EXHIBIT 99
SUBSCRIPTION AGREEMENT AND
INVESTMENT LETTER
GalaGen Inc.
Xxxxx 000
000 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Gentlemen:
The undersigned hereby subscribes for and offers to purchase from
GalaGen Inc., a Delaware corporation (the "Company"), __________ shares of
Common Stock of the Company, par value $.01 per share (the "Shares"), and a
warrant (the "Warrant") to purchase ______ shares of Common Stock of the
Company, subject to adjustment as noted therein, substantially in the form of
Exhibit A hereto. The undersigned further understands that the offering is being
made without registration of the Shares or the Warrant under the Securities Act
of 1933, as amended (the "Securities Act"), and is being made only to
"accredited investors" (as defined in Rule 501 of Regulation D under the
Securities Act).
1. PURCHASE PRICE. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for the Shares and the Warrant for an
aggregate purchase price of $_________, which amount is payable as described in
Section 4 hereof.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES AND THE WARRANT.
It is understood and agreed that the Company shall have the sole right, at its
complete discretion, to accept or reject this subscription, in whole or in part,
for any reason and that the same shall be deemed to be accepted by the Company
only when it is signed by a duly authorized officer of the Company and delivered
to the undersigned at the Closing referred to in Section 3 hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to issue any of the Shares or the Warrant to any person who
is a resident of a jurisdiction in which the issuance of Shares or the Warrant
to such person would constitute a violation of the securities, "blue sky" or
other similar laws of such jurisdiction (collectively referred to as the "State
Securities Laws").
3. THE CLOSING. The closing of the purchase and sale of the Shares and
the Warrant (the "Closing") shall take place on October 11, 2000 (the "Closing
Date") and at a place and at a time mutually agreed to by the Company and the
undersigned.
4. PAYMENT FOR SHARES AND THE WARRANT. Payment for the Shares and the
Warrant shall be received by the Company from the undersigned by cashier's check
or wire transfer
of immediately available funds at or prior to the Closing. The Company shall
deliver the Shares and the Warrant to the undersigned at the Closing.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. When used in this
Section 5, the phrase "to the Company's knowledge" shall mean the actual
knowledge of the officers of the Company. The Company hereby represents and
warrants to the undersigned that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is currently being
conducted and to own its assets. The Company is duly qualified as a
foreign corporation to do business in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except where the failure to so qualify would not
materially or adversely affect the Company, its business, assets,
condition (financial or otherwise) or operations.
(b) The Company has all requisite authority to enter into this
Agreement, the Warrant and the Registration Rights Agreement (as
defined in Section 18) and to perform all the obligations required to
be performed by the Company hereunder and thereunder. All corporate
action on the part of the Company, its officers, directors and
stockholders necessary for the authorization, execution and delivery of
this Agreement and the Registration Rights Agreement, the performance
of all the Company's obligations hereunder and thereunder, and for the
authorization, issuance, sale and delivery of the Shares and the
Warrant has been taken or will be taken prior to the Closing. Each of
this Agreement and the Registration Rights Agreement, when executed and
delivered by the Company, shall, assuming due execution and delivery by
the undersigned, constitute a valid and legally binding obligation of
the Company enforceable in accordance with its terms, except as the
enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditors' rights generally, except for judicial
limitations on the enforcement of the remedy of specific performance
and other equitable remedies and except for limitations on the
enforceability of the indemnification and contribution provisions of
the Registration Rights Agreement.
(c) The Shares and the Warrant, when issued and paid for, will
be duly authorized, validly issued and fully paid and nonassessable,
free of any liens, claims or encumbrances except for restrictions on
transfer imposed by state and federal securities laws and except for
the liens, claims and encumbrances created by the undersigned, and the
issuance of the Shares and the Warrant is not subject to any preemptive
right or right of first refusal that has not been waived. The shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares") have been reserved for issuance based upon the initial
exercise price, and when issued upon exercise will be duly authorized,
validly issued and fully paid and nonassessable, free of
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any liens, claims or encumbrances except for restrictions on transfer
imposed by state and federal securities laws and except for the liens,
claims and encumbrances created by the undersigned.
(d) Assuming the accuracy of the representations and
warranties of the undersigned contained in Section 6 hereof on the date
hereof and on the Closing Date, the offer, issue, and sale of the
Shares and the Warrant and the offer of the Warrant Shares are exempt
from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit, or
qualification requirements of all applicable State Securities Laws.
(e) The Company has furnished to the undersigned the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1999
and the Company's quarterly reports on Form 10-Q for the quarters ended
March 31, 2000 and June 30, 2000 (the "SEC Documents"). Each of the SEC
Documents, as of its date (or if amended, as of the date of such
amendment), complied as to form in all material respects with the
requirements of the Securities Exchange Act of 1934 (the "1934 Act"),
and the information contained in such document, as of its date, did not
contain any untrue statement of a material fact, and did not omit to
state any material fact necessary to make any statement, in light of
the circumstances under which such statement was made, not misleading.
The Company has not filed with the Securities and Exchange Commission
(the "SEC") any reports under the 1934 Act since the date of the
quarterly report on Form 10-Q for the quarter ended June 30, 2000
(f) The Company has, within the past twelve months, timely
filed with the SEC all reports and other documents required to be so
filed.
