<PAGE>
As filed with the Securities and Exchange Commission on May 4, 1999.
Registration No. 333-71883
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_________________________
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
GALAGEN INC.
(Exact name of the Registrant as specified in is charter)
Delaware 41-1719104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
(Address and telephone number of the Registrant's
principal executive offices)
Robert A. Hoerr
Chairman of the Board of Directors and Chief Executive Officer
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
(Name, address and telephone number of agent for service)
___________________________________
copy to:
Kris Sharpe
Faegre & Benson LLP
200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
___________________________________
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED SHARE (1) PRICE (1) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,633,800 $1.78 $2,908,164 $808(2)
Shares
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) The Registrant paid $212 in connection with the original filing of this
Registration Statement for the registration of 318,800 shares with a
proposed maximum offering price per share of $2.39. Pursuant to this
Amendment No. 2, the number of shares being registered has been increased
to 1,633,800. As a result, based on the maximum offering price shown in
the above table, the additional registration fee paid today is $596.00.
-----------------------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell and does not seek an offer to
buy these securities in any jurisdiction where the offer or sale in not
permitted.
Subject to completion. Dated May 4, 1999.
PROSPECTUS
1,633,800 SHARES
GALAGEN INC.
COMMON STOCK
This prospectus relates to shares of our common stock that may be sold
by the selling stockholders named under "Selling Stockholders". We will not
receive any of the proceeds from the sale of those shares.
Our common stock is traded on the Nasdaq National Market under the
symbol "GGEN." On April 30, 1999, the last sale price for the common stock,
as reported on the Nasdaq National Market, was $1.81 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR FACTORS YOU SHOULD CONSIDER
BEFORE BUYING SHARES OF THE COMMON STOCK.
-----------------------------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
-----------------------------------
The date of this prospectus is May __, 1999
<PAGE>
THE COMPANY
We are a nutritional products company. Our mission is to become the
leading presence in foods, beverages and dietary supplements that help enhance
the immune system. To accomplish this mission, we are focusing our efforts on
segments of the consumer foods and beverages market and the clinical nutrition
products markets that demand immune-enhancing benefits. A critical factor for
our success is our immune-enhancing ingredient that is derived from colostrum,
milk collected in the first few milkings of a dairy cow after its calf is born.
We have branded our immune-enhancing ingredient Proventra-TM- Brand Natural
Immune Components. The primary immune-enhancing components of Proventra are
antibodies. Antibodies are proteins that enhance the body's immune system to
protect against harmful pathogens. Proventra also provides proteins, such as
lactoferrin, as well as growth factors and multiple vitamins and minerals.
We are a Delaware corporation formed in 1992. Our executive offices are
located at 1275 Red Fox Road, Arden Hills, Minnesota 55112, and our telephone
number is (651) 634-4230.
RISK FACTORS
You should consider carefully the following risks before you decide to buy
our common stock. The risks and uncertainties described below are not the only
ones facing our company. Additional risks and uncertainties also may impair our
business operations. If any of the following risks actually occur, our
business, financial condition and results of operations would likely suffer. In
such case, the trading price of our common stock could decline, and you may lose
all or part of the money paid to buy our common stock.
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about our business and
our industry. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of a number of
factors, as more fully described below and elsewhere in this prospectus. We
undertake no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events occur
in the future.
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GENERAL
WE MAY NOT EVER ACHIEVE A PROFITABLE LEVEL OF OPERATIONS.
Our ability to achieve profitable operations depends in large part on:
- entering into agreements to develop products and establish markets
for those products;and
- making the transition from a research company to an operating and
marketing company.
We cannot be sure we will be successful in ever achieving either result.
We have experienced significant operating losses in each year since our
inception in 1987. We have an accumulated deficit of more than $57 million as
of December 31, 1998. We may continue to lose money in the future.
IF WE CANNOT OBTAIN CONTINUING FUNDING, WE MAY BE UNABLE TO IMPLEMENT OUR
BUSINESS PLANS.
If we cannot find adequate funding, we may have to delay or eliminate some
of our product development plans. We may be required to grant licenses to
others to establish markets for products or technologies that we would
otherwise seek to market ourselves.
Our cash requirements for working capital depend on numerous factors.
These factors include:
- our spending on marketing activities, including clinical
marketing trials;
- our progress in finding partners to help us develop products and
market those products;
- the willingness and ability of our partners to provide funding
for our activities;
- our spending on product development programs;
- the rate of technological advances in the production of our
products;
- our spending on facilities, equipment and personnel to make our
products; and
- the status of competitive products.
Our long-term ability to continue funding our planned operations depends on
our ability to obtain additional funds through:
- product revenues;
- equity or debt financing;
- finding partners to help us develop products and market those
products;
- license agreements; or
- other financing sources.
Because of our significant long-term capital requirements, we may seek to
raise funds when conditions are favorable. We may do so even if we do not have
an immediate need for the capital at the time we raise it. If
3
<PAGE>
we have not raised funds prior to when our needs for funding become
immediate, we may be forced to raise funds when conditions are unfavorable.
This could result in significant dilution of our current stockholders.
