EXHIBIT 10.1
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SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of May 9, 2001,
by and among DynaGen, Inc., a corporation organized under the laws of the State
of Delaware (the "Company"), with headquarters located at 000 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx and the undersigned ("Purchaser").
WHEREAS:
A. The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act").
B. The Company desires to sell and issue to Purchaser and Purchaser
desires to purchase, upon the terms and conditions stated in this Agreement, the
number of shares of Series P Preferred Stock., $.01 par value per share (the
"Preferred Stock"), of the Company convertible into shares of common stock, par
value $.01 per share, of the Company (the "Common Stock") in accordance with the
terms and conditions set forth herein. The Series P Preferred Stock Designation
setting forth the rights, preferences, including the terms upon which the shares
of Preferred Stock are convertible into shares of Common Stock, is attached
hereto as Exhibit A. The shares of Common Stock issuable upon conversion of the
Preferred Stock or otherwise pursuant to the Preferred Stock are referred to
herein as the "Conversion Shares." The Preferred Stock and the Conversion Shares
are collectively referred to herein as the "Securities."
NOW, THEREFORE, the Company and the Purchaser hereby agree as
follows:
1. PURCHASE AND SALE OF PREFERRED STOCK
a. Purchase of Preferred Stock. On the Closing Date (as defined
below), subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to Purchaser and
Purchaser agrees to purchase from the Company, the number of shares of Preferred
Stock (the "Preferred Shares") set forth on the signature page. The purchase
price (the "Purchase Price Per Share") for each of the Preferred Shares is
$100.00 per share.
b. Form of Payment. On the Closing Date (as hereinafter defined),
Purchaser shall pay the aggregate Purchase Price for the Preferred Shares by
wire transfer to the Company and shall deliver by telecopier (with originals
following by first class mail) a fully executed copy of this Subscription
Agreement to the Company. Payment and delivery instructions are attached as
Exhibit B hereto. Promptly upon receipt of the Purchase Price and the executed
Agreement, the Company shall deliver a certificate (the "Certificate")
representing the Preferred Shares together with the accepted Agreement to the
Purchaser by Federal Express or other overnight courier at the address set forth
on the signature page of this Agreement.
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c. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the shares of Preferred Shares pursuant to this
Agreement shall take place from time to time as may be mutually agreed upon by
the Company and Purchaser. Each closing shall occur at the offices of the
Company.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents
and warrants to the Company that:
a. Investment Purpose. Purchaser is purchasing the Preferred Stock
for Purchaser's own account for investment only and not with a present view
towards the public sale or distribution thereof, except pursuant to sales that
are exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. Purchaser understands that Purchaser must
bear the economic risk of this investment indefinitely, unless the Preferred
Shares or the Conversion Shares are registered pursuant to the Securities Act
and any applicable state securities or blue sky laws or an exemption from such
registration is available, and that the Company has no present intention of
registering any such Securities other than as contemplated by the Registration
Rights Agreement, dated as of the date hereof, between the Company and the
Purchaser (the "Registration Rights Agreement").
b. Accredited Investor Status. Purchaser is an "accredited investor"
as defined in Rule 501(a) promulgated under the Securities Act.
c. Reliance on Exemptions. Purchaser understands that the Preferred
Shares and the Conversion Shares are being offered and sold to Purchaser in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Preferred Shares and Conversion Shares.
d. Information. Purchaser and its counsel or representative, if any,
have been furnished all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Preferred Shares which have been requested by Purchaser or its counsel or
representative. Purchaser and its counsel, if any, have been afforded the
opportunity to ask questions of the Company and have received what Purchaser
believes to be complete and satisfactory answers to any such inquiries. Neither
such inquiries nor any other due diligence investigation conducted by Purchaser
or its counsel or any of its representatives shall modify, amend or affect
Purchaser's right to rely on the Company's representations and warranties
contained in Section 3 below. Purchaser has been informed and understands that
(i) this investment involves a HIGH DEGREE OF RISK, (ii) the Company's
independent auditors have included an explanatory paragraph in their opinion on
the Company's financial statements expressing substantial doubt about the
Company's ability to continue as a going concern, and (iii) the Company's common
stock has been delisted by the NASDAQ Stock
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Market and is currently quoted on the NASD OTC Bulletin Board and traded on the
Boston Stock Exchange.
e. Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or (b)
Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration, including without limitation Rule 144 promulgated under the
Securities Act (or a successor rule) ("Rule 144"), or (c) transferred without
consideration to an affiliate of Purchaser; (ii) any sale of such Securities
made in reliance on Rule 144 may be made only in accordance with the terms of
said Rule and further, if said Rule 144 is not applicable, any resale of such
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Securities and Exchange
Commission (the "SEC") thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement).
g. Legends. Purchaser understands that the Preferred Shares and,
until such time as the Conversion Shares have been registered under the
Securities Act as contemplated by Section 5 of this Agreement or otherwise may
be sold by Purchaser pursuant to Rule 144 without any restriction as to the
public resale thereof, the certificates for the Conversion Shares, may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective registration
statement for the securities under said Act, or an opinion of
counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, that registration is not required
under said Act or unless the Company is provided with reasonable
assurances that the securities were sold pursuant to Rule 144 under
said Act.
h. Authorization: Enforcement. This Agreement and the Registration
Rights Agreements (together, the "Transaction Agreements") have been duly and
validly authorized, executed and delivered on behalf of Purchaser and are valid
and binding agreements of Purchaser enforceable in accordance with their
respective terms.
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i. Location of Purchaser. Purchaser has advised the Company in
writing with respect to the jurisdictions wherein the investment decision
regarding Purchaser's acquisition of the Preferred Stock has been made.
j. Conversion Limitation. Notwithstanding the provisions hereof, in
no event (except (i) in the event of a Mandatory Conversion (as defined in the
Certificate of Designations, Preferences and Rights of Series P Preferred Stock
(the "Certificate of Designation") or (ii) if the Company is in default under
any provision of the Transaction Agreements, as defined above) shall the holder
be entitled to convert any of the Preferred Shares to the extent that, after
such conversion, the sum of (1) the number of shares of Common Stock
beneficially owned by the Purchaser and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of
unconverted Preferred Shares), and (2) the number of shares of Common Stock
issuable upon the conversion of the Preferred Shares with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Purchaser and its affiliates of more than 4.99% of the
outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such proviso.
k. Company Reliance On Purchaser's Representations. Purchaser
understands that the Company is relying on the truth and accuracy of the
representations and warranties made herein by Purchaser in offering the
Preferred Shares for sale and in relying upon applicable exemptions available
under the Act and applicable state securities laws.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Purchaser that:
a. Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of the State of Delaware,
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction where
the failure so to qualify would have a Material Adverse Effect. "Material
Adverse Effect" means any material adverse effect on the operations, properties,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole on a consolidated basis or on the ability of the
Company to perform its obligations in connection with the transactions
contemplated hereby on a timely basis.
b. Authorization: Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, to issue and sell the Preferred Shares in
accordance with the terms hereof, and to issue the Conversion Shares upon
conversion of the Preferred Shares in accordance with their terms. The
execution, delivery and performance of this Agreement and the Registration
Rights Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Preferred Shares and the issuance and reservation for issuance of the
Conversion Shares) have been duly authorized by the Company's
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Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or its stockholders is required; this Agreement has been
duly executed and delivered by the Company; and this Agreement constitutes the
valid and binding obligations of the Company enforceable against the Company in
accordance with its respective terms.
c. Issuance of Securities. The Preferred Stock is duly authorized
and, upon issuance in accordance with the terms of this Agreement, the Preferred
Shares will be validly issued, fully paid and non-assessable. The Conversion
Shares have been duly authorized by the Company's Board of Directors, and have
been reserved for issuance upon conversion of the Preferred Shares in accordance
with the terms thereof, and upon issuance in accordance with the terms of this
Agreement will be validly issued, fully paid and non-assessable.
d. Valid Issuance of Securities. The Company has an authorized
capitalization consisting of 225,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, par value $0.01 per share. As of the date of this
Agreement, the Company has issued and outstanding the shares of capital stock,
options, warrants and convertible securities set forth on Schedule 3(d). All of
the shares of Common Stock of the Company issued to date have been duly and
validly authorized and issued and are fully paid and non-assessable. Except as
set forth above or as disclosed in Schedule 3(d) or in the SEC Documents as of
the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of it subsidiaries is
or may become bound to redeem or issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act. Except as disclosed in Schedule 3(d)
or in the SEC Documents as of the date hereof there are no securities or
instruments containing any anti-dilution, right of first refusal, preemptive
rights or similar provisions that will be triggered by the issuance of the
Securities as described in this Agreement. Upon issuance of the Securities, such
securities will be duly and validly issued, fully paid and non-assessable.