(g) The Company is authorized to issue 40,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of September
30, 2000, there were 10,518,371 shares of Common Stock and no shares of
Preferred Stock outstanding. No shares of capital stock of the Company,
or securities convertible into or exercisable for such capital stock,
have been issued by the Company since September 30, 2000 except for
issuances pursuant to the Company's equity compensation plans or
pursuant to outstanding options, warrants, rights or convertible notes,
in each case as disclosed in or attached as exhibits to the SEC
Documents, and warrants to purchase 10,000 shares of Common Stock
issued to Xxxxxxx Real Estate Company, Inc. on June 12, 2000 (the
"Xxxxxxx Warrant"). Other than 1,816,045 shares issuable pursuant to
option plans and 802,991 shares issuable pursuant to outstanding
warrants, all of which are described in or attached as exhibits to the
SEC Documents, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal)
or agreements of any kind for the purchase or acquisition of any of its
securities from the Company, except for the
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Xxxxxxx Warrant. All outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable
and were issued in compliance with federal and state securities laws;
and none of the outstanding shares of Common Stock were issued in
violation of the preemptive rights, if any, of any stockholders of the
Company.
(h) There is no action, suit or proceeding pending, or, to the
Company's knowledge, threatened, against the Company (a) which
questions the validity of this Agreement or the Registration Rights
Agreement or the ability of the Company to consummate the transactions
contemplated hereby or thereby or (b) which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties,
prospects, operations, or financial condition of the Company.
(i) To the Company's knowledge, there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the
voting of their respective shares other than proxies which have been or
may be given in connection with the Company's annual meeting of
stockholders and other than as disclosed in documents filed with the
SEC pursuant to the 1934 Act.
(j) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and consummation of the
transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Restated Certificate of
Incorporation, as amended, or Restated Bylaws of the Company; (b)
result in any breach, violation of or default or loss of a benefit
under, or conflict with, or permit the acceleration of any obligation
under (in each case, upon the giving of notice, the passage of time, or
both) any mortgage, indenture, lease, loan agreement or other agreement
or instrument, permit, franchise, license, judgment, order, decree,
law, ordinance, rule or regulation applicable to the Company or its
properties. The Company is not in violation or default of any term of
its Restated Certificate of Incorporation or Restated Bylaws or of any
provision of any mortgage, indenture, lease, loan agreement or other
agreement or instrument, permit, franchise, license, judgment, order,
decree, law, ordinance, rule or regulation applicable to the Company or
its properties where such violation or default would have a material
adverse effect on the Company's business, properties, operations or
financial condition.
(k) All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings
with, any federal, state or local governmental authority, required on
the part of the Company in connection with the valid execution,
delivery and performance of this Agreement and the Registration Rights
Agreement, the offer, sale or issuance of the Shares and the Warrant,
or the consummation of any other transaction contemplated hereby and
thereby, have been
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obtained, or will be effective at the Closing, except for notices
required or permitted to be filed with certain state and federal
securities commissions after the Closing, which notices will be filed
on a timely basis and except for filings and such other actions
required to be taken pursuant to the Registration Rights Agreement
after the date hereof.
(l) Except as disclosed in or contemplated by the SEC
Documents and except as disclosed on Schedule 1 hereto, since June 30,
2000, the Company has not (i) incurred or become subject to any
material liabilities (absolute or contingent) except liabilities
incurred in the ordinary course of business, consistent with past
practices; (ii) mortgaged, pledged or subjected to lien, charge or any
other encumbrance any of its assets, tangible or intangible other than
Permitted Liens (as defined below); (iii) sold, assigned or transferred
any of its assets or canceled any debts or obligations except in the
ordinary course of business, consistent with past practices; (iv)
suffered any extraordinary losses, or waived any rights of substantial
value; (v) sold, assigned or transferred to a third party that is not
an affiliate (within the meaning set forth in Rule 405 under the
Securities Act) any material patents, trademarks, copyrights, trade
secrets or other intangible assets for compensation less than the fair
value of such assets; (vi) declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock; (vii)
entered into any material transaction other than in the ordinary course
of business, consistent with past practices; (viii) violated any term
of its Restated Certificate of Incorporation or Restated By-Laws or
defaulted on any provision of any mortgage, indenture, lease, loan
agreement or other agreement or instrument or violated any permit,
franchise, license, judgment, order, decree, law, ordinance, rule or
regulation applicable to the Company or its properties where such
violation or default would have a material adverse effect on the
Company's business, properties, prospects, operations or financial
condition; or (ix) otherwise had any material change in its condition,
financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or
in the aggregate has had a material adverse effect on the Company. For
purposes of this Section 5(l), "Permitted Liens" shall mean (i) liens
for taxes, assessments and governmental charges or levies not yet due
and payable, and (ii) inchoate encumbrances imposed by federal or state
laws, statutes or regulations, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens which are not, in the
aggregate, material.
(m) Subject to the terms of the letter described in item 1 on
Schedule 1 hereto, the Common Stock of the Company is currently and
shall continue to be listed on The Nasdaq SmallCap Market.
(n) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company contained in
any document, certificate or other writing furnished to the undersigned
in connection with the transactions
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contemplated hereby, when taken as a whole, contains any untrue
statement of a material fact or omits to state any material fact
necessary to make statements herein or therein not misleading in light
of the circumstances in which they are made.