IF WE DO NOT ACHIEVE A PROFITABLE LEVEL OF OPERATIONS AND CANNOT FIND
FUNDING IN THE FUTURE, WE COULD EVENTUALLY BECOME INSOLVENT OR BANKRUPT.
If we do not achieve a profitable level of operations and we do not obtain
necessary funding from some source other than operations, we could eventually
deplete our cash reserves and become insolvent or bankrupt.
THE RELATIVELY LOW LEVEL OF TRADING IN OUR COMMON STOCK MAY MAKE IT HIGHLY
VOLATILE.
The volume of shares of common stock traded on the Nasdaq National Market
has been relatively small. Given the small volume of shares traded, market
fluctuations may have a particularly adverse effect on the market price of our
common stock. We cannot be sure of the liquidity of the market for the common
stock or the price at which any sales may occur. The volume of trading in our
common stock in the future will depend upon the number of holders of the common
stock, the interest of securities dealers in maintaining a market in the common
stock and other factors beyond our control. The market price of our common stock
could be subject to significant fluctuations in response to:
- our operating results;
- the operating results of our competitors or other biotechnology
companies;
- technological developments;
- government regulations;
- the status of our proprietary rights to potential products;
- litigation;
- public safety concerns; and
- other factors.
Some of these factors are unrelated to our operating performance and beyond
our control.
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GALAGEN AND THE OWNERS OF SHARES OF OUR COMMON STOCK MAY HAVE DIFFICULTY IN
SELLING THOSE SHARES IN THE FUTURE IF OUR COMMON STOCK IS REMOVED FROM LISTING
ON THE NASDAQ NATIONAL MARKET.
We must meet specific requirements for our shares to continue to be listed
on the Nasdaq National Market. We cannot be sure that we will continue to meet
those requirements in the future. If we fail to meet the continued listing
requirements, or fail to file a plan acceptable to Nasdaq for meeting those
requirements, Nasdaq may remove our common stock from listing on the National
Market. We cannot be sure that our common stock will continue to be listed on
the National Market. If in the future our common stock fails to qualify for
continued listing on the National Market, we would apply to have its listing
transferred to the Nasdaq SmallCap Market. If the listing of our common stock
is transferred from the National Market to the SmallCap Market, it may be more
difficult for owners of our common stock to sell it through brokers.
Additionally, we may have more difficulty raising funds through the sale of our
common stock or securities convertible into common stock.
If trading privileges in our common stock on the Nasdaq National Market
were terminated, we would be required to demonstrate compliance with the
applicable requirements for initial inclusion of a security on the Nasdaq
National Market before our common stock would be listed again on that exchange.
The requirements for initial inclusion are more stringent than those for
continued listing.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT EXCEED OUR INSURANCE
COVERAGE.
Our business involves exposure to potential product liability risks that
are inherent in the production, manufacture and distribution of consumer and
clinical food products that are designed to be ingested. The successful
assertion or settlement of any uninsured claim, a significant number of insured
claims or a claim
5
<PAGE>
exceeding our insurance coverage could have a material adverse
effect on our business and financial condition. We cannot be sure that we will
be able to obtain product liability insurance on acceptable terms or that
provides adequate protection. Furthermore, we cannot be sure that we will be
able to secure increased insurance coverage as the markets for our products
increase.
IF WE RELY ON INACCURATE MARKET INFORMATION, WE COULD MAKE DECISIONS THAT
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
Because we are currently developing our products and markets for those
products, we are particularly reliant on market data. If that data is
inaccurate, we may commit resources to product development and marketing efforts
that do not become profitable. Product development and marketing efforts that
do not become profitable may have a material adverse effect on our business and
financial condition. We have obtained market and related data from a
competitive-market analysis firm. We have not independently verified the
accuracy of that information. In any event, the methodology typically used in
compiling market and related data makes it subject to inherent uncertainties and
estimations. As a result, we cannot be sure as to the accuracy or completeness
of our market information.
INADEQUATE PROVENTRA PRODUCTION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND FINANCIAL CONDITION.
Given our limited experience in manufacturing Proventra, we cannot be sure
that we will be successful in producing Proventra of acceptable quality on a
commercial scale and at acceptable costs in our pilot plant facility. If we
cannot, our business and financial condition could be materially adversely
affected. Our production of Proventra will be regulated by the Minnesota
Department of Agriculture. We believe that our current manufacturing facility
will meet the anticipated requirements for the production of Proventra for use
in consumer and clinical nutritional products through the year 2000. Further,
we believe that contract manufacturers would be available to increase our
Proventra production capacity quickly, if required. However, until we begin
producing Proventra on a commercial scale, we cannot be sure that our production
capabilities will be adequate
FAILURE OF OUR COLLABORATIONS TO DEVELOP AND MARKET PRODUCTS CONTAINING
PROVENTRA COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL
CONDITION.
We are relying on collaborations with larger, more established companies to
develop and market products containing Proventra. Our or our collaborators'
inability to bring products to market could have a material adverse effect on
our business and financial condition. We anticipate that products containing
Proventra will be introduced in particular markets in the last half of 1999
through collaborations we have established with other companies. However,
introduction of these products to test markets on schedule depends on our
ability and our collaborators' ability to accomplish the following:
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- finalize market research;
- finalize product development;
- establish product manufacturing;
- initiate marketing, sales and distribution activities related to our
products; and
- provide the funding necessary to accomplish these activities.
