EXHIBIT 4.4
THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES
COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"). THIS AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION
UNDER THE PROVISIONS OF THE 1933 ACT AND UNDER PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH TRANSACTION DOES NOT REQUIRE
REGISTRATION OF THE SECURITIES, WHICH OPINION AND WHICH COUNSEL SHALL BE
SATISFACTORY TO THE COMPANY IN ITS SOLE DISCRETION.
6% CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
GALAGEN INC.
THIS AGREEMENT is made this 18th day of November, 1997, between
GALAGEN INC., NASDAQ Symbol "GGEN" (the "Company"), a Delaware corporation, with
its principal office at 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 and
the Purchasers specified in Schedule A attached hereto (collectively referred to
as the "Purchaser"), with their respective principal offices at the addresses
specified in Schedule A.
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Purchaser agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement:
"Agreement" means this 6% Convertible Debenture Purchase Agreement
including all Exhibits hereto.
"Closing Date" means the first date on which the original Debentures
and Warrants and the purchase price therefor have been delivered to the Escrow
Agent.
"Closing" means the completion of the purchase and sale of the
Debentures and Warrants on the Closing Date.
"Common Stock" means the Common Stock of the Company, $.01 par value
per share.
"Conversion Date" means the date on which the Purchaser has telecopied
the Notice of Conversion to the Company.
"Conversion Price" means an amount equal to Eighty-Two and One-Half
(82 1/2%) percent of the lowest sale price, which price may not be lower than
one-quarter (1/4) of a point lower than the closing bid price, of a share of the
Common Stock as reported on the NASDAQ National Market or the other principal
securities exchange or market on which the Common Stock is traded for the
previous three (3) trading days ending on the day before the Conversion Date.
If during the three (3) trading days used to determine the Conversion
Price or on the Conversion Date the Company shall subdivide its outstanding
shares of Common Stock into a greater number of shares (whether effected through
a stock split or by issuance of a stock dividend), the closing bid price for
trading days occurring before the effect of such subdivision shall be
proportionately reduced for purposes of calculating the Conversion Price and,
conversely, in case the number of shares of Common Stock shall be combined into
a smaller number of shares, the closing bid price for trading days occurring
before the effect of such combination shall be proportionately increased for
purposes of calculating the Conversion Price.
"Conversion Shares" means the Common Stock issuable upon the
conversion of the Convertible Debenture and upon exercise of the Warrants.
"Debenture" or "Debentures" means the Convertible Debenture or
Convertible Debentures in the form annexed hereto as Exhibit A issued by the
Company to the Purchaser under Section 2 of this Agreement.
"Holder" means the Purchaser of a Debenture or its registered assigns.
"Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Chief Executive Officer or the Board of Directors of the Company that
disclosure of such information in the registration statement covering the resale
of the Conversion Shares (the "Registration Statement") would be detrimental to
the business and affairs of the Company; or (b) any material engagement or
activity by the Company which would, in the good faith determination of the
Chief Executive Officer or the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the Chief
Executive Officer or the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.
"Registration Effective Date" means the date upon which the
registration of the Conversion Shares is declared effective by the Commission.
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"Warrant" or "Warrants" means the Warrant or Warrants to purchase
Common Stock in the form annexed hereto as Exhibit B issued by the Company to
the Purchaser under Section 2 of this Agreement.
Section 2. AUTHORIZATION AND SALE OF DEBENTURES AND WARRANTS.
2.1 AGREEMENT TO PURCHASE AND SELL THE DEBENTURES AND THE WARRANTS.
The Company agrees to sell to the Purchaser Debentures in the aggregate
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Principal Amount") and Warrants to purchase an aggregate of 200,000 shares of
Common Stock at One Hundred Percent (100%) of such principal amount (the
"Purchase Price") in reliance upon the representations and warranties of the
Purchaser contained in this Agreement. The Purchaser agrees to purchase the
Debentures and the Warrants from the Company for the Purchase Price in reliance
upon the representations and warranties of the Company contained in this
Agreement.
2.2 THE DEBENTURES.
(a) AUTHORIZATION. Subject to the terms and conditions of this
Agreement, the Company has authorized the execution and delivery of one or more
Debentures in an aggregate principal amount equal to the Principal Amount.
Simple interest shall accrue on the unpaid principal of the Debentures from the
Closing Date at the rate of six percent (6%) per annum. The Debentures shall
mature on that date which is eighteen (18) calendar months from the Closing Date
(the "Maturity Date").
(b) DISCOUNTED CONVERSION. Prior to the Maturity Date, the
Debentures are convertible into Common Stock at the election of the Holder in
accordance with this Section 2 and Section 9 below. Subject to the other terms
and conditions of this Agreement, the Company promises to pay to the Holder on
each Conversion Date the unpaid principal amount being converted plus accrued
but unpaid interest thereon in either cash or Common Stock at the Conversion
Price, the determination as to whether such payment shall be in cash or Common
Stock to be made by the Company in its sole discretion.
Subject to the other terms and conditions of this Agreement, on the
Maturity Date all of the unpaid principal amount of the Debentures and all
accrued but unpaid interest thereon shall automatically be converted into shares
of Common Stock at the Conversion Price without any act by the Company or the
Holder thereof ("Mandatory Conversion").
Except as provided in Section 2.2(d), the Debentures shall not be
convertible, whether by voluntary conversions pursuant to Conversion Notices or
through Mandatory Conversions, in the aggregate into more than One Million Four
Hundred Thousand (1,400,000) shares of Common Stock (the "Maximum Share
Amount"). Upon issuance of the Maximum Share Amount, then, unless a Debenture
is otherwise redeemed by the Company pursuant to Section 2.2(c) or 2.2(d) below
or conversion is permitted under Section 2.2(d) below, no further
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payment in cash or stock is required to by made by the Company for any principal
of or accrued interest on any Debenture.
Subject to the other terms and conditions of this Agreement, each
Debenture is voluntarily convertible at the election of the Holder in accordance
with the following schedule: up to one-third (1/3) of the unpaid principal
amount and accrued interest at any time on or after the Registration Effective
Date; up to an additional one-third (1/3) of the unpaid principal amount and
accrued interest at any time on or after the date five (5) calendar months after
the Closing Date; and up to an additional one-third (1/3) of the unpaid
principal amount and accrued interest at any time on or after twelve (12)
calendar months after the Closing Date.
Notwithstanding the immediately preceding paragraph, if the closing
bid price of a share of the Common Stock, as reported on Nasdaq National Market
or the other principal securities exchange or market on which the Common Stock
is traded, does not average during the eighth (8th) month Two and 50/100 ($2.50)
Dollars, then the Purchaser may convert the final one-third (1/3) of the unpaid
principal amount and accrued interest at any time on or after nine (9) calendar
months after the Closing Date.
(c) REDEMPTION. If a Notice of Conversion is received by the
Company which, but for the third paragraph of Section 2.2(b), would result in
the issuance of Common Stock at the Conversion Price in excess of the Maximum
Share Amount, then the Company may elect to redeem that portion of the unpaid
principal and accrued interest which would result in such excess otherwise
being issued for cash in an amount equal to One Hundred Twenty-Three and
One-Half (123 1/2%) percent of such principal amount (but not such accrued
interest). If the Company has not issued the Maximum Share Amount pursuant
to voluntary conversions of Debentures prior to the Maturity Date and if the
Mandatory Conversion of the unpaid Debentures on the Maturity Date would, but
for the third paragraph of Section 2.2(b), result in the issuance of shares
of Common Stock at the Conversion Price in excess of the Maximum Share
Amount, then the Company may elect to redeem for cash One Hundred
Twenty-Three and One-Half (123 1/2%) Percent of the unpaid principal amount
which would otherwise result in such excess on the Maturity Date pro rata
from all Holders of unpaid Debentures.
The Company shall effect each such redemption by sending notice of its
election to redeem ("Redemption Notice"), which shall be irrevocable, by
facsimile, personal delivery or overnight courier, by 5 P.M. New York City time,
the second business day following its receipt of the Notice of Conversion, or
the Maturity Date, as the case may be, to the Holders of the Debentures being
redeemed. Such Redemption Notice shall indicate (a) whether the Company will
redeem all or part of the Debentures and (b) the redemption price, which shall
be equal to One Hundred Twenty-Three and One-Half (123 1/2%) percent of the
principal amount being redeemed (the "Redemption Price").
The Company shall not be entitled to send any Redemption Notice and
begin the redemption procedure hereunder unless it has:
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(i) the full amount of the Redemption Price in cash, available
in a demand or other immediately available account in a bank or similar
financial institution;
(ii) immediately available credit facilities, in the full amount
of the Redemption Price with a bank or similar financial institution; or
(iii) a combination of the items set forth in (a) and (b)
above, aggregating the full amount of the Redemption Price.
Upon delivery of the Redemption Notice, the Company and the Holder
shall agree on reasonable arrangements for a closing of the redemption of
Debentures. If the parties cannot agree, then the closing shall be held at the
principal executive offices of the Company.
In the event the Company does not pay the Redemption Price within ten
(10) days of sending a Redemption Notice, the Company shall have waived its
right to redeem the Debentures which are the subject of such Redemption Notice
at any time and the Purchaser shall continue to have the right to convert the
remainder of its Debentures in accordance with the last paragraph of Section
2.2(b) and shall receive the increase in interest from six (6%) percent to
fifteen (15%) percent.
(d) MARKET CONVERSION; MANDATORY REDEMPTION. Promptly after the
Closing Date, the Company shall submit a request to the Nasdaq Stock Market for
an interpretation (the "Interpretation") of the Marketplace Rule
4460(i)(1)(D)(ii) as to whether the conversion of remaining unpaid principal
amount and accrued interest on Debentures into Common Stock at "market" prices
as described in this Section 2.2(d) after full issuance of the Maximum Share
Amount at "discounted" prices as described in Section 2.2(b) above would not
require approval by the stockholders of the Company.
