EXHIBIT 10.3
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of November ___,
1999, by and among DynaGen, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), with headquarters located at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 K 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 K 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.
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 Market and is currently traded on
the Boston Stock Exchange.
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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.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend upon conversion of the Preferred Stock to the
holder of any Security upon which it is stamped, if (a) the resale of such
Security is registered under the Securities Act, or (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public sale
or transfer of such Security may be made without registration under the
Securities Act or (c) such
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holder provides the Company with reasonable assurances that such Security has
been sold pursuant to Rule 144 or can be sold pursuant to Rule 144 without any
restriction as to the number of Securities acquired as of a particular date that
can then be immediately sold. Purchaser agrees to sell all Securities, including
those represented by a certificate(s) from which the legend has been removed,
pursuant to an effective registration statement and to deliver a prospectus in
connection with such sale (if and to the extent such delivery is required) or in
compliance with an exemption from the registration requirements of the
Securities Act. In the event the above legend is removed from any Security and
thereafter the effectiveness of a registration statement covering such Security
is suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance notice to
Purchaser the Company may require that the above legend be placed on any such
Security that cannot then be sold pursuant to an effective registration
statement or Rule 144 without any restriction as to the number of Securities
acquired as of a particular date that can then be immediately sold, which legend
shall be removed when such Security has been sold pursuant to Rule 144 or may be
sold pursuant to an effective registration statement or Rule 144 without any
restriction as to the number of Securities acquired as of a particular date that
can then be immediately sold.
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.
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
Amended and Restated Certificate of Designations, Preferences and Rights of
Series K 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 9.99%
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.
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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 jurisdiction in
which it is incorporated, 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 Board of Directors
and no further consent or authorization of the Company, its Board or 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 75,000,000 shares of Common Stock, par value $0.01
per share, 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 3.4. 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 3.4, 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
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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 for the disclosed in Schedule 3.4, 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 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
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 (as hereinafter defined), 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, 1996, 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, 1996, 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, except for such exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents complied
in all
6
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 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 SB-2 or S-3 under the Securities Act.
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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 Nasdaq OTC
Bulletin Board, and such Common Stock is currently listed on the Nasdaq OTC
Bulletin Board and 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 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 Nasdaq OTC Bulletin Board and 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
8
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 August 1998, 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.
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
9
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 New York Stock Exchange or The American Stock Exchange.
h. Listing of Securities. The Company shall (a) not later than the
Effective Date, prepare and file with the Nasdaq OTC Bulletin Board (as well as
any other national securities exchange, market or trading facility on which the
Registrable Securities (as such term is defined in the Registration Rights
Agreement of even date herewith) any additional shares listing application
covering the Registrable Securities covered by on the Nasdaq OTC Bulletin Board,
(b) take all other steps, if any, which may be necessary to cause such
Registrable Securities to be approved for listing on the Nasdaq OTC Bulletin
Board (as well as on any other national securities exchange, market or trading
facility on which the Registrable Securities are then listed) 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 or market.
i. Certain Agreements. Except in accordance with the provisions of the
Registration Rights Agreement or in connection with the subsequent sale of
Preferred Shares (which shall not exceed in the aggregate 20,000 shares), the
Company covenants and agrees that it will not, without the prior written consent
of the Purchaser, enter into any subsequent or further offer or sale of
securities convertible into shares of Common Stock with a market value exceeding
$500,000 with any third party which would require the filing of a Registration
Statement prior to sixty (60) days after the Effective Date.
j. Reimbursement. If (i) any Purchaser, other than by reason of its
gross 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
Documents, 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 Commission against or
involving the Company or in connection with or as a result of the consummation
of the transactions contemplated by the Transaction Documents, 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
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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.
k. Release. Effective upon the mutual execution hereof, the Company,
for itself and on behalf of all affiliated persons and entities,
representatives, and all predecessors in interest, successors and assigns
(collectively, the "Releasing Parties"), hereby releases and forever discharges
each of Purchaser, and Purchaser's direct and indirect partners, officers,
directors, employees, affiliates, representatives, agents, trustees,
beneficiaries, predecessors in interest, successors in interest and nominees, of
and from any and all claims, demands, actions and causes of action, whether
known or unknown, fixed or contingent, arising prior to the Closing Date, that
the Company may have had, may now have or may hereafter acquire with respect to
any matters whatsoever under, relating to or arising from any prior Purchase
Agreement, Registration Agreement or the Preferred Shares, and the agreements
entered into in connection therewith (sometimes collectively referred to as the
"Prior Agreements") with the Purchaser or any affiliate of the Purchaser. The
Purchasers expressly agree that, if any of them commences an action against the
Company, the Company does not waive and the Company may raise (i) any and all
defenses and counterclaims it may have with respect to honoring the terms of the
Prior Agreements, or any (ii) offsets it may have with respect to the amounts
owed under the Prior Agreements. The Company represents, warrants and covenants
that it has not, and at the time this release becomes effective will not have,
sold, assigned, transferred or otherwise conveyed to any other person or entity
all or any portion of its rights, claims, demands, actions or causes of action
herein released.
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
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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 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. 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.
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 Southern
District of New York 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.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Chu, Ring & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇, 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
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assign this Agreement or any rights or obligations hereunder without the prior
written consent of 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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