DELAYS OR HIGH COSTS IN PRODUCT DEVELOPMENT COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
If we, or our strategic partners, cannot obtain accurate marketing data or
develop a product responsive to the needs identified by that data, our business
and financial condition could be materially adversely affected. The amount of
time it will take us, together with our strategic partners, to develop consumer
and clinical nutrition products and the associated costs of developing those
products depends on, among other things, the results of our market research for
consumer and clinical products. It also depends on our discussions with end
users or purchasers of the potential products. Market research and discussions
may give us indications of potential customers, what types of products they may
desire and what clinical information is necessary for effective marketing and
sales.
RISKS SPECIFIC TO FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS
PUBLIC MISPERCEPTION THAT OUR PRODUCTS MAY NOT BE SAFE COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
We are highly dependent upon consumers' perception of the safety and
quality of our products as well as of similar products distributed by other
companies. Thus, for example,the publication of reports asserting that such
products may be harmful could have a material adverse effect on our business and
financial condition, regardless of whether such reports are scientifically
supported and regardless of whether the alleged harmful effects would be present
at the dosages recommended for such products.
INNOVATIVE INGREDIENTS MAY PRODUCE UNWANTED EFFECTS AND EXPOSE US TO
PRODUCT LIABILITY CLAIMS OR LOSS OF CONSUMER CONFIDENCE.
If we develop products with innovative ingredients that over time are shown
to produce unwanted effects, we could be exposed to product liability claims and
lose consumer confidence, which could have a material adverse effect on our
business and financial condition. Some of our future products may contain
innovative ingredients or combinations of ingredients that do not have a long
history of human consumption. While we believe all of our products will be safe
when taken as we direct, there is little long-term experience with human
consumption of some of these innovative product ingredients or combinations of
these products in concentrated form. Although we perform research and/or test
the formulation and production of our products, we will sponsor only limited
clinical studies or rely on other outside published data.
IF LARGER COMPANIES WITH GREATER ACCESS TO
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CAPITAL AND PRODUCT MARKETS ENTER OUR SEGMENT OF THE NUTRITIONAL PRODUCTS
MARKET, WE MAY BE MATERIALLY ADVERSELY AFFECTED.
Increased competition in the nutritional products industry could have a
material adverse effect on our business and financial condition. Because the
industry generally has low barriers to entry, additional competitors could enter
the market at any time.
Potential competitors could be larger than we are, have greater access to
capital than we do and may be better able to withstand volatile market
conditions than we are. Although the nutritional products industry to date has
been characterized by many relatively small participants, national or
international companies, including pharmaceutical companies or other suppliers
to mass merchandisers, may seek to enter or to increase their presence in this
industry or to consolidate it.
OUR FAILURE TO OBTAIN NECESSARY APPROVALS OR OTHERWISE COMPLY WITH
GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND
FINANCIAL CONDITION.
Our current and potential functional foods and nutraceutical products may
become subject to governmental regulation in the future. The burden of such
regulation could add materially to the costs and risks of our development and
marketing efforts. There can be no assurance that we could obtain the required
approvals or comply with new regulations if our products are subject to
additional governmental regulation in the future.
Some of our products in development may be subject to regulation by one or
more federal agencies, principally the Food and Drug Administration and the
Federal Trade Commission, and to a lesser extent the Consumer Product Safety
Commission and the United States Department of Agriculture, regarding the
formulation, manufacturing, processing, packaging, labeling, advertising,
distribution and sale of nutritional supplements. These activities are also
regulated by various governmental agencies for the states and localities in
which our products are sold, as well as by governmental agencies in foreign
countries in which our products are sold. Among other matters, regulation by
the FDA and FTC is concerned with claims made with respect to a product which
refer to the value of the product in treating or preventing disease or other
adverse health conditions.
RISKS SPECIFIC TO CRITICAL CARE NUTRITION PRODUCTS
IF WE DO NOT INCREASE THE SALES VOLUME OF OUR CRITICAL CARE NUTRITION
PRODUCTS, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY
AFFECTED..
Increasing the sales of our critical care nutrition products is an
important part of our business strategy. If we are not successful in obtaining
these sales increases, our business and financial condition may be materially
adversely affected. We acquired our current critical care enteral nutrition
products from Nutrition Medical on December 23, 1998. Our ability to increase
sales levels of the acquired critical
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care enteral nutrition products will depend on our ability to successfully
complete clinical marketing studies and on our ability to effectively execute
our operating sales and marketing plans. We cannot be sure that we will
succeed in increasing the sales of these products.