(o) To the Company's knowledge, the Company owns or possesses
sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now
conducted and as presently proposed to be conducted. Except as
described in or attached as an exhibit to the SEC Documents, there are
no outstanding options, licenses or agreements of any kind relating to
the foregoing proprietary rights, nor is the Company bound by or a
party to any options, licenses or agreements of any kind with respect
to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and
processes of any other person or entity other than such licenses or
agreements arising from the purchase of "off the shelf" or standard
products. The Company has not received any communications alleging that
the Company has violated or, by conducting its business as presently
proposed would violate, any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity.
(p) To the Company's knowledge, none of its employees is
obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that
would interfere with their duties to the Company or that would conflict
with the Company's business as presently proposed to be conducted. Each
former and current employee, officer and consultant of the Company has
executed a proprietary information and inventions agreement in the
form(s) as delivered to the Purchasers.
(q) The Company is not a real property holding corporation
within the meaning of Section 897(c)(2) of the Internal Revenue Code of
1986 and any regulations promulgated thereunder.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERSIGNED. The
undersigned hereby represents and warrants to and covenants with the Company
that:
(a) GENERAL:
(i) The undersigned has all requisite
authority to enter into this Agreement and the Registration
Rights Agreement and to perform all the obligations required
to be performed by the undersigned hereunder and thereunder.
Each of this Agreement and the Registration Rights Agreement,
when executed and delivered by the undersigned, shall,
assuming due
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execution and delivery by the Company, constitute a valid
and legally binding obligation of the undersigned
enforceable in accordance with its terms, except as the
enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally, and except for judicial limitations on the
enforcement of the remedy of specific performance and other
equitable remedies.
(ii) The undersigned is a resident of or is
domiciled in the state or other jurisdiction set forth on the
signature page hereto.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The undersigned realizes that purchase
of the Shares and the Warrant is a speculative investment, and
that the economic benefits which may be derived therefrom are
uncertain. In determining whether or not to make an investment
in the Company, the undersigned has relied solely upon the
written materials provided to the undersigned by the Company,
receipt of which is hereby acknowledged, and upon independent
investigations made by the undersigned and the undersigned's
representatives.
(ii) The opportunity has been made available
to the undersigned to ask questions of and receive answers
from representatives of the Company concerning the terms and
conditions of the Shares and the Warrant and to review the
Company's material books and records.
(iii) The undersigned understands that no
federal or state agency has passed upon the Shares or the
Warrant or made any finding or determination concerning the
fairness or advisability of this investment.
(c) STATUS OF UNDERSIGNED:
(i) The undersigned, if an individual, has
attained the age of majority (as established in the
undersigned's state of residence), and, in any event, is under
no disability with respect to entering into a contractual
relationship with the Company and in executing this Agreement.
(ii) The undersigned has such knowledge,
skill and experience in business, financial and investment
matters so that the undersigned is capable of evaluating the
merits and risks of the investment to be made hereunder. To
the extent necessary, the undersigned has retained, at the
undersigned's own expense, and relied upon, appropriate
professional advice regarding the
7
investment, tax and legal merits and consequences of this
Agreement and of owning the Shares, the Warrant and the
Warrant Shares.
(iii) The undersigned is acquiring the
Shares, the Warrant and the Warrant Shares for its own account
or for the account of its clients for investment only, and not
with a view towards their distribution. The undersigned's
clients have represented to the undersigned that such clients
are acquiring the Shares, the Warrant and the Warrant Shares
for investment only, and not with a view towards their
distribution.
(iv) The undersigned, and any of the
undersigned's clients to which it attributes any of the
Shares, the Warrant or the Warrant Shares is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
The undersigned agrees to furnish any additional information
requested to assure compliance with applicable federal and
state securities laws in connection with the purchase and sale
of the Shares and the Warrant. The undersigned acknowledges
that the undersigned has completed Part I, the Subscriber
Information questionnaire, and Part II, the Accreditation
Criteria questionnaire, previously provided to the undersigned
and that the information contained therein is complete and
accurate as of the date thereof and is hereby affirmed as of
the date hereof.
(v) The information presented and statements
made by the undersigned in the questionnaire referred to in
Section 6(c)(iv) completed and delivered by the undersigned
and returned to the Company with this Agreement are complete
and accurate as of this date and may be relied upon by the
Company in determining whether to accept this offer.
(vi) The undersigned's commitment to
investments that are not readily marketable is not
disproportionate to the undersigned's net worth, and the
investment to be made hereunder will not cause such commitment
to become excessive. The undersigned has adequate means of
providing for the undersigned's current needs and
contingencies and has no need for liquidity with respect to
the undersigned's investment contemplated hereby, and can
withstand a complete loss of such investment.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES, THE WARRANT
AND THE WARRANT SHARES:
(i) The undersigned understands that the
Shares, the Warrant and the Warrant Shares have not been
registered under the Securities Act, or any State Securities
Laws, in reliance on exemptions from registration which
depend, in part, on the undersigned's investment intention;
and, accordingly,
8
the truth and accuracy of the foregoing representation will
be relied upon by the Company to establish such exemptions.
The undersigned acknowledges that the Company is not
required to recognize any transfer of the Shares, the
Warrant or the Warrant Shares unless, in the opinion of
counsel to the Company, such transfer would not result in a
violation of any federal or state law regarding the offer
and sale of securities and unless the other restrictions on
transfer set forth in the Shares, the Warrant or the Warrant
Shares, as the case may be, are complied with.