If (i) the Interpretation provides that stockholder approval is not
required, (ii) any portion of the unpaid principal of and accrued interest on
any Debenture is not convertible into shares of Common Stock at the Conversion
Price because of the third paragraph of Section 2.2(b) and (iii) such principal
amount and accrued interest is not redeemed by the Company pursuant to Section
2.2(c) above, then the Holder may elect by notice to the Company (delivered in
the same manner as a Notice of Conversion) to convert such principal amount and
accrued interest into shares of Common Stock at a conversion price equal to the
greater of (i) the average closing bid price over the previous twenty (20)
trading days immediately prior to the Conversion Date and (ii) the closing bid
price on the trading day immediately prior to the Conversion Date. In such
event the interest rate on the Debentures shall be increased from six (6%)
percent to fifteen (15%) percent simple interest per annum retroactively to the
date of issuance of the Debenture.
If the Interpretation provides that stockholder approval is required
and any portion of the unpaid principal of and accrued interest on any Debenture
are not convertible into shares of Common Stock at the Conversion Price because
of the third paragraph of Section 2.2(b), then the Company shall be required
(rather than it being at the Company's option) to redeem, upon receipt of
Notices of Conversion for such principal or upon a Mandatory Conversion, up to a
maximum
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Five Hundred Thousand Dollars ($500,000) aggregate principal amount of
Debentures, payable at the maximum rate of Two Hundred Fifty Thousand Dollars
($250,000) per calendar quarter.
2.4 THE WARRANTS. The Warrants to purchase an aggregate of Two
Hundred Thousand (200,000) shares of Common Stock shall be issued pro rata to
Purchasers of each Debenture according to the principal amount of the Debenture
or Debentures purchased by such Purchasers.
2.5 TIME AND PLACE OF CLOSINGS. The Closing shall be held at the
offices of Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP ("Escrow Agent"), 00 Xxxxxxxx, 00xx
Xx., Xxx Xxxx, XX 00000, on the Closing Date.
2.6 PAYMENT AND DELIVERY. At or prior to the Closing, the following
shall occur:
(a) Purchaser shall remit by wire transfer the Purchase Price to
Escrow Agent as per the separate Escrow Agreement in the form of Exhibit C
attached hereto, which shall be executed and delivered by the parties
contemporaneously with this Agreement, as payment in full for the Debenture[s]
and the Warrants.
(b) Company shall deliver or cause to be delivered to Escrow
Agent original Debentures, substantially in the form set forth in Exhibit A
hereto, and original Warrants, substantially in the form set forth in Exhibit B
hereto, bearing the original signatures of an authorized officer of the Company.
(c) Wire instructions for Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP, as
follows:
Chase Manhattan Bank, N.A.
ABA #000000000
For the Account of
United States Trust Company of New York
Account #000-0-000000
In Favor of
Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP Attorney Trust Account
Account #59-01383
Section 3. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to, and covenants with, the Purchaser
that the following are true and correct as of the date hereof.
3.1 ORGANIZATION; QUALIFICATION. The Company is a corporation duly
organized and validly existing under the laws of Delaware and is in good
standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in which the ownership of its
property or the
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nature of its business requires such qualification, except where failure to so
qualify would not have a material adverse effect on the Company.
3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, $.01 par value per share, of
which 7,229,965 are outstanding, and 15,000,000 shares of Preferred Stock, par
value $.01 per share, none of which are outstanding. All issued and outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. As of the Closing Date, the Company had reserved
from its authorized but unissued shares of Common Stock a sufficient number of
shares of Common Stock for issuance upon conversion of the Principal Amount of
the Debentures.
3.3 AUTHORIZATION. The Company has all requisite corporate right,
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement, the Debentures and the
Warrants by the Company, the authorization, sale, issuance and delivery of the
Conversion Shares 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
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 as they may apply to the indemnification provisions
set forth in Section 7.3 of this Agreement. Upon their issuance and delivery
pursuant to this Agreement and pursuant to the terms and conditions of the
Debentures and Warrants, the Conversion Shares will be validly issued, fully
paid and nonassessable and will be free of any liens or encumbrances except for
those imposed by or on behalf of the Purchaser, its creditors or agents.
3.4 NO CONFLICT. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Certificate of Incorporation, and any amendments thereto,
Bylaws and any amendments thereto of the Company or any material mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree statute, law, ordinance, rule or
regulation applicable to the Company, its properties or assets.
3.5 ACCURACY OF REPORTS AND INFORMATION. The Company is in
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12 (g) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"). The Company has registered its Common Stock pursuant
to Section 12 of the 1934 Act and the Common Stock is listed and trades on the
NASDAQ National Market.
The Company has filed all material required to be filed pursuant to
all reporting obligations under either Section 13(a) or 15(d) of the 1934 Act
for a period of at least twelve (12)
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months immediately preceding the Closing Date (or for such shorter period that
the Company has been required to file such material).
3.6 COMMISSION FILINGS/FULL DISCLOSURE. For a period of at least
twelve (12) months immediately preceding the Closing Date, or such shorter
period that the Company has been required to file Reports (as defined below),
(i) none of the Company's filings with the Commission contain any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading, and (ii) the Company
has timely filed all requisite forms, reports and exhibits thereto with the
Commission.
There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been publicly disclosed
by the Company or disclosed to the Purchaser which (i) could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise) or on earnings, business affairs, properties or assets of the
Company, or (ii) could reasonably be expected to materially and adversely affect
the ability of the Company to perform its obligations pursuant to this
Agreement.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except as set forth in the Reports or as incurred in the ordinary
course of business after the date of the Reports.
3.8 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Debentures, or
the consummation of any other transaction contemplated hereby, except the filing
with the Commission of a Form D under Regulation D of the 1933 Act in connection
with the issuance of Debentures and the Warrants and the Registration Statement
for the purpose of registering the Conversion Stock and "Blue Sky" filings
and/or registrations required in connection with the purchase and sale of the
Debentures, the Warrants or the Conversion Shares.
3.9 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in the Form
10-Ks, Form 10-Qs and Form 8-Ks filed by the Company for a period of at least
twelve (12) months immediately preceding the Closing Date, or such shorter
period that the Company has been required to file such reports (the "Reports"),
the Company has the right to use all trademarks, trade names, patent rights,
copyrights and licenses used by the Company to conduct its business as presently
conducted. To the Company's knowledge, neither the Company nor its products is
infringing or will infringe any trademark, trade name, patent right, copyright,
license, trade secret or other similar right of others currently in existence;
and there is no claim being made against the Company regarding any trademark,
trade name, patent, copyright, license, trade secret or other intellectual
property right which could have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company. Notwithstanding the foregoing, the Company makes no representation in
this Section 3.9 as to any matter related to or
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covered by the proposed patent license agreement currently being negotiated by
the Company and Metagenics, Incorporated.
3.10 MATERIAL CONTRACTS. Except as set forth in the Reports, the
material agreements to which the Company is a party described in the Reports are
valid agreements, in full force and effect, the Company is not in material
breach or material default (with or without notice or lapse of time, or both)
under any of such agreements, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default (with or without notice or lapse of time, or both) under any of such
agreements.
3.11 LITIGATION. Except as disclosed in the Reports, there is no
action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any material adverse change in the business, prospects,
conditions, affairs or operations of the Company. The Company is not a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company currently intends to initiate which will materially effect the Company.
3.12 TITLE TO ASSETS. Except as is required to be set forth in the
Reports, the Company has good and marketable title to all material properties
and material assets described in the Reports as owned by it, free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest
other than such as are not material to the business of the Company.
3.13 SUBSIDIARIES. Except as disclosed in the Reports and the
financial statements, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership, association or
other business entity.
3.14 REQUIRED GOVERNMENTAL PERMITS. The Company is in possession
of and operating in material compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities which are material to the conduct of its business, all of
which are valid and in full force and effect, except for governmental approvals
from the U.S. Food & Drug Administration or other governmental bodies which may
be required for further development or commercialization of the Company's
products in development.
3.15 LISTING. The Company will exercise its best efforts to
maintain the listing of its Common Stock on the Nasdaq National Market or other
organized United States Markets or Quotron System. The Company has not received
any notice, oral or written, regarding any intention by Nasdaq to delist the
Common Stock.
3.16 OTHER OUTSTANDING SECURITIES. Except as disclosed in the
Reports, there are no other material outstanding debt or equity securities
presently convertible into Common Stock.
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3.17 LEGAL OPINION. Purchaser shall, upon the purchase of the
Debenture, receive an opinion letter from counsel to the Company, and the
Company represents that it will immediately obtain such an opinion from counsel
to the Company in the form attached as Exhibit E.
3.18 DILUTION. The Company is aware and acknowledges that
conversion of the Debentures could cause dilution to existing shareholders and
could significantly increase the outstanding number of shares of Common Stock.
3.19 RIGHT OF FIRST REFUSAL. In the event the Company offers and
sells by private placement convertible debt or equity securities of the Company
for cash within twelve (12) months from the Closing Date other than (a) shares
of Common Stock sold to the public pursuant to a registration statement filed
under the 1933 Act, (b) shares of Common Stock awarded or issued upon the
exercise of options granted pursuant to employee and consultant benefit plans
adopted by the Company, and the grant of such options themselves and (c) shares
of Common Stock issued upon conversion of the Debentures or exercise of the
Warrants or upon exercise or conversion of options, warrants or other
convertible securities outstanding on the Closing Date (all such convertible
debt or equity securities, other than securities referred to in (a), (b) and (c)
above, being hereinafter sometimes collectively referred to as "Additional
Securities"), the Purchaser(s) shall have the right of first refusal to purchase
their pro rata share of such Additional Securities upon the same terms and
conditions as the Company is proposing to issue and sell such Additional
Securities to others. A Purchaser shall have ten (10) business days to reply
in writing after receipt of such written notice from the Company. If a Purchaser
elects to accept such offer in whole or in part, such Purchaser shall so accept
by written notice to the Company given within two (2) business days. If a
Purchaser fails to accept such offer in whole or in part within such two (2)-day
period, any of such Additional Securities not purchased by such Purchaser
pursuant to such offer may be offered for sale to others by the Company free and
clear of the restrictions imposed by this Section.
For purposes of the previous paragraph, a Purchaser's "pro rata share"
is the number of shares of Additional Securities (rounded to the nearest whole
share or dollar amount) as is equal to the product of (a)(i) the number of
shares of Common Stock issuable upon the conversion of the Debentures held by
such Purchaser immediately prior to the issuance of the Additional Securities
being offered divided by (ii) the total number of shares of Common Stock issued
and outstanding by the Company and issuable upon the conversion of all
outstanding options, warrants and other convertible securities by the Company
immediately prior to the issuance of the Additional Securities, multiplied by
(b) the entire offering of Additional Securities.