IF OUR MARKETING EFFORTS DO NOT GENERATE THE NAME RECOGNITION FOR OUR
COMPANY AND OUR CRITICAL CARE PRODUCTS NECESSARY TO SIGNIFICANTLY ENHANCE
REVENUES, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY
AFFECTED
We cannot be sure that our marketing efforts will achieve the name
recognition of our company and of our critical care nutrition products necessary
to significantly enhance revenues. If they do not, our business and financial
condition could be materially adversely affected. Our products, with the
exception of Glutasorb-TM-, are designed to be substantially equivalent to
existing branded competitive products. Although we believe that the quality and
efficacy of our critical care nutrition products are comparable to branded
competitive products, no independent comparison between our critical care
nutrition products and competitive products has been completed. We cannot be
sure that the efficacy or quality of our critical care nutrition products is, or
will be, comparable to branded competitive products. Furthermore, our name and
our products are relatively unknown to large segments of our target markets.
PRICE REDUCTIONS BY COMPETITORS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND FINANCIAL CONDITION.
Much of our marketing strategy for our critical care nutrition products
is focused on the price advantage of our critical care nutrition products.
If a competitor reduces or eliminates the price advantage of our products, we
cannot be sure that we will be able to compete successfully with the
competitor, or operate profitably under such conditions. If we could not,our
business and financial condition could be materially adversely affected. We
believe that the principal advantage of our critical care nutrition products,
with the exception of Glutasorb, is cost effectiveness. Because these
products were only recently acquired, we have not yet experienced any
competitor lowering its prices to offset any price advantage we may have. We
are aware that while the products were owned by Nutrition Medical, at least
one competitor in the critical care nutrition products market lowered prices
to various customers of some branded products to levels that offset all or
part of the price advantage held by Nutrition Medical. We believe that any
selective price reductions by a competitor may result in lost sales of our
competing products.
IF THE CONTRACT MANUFACTURERS THAT PRODUCE OUR PRODUCTS CANNOT DO SO
ADEQUATELY, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY
AFFECTED
We rely on contract manufacturers to produce our critical care nutrition
products according to our specifications. Any interruption in supply from these
manufacturers of any of our products could have a material adverse effect on our
business and financial condition. We cannot be sure that contract manufacturers
will consistently supply adequate quantities of our products on a timely basis
or that the quality of such products will be consistently maintained. We also
rely on these manufacturers to comply with all applicable government regulations
and manufacturing guidelines. We cannot be sure
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these contract manufacturers will consistently comply with government
regulations. In the event of a sale of a defective product, we would be
exposed to product liability claims and could lose customer confidence. In
addition, minimum quantity order requirements imposed by manufacturers may
result in excess inventory levels, requiring additional working capital and
increasing exposure to losses from inventory obsolescence.
BECAUSE THE WAY WE DISTRIBUTE OUR PRODUCTS MAY RESULT IN A RELATIVELY SMALL
NUMBER OF CUSTOMERS, THE LOSS OF PARTICULAR CUSTOMERS COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
Our critical care nutrition product sales may become concentrated with a
few large distributors and customers. We cannot be sure that orders from such
customers will continue or that our future orders will not significantly
decline, which could have a material adverse effect on our business and
financial condition.
WE MAY BECOME INVOLVED IN LITIGATION WITH COMPETITORS THAT MAY HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
Companies in the private label industry are commonly the subject of claims
and lawsuits brought by brand name competitors alleging that the private label
products have formulas, labeling or packaging similar to competing brand name
products. Such litigation may require the commitment of substantial management
time and legal fees. Accordingly, such litigation may have a material adverse
effect on our business and financial condition. Several of the critical care
nutrition products we acquired from Nutrition Medical were the subject of a
lawsuit alleging patent infringement. The suit was favorably resolved before we
acquired the products. Similar claims may be made against us by competitors in
the future. Competitors may also respond to our marketing strategy by more
aggressively seeking patents on their products to limit our future product
development efforts. If similar infringement allegations are made against us in
the future, we may need to reformulate or repackage some of our current and
future products to allow us to continue to market products that are comparable
to competitors' patented products. We may be unable to effectively reformulate
our products. Furthermore, we cannot be sure that a reformulated product would
be viewed by customers to be essentially equivalent to the patented product.
Moreover, we cannot be sure that any future lawsuits could be satisfactorily
settled by reformulating, relabeling or repackaging a product.
DIRECT COMPETITION FROM LARGER COMPANIES WITH SIGNIFICANT FINANCIAL
RESOURCES MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL
CONDITION.
Our competitors in the critical care nutrition products market are
established companies with significant financial resources. These companies
sell branded products that have achieved a high level of customer awareness. If
we are not able to compete successfully or operate profitably in this market,
our business and financial condition could be materially adversely affected.
Other companies may also enter this market.
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IF WE CANNOT ENFORCE, FOR ANY REASON, THE TRADEMARKS THAT WE ACQUIRED FROM
NUTRITION MEDICAL,OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY
ADVERSELY AFFECTED.
We cannot be sure that the trademarks we acquired from Nutrition Medical do
not or will not violate the proprietary rights of others. Nor can we be sure
that our proprietary rights in the marks would be upheld if challenged. If we
were prevented from using the marks for any reason,our business and financial
condition may be materially adversely affected. In addition, we cannot be sure
that we will have the financial resources necessary to enforce or defend our
trademarks, which could also have a material adverse effect on our business and
financial condition. We are in the process of registering existing trademarks
for the products acquired from Nutrition Medical with the United States Patent &
Trademark Office. As part of Nutrition Medical, the products were not
registered. Instead Nutrition Medical relied on common law trademark rights.