e. No Conflicts. To the Company's knowledge, the execution, delivery
and performance of this Agreement and the Registration Rights Agreement by the
Company, the performance by the Company of its obligations hereunder and
thereunder, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance, as applicable, of the Preferred Shares and the Conversion Shares)
will not (i) result in a material violation of the Certificate of Incorporation
or Bylaws subject to the need to obtain stockholder approval to increase the
authorized shares of Common Stock as discussed in Section 3(d) above or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its
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subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
or for which consents have been obtained). Except as described in the SEC
Documents, to the Company's knowledge, neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation or other
organizational documents and except as described in the SEC Documents, to the
Company's knowledge, neither the Company nor any of its subsidiaries is in
default under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, except for defaults as would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect or for which consents have been obtained.
f. SEC Documents, Financial Statements. Since December 31, 2000, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (all of the foregoing, filed prior to the date hereof and after December
31, 2000, and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits) incorporated by reference
therein together with any registration statements or other documents filed by
the Company pursuant to the Securities Act prior to the date hereof and all news
releases by the Company being hereinafter referred to herein as the "SEC
Documents"). The Company has made available to Purchaser true and complete
copies of the SEC Documents requested by the Purchaser, except for such
exhibits, schedules and incorporated documents. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with U.S generally accepted accounting principles, consistently
applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements of the Company included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of the most
recent financial statements
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included in the SEC Documents and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company.
g. Absence of Litigation. Except as disclosed in the SEC Documents or
otherwise disclosed to Purchaser, there is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the Company, any of
its subsidiaries, or any of their respective directors or officers in their
capacities as such, wherein an unfavorable decision, ruling or finding would or
could reasonably be expected to result in a Material Adverse Effect.
h. Disclosure. All information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser pursuant to Section 2(d)
hereof and otherwise in connection with the transactions contemplated hereby is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or exists with respect to the
Company or its subsidiaries or their respective businesses, properties,
prospects, operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company's Exchange Act Reports are being incorporated into an effective
registration statement filed by the Company under the Securities Act).
i. Current Public Information. The Company is currently eligible to
register the resale of its Common Stock by a stockholder on a registration
statement on Form S-3 under the Securities Act.
j. No General Solicitation. Neither the Company nor any person acting
for the Company has conducted any "general solicitation," as such term is
defined in Regulation D, with respect to any of the Securities being offered
hereby.
k. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act.
l. Company Status. The Company has registered its shares of Common
Stock pursuant to Section 12(g) of the Exchange Act, is in full compliance with
all reporting requirements of the Exchange Act, and the Company has maintained
all requirements for the continued listing of its Common Stock on the NASD OTC
Bulletin Board, and such Common Stock is currently quoted on the NASD OTC
Bulletin Board and traded on the Boston Stock Exchange.
m. Certain Transactions. Except as set forth in the SEC Documents and
except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course
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of business upon terms no less favorable than the Company could obtain from
third parties and other than the grant of stock options, none of the current
officers, directors, or employees of the Company (or any spouse or relative of
any such person) is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
n. Dilution. The number of shares of Common Stock issuable upon
conversion of the Preferred Shares may increase substantially in certain
circumstances. The Company's executive officers and directors have studied and
fully understand the nature of the transactions contemplated by this Agreement
and recognize that they have a potential dilutive effect. The board of directors
of the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue additional Shares is binding upon the
Company and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.
o. Nasdaq Listing. The Company's Common Stock is presently quoted on
the NASD OTC Bulletin Board under the symbol "DYG" and traded on the Boston
Stock Exchange under the symbol "DYGN." The Company meets all criteria of the
Boston Stock Exchange. The Company is not in receipt of any written notice from
any stock exchange, market or trading facility on which the shares of Common
Stock are or have been listed (or on which they are or have been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such stock exchange, market or trading facility or that the
shares of Common Stock will be delisted from such stock exchange, market or
trading facility.
p. No Integrated Offering. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since January 1, 2000, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
4. COVENANTS
a. Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Sections 6 and 7 of this Agreement.
b. Blue Sky Laws. The Company shall take such action as the Company
or Purchaser shall reasonably determine is necessary to qualify the Securities
for sale to Purchaser pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States or obtain exemption
therefrom, and shall provide evidence of any such action so taken to Purchaser.