(ii) The undersigned understands that the
Shares and the Warrant are, and upon exercise of the Warrant
the Warrant Shares will be, "restricted securities" under
applicable federal securities laws and that the Securities Act
and the rules of the SEC provide in substance that the
undersigned may dispose of the Shares, the Warrant or the
Warrant Shares only pursuant to an effective registration
statement under the Securities Act or an exemption therefrom,
and the undersigned understands that the Company has no
obligation or intention to register any of the Shares, the
Warrant or the Warrant Shares (except for the registration
rights referred to in Section 18 hereof), or to take action so
as to permit sales pursuant to the Securities Act (including
Rule 144 thereunder). Accordingly, the undersigned understands
that, under the SEC's rules and until the Shares, the Warrant
or the Warrant Shares are registered for sale under the
Securities Act, the undersigned may dispose of the Shares, the
Warrant or the Warrant Shares, as the case may be, principally
only in "private placements" which are exempt from
registration under the Securities Act, in which event the
transferee will acquire "restricted securities" subject to the
same limitations as in the hands of the undersigned. As a
consequence, the undersigned understands that the undersigned
must bear the economic risks of the investment in the Shares,
the Warrant or the Warrant Shares for an indefinite period of
time.
(iii) The undersigned agrees: (A) that the
undersigned will not sell, assign, pledge, give, transfer or
otherwise dispose of the Shares, the Warrant or the Warrant
Shares or any interest therein, or make any offer or attempt
to do any of the foregoing, except pursuant to a registration
of the Shares, the Warrant or the Warrant Shares, as
applicable, under the Securities Act and all applicable State
Securities Laws or in a transaction which is exempt from the
registration provisions of the Securities Act and all
applicable State Securities Laws; (B) that the Warrant and the
certificate(s) for the Shares and the Warrant Shares (when and
if issued) will bear a legend making reference to the
foregoing restrictions; and (C) that the Company and any
transfer agent for the Shares, the Warrant and the Warrant
Shares shall not be required to give effect to any purported
transfer of such securities except upon compliance with the
foregoing restrictions.
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(iv) The undersigned acknowledges that the
Company has the right in its sole and absolute discretion to
abandon this private placement at any time prior to the
completion of the offering and to return the previously paid
subscription price of the Shares and the Warrant, without
interest thereon, to the undersigned.
(v) The undersigned has not used any person
as a "Purchaser Representative" within the meaning of SEC
Regulation D to represent it in determining whether it should
purchase the Shares or the Warrant.
(c) CONFIDENTIALITY AGREEMENT. The undersigned agrees that,
except with the prior written permission of the Company, it shall at
all times keep confidential and not divulge, furnish or make accessible
to anyone any confidential information, knowledge or data concerning or
relating to the business or financial affairs of the Company, including
the existence or terms of this Agreement or the nature of the
transactions contemplated hereby, to which the undersigned has been or
shall become privy by reason of this Agreement, discussions or
negotiations relating to this Agreement or the performance of this
Agreement until the Company has made such information publicly
available.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED. The
undersigned's obligation to purchase the Shares and the Warrant at the
Closing is subject to the fulfillment, at or prior to the Closing, of
all of the following conditions, any of which may be waived by the
undersigned:
(i) The representations and warranties made
by the Company in Section 5 hereof shall be true and correct
in all respects on the date of the Closing with the same force
and effect as if they had been made on and as of said date;
and the Company shall have performed and complied with all
obligations, agreements and conditions herein required to be
performed by it on or prior to the Closing.
(ii) The undersigned shall have received
from Faegre & Xxxxxx LLP, counsel to the Company, an opinion
letter substantially in the form attached hereto as Exhibit C,
addressed to it, dated the date of the Closing.
(iii) All corporate and other proceedings in
connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and
form to the undersigned, and the undersigned shall have
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received all such counterpart originals or certified or other
copies of such documents as it may reasonably request.
(iv) All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Shares and
the Warrant pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing,
except for notices required or permitted to be filed with
certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and
except for filings and other actions required to be taken
pursuant to the Registration Rights Agreement after the date
hereof. At the time of the Closing, the sale and issuance of
the Shares and the Warrant shall be legally permitted by all
laws and regulations to which the undersigned and the Company
are subject.
(v) No stop order or other order enjoining
the sale of the Shares and the Warrant shall have been issued
and no proceedings for such purpose shall be pending or, to
the knowledge of the Company, threatened by the SEC or any
commissioner of corporations or similar officer of any other
state having jurisdiction over this transaction.
(vi) The Company shall have delivered to the
undersigned a Certificate, executed by the President of the
Company, dated the Closing Date, certifying to (i) the
fulfillment of the conditions specified in subparagraphs (i)
and (v) of this Section 7 and (ii) the incumbency of the
officers of the Company executing this Agreement and the other
instruments delivered by the Company upon the Closing.
(vii) The Company shall have delivered to
the undersigned a Certificate, executed by the Secretary of
the Company, dated the Closing Date, certifying that (i) the
copies of the Restated Certificate of Incorporation, as
amended, and the Restated By-Laws, as amended, of the Company
attached thereto are true and complete and are in full force
and effect and (ii) the copy of the resolutions duly adopted
by the Board of Directors of the Company attached thereto is
true and correct and that such resolutions have been entered
in the minute books of the Company and have not been amended,
altered or repealed and remain in full force and effect. The
Company will attach to such Certificate good standing
certificates, dated as of a recent date, with respect to the
Company from the applicable authorities in Delaware and any
other jurisdiction in which the Company is qualified to do
business.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. In addition to,
and not in limitation of, the Company's rights set forth in Section 2
hereof, the Company's
11
obligation to issue and sell the Shares and the Warrant at the Closing
is subject to the fulfillment, on or prior to the Closing, of the
following conditions, any of which may be waived by the Company:
(i) The representations and warranties made
by the undersigned in Section 6 hereof shall be true and
correct in all respects on the date of the Closing with the
same force and effect as if they had been made on and as of
said date, and the undersigned shall have performed and
complied with all obligations, agreements and conditions
herein required to be performed by the undersigned on or
before the Closing.