The lack of such registration may impair our ability to successfully register
the trademarks or to prosecute successfully an infringement action against other
users of these trademarks.
OUR FAILURE TO OBTAIN NECESSARY APPROVALS OR OTHERWISE COMPLY WITH
GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND
FINANCIAL CONDITION.
Our critical care products and potential critical care products are, or
will be, subject to government regulation. Our current products are regulated
as food and medical food by the FDA and are subject to labeling requirements,
current good manufacturing practice regulations and other regulations designed
to ensure the safety of the products. Our current and potential products may
become subject to further governmental regulation in the future. The burden of
such regulation could add materially to the costs and risks of our development
and marketing efforts. There can be no assurance that we could obtain the
required approvals or comply with new regulations if our products are subject to
additional governmental regulation in the future.
Claims we make in labeling and advertising our products are subject to
regulation by the FDA, the FTC and various state agencies under their general
authority to prevent false, misleading and deceptive trade practices. These
regulations involve stringent tracking, testing and documentation standards.
Failure to comply with such requirements can result in adverse regulatory
action, including injunctions, civil or criminal penalties, product recalls or
the relabeling, reformulation or possible termination of products.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is listed on the Nasdaq National Market under the symbol
GGEN. The following table shows, for the calendar periods indicated, the
reported high and low sale prices of the common stock on the Nasdaq National
Market, as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
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<S> <C> <C>
1997:
First Quarter. . . . . . . . . . . . . . $4.625 $1.750
Second Quarter . . . . . . . . . . . . . 3.250 2.000
Third Quarter. . . . . . . . . . . . . . 2.750 2.000
Fourth Quarter . . . . . . . . . . . . . 2.375 1.500
1998:
First Quarter. . . . . . . . . . . . . . $2.250 $0.844
Second Quarter . . . . . . . . . . . . . 3.313 1.563
Third Quarter. . . . . . . . . . . . . . 4.000 1.625
Fourth Quarter . . . . . . . . . . . . . 3.000 1.375
1999:
First Quarter. . . . . . . . . . . . . . $2.625 $1.750
Second Quarter (through April 23, 1999). 2.063 1.625
</TABLE>
As of April 23, 1999 there were 149 holders of record of our common stock.
We have never declared or paid any cash dividends on our common Stock. We
currently do not anticipate paying any cash dividends in the foreseeable future.
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SELLING STOCKHOLDERS
The following table presents the number of outstanding shares of our common
stock beneficially owned by the selling stockholders as of April 23, 1999. The
table also presents the maximum number of shares proposed to be sold by the
selling stockholders and the number of shares they will own after the sales.
The percentages are based on 10,298,996 shares outstanding on April 23, 1999.
<TABLE>
<CAPTION>
SHARES OWNED SHARES OWNED
PRIOR TO OFFERING AFTER OFFERING (1)
------------------------- -----------------------
PERCENT OF SHARES PERCENT OF
NAME NUMBER OUTSTANDING OFFERED NUMBER OUTSTANDING
- ---------------------------- ---------- ------------ --------- ------- ------------
<S> <C> <C> <C> <C> <C>
NM Holdings, Inc. 318,800 3.1 318,800 0 --
Lombard Odier & Cie 1,015,800 9.9 1,015,000 0 --
H. Leigh Severance 50,000 * 50,000 0 --
H. L. Severance, Inc. Profit
Sharing Plan and Trust 35,000 * 35,000 0 --
H. L. Severance, Inc.
Pension Plan and Trust 15,000 * 15,000 0 --
Winston R. Wallin (2) 254,605 2.5 200,000 54,605 *
</TABLE>
- -------------------------
*Less than 1%.
(1) Assumes sale of all shares of the selling stockholders being offered.
(2) Includes 17,635 shares and a warrant to purchase 1,805 shares beneficially
owned by The Wallin Foundation. Mr. Wallin disclaims beneficial ownership
of these shares. Mr. Wallin has been on our Board of Directors since 1993.
PLAN OF DISTRIBUTION
The selling stockholders may sell the shares being offered from time to
time in one or more transactions:
13
<PAGE>
- on the Nasdaq National Market or otherwise;
- in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on shares, whether the options are
listed on an options exchange or otherwise; or
- a combination of such methods of sale.
The selling stockholders may sell the shares at market prices prevailing
at the time of sale, at prices related to those market prices or at
negotiated prices. The selling stockholders also may sell the shares
pursuant to Rule 144 adopted under the Securities Act of 1933 as permitted by
that Rule. The selling stockholders may effect transactions by selling
shares directly to purchasers or to or through broker-dealers. The
broker-dealers may act as agents or principals. The broker-dealers may
receive compensation in the form of discounts, concessions or commissions
from the selling stockholders or the purchasers of the shares. The
compensation of any particular broker-dealer may be in excess of customary
commissions. The selling stockholders and broker-dealers that participate
with the selling stockholders in the distribution of shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act.