3.20 NO UNDISCLOSED LIABILITIES OR EVENTS. The Company has no
liabilities or obligations other than those disclosed in the Reports, this
Agreement or those incurred in the ordinary course of the Company's business
since January 1, 1997, and which individually or in the aggregate, do not or
would not have a material adverse effect on the properties, business, condition
(financial or otherwise), results of operations or prospects of the Company. No
event or circumstances has occurred or exists with respect to the Company or its
properties, business, condition (financial or otherwise), results of operations
or prospects, which, under applicable law,
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rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
3.21 NO DEFAULT. The Company is not in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its property is bound,
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement or the Transaction
Documents, including the conversion provision of the Debentures, will conflict
with or result in the breach or violation of any of the terms or provisions of,
or constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under, any material indenture,
mortgage, deed of trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is bound or any
statute or the Certificate of Incorporation of the Company, or any decree,
judgment, order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or its properties, or the Company's listing
agreement for its Common Stock.
Section 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER. The Purchaser represents and warrants to, and covenants with, the
Company that the following are true and correct as of the date hereof and as of
the Closing Date.
4.1 AUTHORITY. The Purchaser has all requisite right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Purchaser, its directors, shareholders, members or partners necessary for the
authorization, execution, delivery and performance of this Agreement, and the
purchase of the Debentures and the Warrants as well as their respective
conversion and exercise, and the performance of the Purchaser's obligations
hereunder, has been taken. The Purchaser's signatory has all right, power,
authority and capacity to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and will constitute the legal, valid and binding
obligation of the Purchaser, enforceable 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 as they may apply
to the indemnification provisions set forth in Section 7.3 of this Agreement.
4.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor"
as defined in Rule 501(a) under the 1933 Act. Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company, including the Reports, the
other material books and records of the Company and the Company's executive
officers, to reach an informed and knowledgeable decision to acquire the
Debentures and the Warrants. Purchaser has such business and financial
experience as is required to give it the capacity to protect its own interests
in connection with the purchase of the Debentures and the Warrants.
11
4.3 INVESTMENT INTENT. Without limiting its ability to resell the
underlying Common Stock pursuant to an effective registration statement,
Purchaser represents that it is purchasing the Debentures and the Warrants for
its own account as principal for investment purposes, and not with a view to a
distribution. Purchaser understands that its acquisition of the Debentures and
the Warrants have not been registered under the 1933 Act or registered or
qualified under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein. Purchaser will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose
of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Debentures, Warrants or Conversion Shares, except in compliance
with the 1933 Act and any applicable state securities laws, and the rules and
regulations promulgated thereunder.
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS. Purchaser further
acknowledges and understands that the Debentures or the Conversion Shares may
not be resold or otherwise transferred except in a transaction registered under
the 1933 Act and any applicable state securities laws or unless an exemption
from such registration is available. Purchaser understands that the Debentures,
the Warrants and, if converted or exercised as the case may be, the Conversion
Shares will be imprinted with a legend that prohibits the transfer of such
securities unless (i) it is registered or such registration is not required
pursuant to an exemption therefrom, and (ii) if the transfer is pursuant to an
exemption from registration other than Rule 144 under the 1933 Act and Purchaser
provides an opinion of counsel to the Company, which opinion and which counsel
shall be reasonably satisfactory to the Company to the effect that the
transaction is so exempt.
4.5 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands
that nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Debentures constitutes legal, tax
or investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Debentures.
4.6 PURCHASER REVIEW. Purchaser hereby represents and warrants
that the Purchaser has carefully examined the Reports, and the financial
statements contained therein. The Purchaser acknowledges that the Company has
made available to the Purchaser all documents and information that it has
requested relating to the Company and has provided answers to all of its
questions concerning the Company and the Debenture. Nothing stated in the
previous two sentences, however, shall be deemed to affect the representations
and warranties of the Company contained in this Agreement.
4.7 RESTRICTIONS ON CONVERSION OF DEBENTURE. The convertibility
of the Debenture shall be restricted such that the portion of the Debenture
which, if otherwise converted, would result in the Purchaser or the Holder being
deemed the beneficial owner, in accordance with the provisions of Rule 13d-3 of
the 1934 Act, of 4.99% or more of the then issued and outstanding Common Stock,
shall not be convertible. If, in accordance with the
12
foregoing sentence, any portion of the Debenture remains unconvertible on the
Maturity Date, the Company shall have no further obligation therefor.
4.8 CERTAIN RISKS. The Purchaser recognizes that the purchase of
the Debentures, the Warrants and the Conversion Shares involves a high degree of
risk in that:
(i) 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 and the Debentures, the Warrants and the
underlying securities;
(ii) the Purchaser may not be able to liquidate its
investment;
(iii) transferability of the Debentures, the Warrants and
Conversion Shares is extremely limited;
(iv) in the event of disposition, Purchaser could sustain
the loss of its entire investment;
(v) the Debentures and Warrants represent non-voting
securities, which have the right to convert or exercise into and purchase
shares of voting equity securities in a corporate entity;
(vi) no return on investment, whether through distributions,
appreciation, transferability or otherwise, and no performance by, through
or of the Company, has been promised, assured, represented or warranted by
the Company, or by any director, officer, employee, agent or representative
thereof;
(vii) while the Common Stock is presently quoted and traded
on the NASDAQ National Market and while the Purchasers are beneficiaries of
certain registration rights provided herein,
(a) the Debentures, the Warrants and the Conversion Shares
are not registered under applicable federal or state
securities laws, and thus may not be sold, conveyed, assigned
or transferred unless registered under such laws or unless an
exemption from registration is available under such laws, as
more fully described below; and
(b) neither the Debentures nor the Warrants are quoted,
traded or listed for trading or quotation on the NASDAQ
National Market, or any other organized market or quotation
system, and there is therefore no present public or other
market for such Debentures and none is likely to develop, nor
can there be any assurance that the Common Stock will continue
to be quoted, traded or listed for trading or quotation on the
NASDAQ National Market or on any other organized market or
quotation system.
13
4.9 NO REGISTRATION, REVIEW OR APPROVAL. The Purchaser
acknowledges and understand that the limited private offering and sale of the
Debentures, the Warrants and the Conversion Shares pursuant to this Agreement
has not been reviewed or approved by the Commission or by any state securities
commission, authority or agency, and is not registered under the 1933 Act or
under the securities or "blue sky" laws, rules or regulations of any state. The
Purchaser acknowledges, understands and agrees that the Debentures and the
Conversion Shares are being offered and sold hereunder pursuant to (i) a private
placement exemption to the registration provisions of the 1933 Act pursuant to
Section 3(b) or Section 4(2) of the 1933 Act and Regulation D promulgated under
the 1933 Act, and (ii) a similar exemption to the registration provisions of
applicable state securities laws.
Section 5. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE. The
Company understands that the Purchaser's obligation to purchase the Debentures
is conditioned upon:
(a) Acceptance by Purchaser of this Agreement for the
purchase of the Debentures and the Warrants, as evidenced by the execution of
this Agreement by its authorized officers;
(b) Delivery of the original Debentures and Warrants into
Escrow;
(c) Delivery of legal opinion as required by this
Agreement;
(d) Execution and delivery by the Company of the Agreement.
Section 6. CONDITIONS TO COMPANY'S OBLIGATION TO SELL. Purchaser
understands that the Company's obligation to sell the Debentures and the
Warrants is conditioned upon:
(a) The receipt and acceptance by the Company of this
Debenture Purchase Agreement for the Debenture as evidenced by execution of this
Agreement by the President or any Vice President of the Purchaser; and
(b) Delivery into escrow by Purchaser of good funds in the
amount of the Purchase Price as payment in full for the purchase of the
Debenture and the Warrants.
(c) Execution and delivery by the Purchaser of the
Agreement.
Section 7. COMPLIANCE WITH THE 1933 ACT.
7.1 REGISTRATION RIGHTS AGREEMENT. The parties will enter into a
Registration Rights Agreement, annexed hereto as Exhibit D (the "Registration
Rights Agreement").
7.2 UNDERWRITER. The Company understands that the Purchaser
disclaims being an "underwriter" (as such term is defined under the 1933 Act and
the rules and regulations promulgated thereunder (an "Underwriter"), but
Purchaser being deemed an Underwriter shall not relieve the Company of any
obligation it has hereunder, except as may be required by law.
14
7.3 INDEMNIFICATION. Each of the Company and the Purchaser agrees
to indemnify the other and to hold the other harmless from and against any and
all losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with any
material breach by the indemnifying party of any representation, warranty or
covenant made by it in this Agreement.
7.4 INFORMATION AVAILABLE. So long as the Registration Statement
is effective, the Company will furnish to Purchaser:
(a) as soon as practicable after each becomes available
(but in the case of the Company's Annual Report to Stockholders, within 150 days
after the end of each fiscal year of the Company), one copy of (i) its Annual
Report to Stockholders (which Annual report shall contain financial statements
audited in accordance with generally accepted accounting principles in the
United States of America by a national firm of certified public accountants);
(ii) each of its Quarterly Reports to Stockholders, and its Quarterly Reports on
Form 10-Q; and (iii) a full copy of the Registration Statement (the foregoing,
in each case, including exhibits); and
(b) upon the reasonable request of Purchaser, such other
information that is generally available to the public.
7.5 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Conversion Shares to the public without
registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the 1933 Act, at all times
after the effective date on which the Company becomes subject to the reporting
requirements of the 1933 Act or the 1934 Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
1933 Act and the 1934 Act;
(c) to furnish to Purchaser forthwith upon request a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144, and of the 1933 Act and the 1934 Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing Purchaser
to sell any of the Underlying Shares without registration.