(ii) All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are required in
connection with the lawful sale and issuance of the Shares and
the Warrant pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing. No
stop order or other order enjoining the sale of the Shares and
the Warrant shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC or any commissioner of corporations or
similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance
of the Shares and the Warrant shall be legally permitted by
all laws and regulations to which the undersigned and the
Company are subject.
8. LEGEND. Each certificate for Shares and the Warrant will be
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR
OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR, IN THE OPINION OF COUNSEL, SUCH
REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS IS NOT REQUIRED."
9. BROKERS. Except for the letter agreement dated October 11, 2000
between the Company and Lombard Odier & Cie, the undersigned has not entered
into any agreement to pay any broker's or finder's fee to any person with
respect to this Agreement or the transactions contemplated hereby.
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10. FILING OF REPORTS. The Company will, so long as it has securities
registered pursuant to Section 12 of the 1934 Act or has securities registered
pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the SEC so that Rule 144 under the Securities
Act or any successor provision thereto will be available to the security holders
of the Company who are otherwise able to take advantage of the provisions of
such Rule.
11. WAIVER, AMENDMENT. Neither this Agreement nor any provisions hereof
shall be modified, changed, discharged or terminated except by an instrument in
writing, signed by the party against whom any waiver, change, discharge or
termination is sought, and any waiver, change, discharge or termination shall be
effective only to the extent specifically set forth in such writing.
12. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, to it at the following address:
GalaGen Inc.
Xxxxx 000
000 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Executive Officer
(b) If to the undersigned, the address set forth on the
signature page hereto;
or at such other address as either party shall have specified by notice in
writing to the other.
13
17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18. REGISTRATION RIGHTS. The Company and the undersigned agree that the
undersigned shall have the benefit of the registration rights as set forth in
the Registration Rights Agreement of even date herewith, in the form attached as
Exhibit B hereto (the "Registration Rights Agreement"), with respect to the
resale of the Shares and the Warrant Shares.
19. SURVIVAL. All representations, warranties and covenants contained
in this Agreement shall survive (i) the acceptance of the subscription by the
Company and (ii) if the undersigned is an individual, the death or disability of
the undersigned.
20. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing of the purchase of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the undersigned contained in
this Agreement to be false or incorrect.
21. ENTIRE AGREEMENT. This Agreement, the Appendices hereto, and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
23. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to either party or its respective successors and
assigns upon any breach, default or noncompliance of the other party hereto
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that all remedies, either under this
Agreement, by law, or otherwise afforded to either party shall be cumulative and
not alternative.
14
24. PREVAILING PARTY. If legal action is brought by, or on behalf of,
either party to enforce or interpret this Agreement, the prevailing party shall
be entitled to recover its attorneys' fees and legal costs in connection
therewith.
25. FEES AND EXPENSES. At the Closing, the Company shall pay the
reasonable fees and expenses of Xxxxxx Godward LLP, the special counsel for
Lombard Odier & Cie in connection with the transactions contemplated by this
Agreement; provided, however, that the aggregate amount of such reimbursement
shall not exceed $25,000.
15
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement and Investment Letter this 11th day of October, 2000.
----------------------------------------------
Signature
----------------------------------------------
Print Name
----------------------------------------------
Number and Street
----------------------------------------------
City, State and Zip
----------------------------------------------
Subscriber's Social Security
or Tax Identification Number
----------------------------------------------
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary, Corporation or Partnership, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation ( ) Partnership
16
Accepted as of October 11, 2000
GALAGEN INC.
By:_______________________
Name:__________________
Title:_________________
17
SCHEDULE 1
1. Letter from The Nasdaq Stock Market to Xxxxxx X. Xxxxx, Esq. dated
September 27, 2000.
2. The following press releases were issued by the Company:
Sep 29, 2000
GalaGen Securities to Trade on Nasdaq SmallCap Market; Nasdaq Grants
GalaGen Extension to Comply With Listing Requirements
Aug 1, 2000
GalaGen Second-Quarter Results Reflect Investment in Marketing
and Science
Jul 19, 2000
RDIA and LSRO Spearhead Consensus-Building Conference on Proposed
New Process for Reviewing Structure/Function Claims
Jul 13, 2000
GalaGen Announces Agreement With Xxxxx Xxxxxx
3. The Company had net losses of approximately $1,100,000 in the third quarter
of 2000.
4. The Company financed the purchase of approximately $150,000 of computer
equipment and office furniture and gave a security interest in those assets
to secure the debt.
EXHIBIT A
WARRANT
To Subscribe for and Purchase Common Stock of
GALAGEN INC.
THIS CERTIFIES THAT, for value received, __________________________
(herein called "Purchaser") or registered assigns is entitled to subscribe for
and purchase from GalaGen Inc. (herein called the "Company"), a corporation
organized and existing under the laws of the State of Delaware, at the price
specified below (subject to adjustment as noted below) at any time from and
after the date hereof to and including October 11, 2010,
___________________________________ (_______) fully paid and nonassessable
shares of the Company's Common Stock (subject to adjustment as noted below).