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c. Reporting Status. So long as Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act.
d. Use of Proceeds. The Company shall use the proceeds from the sale
of the Preferred Stock for internal working capital purposes and general
corporate purposes.
e. Financial Information. Upon the written request of Purchaser while
holding any Preferred Shares, the Company shall send the following reports to
Purchaser: a copy of its Annual Report on Form 10-K, its Quarterly Reports on
Form l0-Q, any proxy statements, any Current Reports on Form 8-K and any press
releases issued by the Company or any of its subsidiaries.
f. Reservation of Shares. The Company shall reserve and shall at all
times thereafter have authorized and reserved for the purpose of issuance a
sufficient number of shares of Common Stock to provide for the full conversion
of the shares of Preferred Shares issued in accordance herewith and issuance of
the Conversion Shares in connection therewith and as otherwise required by the
terms of the Preferred Stock.
g. Corporate Existence. So long as Purchaser beneficially owns the
Preferred Shares, the Company shall maintain its corporate existence, except in
the event of a merger, consolidation or sale of all or substantially all of the
Company's assets, as long as the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith regardless of
whether or not the Company would have had a sufficient number of shares of
Common Stock authorized and available for issuance in order to effect the
conversion of the Preferred Shares as of the date of such transaction, and (ii)
is a publicly traded corporation whose common stock is listed for trading on the
Nasdaq Stock Market, the OTC Bulletin Board or a national securities exchange.
h. Listing of Securities. The Company shall (a) as soon as
practicable after the Effective Date, prepare and file with the Boston Stock
Exchange an additional shares listing application covering the Registrable
Securities, (b) take all other steps, if any, which may be necessary to cause
such Registrable Securities to be approved for listing on the Boston Stock
Exchange as soon as possible thereafter, and (c) provide to Purchaser evidence
of such listing, and the Company shall use its best efforts to maintain the
listing of its Registrable Securities on such exchange.
i. Reimbursement. If (i) any Purchaser, other than by reason of its
negligence or willful misconduct or violation of any applicable law, rule or
regulation, becomes involved in any capacity in any action, proceeding or
investigation brought by any stockholder of the Company, in connection with or
as a result of the consummation of the transactions contemplated by Transaction
Agreements, or is impleaded in any such action, proceeding or investigation, or
(ii) any Purchaser, other than by reason of its gross negligence or willful
misconduct or by reason of its trading of the Company's securities in a manner
that is illegal under the federal securities laws, rules or regulations or by
reason of its violation of any other law, becomes involved in any capacity in
any action, proceeding or investigation brought by the
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Commission against or involving the Company or in connection with or as a result
of the consummation of the transactions contemplated by the Transaction
Agreements, or is impleaded in any such action, proceeding or investigation by
any person, then in any such case, the Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any investigation
and preparation) incurred in connection therewith, as such expenses are
incurred. In addition, other than with respect to any matter in which such
Purchaser is a named party or is impleaded, the Company will pay such Purchaser
the charges, as reasonably determined by such Purchaser, for the time of any
officers or employees of such Purchaser devoted to appearing and preparing to
appear as witnesses, assisting in preparation for hearings, trials or pretrial
matters, or otherwise with respect to inquiries, hearing, trials, and other
proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such affiliate and any such Person. The Company
also agrees that neither any Purchaser nor any such affiliate, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any person asserting claims on behalf of or in right of the
Company in connection with or as a result of the consummation of the Transaction
Documents except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence or willful
misconduct or violation of law, rule or regulation by such Purchaser.
5. REGISTRATION; TRANSFER AGENT INSTRUCTIONS
a. Registration Rights. The Company and the Purchaser shall enter
into a Registration Rights Agreement as of the date hereof.
b. Transfer Agent Instructions. The Company shall instruct its
transfer agent to issue certificates, registered in the name of Purchaser or its
nominee, for the Conversion Shares in such amounts as specified from time to
time by Purchaser to the Company upon conversion of the Preferred Shares. Prior
to registration of the Conversion Shares under the Securities Act or resale of
such Securities under Rule 144, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than such instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof in the case of the
Conversion Shares prior to registration of the Conversion Shares under the
Securities Act, will be given by the Company to its transfer agent and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Preferred
Stock terms. Nothing in this Section shall affect in any way Purchaser's
obligations and agreement set forth in Section 2(f) hereof not to resell the
Securities except pursuant to an effective registration statement (and to
deliver a prospectus in connection with such a sale) or in compliance with an
exemption from the registration requirements of applicable securities law. If
Purchaser provides the Company with an opinion of counsel, which opinion of
counsel shall be in form, substance and scope customary
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for opinions of counsel in comparable transactions, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by a
Purchaser.
c. Rule 144. The Company will use its best efforts to make all
filings and take all other actions so that Rule 144 promulgated under the
Securities Act of 1933, as amended, will be available for the resale of the
Conversion Shares.