7.6 TEMPORARY CESSATION OF OFFERS AND SALES BY PURCHASER. If at
any time or from time to time after the Registration Effective Date, the Company
notifies the Purchasers in writing of the existence of a Potential Material
Event, the Purchasers shall not offer or sell any
15
Conversion Shares or engage in any other transaction involving or relating to
the Conversion Shares, from the time of the giving of notice with respect to a
Potential Material Event until such Purchasers receive written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; PROVIDED, HOWEVER,
that the Company may not so suspend the right to such holders of Conversion
Shares for more than one (1) thirty (30) day period and one (1) twenty (20) day
period in the aggregate during any twelve month period, with at least a ten (10)
business day interval between such periods, during the periods the Registration
Statement is required to be in effect. The Company must give Purchaser notice
in writing at least two (2) business days prior to the first day of each
blackout period. The Purchaser has the right to convert shares during this
blackout notice period.
7.7 TRANSFER OF COMMON STOCK AFTER REGISTRATION. Purchaser hereby
covenants with the Company not to make any sale of the Conversion Stock except
either (i) in accordance with the Registration Statement, in which case
Purchaser covenants to comply with the requirement of delivering a current
prospectus, or (ii) in accordance with Rule 144, in which case Purchaser
covenants to comply with Rule 144.
7.8 TERMINATION OF OBLIGATIONS. The obligations of the Company
pursuant to the Registration Rights Agreement shall cease and terminate upon the
earlier to occur of (i) such time as all of the Common Stock issuable upon
conversion of the Debenture have been re-sold, or (ii) such time as all of the
Common Stock issuable upon conversion of the Debenture may be re-sold in any
three-month period pursuant to Rule 144 under the 0000 Xxx.
7.9 LEGEND. The certificate or certificates representing the
Debentures and prior to their resale pursuant to the Registration Statement, the
Conversion Shares, shall be subject to a legend restricting transfer under the
1933 Act, such legend to be substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS
EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND
UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS; AND IN THE CASE OF AN
EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL THAT SUCH
TRANSACTION DOES NOT REQUIRE REGISTRATION OF THE SECURITIES, WHICH OPINION
AND WHICH COUNSEL SHALL BE SATISFACTORY TO THE COMPANY IN ITS SOLE
DISCRETION."
Such securities shall also include any legends required by any applicable state
securities laws.
16
With respect to the Conversion Shares, the legend(s) shall be removed
and the Company shall issue a replacement certificate without such legend to the
holder of such certificate if the such holder provides to the Company an opinion
of counsel reasonably acceptable to the Company, to the effect that a public
sale, transfer or assignment of such stock may be made without registration.
Section 8. LEGAL FEES AND EXPENSES. Except as provided in the Escrow
Agreement, each of the parties shall pay its own fees and expenses (including
the fees of any attorneys, accountants, appraisers or others engaged by such
party) in connection with this Agreement and the transactions contemplated
hereby.
Section 9. NOTICE OF CONVERSION. Subject to the Company's rights to
prepay or redeem under Section 2 above, conversion of unpaid principal of and
accrued interest on a Debenture to Common Stock may be exercised in whole or in
part by the Holder by telecopying an executed and completed Notice of Conversion
(in the form annexed hereto as Exhibit F) to the Company, specifying the
principal amount of the Debenture being converted, and delivering the original
Notice of Conversion and the certificate representing the Debenture to the
Company by express courier within three (3) business days of exercise. Each
date on which a Notice of Conversion is telecopied to the Company in accordance
with the provisions hereof shall be deemed a Conversion Date. The Company will
transmit the certificates representing the Common Stock issuable upon
conversion, the principal amount of the Debenture being converted, and of the
accrued interest on such portion of the principal amount (together with the
certificates representing any portions of the Debenture not so converted) to the
Purchaser via express courier as soon as practicable after the Company has
received the original Notice of Conversion and Debenture being so converted. In
addition to any other remedies which may be available to the Purchaser, in the
event that the Company fails for any reason (other than prepayment or redemption
under Section 2 above) to effect delivery of such shares of Common Stock within
seven (7) business days of such exercise, the Purchaser will be entitled to
revoke the relevant Notice of Conversion by delivering by telecopier with an
original by overnight courier a notice to such effect to the Company whereupon
the Company and the Purchaser shall each be restored to their respective
positions immediately prior to the delivery of the Notice of Conversion. Upon
receipt of such Notice the Company shall return by overnight courier the
original certificate representing the Debenture. The Notice of Conversion and
certificate representing the portion of the Debenture converted shall be
delivered as follows:
To the Company:
GalaGen Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
(tele) (000) 000-0000
(fax) (000) 000-0000
17
or to such other person at such other place as the Company shall designate to
the Purchaser in writing.
In the event that the Common Stock issuable upon conversion of the
Debenture is not delivered within seven (7) business days of the Conversion
Date, the Company shall pay to the Purchaser, by wire transfer, as liquidated
damages for such failure and not as a penalty, for each $100,000 of Debenture
sought to be converted, $500 for each of the first five (5) days, and $1,000 per
day thereafter, that the Conversion Shares are not delivered, which penalty
shall begin to run from the eighth (8th) business day after the Conversion Date.
Section 10. NOTICES. Except as provided in Section 9 above, all
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed by first class registered or certified airmail, postage
prepaid, and shall be deemed given when so mailed:
(a) if to the Company, to
GalaGen Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
(tele) (000) 000-0000
(fax) (000) 000-0000
copy to:
Faegre & Xxxxxx LLP
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 000000
Attn: Xxxxx Will
(tele) (000) 000-0000
(fax) (000) 000-0000
or to such other person at such other place as the Company shall designate to
the Purchaser by notice in accordance with this Section;
(b) if to the Purchaser, to such Purchaser's address set forth on Schedule A
hereto, with a copy to Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP, 00 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx Xxxxxxxxx, (tele) (000) 000-0000,
(fax) (000) 000-0000, or at such other address or addresses as may have been
furnished to the Company by notice in accordance with this Section; or
(c) if to any registered assign of a Purchaser, at such address
or addresses as shall have been furnished to the Company at the time of the
transfer or transfers, or
18
at such other address or addresses as may have been furnished by such registered
assign or assigns to the Company by notice in accordance with this Section.
Section 11. MISCELLANEOUS.
11.1 ENTIRE AGREEMENT. This Agreement, including all Exhibits
hereto, embody the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersedes all prior oral or
written agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement or any kind not
expressly set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.
11.2 AMENDMENTS. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and by
Purchaser.
11.3 HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
11.4 SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
11.5 GOVERNING LAW/JURISDICTION. This Agreement will be construed
and enforced in accordance with and governed by the laws of the State of
Delaware, except for matters arising under the 1933 Act, without reference to
principles of conflicts of law. Any action arising out of or related to this
Agreement shall be brought in a court of competent jurisdiction in Delaware.
Each party consents to the exercise of personal jurisdiction by such courts.
Each party hereby agrees that if either party to this Agreement obtains a
judgment against it in such a proceeding, the party which obtained such judgment
may enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law.
11.6 RECOVERY OF ATTORNEY'S FEES. Should any party bring an action
to enforce the terms of this Agreement then, if Purchaser prevails in such
action it should be entitled to recovery of its attorney's fees from the
Company, and if the Company prevails in such action it shall be entitled to
recovery of its attorney's fees from the Purchasers.
11.7 FEES. The Company acknowledges that Purchaser shall have no
responsibility for the payment of any of the Company's fees in connection with
this offering.
19
11.8 COUNTERPARTS/FACSIMILE. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other party. In lieu of the original, a facsimile
transmission or copy of the original shall be as effective and enforceable as
the original.
11.9 PUBLICITY. The Purchaser shall not issue any press releases
or otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the Company,
except as may be required by applicable law or regulation.
11.10 SURVIVAL. The representations and warranties in this
Agreement shall survive Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized representatives the day and year first above
written.
GALAGEN INC.
By
------------------------------------
Chief Financial Officer
20
PURCHASER
CPR (USA) INC.
By
------------------------------------
Its
--------------------------------
LIBERTYVIEW PLUS FUND
By
------------------------------------
Its
-----------------------------
LIBERTYVIEW FUND, LLC
By
------------------------------------
Its
--------------------------------
21
SCHEDULE A
Principal Amount
Name and Address of Purchaser of Debentures Warrant Shares Purchase Price
----------------------------- ---------------- -------------- --------------
CPR (USA) INC. $1,250,000 166,667 $1,250,000
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
LIBERTYVIEW PLUS FUND $200,000 26,667 $200,000
x/x Xxxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx XX DX Bermuda
LIBERTYVIEW FUND, LLC $50,000 6,666 $50,000
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
EXHIBIT A
No. __ $_________ USD
GALAGEN INC.
6% Convertible Debenture due May 18, 1999
THIS DEBENTURE HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS DEBENTURE SHALL
NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE
DEBENTURE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.
THIS DEBENTURE MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION
UNDER THE PROVISIONS OF THE 1933 ACT AND UNDER PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH TRANSACTION DOES NOT REQUIRE
REGISTRATION OF THE SECURITIES, WHICH OPINION AND WHICH COUNSEL SHALL BE
SATISFACTORY TO THE COMPANY IN ITS SOLE DISCRETION.
THIS DEBENTURE is one of a duly authorized issue of Debentures of
GALAGEN INC., a corporation duly organized and existing under the laws of the
State of Delaware (the "ISSUER") issued on November 18, 1997, and designated as
its 6% Convertible Debenture due May 18, 1999, in an aggregate face amount not
exceeding One Million Five Hundred Thousand (USD$1,500,000) Dollars, issuable in
One Hundred Thousand ($100,000) Dollars par value face amounts.
This Debenture has been issued under the terms and provisions of the
6% Convertible Debenture Purchase Agreement dated as of November 18, 1997
between the ISSUER and HOLDER (the "Agreement") and shall be subject to all of
the terms and conditions and entitled to all of the benefits thereof.
FOR VALUE RECEIVED, the ISSUER promises to pay to
the registered holder hereof or its registered assigns, if any (the "HOLDER"),
the principal sum of:
United States Dollars,
on May 18, 1999 (the "Maturity Date"), and to pay simple interest, as outlined
below, at the rate of six percent (6%) per annum on the principal sum
outstanding from time to time for the term of the Debenture or until the
Debenture is completely converted. Accrual of interest shall commence on the
first business day to occur after the date hereof and shall continue until
payment in full of the principal sum has been made or duly provided for, at
which time such interest shall also be payable. The interest so payable will be
paid to the person in whose name this Debenture (or one or more predecessor
Debentures) is registered on the records of the ISSUER regarding registration
and transfers of the Debenture (the "Debenture Register"), provided, however,
that the ISSUER'S obligation to a transferee of this Debenture arises only if
such transfer, sale or other disposition is made in accordance with the terms
and conditions contained in the Agreement. The principal of, and interest on,
this Debenture are payable as provided in the Agreement in cash or Conversion
Shares (as defined in the Agreement) in the sole discretion of the Company.