This Warrant has been issued in connection with the purchase from the Company by
Purchaser of shares of Common Stock of the Company pursuant to a Subscription
Agreement and Investment Letter dated October 11, 2000 (the "Agreement") between
the Company and the Purchaser.
The warrant purchase price (subject to adjustment as noted below) shall
be $.80 per share.
This Warrant is subject to the following provisions, terms and
conditions:
1. The rights represented by this Warrant may be exercised by the
holder hereof, in whole or in part, by written notice of exercise delivered to
the Company and by the surrender of this Warrant (properly endorsed if required)
at the principal office of the Company and upon payment to it by check of the
purchase price for such shares. The Company agrees that the shares so purchased
shall be and are deemed to be issued to the holder hereof as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares as aforesaid. Subject to
the provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding 10 days, after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be delivered to the holder hereof
within such time.
2. Notwithstanding the foregoing, however, the Company shall not
be required to deliver any certificate for shares of stock upon exercise of this
Warrant except in accordance with the provisions, and subject to the
limitations, of paragraph 7 hereof and the restrictive legend under the heading
"Restriction on Transfer" below.
3. The Company covenants and agrees that all shares which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized
and issued, fully paid and nonassessable. The Company further covenants and
agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.
4. The above provisions are, however, subject to the following:
(a) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the warrant
purchase price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the warrant purchase price in effect immediately prior to such combination shall
be proportionately increased.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder hereof shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of the shares of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of the holder
of this Warrant to the end that the provisions hereof (including without
limitation provisions for adjustments of the warrant purchase price and of the
number of shares purchasable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument executed and mailed to the registered
holder hereof at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
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(c) Upon any adjustment of the warrant purchase price, then and in
each such case the Company shall give written notice thereof, by first-class
mail, postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the warrant purchase price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(d) No fractional shares of Common Stock shall be issued upon the
exercise of this Warrant, but, instead of any fraction of a share which would
otherwise be issuable, the Company shall pay a cash adjustment (which may be
effected as a reduction of the amount to be paid by the holder hereof upon such
exercise) in respect of such fraction in an amount equal to the same fraction of
the market price per share of Common Stock as of the close of business on the
date of the notice required by paragraph 1 above. "Market price" for purposes of
this paragraph 4(d) and for purposes of paragraph 10(c) hereof shall mean, if
the Common Stock is traded on a securities exchange or on the Nasdaq National
Market, the closing price of the Common Stock on such exchange or the Nasdaq
National Market, or, if the Common Stock is otherwise traded in the
over-the-counter market, the closing bid price, in each case averaged over a
period of 20 consecutive business days prior to the date as of which "market
price" is being determined. If at any time the Common Stock is not traded on an
exchange or the Nasdaq National Market, or otherwise traded in the
over-the-counter market, the "market price" shall be deemed to be the higher of
(i) the book value thereof as determined by any firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Company as of the last day of any month ending within 60 days preceding the date
as of which the determination is to be made, or (ii) the fair value thereof
determined in good faith by the Board of Directors of the Company as of a date
which is within l5 days of the date as of which the determination is to be made.
5. As used herein, the term "Common Stock" shall mean and include
the Company's presently authorized Common Stock and shall also include any
capital stock of any class of the Company hereafter authorized which shall not
be limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company;
provided that the shares purchasable pursuant to this Warrant shall include
shares designated as Common Stock of the Company on the date of original issue
of this Warrant or, in the case of any reclassification of the outstanding
shares thereof, the stock, securities or assets provided for in paragraph 4(b)
above.
6. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company.
7. The holder of this Warrant, by acceptance hereof, agrees to
give written notice to the Company before transferring this Warrant, or
transferring any Common Stock issuable or
A-3
issued upon the exercise hereof prior to such time as such Common Stock has been
registered for resale with the Securities and Exchange Commission, of such
holder's intention to do so, describing briefly the manner of any proposed
transfer of this Warrant or such holder's intention as to the disposition to be
made of shares of Common Stock issuable or issued upon the exercise hereof. Such
holder shall also provide the Company, if reasonably requested, with an opinion
of counsel satisfactory to the Company to the effect that the proposed transfer
of this Warrant or disposition of shares may be effected without registration or
qualification (under any Federal or State law) of this Warrant or the shares of
Common Stock issuable or issued upon the exercise hereof. Upon receipt of such
written notice and opinion by the Company, such holder shall be entitled to
transfer this Warrant, or to dispose of shares of Common Stock received upon the
exercise of this Warrant, all in accordance with the terms of the notice
delivered by such holder to the Company, provided that an appropriate legend
respecting the aforesaid restrictions on transfer and disposition may be
endorsed on this Warrant or the certificates for such shares.
8. Subject to the provisions of paragraph 7 hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, at the principal
office of the Company by the holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
the bearer of this Warrant, when endorsed, may be treated by the Company and all
other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding; but until such transfer on such books, the Company
may treat the registered holder hereof as the owner for all purposes.
9. This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the principal office of the Company, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said holder hereof at the time of
such surrender.