Any commissions received by them and any profit on the resale of shares may
be deemed to be underwriting compensation. We have informed the selling
stockholders that the anti-manipulative provisions of Regulation M
promulgated under the Securities Exchange Act of 1934 may apply to their
sales of shares in the market.
Upon notification to us by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale or
purchase of shares, a supplement to this prospectus will be filed, if
required, disclosing:
- the name of the participating broker-dealers;
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;
- that such broker-dealers did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transaction.
NM Holdings, one of the selling stockholders, has agreed to limit its sales
of shares offered by this prospectus as follows:
- immediately upon effectiveness of the registration statement to which
this prospectus relates, it may sell up to 10% of the offered shares;
- during each month of December 1998 through May 1999 it may sell up to
an additional 5% of the offered shares per month; and
14
<PAGE>
- during each month of June 1999 through November 1999 it may sell up to
an additional 10% of the offered shares per month.
We may suspend sales of shares offered by this prospectus for a limited
time, according to the terms of the purchase agreements relating to the
shares. We will promptly notify the selling stockholders any time sales of
shares are suspended and will promptly notify the selling stockholders of the
termination of any such suspension.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the
SEC at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. You can also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of its Public Reference Room. Our SEC filings are
also available at the office of the National Association of Securities Dealers,
Inc. For more information on obtaining copies of our public filings at the
National Association of Securities Dealers, Inc., you should write to National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update this prospectus. We incorporate by
reference the documents listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after
the initial filing of the registration statement that contains this prospectus
and prior to the time that all the securities offered by this prospectus are
sold:
- Annual Report on Form 10-K for the year ended December 31, 1998
(including information specifically incorporated by reference into our
Form 10-K from our 1998 Annual Report to Shareholders and our
definitive Notice and Proxy Statement for our 1999 Annual Meeting of
Shareholders); and
- the description of our common stock contained in the registration
statement on Form 8-A filed on March 13, 1996 and any amendment or
reports filed to update that description after the date of this
prospectus.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address:
Mr. Robert A. Hoerr, M.D., Ph.D.
Chairman of the Board of Directors
and Chief Executive Officer
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
You should rely only on the information incorporated by reference or
presented in this prospectus. We have not authorized anyone else to provide you
with different information. We are only offering these securities in states
where the offer is permitted. You should not assume that the information in
this prospectus is accurate as of any date other than the date on the cover
page of this prospectus.
16
<PAGE>
LEGAL OPINIONS
Faegre & Benson LLP, 2200 Norwest Center, Minneapolis, Minnesota 55402 will
pass upon the validity of the shares of common stock offered by this
prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements appearing in our Annual Report on Form 10-K for the year ended
December 31, 1998, as set forth in their report thereon included in that Report
and incorporated in this prospectus by reference. Those financial statements
are incorporated in this Prospectus by reference in reliance upon their report
given upon their authority as experts in accounting and auditing.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of the
shares of common Stock being registered hereunder other than underwriting
commissions and expenses, are estimated below.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . $ 808
Nasdaq listing fee . . . . . . . . . . . 17,500
Legal services and expenses. . . . . . . 65,000
Accounting services and expenses . . . . 1,000
Printing fees. . . . . . . . . . . . . . 500
Miscellaneous. . . . . . . . . . . . . . 5,192
---------------
Total $ 90,000
---------------
---------------
</TABLE>
Except for the SEC registration fee and the Nasdaq listing fee, all of
the foregoing expenses have been estimated. The selling stockholders will bear
fees and disbursements of their own legal counsel and transfer taxes, provided,
however, that the Registrant will pay up to $1,250 of the expenses for legal
counsel to NM Holdings in connection with the registration of this offering.
The Registrant will bear all other expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation may indemnify any person who was or
is a party or is threatened to be made a party to an action (other than an
action by or in the right of the corporation) by reason of his or her services
as a director or officer of the corporation, or his or her service, at the
corporation's request, as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees)
that are actually and reasonably incurred by him or her ("Expenses"), and
judgments, fines and amounts paid in settlement that are actually and reasonably
incurred by him or her, in connection with the defense or settlement of such
action, provided that he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation's best interests,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his or her conduct was unlawful. Although Delaware law permits
a corporation to indemnify any person referred to above against Expenses in
connection with the defense or settlement of an action by or in the right of the
corporation, provided that he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the corporation's best
interests, if such person has been judged liable to the corporation,
indemnification is only permitted to the extent that the Court of Chancery (or
the court in which the action was brought) determines that, despite the
adjudication of liability, such person is entitled to indemnity for such
Expenses as the court deems proper. The General Corporation Law of the State of
Delaware also provides for mandatory indemnification of any director, officer,
employee or agent against Expenses to the extent such person has been successful
in any proceeding covered by the statute. In addition, the General Corporation
Law of the State of Delaware provides for the general authorization of
advancement of a director's or officer's litigation Expenses in lieu of
requiring the authorization of such advancement by the board of directors in
specific cases, and that indemnification and advancement of Expenses provided by
the statute shall not be deemed exclusive of any other rights to which those
seeking indemnification of Expenses may be entitled under any bylaw, agreement
or otherwise.
