QUESTIONNAIRE
--------------------------------------
The undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in this Section VII and such answers have
been provided under the assumption that the Company and its counsel will rely on
them.
24
SIGNATURE PAGE Date Signed: __________ , 2000
--------------
Number of shares: _______________________
Multiplied by Offering Price per share: x $_______________________
Equals subscription amount: = $_______________________
Warrants (multiply the number of shares by 10%): _______________________
____________________________ ______________________________
Signature Second Signature (if purchasing jointly)
____________________________ ______________________________
Printed Name Printed Second Name
____________________________ ______________________________
Entity Name Entity Name
____________________________ ______________________________
Address Address
____________________________ ______________________________
City, State and Zip Code City, State and Zip Code
____________________________ ______________________________
Telephone-Business Telephone--Business
____________________________ ______________________________
Facsimile-Business Facsimile--Business
____________________________ ______________________________
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should be issued: _________________________________
Check "YES" if you would like the securities to be delivered to your account
with Leerink Xxxxx & Company or "NO" if you would like the securities to be
delivered to your address as set forth above.
YES _____ NO _____
25
This Subscription Agreement is agreed to and accepted as of ____________, 2000.
SALIX PHARMACEUTICALS, LTD.
By:
__________________________
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
26
CERTIFICATE OF SIGNATORY
(To be completed if Securities are being subscribed for by an entity)
I,______________________________, am the____________________________
of _____________________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute
and carry out the terms of the Subscription Agreement and to purchase and hold
the Securities, and certify further that the Subscription Agreement has been
duly and validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this___ day of ____, 2000.
_______________________________________
(Signature)
27
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
----------
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
---
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
SALIX PHARMACEUTICALS, LTD.
WARRANT
-------
Warrant No.[_] Dated: November 9, 2000
Salix Pharmaceuticals, Ltd., a British Virgin Islands corporation (the
"Company"), hereby certifies that, for value received, [__________________] or
-------
its registered assigns ("Holder"), is entitled, subject to the terms set forth
------
below, to purchase from the Company up to a total of ___________ shares of
common stock, no par value per share (the "Common Stock"), of the Company (each
------------
such share, a "Warrant Share" and all such shares, the "Warrant Shares") at an
------------- --------------
exercise price equal to $9.72 per share (as adjusted from time to time as
provided in Section 7, the "Exercise Price"), at any time and from time to time
from and after the date hereof and through and including November 8, 2005 (the
"Expiration Date"), and subject to the following terms and conditions.
---------------
1. Registration of Warrant. The Company shall register this
-----------------------
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
----------------
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, and the Company shall not be affected
by notice to the contrary.
2. Registration of Transfers and Exchanges.
---------------------------------------
(a) Subject to compliance with applicable securities laws, the
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Transfer Agent or to the
Company at its address for notice set forth in Section 10. Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "New Warrant"),
-----------
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company at its address for notice set forth in
Section 10, for one or more New Warrants, evidencing in the aggregate the right
to purchase the number of Warrant Shares which may then be purchased hereunder.
Any such New Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
---------------------------------
(a) This Warrant shall be exercisable by the registered
Holder on any business day before 5:00 P.M., New York City time, at any time and
from time to time on or after the date hereof to and including the Expiration
Date. At 5:00 P.M., New York City time on the Expiration Date, the portion of
this Warrant not exercised prior thereto shall be and become void and of no
value.
(b) Upon surrender of this Warrant, with the Form of Election
to Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 10 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but in
no event later than five (5) business days after the Date of Exercise (as
defined herein)) issue or cause to be issued and cause to be delivered to or
upon the written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective or the Warrant Shares are
not freely transferable pursuant to Rule 144(k) promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), or (ii) if this Warrant shall
--------------
have been issued pursuant to a written agreement between the original Holder and
the Company, as required by such agreement. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of record
of such Warrant Shares as of the Date of Exercise of this Warrant. The Company
shall, upon request of the Holder, if available, use its best efforts to deliver
Warrant Shares hereunder electronically through the Depository Trust Corporation
or another established clearing corporation performing similar functions.