10. (a) In addition to and without limiting the rights of the
holder of this Warrant under the terms of this Warrant, the holder of this
Warrant shall have the right (the "Conversion Right") to convert this Warrant or
any portion thereof into shares of Common Stock as provided in this paragraph 10
at any time or from time to time prior to its expiration. Upon exercise of the
Conversion Right with respect to a particular number of shares subject to this
Warrant (the "Converted Warrant Shares"), the Company shall deliver to the
holder of this Warrant, without payment by the holder of any exercise price or
any cash or other consideration, that number of shares of Common Stock equal to
the quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Warrant Shares by the fair market value (as defined in paragraph (c)
below) of a single share of Common Stock,
A-4
determined in each case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the Converted Warrant Shares shall be
determined by subtracting the aggregate warrant purchase price of the Converted
Warrant Shares from the aggregate fair market value of the Converted Warrant
Shares. Notwithstanding anything in this paragraph 10 to the contrary, the
Conversion Right cannot be exercised with respect to a number of Converted
Warrant Shares having a Net Value below $100. No fractional shares shall be
issuable upon exercise of the Conversion Right, and if the number of shares to
be issued in accordance with the foregoing formula is other than a whole number,
the Company shall pay to the holder of this Warrant an amount in cash equal to
the fair market value of the resulting fractional share.
(b) The Conversion Right may be exercised by the holder of this
Warrant by the surrender of this Warrant at the principal office of the Company
together with a written statement specifying that the holder thereby intends to
exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in paragraph (a) above as
the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the shares of Common Stock issuable upon
exercise of the Conversion Right, together with a check in payment of any
fractional share and, in the case of a partial exercise, a new warrant
evidencing the shares remaining subject to this Warrant, shall be issued as of
the Conversion Date and shall be delivered to the holder of this Warrant within
10 days following the Conversion Date.
(c) For purposes of this paragraph 10, the "fair market value" of
a share of Common Stock as of a particular date shall be its "market price",
calculated as described in paragraph 4(d) hereof.
11. All questions concerning this Warrant will be governed and
interpreted and enforced in accordance with the internal law of the State of
Delaware.
12. 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.
13. Any notice, request or other document required or permitted to
be delivered to the holder of this Warrant or the Company shall be delivered or
shall be sent by confirmed facsimile or by certified mail, postage prepaid, to
such holder at its address as shown on the books of the Company or to the
Company at Suite 301, 000 Xxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, fax
(000) 000-0000, Attention: Secretary, or such other address as either may from
time to time provide to the other.
A-5
14. This Warrant shall be binding and inure to the benefit of the
successors and permitted assigns of the Company and, subject to the provisions
of paragraph 8, the holder of this Warrant.
15. The Company represents and warrants to the holder of this
Warrant that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
A-6
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and this Warrant to be dated as of October 11, 2000.
GALAGEN INC.
By____________________________________________
Its______________________________________
RESTRICTION ON TRANSFER
The securities evidenced hereby may not be transferred without (i) the
opinion of counsel satisfactory to the Company that such transfer may be
lawfully made without registration under the Federal Securities Act of 1933 and
all applicable state securities laws or (ii) such registration.
A-7
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
this Warrant, and appoints
to transfer this Warrant on the books of the Company with the full power of
substitution in the premises.
Dated:
In the presence of:
----------------------------------------------------------
(Signature must conform in all respects to the name of the
holder as specified on the face of this Warrant without
alteration, enlargement or any change whatsoever, and the
signature must be guaranteed in the usual manner)
A-8
SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such
Holder Desires to Exercise this Warrant in Whole
or in Part:
To: GalaGen Inc. (the "Company")
The undersigned _________________________
Please insert Social Security or other
identifying number of Subscriber:
_______________________
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, ________ shares of the Common Stock
provided for therein and tenders payment herewith to the order of the Company in
the amount of $_______, such payment being made as provided on the face of this
Warrant.
The undersigned requests that certificates for such shares of
Common Stock be issued as follows:
Name:
----------------------------------------------------------
Address:
----------------------------------------------------------
Deliver to:
----------------------------------------------------------
Address:
----------------------------------------------------------
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated:
Signature _________________________________________________
Note: The signature on this Subscription Form must
correspond with the name as written upon the face of this
Warrant in every particular, without alteration or
enlargement or any change whatever.
A-9
EXHIBIT B
REGISTRATION RIGHTS
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 11th of October,
2000, between ____________________ (the "Holder") and GALAGEN INC., a Delaware
corporation (the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Holder is purchasing from the Company, pursuant to a
Subscription Agreement and Investment Letter of even date herewith (the
"Subscription Agreement"), shares of Common Stock of the Company (the "Shares");
and
WHEREAS, the Company desires to grant to the Holder the
registration rights set forth herein with respect to the Shares;
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGISTRABLE SECURITIES. As used herein the term
"Registrable Security" means the Shares and the shares of Common Stock issued or
issuable upon exercise of the Warrant (as defined in the Subscription
Agreement); 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 "Act"), and disposed of pursuant
thereto, (ii) registration under the Act is no longer required for the immediate
public distribution of such security as a result of the provisions of Rule
144(k) promulgated under the Act, or (iii) it has ceased to be outstanding and,
provided further, that the parties understand that, with respect to the shares
of Common Stock issued or issuable upon exercise of the Warrant, the
registration rights granted by this Agreement relate only to the resale of such
shares. 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 of the Company, 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 Shares as provided herein,
the Shares are "restricted securities" as defined in Rule 144 promulgated under
the Act. The Holder understands that no disposition or transfer of the 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 Act or (ii) such registration.
Section 3. REGISTRATION RIGHTS.