Accordingly, this Debenture is payable in cash only upon an Event of Default (as
defined below) or at the sole discretion of the Company. Principal and interest
are payable at the address last appearing on the Debenture Register as
designated in writing by the HOLDER hereof from time to time. The ISSUER will
pay the principal of and all accrued and unpaid interest due upon this Debenture
on the Maturity Date in cash or Conversion Shares as provided in the Agreement,
less any amounts required by law to be deducted or withheld, to the HOLDER at
the last address on the Debenture Register.
The Debenture is subject to the following additional provisions:
1. The Debenture is exchangeable for like Debentures in equal
aggregate principal amount of authorized denominations, as requested by the
HOLDERS surrendering the same. No service charge will be made for such
registration or transfer or exchange, although the HOLDERS shall be responsible
for their own expenses associated with complying with the restrictions on
transfer of the Debenture in the Agreement.
2. The ISSUER shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the U.S. Internal Revenue Code of
1986, as amended, or other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original HOLDER hereof and may be transferred or
exchanged only in compliance with the 1933 Act and applicable state securities
laws and in compliance with the restrictions on transfer provided in the
Agreement. Prior to the due presentment for such transfer of this Debenture,
the ISSUER and any agent of the ISSUER may treat the person in whose name this
Debenture is duly registered on the Debenture Register as the owner hereof for
the purpose of receiving payment as
2
herein provided and all other purposes, whether or not this Debenture is
overdue, and neither the ISSUER nor any such agent shall be affected by notice
to the contrary. The transferee shall be bound, as the original HOLDER by the
same representations and terms described herein and under the Agreement.
4. The HOLDER is entitled, at its option, to convert this Debenture
in accordance with the terms and conditions contained in the Agreement. The
ISSUER is entitled to redeem this Debenture in accordance with the Agreement.
No fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be rounded to the
nearest whole share.
5. No provision of this Debenture shall alter or impair the
obligation of the ISSUER, which is absolute and unconditional, upon an Event of
Default (as defined below), to pay the principal of, and interest on this
Debenture at the place, time, and rate, and in the coin or currency herein
prescribed.
6. The ISSUER hereby expressly waives demand and presentment for
payment, notice on nonpayment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any
action to collect amounts called for hereunder and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder.
7. If one or more of the following described "Events of Default"
shall occur,
a. Any of the representations or warranties made by the ISSUER
herein, or in the Agreement shall have been incorrect when made in any material
respect; or
b. The ISSUER shall fail to perform or observe in any material
respect any other covenant, term, provision, condition, agreement or obligation
of the ISSUER under this Debenture, the Registration Rights Agreement and the
Agreement between the parties of even date herewith, and such failure shall
continued uncured for a period of twenty (20) days after written notice from the
HOLDER specifically describing such failure or, if such failure is by its nature
curable but not curable within twenty (20) days from the date of such notice, if
the ISSUER shall have failed to commence within such twenty (20) day period in
good faith to cure such failure and shall have failed to cure such failure
within a reasonable time longer than twenty (20) days; or
c. A trustee, liquidator or receiver shall be appointed for the
ISSUER or for a substantial part of its property or business without its consent
and shall not be discharged within thirty (30) days after such appointment; or
d. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or control of the
whole or any
3
substantial portion of the properties or assets of the ISSUER and shall not be
dismissed within thirty (30) calendar days thereafter; or
e. Bankruptcy reorganization, Insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any law for the
relief or debtors shall be instituted by or against the ISSUER and, if
instituted against the ISSUER, ISSUER shall by any action or answer approve of,
consent to or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any such proceeding
or such proceedings shall not be dismissed within thirty (30) days thereafter;
or
f. The Common Stock is delisted from trading on any of the NASDAQ
National Market unless it is thereupon admitted to trading on the NASDAQ
SmallCap Market or any national stock exchange.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the HOLDER (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the HOLDER and in the HOLDER'S sole discretion, the HOLDER may consider this
Debenture immediately due and payable, without presentment, demand protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
HOLDER may immediately, and without expiration of any period of grace, enforce
any and all of the HOLDER'S rights and remedies provided herein or any other
rights or remedies afforded by law. It is agreed that in the event of such
action such holders of Purchased Securities shall be entitled to receive all
reasonable fees, costs and expenses incurred, including without limitation such
reasonable fees and expenses of attorneys (if litigation is commenced).
8. In case any provision of this Debenture is held by a court of
competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
9. This Debenture and the Agreement constitute the full and entire
understanding and agreement between the ISSUER and HOLDER with respect hereto.
Neither this Debenture nor any terms hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the ISSUER and the
HOLDER. Any capitalized terms shall have the same meaning as given in the
Agreement. In the event of any inconsistencies between this Debenture and the
Agreement, the Agreement shall control.
10. This Debenture shall be governed by and construed in accordance
with the laws of the State of Delaware.
11. The convertibility of the Debenture shall be restricted such that
that portion of the Debenture which, if otherwise converted, would result in
HOLDER being deemed the beneficial owner, in accordance with the provisions of
Rule 13d-3 of the 1934 Act, of 4.99% or
4
more of the then issued and outstanding Common Stock, shall not be convertible.
If, in accordance with the foregoing sentence, any portion of the Debenture
remains unconvertible on the Maturity Date, the Company shall have no further
obligation therefor.
IN WITNESS WHEREOF, the ISSUER has caused this instrument to be duly
executed by an officer thereunto duly authorized.
GALAGEN INC.
By
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
Date: November 18, 1997
5
EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS WARRANT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE WARRANT IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THIS WARRANT MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION
UNDER THE PROVISIONS OF THE 1933 ACT AND UNDER PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH TRANSACTION DOES NOT REQUIRE
REGISTRATION OF THE WARRANT, WHICH OPINION AND WHICH COUNSEL SHALL BE
SATISFACTORY TO THE COMPANY IN ITS SOLE DISCRETION.
STOCK PURCHASE WARRANT
No. __
To Purchase ______ Shares of Common Stock of
GALAGEN INC.
THIS CERTIFIES that, for value received, _____________________________
(the "Investor"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after November 18, 1997 and on or prior
to November 18, 2002 (the "Termination Date") but not thereafter, to subscribe
for and purchase from GALAGEN INC., a corporation incorporated in Delaware (the
"Company"), _________________________ (______) shares (the "Warrant Shares") of
Common Stock, par value US$0.01 per share of the Company (the "Common Stock").
The purchase price of one share of Common Stock (the "Exercise Price") under
this Warrant shall be equal to One Hundred Ten (110%) percent of the closing
sale price as reported by the Nasdaq National Market ("Nasdaq") on the Closing
Date (as defined in the 6% Convertible Debenture Purchase Agreement, dated
November 18, 1997 (the "Agreement"), between the Company and the Investor). The
Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant is being issued
in connection with the Agreement and is subject to its terms and conditions. In
the event
of any conflict between the terms of this Warrant and the Agreement, the
Agreement shall control.
1. TITLE OF WARRANT. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. AUTHORIZATION OF SHARES. The Company covenants that all shares
of Common Stock which may be issued upon the exercise of rights represented by
this Warrant will, upon exercise of the rights represented by this Warrant, be
duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. EXERCISE OF WARRANT. Except as provided in Section 4 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times, before the close of business on the Termination Date, or such
earlier date on which this Warrant may terminate as provided in this Warrant, by
the surrender of this Warrant and the Notice of Exercise Form annexed hereto
duly executed, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered holder
hereof at the address of such holder appearing on the books of the Company) and
upon payment of the Exercise Price of the shares thereby purchased; whereupon
the holder of this Warrant shall be entitled to receive a certificate for the
number of shares of Common Stock so purchased. Certificates for shares
purchased hereunder shall be delivered to the holder hereof within ten (10)
business days after the date on which this Warrant shall have been exercised as
aforesaid. Payment of the Exercise Price of the shares may be by certified
check or cashier's check or by wire transfer to an account designated by the
Company in an amount equal to the Exercise Price multiplied by the number of
Warrant Shares.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; PROVIDED, HOWEVER, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and PROVIDED FURTHER, that upon any transfer involved in the issuance or
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
2
6. CLOSING OF BOOKS. The Company will not close its shareholder
books or records in any manner which prevents the timely exercise of this
Warrant for a period of time in excess of five (5) trading days per year.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise thereof. Upon the surrender of this
Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so
purchased shall be and be deemed to be issued to such holder as the record owner
of such shares as of the close of business on the later of the date of such
surrender or payment.
8. ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company); provided,
however, that the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any expenses of transfer incidental thereto
and that this Warrant may not be resold or otherwise transferred except (i) in a
transaction registered under the Securities Act of 1933 (the "Securities Act"),
or (ii) in a transaction pursuant to an exemption, if available, from such
registration and whereby, if requested by the Company, an opinion of counsel
reasonably satisfactory to the Company is obtained by the holder of this Warrant
to the effect that the transaction is so exempt.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
certificate or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or
stock certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
11. EFFECT OF CERTAIN EVENTS.
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction"), in which
the consideration to be received by the Company or its shareholders consists
solely of cash, then the Warrant shall terminate if the Warrant has not been
exercised by
3
the effective date of such transaction, the Company shall give the holder of
this Warrant thirty (30) days' notice of such termination and of the proposed
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
shareholders consists in part of consideration other than cash, the holder of
this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) "PIGGY-BACK" REGISTRATION.