5A. CONVERSION OF THE PREFERRED SHARES
a. If the Conversion Price (as defined in the Certificate of
Designation) exceeds $.80 per share at the time the Purchaser converts any
Preferred Shares into shares of Common Stock, then the Conversion Price at the
time of such conversion shall be deemed to be $.80 per share.
b. The Purchaser may sell up to twenty percent (20%) of the shares of
Common Stock of the Company currently held by the Purchaser during any single
Trading Day (as Defined in the Certificate of Designation), provided, however,
that the number of shares of Common Stock able to be sold by the Purchaser
during any single Trading Day may not exceed twenty percent (20%) of the average
daily trading volume of the Common Stock for the three Trading Days prior to the
date of the sale.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to issue and sell the
Preferred Shares to Purchaser at the closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
a. Purchaser shall have executed the execution page to this Agreement
and delivered the same to the Company.
b. Purchaser shall have delivered the Purchase Price for the
Preferred Shares.
c. The representations and warranties of Purchaser shall be true and
correct in all material respects.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
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7. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
The obligation of Purchaser hereunder to purchase the Preferred
Shares on the Closing Date is subject to the satisfaction of each of the
following conditions, provided that these conditions are for Purchaser's sole
benefit and may be waived by Purchaser at any time in Purchaser's sole
discretion:
a. The Company shall have executed the signature page to this
Agreement and delivered the same to Purchaser.
b. The Company shall have delivered to Purchaser one or more duly
executed Certificates representing the Preferred Shares purchased hereby in the
principal amount being purchased by Purchaser in accordance with Section 1(b)
above.
c. The representations and warranties of the Company shall be true
and correct as of the Closing Date in all material respects and the Company
shall have performed, satisfied and complied in all material respects the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
8. GOVERNING LAW; MISCELLANEOUS
a. Governing Law; Jurisdiction. 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 in the State of Delaware. The parties consent
to the jurisdiction of the United States District Courts for the District of
Massachusetts in any suit or proceeding based on or arising under this Agreement
and agree that all claims in respect of such suit or proceeding may be
determined in such court. The parties irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The parties
further agree that service of process mailed by first class mail shall be deemed
in every respect effective service of process in any suit or proceeding arising
hereunder. Nothing herein shall affect Purchaser's right to serve process in any
other manner permitted by law. The parties agree that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.
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c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement: Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor Purchaser make any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and
Purchaser.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier, overnight delivery
service or by confirmed telecopy, and shall be effective five days after being
placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by courier, overnight delivery service or confirmed
telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
DynaGen, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
If to Purchaser:
to the address set forth on the
signature page hereof.
Each party shall provide notice to the other parties of any
change in address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of
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the other. This provision shall not limit Purchaser's right to transfer the
Securities pursuant to the terms of the Preferred Stock and this Agreement or to
assign Purchaser's rights hereunder to any such transferee, nor shall this
provision limit the right of Purchaser to transfer or assign its rights under
such agreements and instruments to an affiliate (provided that Purchaser makes
no more than two (2) such transfers), provided that the representations and
warranties set forth in Section 2 are true and correct with respect to such
affiliate or managed account.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the parties and
the agreements and covenants set forth in Sections 2, 3, 4 and 5 shall survive
the closing hereunder and any conversion of the Preferred Stock, notwithstanding
any due diligence investigation conducted by or on behalf of Purchaser.
j. Publicity. Purchaser shall not make any press release or other
public statement concerning the transactions contemplated hereby without the
prior written consent of the Company.
k. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements. certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
PURCHASER
By: ______________________________
Name:_____________________________
Title:____________________________
SUBCRIPTION AMOUNT:
Number of Shares: ________________
Total Purchase Price: ____________
ACCEPTED:
DYNAGEN, INC.
By: ______________________________
Name:_____________________________
Title:____________________________
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