(a) The Company shall, within thirty days of the date hereof,
file with the Securities and Exchange Commission (the "Commission"), at the sole
expense of the Company (except as provided in Section 3(c) hereof), in respect
of all Registrable Securities, a registration statement under the Act so as to
permit a public offering and sale of the Registrable Securities under the Act
(the "Registration Statement").
(b) The Company will keep any Registration Statement or
post-effective amendment filed under this Section 3 current under the Act until
the earliest of (i) the date that all of the Registrable Securities have been
sold pursuant to the Registration Statement, (ii) the date that the Registrable
Securities may be sold under the provisions of Rule 144(k) or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) Except as otherwise provided in Section 9 hereof, 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. In addition, the Company shall reimburse the reasonable legal fees and
expenses of one special legal counsel to the Holder and the other holders of
securities included in any Registration Statement pursuant to this Agreement and
any other Registration Rights Agreements similar hereto and of even date
herewith in connection with the securities proposed to be registered in such
Registration Statement; provided, however, that the aggregate amount of such
reimbursement shall not exceed $25,000. The Holder shall bear the cost of
underwriting discounts and commissions, if any, applicable to the Registrable
Securities being registered. The Company shall use its best efforts to qualify
any of the Registrable Securities for sale in such states as the 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 included therein
(the "Prospectus") and other related documents in such quantities as may be
reasonably requested by the Holder.
(d) 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.
(e) If, at any time or from time to time after the effective
date of the Registration Statement, the Company notifies the Holder in writing
of the existence of a Potential Material Event (as hereinafter defined), the
Holder 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 the Holder
receives 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,
B-2
that the Company may not so suspend the rights of the Holder 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 period the Registration Statement is required
to be in effect.
"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 (including disclosure to be made in a document filed
pursuant to the Securities Exchange Act of 1934, as amended, and incorporated by
reference into such registration statement (an "Incorporated Document")), 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 (or in an Incorporated Document) 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
(including disclosure to be made in an Incorporated Document) 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 (including any Incorporated Documents) would be
materially misleading absent the inclusion of such information.
Section 4. COOPERATION WITH COMPANY. The Holder 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. In connection with the
registration 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 the Registration Statement and the Prospectus as may be necessary
to keep the 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 the Registration Statement whenever the Holder of the Registrable
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
pursuant to Rule 415 promulgated under the Act);
(b) furnish to the Holder such numbers of copies of the
Prospectus, including any amendment or supplement thereto, in conformity with
the requirements of the Act, as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
owned by the Holder;
(c) use its best efforts to register and qualify the
Registrable Securities covered by the 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
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Section 3(c) above), and do any and all other acts and things which may be
necessary or advisable to enable the Holder to consummate the public sale or
other disposition in such jurisdiction of the Registrable Securities owned by
the 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;
(d) use its best efforts to list the Registrable Securities
on The Nasdaq National Market, The Nasdaq SmallCap 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 Nasdaq or of
such exchange;
(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; and
(f) notify the Holder, at any time when a Prospectus relating
thereto covered by the 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 the 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 Act (the "Distributing Holder")
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 Holder may become subject, under the 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 the Registration Statement, or any related
preliminary prospectus, Prospectus 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, Prospectus or amendment or supplement thereto in reliance upon, and
in conformity with, written information furnished to the Company by the
Distributing Holder 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
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give (in violation of the Act or the rules and regulations promulgated
thereunder) a copy of the Prospectus contained in the 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 Act or the rules and regulations promulgated thereunder. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Distributing Holder agrees that it will indemnify
and hold harmless the Company, and each officer and director of the Company or
person, if any, who controls the Company within the meaning of the 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 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 the Registration Statement, or any
related preliminary prospectus, Prospectus 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, Prospectus 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. The indemnity obligation of the
Distributing Holder set forth in this Section 6(b) shall not exceed the proceeds
received by the Distributing Holder upon a sale of Registrable Securities
pursuant to the Registration Statement. This indemnity agreement will be in
addition to any liability which the Distributing Holder 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
except to the extent the indemnified party's failure to so notify in breach of
this Section 6(c) materially prejudices the indemnifying party's ability to
defend such action or claim. 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
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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 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
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of any action in respect of which
indemnification may be sought hereunder unless such settlement or compromise
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim.
Section 7. CONTRIBUTION. In order to provide for just and
equitable contribution under the 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 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
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meaning of Section 11(f) of the Act) 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, (iii) if mailed by certified mail, return receipt requested, postage
prepaid, or (iv) if sent by overnight courier, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on
the signature page of this Agreement.
(b) If to the Company, at GalaGen Inc., Xxxxx 000, 000
Xxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, Attn: Chief Executive Officer,
(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 or two (2)
days after they are sent by overnight courier 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; provided, however, that in the event that the Holder transfers any of
the Shares, the Warrant or the Warrant Shares (each as defined in the
Subscription Agreement) to an Affiliate (as defined in Rule 405 under the Act)
of the Holder in accordance with the provisions of the Subscription Agreement,
the Holder may, without the consent of the Company, concurrently assign the
rights under this Agreement with respect to such Shares or Warrant Shares to
such Affiliate if such Affiliate agrees to pay all expenses incurred by the
Company in connection with such transfer and assignment including, without
limitation, any expenses associated with amending the Registration Statement.
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.
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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.
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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____________________________________________
Its_____________________________________
HOLDER:
______________________________________________
By____________________________________________
Its_____________________________________
Address:______________________________________
______________________________________________
______________________________________________
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