A "Date of Exercise" means the date on which the Company shall
----------------
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
(c) This Warrant shall be exercisable, either in its entirety
or, from time to time, for a portion of the number of Warrant Shares, such
portion to be not less than 100 Warrant Shares and any amount in excess of 100
Warrant Shares shall be in 100 share increments. If less
2
than all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
4. Payment of Taxes. The Company will pay all documentary stamp
----------------
taxes attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
5. Replacement of Warrant. If this Warrant is mutilated, lost,
----------------------
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
indemnity, if requested, satisfactory to it. Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
6. Reservation of Warrant Shares. The Company covenants that it will
-----------------------------
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 7). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.
7. Certain Adjustments. The Exercise Price and number of Warrant
-------------------
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 7. Upon each such adjustment of the
Exercise Price pursuant to this Section 7, the Holder shall thereafter prior to
the Expiration Date be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or on any other class of capital
stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, then the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding before such
event and of which the denominator shall be the
3
number of shares of Common Stock (excluding treasury shares, if any) outstanding
after such event. Any adjustment made pursuant to this Section shall become
effective immediately, and shall apply to successive subdivisions and
combinations.
(b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property equal to the amount of Warrant Shares such Holder would have been
entitled to had such Holder exercised this Warrant immediately prior to such
reclassification or share exchange. The terms of any such reclassification or
share exchange shall include such terms so as to continue to give to the Holder
the right to receive the securities or property set forth in this Section 7(b)
upon any exercise following any such reclassification or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 7(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) In case of any (1) merger or consolidation of the Company
with or into another Person where the Company is not the surviving entity, or
(2) sale by the Company of all or substantially all of the assets of the Company
(on a book value basis) in one or a series of related transactions, the Holder
shall have the right thereafter to (A) exercise this Warrant for the shares of
stock and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such merger, consolidation or sale,
and the Holder shall be entitled upon such event or series of related events to
receive such amount of securities, cash and property as the Common Stock for
which this Warrant could have been exercised immediately prior to such merger,
consolidation or sale would have been entitled or (B) in the case of a merger or
consolidation, (x) require the surviving entity to issue common stock purchase
warrants equal to the number Warrant Shares to which this Warrant then permits,
which newly issued warrant shall be identical to this Warrant, and (y)
simultaneously with the issuance of such warrant, shall have the right to
exercise such warrant only into shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger or consolidation. In the case of clause (B), the exercise
price for such new warrant shall be based upon the amount of securities, cash
and property that each share of Common Stock would receive in such transaction
and the Exercise Price of this Warrant immediately prior to the effectiveness or
closing
4
date for such transaction. The terms of any such merger, sale or consolidation
shall include such terms so as continue to give the Holder the right to receive
the securities, cash and property set forth in this Section upon any conversion
or redemption following such event. This provision shall similarly apply to
successive such events.
(e) For the purposes of this Section 7, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
------------
record of the holders of its Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or exchangeable
into shares of Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common
---------------
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(f) All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted pursuant to Section
7(c) above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall be
equal to the average of the adjustments recommended by each of the Appraiser and
such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.
(h) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common Stock;
or
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital
stock of any class or of any rights; or
5
(iv) the approval of any stockholders of the Company shall
be required in connection with any reclassification
of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer
of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash
or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs
of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 20 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
-------- -------
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
8. Payment of Exercise Price. The Holder shall pay the Exercise
-------------------------
Price in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available
-------------
funds; or
(b) Cashless Exercise. The Holder may surrender this Warrant
-----------------
to the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
6
A = the average of the closing sale prices of the Common
Stock for the five (5) trading days immediately prior
to (but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
9. Fractional Shares. The Company shall not be required to issue or
-----------------
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section, be issuable on
the exercise of this Warrant, the Company shall pay an amount in cash equal to
the Exercise Price multiplied by such fraction.