The Restated Certificate of Incorporation of the Registrant eliminates
the personal liability of a director to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director, except under
certain circumstances involving certain wrongful acts such as breach of a
director's duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for any unlawful acts
under Section 174 of the General Corporation Law of the State of Delaware, or
for any transaction from which a director derives an improper personal benefit.
The Registrant's Restated Certificate of Incorporation and Restated Bylaws
provide for the broad indemnification of the directors and officers of the
Registrant and for advancement of litigation expenses to the fullest extent
required or permitted by current Delaware law.
Under the purchase agreement filed as Exhibit 4.2 hereto and the
Registration Rights Agreement filed as Exhibit 4.5 hereto, the selling
stockholders agree to indemnify, under certain conditions, the Registrant, its
directors, certain of its officers and persons who control the Registrant within
the meaning of the Securities Act of 1933, as amended, against certain
liabilities.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
3.1 Restated Certificate of Incorporation of the Registrant. (1)
3.2 Restated Bylaws of the Registrant. (2)
4.1 Specimen Common Stock Certificate. (3)
4.2 Asset Purchase Agreement by and between the Registrant and Nutrition
Medical, Inc. dated as of September 1, 1998. (4)
4.3 Amendment to Asset Purchase Agreement by and between the Registrant and
Nutrition Medical, Inc. dated as of October 28, 1998. (5)
4.4 Second Amendment to Asset Purchase Agreement by and between the
Registrant and Nutrition Medical, Inc. dated as of December 23, 1998.
(6)
4.5 Form of Registration Rights Agreement dated April 20, 1999.
4.6 Subscription Agreement and Investment Letter dated April 20, 1999
(Lombard Odier & Cie).
4.7 Subscription Agreement and Investment Letter dated April 20, 1999
(H. Leigh Severance).
4.8 Subscription Agreement and Investment Letter dated April 20, 1999
(H. L. Severance, Inc. Profit Sharing Plan and Trust).
4.9 Subscription Agreement and Investment Letter dated April 20, 1999
(H. L. Severance, Inc. Pension Plan and Trust).
4.10 Subscription Agreement and Investment Letter dated April 20, 1999
(Winston R. Wallin).
5 Opinion of Faegre & Benson LLP. (7)
23.1 Consent of Ernst & Young LLP. (7)
23.2 Consent of Faegre & Benson LLP (included in Exhibit 5).
24 Powers of Attorney of directors and officers of the Registrant. (7)
</TABLE>
- -------------------------
(1) Incorporated herein by reference to Exhibit No. 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1996 (File No. 0-27976).
(2) Incorporated by reference to Exhibit No. 3.4 of the Registrant's
Registration Statement on Form S-1 (Registration No. 333-1032)
(3) Incorporated herein by reference to the same numbered Exhibit to the
Registrant's Registration Statement on Form S-1 (Registration No.
333-1032).
(4) Incorporated herein by reference to Exhibit No. 10.26 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ending September 30, 1998 (File No. 0-27976).
(5) Incorporated herein by reference to Exhibit No. 2.2 to the
Registrant's Current Report on Form 8-K dated December 23, 1998 (File
No. 0-27976).
(6) Incorporated herein by reference to Exhibit No. 2.3 to the
Registrant's Current Report on Form 8-K dated December 23, 1998 (File
No. 0-27976).
(7) Filed with original filing.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant certifies that it has reasonable grounds to believe it
meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Arden Hills, State of
Minnesota, on May 3, 1999.
GALAGEN, INC.
(Registrant)
By /s/ Robert A. Hoerr
------------------------------------
Robert A. Hoerr, M.D., Ph.D.
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below by the following persons, representing a
majority of the Board of Directors, in the capacities indicated as of May 3,
1999.
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
/s/ Robert A. Hoerr
- ---------------------------
Robert A. Hoerr, M.D., Ph.D. Chairman of the Board of Directors and
Chief Executive Officer and Director
(Principal Executive Officer)
*
- -----------------------------
Henry J. Cardello President and Director (acting Principal
Financial Officer and Principal Accounting
Officer)
*
- -----------------------------
Ronald O. Ostby Director
</TABLE>
*Robert A. Hoerr, M.D., Ph.D., by signing his name hereto, does hereby sign this
document on behalf of himself and each of the other above-named directors and
officers of the Registrant pursuant to powers of attorney duly executed by such
person.
/s/ Robert A. Hoerr
- ----------------------------------
Robert A. Hoerr, M.D., Ph.D.
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
EXHIBIT DESCRIPTION PAGE
- ------- -------------------------------------- -------------------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation Incorporated by Reference
of the Registrant. (1)
3.2 Restated Bylaws of the Registrant. (2) Incorporated by Reference
4.1 Specimen Common Stock Certificate. (3) Incorporated by Reference
4.2 Asset Purchase Agreement by and Incorporated by Reference
between the Registrant and Nutrition
Medical, Inc. dated as of
September 1, 1998. (4)
4.3 Amendment to Asset Purchase Agreement Incorporated by Reference
by and between the Registrant and
Nutrition Medical, Inc. dated as of
October 28, 1998. (5)
4.4 Second Amendment to Asset Purchase Incorporated by Reference
Agreement by and between the
Registrant and Nutrition Medical,
Inc. dated as of December 23, 1998. (6)
4.5 Form of Registration Rights Agreement Filed Electronically
dated April 20, 1999
4.6 Subscription Agreement and Investment Filed Electronically
Letter dated April 20, 1999
(Lombard Odier & Cie)
4.7 Subscription Agreement and Investment Filed Electronically
Letter dated April 20, 1999
(H. Leigh Severance)
4.8 Subscription Agreement and Investment Filed Electronically
Letter dated April 20, 1999 (H. L.