(i) If and only if the Registration Statement (as defined in the
Registration Rights Agreement entered into between the Company and the Purchaser
as contemplated by the Agreement) is not available for resale of the Warrant
Shares, the holder of this Warrant shall have the right to include all of the
Warrant Shares (the "Registrable Securities") as part of any registration of
securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Securities Act or pursuant to
Forms S-4 or S-8) and must be notified in writing of such filing. The holder
shall have five (5) business days to notify the Company in writing as to whether
the Company is to include holder's Registrable Securities as part of the
registration; PROVIDED, HOWEVER, that if any registration pursuant to this
Section shall be underwritten, in whole or in part, the Company may require that
the Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the underwriter of such offering only a limited number of Registrable Securities
should be included in such offering, or no such shares should be included, the
holder of such Registrable Securities, and any other selling stockholders, shall
be reduced, such reduction to be applied by excluding (on a pro rata basis)
Registrable Securities proposed to be sold by the holder of this Warrant and
shares proposed to be sold by all other persons. Those Registrable Securities
which are not included in an underwritten offering pursuant to the foregoing
provisions of this Section (and all other Registrable Securities held by the
selling stockholders) shall be withheld from the market by the Holders thereof
for a period, not to exceed one hundred eighty (180) days, which the underwriter
may reasonably determine is necessary in order to effect such underwritten
offering, and the Holder will sign any agreement to this effect requested by
such underwriter. Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement without incurring any liability to the
holders of Registrable Securities. Notwithstanding the foregoing, if securities
are registered by the Company pursuant to Section 7.1 of that certain Stock and
Warrant Purchase Agreement dated March 20, 1995 between the Company and Chiron
Corporation, then Warrant Shares shall be included in such offering and
registration statement only to the extent that inclusion of the Warrant Shares
will not reduce the amount of securities owned by Chiron Corporation to be
registered in such offering.
(ii) The registration rights set forth in Section 11(c)(i) shall
cease upon the earliest of (A) the effective registration under the Securities
Act of all of the Registrable
4
Securities and the disposal of such securities pursuant to such registration,
(B) registration under the Securities Act is no longer required for the
immediate public distribution of such security as a result of the provisions of
Rule 144 promulgated under the Securities Act, and (C) such Registrable
Securities cease to be outstanding.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per such Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or property) after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such notice, in absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
15. AUTHORIZED SHARES. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a
5
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Nasdaq National
Market or any domestic securities exchange upon which the Common Stock may be
listed.
16. MISCELLANEOUS.
(a) ISSUE DATE; JURISDICTION. The provisions of this Warrant shall
be construed and shall be given effect in all respects as if it had been issued
and delivered by the Company on the date hereof. This Warrant shall be binding
upon any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of Delaware without regard to its conflict of law,
principles or rules.
(b) RESTRICTIONS. The holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) MODIFICATION AND WAIVER. This Warrant and any provisions hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof by the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Dated: November 18, 1997
GALAGEN INC.
By
------------------------------------
Chief Financial Officer
6
NOTICE OF EXERCISE
To: GALAGEN INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock, par value US$0.01 per shares (the "Common Stock") of GALAGEN INC.
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
Dated:
------------------------------
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
-----------------------------------------------
.
---------------------------------------------------------------
---------------------------------------------------------------
Dated: , 1997
--------------
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 18th of November, 1997,
between the person and/or entity whose name and address appears on the signature
page attached hereto (individually a "Holder" or collectively with the holders
of the other Securities issued pursuant to the 6% Convertible Debenture Purchase
Agreement of even date herewith (the "Agreement"), the "Holders") and GALAGEN
INC., a Delaware corporation having its principle place of business at 0000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000.
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to the
Agreement an aggregate of One Million Five Hundred Thousand ($1,500,000) Dollars
principal amount of Debenture(s) and Warrant(s) (as defined in the Agreement);
and
WHEREAS, the Debentures are convertible and the Warrants are
exercisable into shares of the Company's Common Stock, par value $.01 per share
(the "Common Stock"); and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the shares of Common Stock underlying
the Debentures and the Warrants (the "Conversion Shares").
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGISTRABLE SECURITIES. As used herein the term
"Registrable Security" means the Conversion Shares; provided, however, that with
respect to any particular Registrable Security, such security shall cease to be
a Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act of 1933, as amended (the "1933
Act") and disposed of pursuant thereto, (ii) registration under the 1933 Act is
no longer required for the immediate public distribution of such security as a
result of the provisions of Rule 144 promulgated under the 1933 Act, or (iii) it
has ceased to be outstanding. The term "Registrable Securities" means any and/or
all of the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in the definition of "Registrable Security"
as is appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Section 1.
Section 2. RESTRICTIONS ON TRANSFER. The Holder acknowledges and
understands that prior to the registration of the Conversion Shares as provided
herein, the Debenture, Warrant and the Conversion Shares are "restricted
securities" as defined in Rule 144 promulgated under the Act. The Holder
understands that no disposition or transfer of the Debenture, Warrant or
Conversion Shares may be made by Holder in the absence of (i) an opinion of
counsel from counsel to the Holder, which opinion and counsel shall be
reasonably satisfactory to the Company
and its counsel that such transfer may be made without registration under the
1933 Act or (ii) such registration.
Section 3. REGISTRATION RIGHTS.
(a) The Company shall immediately commence to prepare and use
its best efforts to file with and be declared effective by the Securities and
Exchange Commission ("Commission") as soon as practicable, on one occasion, at
the sole expense of the Company (except as provided in Section 3(c) hereof), in
respect of all holders of Registrable Securities, a registration statement under
the 1933 Act so as to permit a non-underwritten public offering and sale of the
Registrable Securities under the 1933 Act (the "Registration Statement"). The
number of Conversion Shares to be registered shall be two hundred (200%) percent
of the number of shares that would be required if all the Registrable Securities
were converted on the day before the filing of the Registration Statement.
(b) The Company will maintain any Registration Statement or
post-effective amendment filed under this Section 3 hereof current under the
1933 Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the holders thereof receive an opinion of counsel that the Registrable
Securities may be sold under the provisions of Rule 144 or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of any
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees) shall be borne by the Company. The Holder shall bear the cost of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered and the fees and expenses of its counsel. The
Company shall use its best efforts to qualify any of the securities for sale in
such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 6 hereof. However, the
Company shall not be required to qualify in any state which will require an
escrow or other restriction relating to the Company and/or the sellers. The
Company at its expense will supply the Holder with copies of the Registration
Statement and the prospectus or offering circular included therein and other
related documents in such quantities as may be reasonably requested by the
Holder.
(d) The Company shall not be required by this Section 3 to
include a Holder's Registrable Securities in any Registration Statement which is
to be filed if, in the opinion of counsel for both the Holder and the Company
(or, should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company) the
proposed offering or other transfer as to which such registration is requested
is exempt from applicable federal and state securities laws and would result in
all purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the 1933 Act.
2
(e) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed with the Commission within
forty-five (45) days from the Closing Date up through and including ninety (90)
days from the Closing Date (as defined in the Agreement) then the Company will
pay Holder (pro rated on a daily basis), as liquidated damages for such failure
and not as a penalty, one (1%) percent of the outstanding principal amount of
the Debentures for each month thereafter until the Registration Statement is
filed.
(f) In the event the Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not declared effective with the
Commission within ninety (90) days from the Closing Date, then the Company will
pay Holder (pro rated on a daily basis), as liquidated damages for such failure
and not as a penalty, one (1%) percent per month thereafter of the outstanding
principal amount of the Debentures until the earlier of the date the
Registration Statement is declared effective or one hundred twenty (120) days
from the Closing Date. If the Registration Statement is not declared effective
with the Commission within one hundred twenty (120) days from the Closing Date,
then the Company will pay Holder (prorated on a daily basis), as liquidated
damages for such failure and not as a penalty, two (2%) percent per month
thereafter of the outstanding principal amount of the Debentures until the
Registration Statement is declared effective.
If the Company does not remit the damages to the Holder as set
forth above, the Company will pay the Holder reasonable costs of collection,
including attorneys fees, in addition to the liquidated damages. Such payment
of the liquidated damages shall be made to the Holder in cash or Common Stock
(at the closing bid price as of the trading date immediately preceding the date
of payment) at the option of the Company if the registration of the Conversion
Shares are not effected; provided, however, that the payment of such liquidated
damages shall not relieve the Company from its obligations to register the
Conversion Shares pursuant to this Section. The registration of the Conversion
Shares pursuant to this provision shall not affect or limit Holder's other
rights or remedies as set forth in this Agreement.
Notwithstanding the foregoing, the amounts payable by the Company
pursuant to this Section 3 shall not be payable to the extent any delay in the
filing of the Registration Statement occurs because of an act of, or a failure
to act timely by, the Investor or its counsel, in the event all of the
Registrable Securities may be sold pursuant to Rule 144 or another available
exemption under the Act, or acts beyond the Company's control.
(j) No provision contained herein shall preclude the Company
from selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
(k) If at any time or from time to time after the effective date
of the Registration Statement, the Company notifies the Holders in writing of
the existence of a Potential Material Event (as defined in the Agreement), the
Holders shall not offer or sell any Registrable Securities or engage in any
other transaction involving or relating to Registrable Securities, from the time
of the giving of notice with respect to a Potential Material Event until such
Holders receive written notice from the Company that such Potential Material
Event either
3
has been disclosed to the public or no longer constitutes a Potential Material
Event; PROVIDED, HOWEVER, that the Company may not so suspend the right to such
holders of Conversion Shares for more than one (1) thirty (30) day period and
one (1) twenty (20) day period in the aggregate during any twelve month period,
with at least a ten (10) business day interval between such periods, during the
periods the Registration Statement is required to be in effect. If a Potential
Material Event shall occur prior to the date the Registration Statement is
filed, then the Company's obligation to file the Registration Statement shall be
delayed without penalty for not more than twenty (20) days. The company must
give Purchaser notice in writing at least two (2) business days prior to the
first day of the blackout period. The Purchaser has the right to convert shares
during this blackout notice period.