10. Notices. Any and all notices or other communications or
-------
deliveries hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, or (ii) if to
the Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.
11. Warrant Agent. The Company shall serve as warrant agent under
-------------
this Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act. Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.
12. Optional Redemption.
-------------------
(a) This Warrant may be redeemed in whole during the
Effectiveness
7
Period at the option of the Company, upon 45 days written notice to the Holder,
at a price equal to $0.01 per Warrant Share (the "Redemption Price") if, and
-------
only if, at the time notice of such redemption is given by the Company to the
-------
Holder as provided in Section 10 hereof, (i) the average Closing Price for the
Common Stock for the ten (10) consecutive trading days immediately preceding the
date that the redemption notice is given exceeds $16.90, and (ii) a registration
statement covering the re-sale of the Warrant Shares filed under the Securities
Act is effective or the Holder may sell all of the Warrant Shares in the public
market in a three month period pursuant to Rule 144 under the Securities Act.
For the purpose of the foregoing sentence, the term "Closing Price" shall mean,
for any relevant day, the last sale price on that day as reported by the
principal exchange or quotation system on which prices for the Common Stock are
reported. On the redemption date the holders of record of redeemed Warrants
shall be entitled to payment of the Redemption Price upon surrender of such
redeemed Warrants to the Warrant Agent at the principal office of the Warrant
Agent.
(b) From and after the redemption date, all rights of the Holder
(except the right to receive the Redemption Price) shall terminate, but only if
(i) on or before the redemption date the Company shall have irrevocably
deposited with the Warrant Agent as paying agent a sufficient amount to pay on
the redemption date the Redemption Price for all Warrants called for redemption,
and (ii) the notice of redemption shall have stated the name and address of the
Warrant Agent and the intention of the Company to deposit such amount with the
Warrant Agent no later than one day prior to the redemption date.
(c) If the Company fails to make a sufficient deposit with the
Warrant Agent as provided above, the holder of any Warrants called for
redemption may at the option of the Holder (a) by notice to the Company declare
the notice of redemption a nullity as to such holder, or (b) maintain an action
against the Company for the Redemption Price. If the Holder brings such an
action, the Company will pay reasonable attorneys' fees of the Holder. If the
Holder fails to bring an action against the Company for the Redemption Price
within 60 days after the redemption date, the Holder shall be deemed to have
elected to declare the notice of redemption to be a nullity and such notice
shall be without any force or effect. Except as otherwise specifically provided
in this provision, a notice of redemption, once mailed by the Company as
provided herein, shall be irrevocable.
13. Miscellaneous.
-------------
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning
8
the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Delaware , without regard to the principles of conflicts of law
thereof. The Company and the Holder hereby irrevocably submit to the exclusive
jurisdiction of the state and federal courts sitting in the City of Wilmington,
Delaware, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, or that such suit, action or proceeding is improper. Each of the
Company and the Holder hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
receiving a copy thereof sent to the Company at the address in effect for
notices to it under this instrument and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
SALIX PHARMACEUTICALS, LTD.
By: _________________________________
Name: Xxxx X. Derbyshire
Title: Chief Financial Officer
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To _________________:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock, no par value per share, of Salix Pharmaceuticals, Ltd.
(the "Common Stock") and , if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
_________________________________
_______________________________________________________________________________
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is entitled to
purchase in accordance with the enclosed Warrant, the undersigned requests that
a New Warrant (as defined in the Warrant) evidencing the right to purchase the
shares of Common Stock not issuable pursuant to the exercise evidenced hereby be
issued in the name of and delivered to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
_______________________________________________________________________________
Dated: ___________, _________ Name of Holder:
(Print)____________________________
(By:)______________________________
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Salix
Pharmaceuticals, Ltd. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of Salix
Pharmaceuticals, Ltd. with full power of substitution in the premises.
Dated: __________,__________
___________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
___________________________________
Address of Transferee
___________________________________
___________________________________
In the presence of:
________________________________