Section 4. COOPERATION WITH COMPANY. Holders will cooperate with the
Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. REGISTRATION PROCEDURES. If and whenever the Company
is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Act, the Company
shall (except as otherwise provided in this Agreement), as expeditiously as
possible:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the Prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Holder or Holders of such securities shall desire to sell or otherwise
dispose of the same (including prospectus supplements with respect to the sales
of securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Act);
(b) furnish to each Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Act, and such other documents, as such Holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such Holder;
(c) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holder shall reasonably request (subject to
the limitations set forth in Section 3(c) above), and do any and all other acts
and things which may be necessary or advisable to enable each Holder to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
4
(d) use its best efforts to list such securities on the Nasdaq
National Market or other national securities exchange on which any securities of
the Company are then listed, if the listing of such securities is then permitted
under the rules of such exchange or Nasdaq;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify each Holder of Registrable Securities covered by such
Registration Statement, at any time when a prospectus relating thereto covered
by such Registration Statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
Section 6. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement
with respect to Registrable Securities pursuant to Section 3 hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the 1933 Act ("Distributing Holders")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), to which the
Distributing Holders may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such Registration Statement, or
any related preliminary prospectus, final prospectus, offering circular,
notification or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holders, specifically for use in the preparation
thereof. This Section 6(a) shall not inure to the benefit of any Distributing
Holder with respect to any person asserting such loss, claim, damage or
liability who purchased the Registrable Securities which are the subject thereof
if the Distributing Holder failed to send or give (in violation of the 1933 Act
or the rules and regulations promulgated thereunder) a copy of the prospectus
contained in such Registration Statement to such person at or prior to the
written confirmation to such person of the sale of such Registrable Securities,
where the Distributing Holder was obligated to do so under the 1933 Act or the
rules and regulations promulgated thereunder. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
5
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each officer, director of the Company or person,
if any, who controls the Company within the meaning of the 1933 Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses claims, damages or liabilities (or actions in
respect thereof; arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a Registration Statement
requested by such Distributing Holder, or any related preliminary prospectus,
final prospectus, offering circular, notification or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus, final
prospectus, offering circular, notification or amendment or supplement thereto
in reliance upon, and in conformity with, written information furnished to the
Company by such Distributing Holder, specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability which the
Distributing Holders may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than as to the particular item as to which indemnification is then
being sought solely pursuant to this Section 6. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, assume the defense thereof, subject to the provisions
herein stated and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation, unless
the indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to
6
the Distributing Holder (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the Distributing Holder,
it being understood, however, that the indemnifying party shall, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the Distributing Holder, which firm shall be
designated in writing by the Distributing Holder). No settlement of any action
against an indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution under the 1933 Act in any case in which (i) the indemnified party
makes a claim for indemnification pursuant to Section 6 hereof but is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the 1933 Act may be
required on the part of any indemnified party, then the Company and the
applicable Distributing Holder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Section 7 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
Section 8. NOTICES. Any notice pursuant to this Agreement by the
Company or by the Holder shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery, or (iii) if mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on
the signature page of this Agreement, with a copy to the person designated in
the Agreement.
7
(b) If to the Company, at GalaGen Inc., 0000 Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxx Xxxxx, XX 00000, Attn: Xxxxx X. Xxxxxx, (tele) (000) 000-0000,
(fax) (000) 000-0000, and a copy to Faegre & Xxxxxx LLP, 2200 Norwest Center, 00
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000, Attn: Xxxxx Will, Esq., (tele)
(000) 000-0000, (fax) (000) 000-0000, or to such other address as any such party
may designate by notice to the other party. Notices shall be deemed given at
the time they are delivered personally or five (5) days after they are mailed in
the manner set forth above. If notice is delivered by facsimile to the Company
and followed by mail, delivery shall be deemed given two (2) days after such
facsimile is sent.
Section 9. ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement cannot be assigned, amended or modified by the
parties hereto, except by written agreement executed by the parties.
Section 10. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 11. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 12. GOVERNING LAW, VENUE. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed entirely within such State, without regard
to its principles of conflicts of laws.
Section 13. SEVERABILITY. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, on the day and year first above written.
GALAGEN INC.
By
-------------------------------
Chief Financial Officer
8
HOLDERS:
CPR (USA) INC.
By
-------------------------------
Its
----------------------------
LIBERTYVIEW PLUS FUND
By
-------------------------------
Its
----------------------------
LIBERTYVIEW FUND, LLC
By
-------------------------------
Its
----------------------------
9
EXHIBIT E
November 18, 1997
To the Purchasers
as defined in that certain
6% Convertible Debenture Purchase Agreement
dated as of the date hereof among
the Purchasers and GalaGen Inc.
Re: GALAGEN INC.: SALE OF CONVERTIBLE DEBENTURES
Ladies and Gentlemen:
This opinion is being rendered to you in connection with the issuance
of 6% Convertible Debentures (the "Debentures"), and related common stock
Warrants (the "Warrants"), by GalaGen Inc. (the "Company"). We have acted as
counsel to the Company in connection with the sale of the Debentures and
Warrants to you pursuant to the terms of a 6% Convertible Debenture Purchase
Agreement (the "Purchase Agreement") dated as of the date hereof by and among
you and the Company.
All terms used herein shall have the respective meanings ascribed to
them in the Purchase Agreement unless otherwise defined herein.
In connection herewith, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of all such corporate and
official records of the Company, and all such other agreements and documents, as
we have considered necessary for the purposes of the opinions hereinafter
expressed, including, without limitation, the following documents:
1. the Purchase Agreement;
2. the Debentures to be issued to the Purchasers upon the Closing
Date;
3. the Warrants to be issued the Purchasers upon the Closing Date;
4. the Convertible Debenture Escrow Agreement dated as of the date
hereof by and among the Company, the Purchasers and Xxxxxxxxx, Xxxxxxxxx & Xxxx,
LLP (the "Escrow Agreement");
5. the Registration Rights Agreement dated as of the date hereof
between the Purchasers and the Company (the "Registration Rights Agreement");
6. the Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and the By-Laws of the Company, as amended (the "By-Laws"); and
7. the resolutions of the Board of Directors of the Company adopted
at its meeting on August 6, 1997 and of the Audit Committee of the Board of
Directors of the Company adopted by written consent effective as of November 13,
1997.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity with the originals of all
documents submitted to us as copies thereof, and the authenticity of the
originals of such copies, and the accuracy and completeness of all corporate
records and documents made available to us by the Company and its agents. In
addition, we have obtained and relied upon such certificates and assurances from
public officials as we have deemed necessary. We have relied as to factual
matters upon certificates of officers of the Company, believing that both you
and we are justified in relying upon such certificates. We have also assumed
that the Purchase Agreement, the Escrow Agreement and the Registration Rights
Agreement (collectively, the "Agreements") have been duly executed and delivered
by the parties thereto (other than the Company) and constitute the legal, valid
and binding obligations of all the respective parties thereto, enforceable by
the Company in accordance with the respective terms of such agreements.
Our opinions expressed below as to certain factual matters are
qualified as being limited "to our knowledge" or by other words to the same or
similar effect. Such words, as used herein, mean the information known to Xxxx
Xxxxxx and Xxxxx Will, the attorneys who have represented the Company in
connection with the transactions contemplated by the Purchase Agreement. In
rendering such opinions, we have not conducted any independent investigation or
consulted with other attorneys in our firm with respect to the matters covered
thereby. No inference as to our knowledge with respect to such matters should
be drawn from the fact of our representation of the Company.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is duly incorporated, validly existing, and in good
standing as a corporation under the laws of the State of Delaware, is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions where the Company owns or leases properties, maintains employees
or conducts business, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect on the Company, and has all
requisite corporate power and authority to own its properties and conduct its
business.
2. The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock, $.01 par value per share, and 15,000,000
shares of Preferred Stock, par value $.01 per shares.
3. The Company has full legal right, power and authority to execute,
deliver and perform the Agreements and to sell and deliver the Debentures, the
Warrants and the Conversion Shares as described in the Agreements. The Company
has taken all necessary corporate action to authorize the execution, delivery
and performance of the Agreements. The
2
Agreements have been duly executed and delivered by, and are the legal, valid
and binding obligations of, the Company and are enforceable against the Company
in accordance with their respective terms.
4. To our knowledge, no approval of any governmental or other body
is required for the execution and delivery of the Agreements by the Company or
the consummation of the transactions contemplated thereby.
5. To our knowledge, the execution, delivery and performance of the
Agreements by the Company and the performance of its obligations thereunder do
not and will not constitute a breach or violation of any of the terms and
provisions of, or constitute a default under or conflict with or violate any
provision of, (i) the Certificate of Incorporation or By-Laws, (ii) any material
indenture, mortgage, deed of trust, agreement or other material instrument to
which the Company is a party or by which it or any of its property is bound,
(iii) any applicable statute or regulation, (iv) or any judgment, decree or
order of any court or governmental body having jurisdiction over the Company or
any of its property.
6. The Debentures and the Warrants have been duly and validly
authorized and, when executed, issued and delivered, will be duly and validly
issued and shall constitute legal, valid and binding obligations of the Company,
enforceable in accordance with their terms.
7. The Conversion Shares have been duly and validly authorized and,
when issued and delivered upon conversion of the Debentures, or exercise of the
Warrants, as the case may be, in accordance with their respective terms, will be
duly and validly issued and fully paid and non-assessable.
8. The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the Company
has timely filed all the material required to be filed pursuant to Sections
13(a) or 15(d) of the 1934 Act for a period of at least twelve months preceding
the date hereof.
9. To the best of our knowledge, after due inquiry, there is no
pending or threatened litigation, investigation or other proceedings against the
Company.
10. Assuming the accuracy of the representations and warranties of
the Company and the Purchasers set forth in the Agreements, the offer, issuance
and sale of the Debentures, Warrants and the Conversion Shares are exempt from
the registration requirements of the 1933 Act.
11. The issuance of the Conversion Shares upon conversion of the
Debentures and exercise of the Warrants in accordance with the terms and
conditions of the Purchase Agreement, the Debentures and the Warrants will not
violate the applicable listing agreement between the Company and any securities
exchange or market on which the Company's securities are listed.
3
12. The Company complies with the eligibility requirements for the
use of Form S-3 under the 0000 Xxx.
The opinions expressed herein are subject to the qualification that
enforcement of the Agreements, the Debentures and the Warrants may be limited or
affected by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and by general principles of equity and limitations on
availability of equitable relief, including specific performance, regardless of
whether such enforceability is considered in a proceeding in equity or at law;
and, moreover, we disclaim any opinion as to the validity or enforceability of
the indemnification provisions of the Registration Rights Agreement.
In rendering the opinions expressed herein, we have assumed proper
filing, if any, as may be required under applicable blue sky laws, the proper
filing of a Form D pursuant to Securities and Exchange Commission Regulation D
and the full disclosure to the Purchasers of all material facts and, with
respect to performance by the Company of its obligations under the Debentures
and the Warrants, we have assumed compliance by the Company at such time with
the registration requirements of the 1933 Act and with applicable state
securities laws.
The foregoing opinions are limited to matters governed by the federal
laws of the United States and the laws of the States of Delaware and Minnesota.
With respect to the opinion in clause (iii) of paragraph 5 above, our opinion is
limited to governmental statutes, rules and regulations that a lawyer in the
State of Minnesota or the State of Delaware, exercising customary professional
diligence, would recognize as being directly applicable to the Company, or to
the transactions contemplated by the Purchase Agreement.
This opinion letter is strictly limited to the matters addressed
herein and is not to be read as an opinion with respect to any other matter.
This opinion is being delivered solely to the addressees hereof (and their legal
representatives) and, except upon written consent of the undersigned, may not be
delivered to or relied upon by any other party.
We do not undertake to advise you of any changes in the opinion
expressed herein subsequent to the date of this letter resulting from changes in
law or matters which may hereafter be brought to our attention.
Very truly yours,
FAEGRE & XXXXXX LLP
4
EXHIBIT F
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT THE
6% CONVERTIBLE DEBENTURE)
The undersigned hereby irrevocably elects to convert the below applicable
portion of Debenture No. ____ into shares of common stock of GALAGEN INC. (the
"Company") according to the conditions hereof, as of the date written below.
The undersigned represents and warrants that
(i) All offers and sales by the undersigned of the shares of Common
Stock issuable to the undersigned upon conversion of the Debenture
shall be made pursuant to an exemption from registration under the
Act, or pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "1933 Act"), subject to any
restrictions on sale or transfer set forth in the 6% Convertible
Debenture Purchase Agreement between the Company and the original
holder of the Certificate submitted herewith for conversion.
(ii) Upon conversion pursuant to this Notice of Conversion, the
undersigned will not own or deemed to beneficially own (within the
meaning of the Securities Exchange Act of 1934) 4.99% or more of the
then issued and outstanding shares of the Company.
------------------------------- -------------------------------
Date of Conversion Applicable Conversion Price
------------------------------- -------------------------------
Number of Common Shares upon $ Amount of Conversion
Conversion
------------------------------- -------------------------------
Signature Name
Address: Delivery of Shares to:
-------------------------------
CONVERTIBLE DEBENTURE ESCROW AGREEMENT
THIS AGREEMENT is made as of the 18th day of November, 1997 by and
among GALAGEN INC., with its principle office at 0000 Xxxxxxxxx Xxxxxx Xxxxx,
Xxxxx Xxxxx, XX 00000 (hereinafter the "Company"), the Purchasers specified on
Schedule A attached hereto, with their respective principal offices at the
addresses set forth in Schedule A (hereinafter collectively referred to as the
"Purchaser"), and XXXXXXXXX, XXXXXXXXX & XXXX, LLP, 00 Xxxxxxxx, 00xx Xx., Xxx
Xxxx, XX 00000 (hereinafter the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Purchaser will be purchasing Debentures and Warrants (the
"Securities") from the Company at a purchase price as set forth in a 6%
Convertible Debenture Purchase Agreement (the "Agreement") dated November 18,
1997, signed by the Company and Purchaser; and
WHEREAS, it is intended that the purchase of Securities be consummated
in accordance with the requirements set forth by Regulation D promulgated under
the Securities Act of 1933, as amended; and
WHEREAS, the Company has requested that the Escrow Agent hold the
funds of Purchaser in escrow until the Escrow Agent has received the Securities.
The Escrow Agent will then immediately wire transfer or otherwise deliver at the
Company's discretion immediately available funds to the Company's account and
arrange for delivery of the Securities to Purchaser as per the Purchaser's
instructions.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1 The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase
of the Securities.
1.2 Upon Escrow Agent's receipt of funds into its attorney trustee
account, it shall notify the Company, or the Company's designated attorney or
agent, of the amount of funds it has received into its account.
1.3 The Company, upon receipt of said notice and acceptance of the
Agreement by both parties, as evidenced by the Company's and the Purchaser's
execution thereof,
shall deliver to the Escrow Agent the Securities being purchased. Escrow Agent
shall then communicate with the Company to confirm the validity of its issuance.
1.4 Once Escrow Agent confirms the validity of the issuance of the
Securities, he shall immediately wire that amount of funds necessary to purchase
the Securities per the written instructions of the Company. The Company will
furnish Escrow Agent with a "Net Letter" directing payment of placement agent
fees in the amount of six percent (6%) of the gross amount in accordance with an
engagement letter between the Company and The Malachi Group, Inc. ("Malachi"),
such fee to be remitted to Malachi in accordance with wire instructions that
will be sent to Escrow Agent from Malachi, with the net balance payable to the
Company. Once the funds have been received per the Company's instructions, the
Escrow Agent shall then arrange to have the Securities delivered as per
instructions from the Purchaser.
1.5 This Agreement may be altered or amended only with the consent
of all of the parties hereto. Should the Company or Purchaser attempt to change
this Agreement in a manner which, in the Escrow Agent's discretion, shall be
undesirable, the Escrow Agent may resign as Escrow Agent by notifying the
Company and the Purchaser in writing. In the case of the Escrow Agent's
resignation or removal pursuant to the foregoing, its only duty, until receipt
of notice from the Company and the Purchaser or its agent that a successor
escrow agent shall have been appointed, shall be to hold and preserve the funds.
Upon receipt by the Escrow Agent of said notice from the Company and the
Purchaser of the appointment of a successor escrow agent, the name of a
successor escrow account and a direction to transfer the funds, the Escrow Agent
shall promptly thereafter transfer all of the funds held in escrow to said
successor escrow agent. Immediately after said transfer, the Escrow Agent shall
furnish the Company and the Purchaser with proof of such transfer. The Escrow
Agent is authorized to disregard any notices, requests, instructions or demands
received by it from the Company or the Purchaser after notice of resignation or
removal shall have been given, unless the same shall be the aforementioned
notice from the Company and the Purchaser to transfer the funds to a successor
escrow agent or to return same to the respective parties.
1.6 The Escrow Agent shall be reimbursed by the Company and the
Purchaser for any reasonable expenses incurred in the event there is a conflict
between the parties and the Escrow Agent shall deem it necessary to retain
counsel.
1.7 The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith in accordance with the advice of the Escrow Agent's
counsel; and in no event shall the Escrow Agent be liable or responsible except
for the Escrow Agent's own gross negligence or willful misconduct.
1.8 The Company and the Purchaser warrant to and agree with the
Escrow Agent that, unless otherwise expressly set forth in this Agreement:
(i) there is no security interest in the Securities or any part
thereof;
2
(ii) no financing statement under the Uniform Commercial
Code is on file in any jurisdiction claiming a security
interest or in describing (whether specifically or generally)
the Securities or any part thereof; and
(iii) the Escrow Agent shall have no responsibility at any
time to ascertain whether or not any security interest exists
in the Securities or any part thereof or to file any financing
statement under the Uniform Commercial Code with respect to
the Securities or any part thereof.
1.9 The Escrow Agent in its capacity as such has no liability
hereunder to either party other than to hold the funds and the Securities and to
deliver them under the terms hereof. Each party hereto agrees to indemnify and
hold harmless the Escrow Agent in its capacity as such from and with respect to
any suits, claims, actions or liabilities arising in any way out of this
transaction including the obligation to defend any legal action brought which in
any way arises out of or is related to this Escrow.
ARTICLE 2
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed any extension
of the time for performance of any other obligation or act.
2.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
(a) GalaGen Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
(tele) (000) 000-0000
(fax) (000) 000-0000
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copy to:
Faegre & Xxxxxx LLP
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 000000
Attn: Xxxxx Will, Esq.
(tele) (000) 000-0000
(fax) (000) 000-0000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing;
(b) if to the Purchaser, to such Purchaser's address set forth on
Schedule A hereto, with a copy to Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP, 00 Xxxxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx Xxxxxxxxx, (tele) (212)
000-0000, (fax) (000) 000-0000.
(c) Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP
00 Xxxxxxxx, 00xx Xx.
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
(tele) (000) 000-0000
(fax) (000) 000-0000
2.3 This Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and assigns of the parties hereto.
2.4 This Agreement is the final expression of, and contains the
entire Agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Agreement
may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
2.5 Whenever required by the context of this Agreement, the
singular shall include the plural and masculine shall include the feminine.
This Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
2.6 The Company acknowledges and confirms that it is not being
represented in a legal capacity by Xxxxxxxxx, Xxxxxxxxx & Xxxx, LLP and it has
had the opportunity to consult with its own legal advisors prior to the signing
of this Agreement.
2.7 The parties hereto expressly agree that this Agreement shall
be governed by, interpreted under and construed and enforced in accordance with
the laws of the State of
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Delaware. Any action to enforce, existing out of, or relating in any way to,
any provisions of this Agreement shall brought through the American Arbitration
Association at the designated locale of New York, New York, if initiated by
GalaGen against either Purchaser or Escrow Agent or both or if initiated by
Purchaser or Escrow Agent against the other, and of New York, New York, if
initiated by either Purchaser or Escrow Agent or both against GalaGen.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 18th day of November, 1997.
GALAGEN INC.
By
-------------------------------------
Chief Financial Officer
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PURCHASER
CPR (USA) INC.
By
-------------------------------------
Its
---------------------------------
LIBERTYVIEW PLUS FUND
By
-------------------------------------
Its
---------------------------------
LIBERTYVIEW FUND, LLC
By
-------------------------------------
Its
---------------------------------
XXXXXXXXX, XXXXXXXXX & XXXX, LLP,
Escrow Agent
By
-------------------------------------
Member
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SCHEDULE A
NAMES AND ADDRESSES OF PURCHASER
CPR (USA) INC.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
LIBERTYVIEW PLUS FUND
x/x Xxxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx XX XX Xxxxxxx
XXXXXXXXXXX FUND, LLC
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
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