Severance, Inc. Profit Sharing Plan
and Trust)
4.9 Subscription Agreement and Investment Filed Electronically
Letter dated April 20, 1999 (H. L.
Severance, Inc. Pension Plan and Trust)
4.10 Subscription Agreement and Investment Filed Electronically
Letter dated April 20, 1999
(Winston R. Wallin)
5 Opinion of Faegre & Benson LLP. Previously Filed Electronically
23.1 Consent of Ernst & Young LLP. Previously Filed Electronically
23.2 Consent of Faegre & Benson LLP Previously Filed Electronically
(included in Exhibit 5).
24 Powers of Attorney of directors and Previously Filed Electronically
officers of the Registrant.
</TABLE>
- ---------------------------
(1) Incorporated herein by reference to Exhibit No. 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1996 (File No. 0-27976).
(2) Incorporated by reference to Exhibit No. 3.4 of the Registrant's
Registration Statement on Form S-1 (Registration No. 333-1032)
(3) Incorporated herein by reference to the same numbered Exhibit to the
Registrant's Registration Statement on Form S-1 (Registration
No. 333-1032).
(4) Incorporated herein by reference to Exhibit No. 10.26 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ending September 30, 1998 (File No. 0-27976).
(5) Incorporated herein by reference to Exhibit No. 2.2 to the
Registrant's Current Report on Form 8-K dated December 23, 1998 (File
No. 0-27976).
(6) Incorporated herein by reference to Exhibit No. 2.3 to the
Registrant's Current Report on Form 8-K dated December 23, 1998 (File
No. 0-27976).
<PAGE>
EXHIBIT 4.5
REGISTRATION RIGHTS
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the ____ of April, 1999,
between ____________________ (the "Holder") and GALAGEN INC., a Delaware
corporation (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holder is purchasing from the Company, pursuant to a Subscription
Agreement and Investment Letter of even date herewith (the "Subscription
Agreement"), shares of Common Stock of the Company (the "Shares"); and
WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the Shares;
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGISTRABLE SECURITIES. As used herein the term
"Registrable Security" means the Shares; provided, however, that with respect to
any particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act of 1933, as amended (the "Act"),
and disposed of pursuant thereto, (ii) registration under the Act is no longer
required for the immediate public distribution of such security as a result of
the provisions of Rule 144(k) promulgated under the Act, or (iii) it has ceased
to be outstanding. The term "Registrable Securities" means any and/or all of
the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock of the Company, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Section 1.
Section 2. RESTRICTIONS ON TRANSFER. The Holder acknowledges and
understands that prior to the registration of the Shares as provided herein, the
Shares are "restricted securities" as defined in Rule 144 promulgated under the
Act. The Holder understands that no disposition or transfer of the Shares may
be made by Holder in the absence of (i) an opinion of counsel from counsel to
the Holder, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that such transfer may be made without registration
under the Act or (ii) such registration.
Section 3. REGISTRATION RIGHTS.
(a) The Company shall, within four months of the date hereof,
file with the Securities and Exchange Commission (the "Commission"), at the sole
expense of the
<PAGE>
Company (except as provided in Section 3(c) hereof), in respect
of all Registrable Securities, a registration statement under the Act so as to
permit a public offering and sale of the Registrable Securities under the Act
(the "Registration Statement").
(b) The Company will keep any Registration Statement or
post-effective amendment filed under this Section 3 current under the Act until
the earliest of (i) the date that all of the Registrable Securities have been
sold pursuant to the Registration Statement, (ii) the date that the Registrable
Securities may be sold under the provisions of Rule 144(k) or (iii) the second
anniversary of the effective date of the Registration Statement.
(c) Except as otherwise provided in Section 9 hereof, all fees,
disbursements and out-of-pocket expenses and costs incurred by the Company in
connection with the preparation and filing of any Registration Statement under
subparagraph 3(a) and in complying with applicable securities and Blue Sky laws
(including, without limitation, all attorneys' fees) shall be borne by the
Company. The Holder shall bear the cost of underwriting discounts and
commissions, if any, applicable to the Registrable Securities being registered
and the fees and expenses of its counsel. The Company shall use its best
efforts to qualify any of the Registrable Securities for sale in such states as
the Holder reasonably designates and shall furnish indemnification in the manner
provided in Section 6 hereof. However, the Company shall not be required to
qualify in any state which will require an escrow or other restriction relating
to the Company and/or the sellers. The Company at its expense will supply the
Holder with copies of the Registration Statement and the prospectus included
therein (the "Prospectus") and other related documents in such quantities as may
be reasonably requested by the Holder.
(d) No provision contained herein shall preclude the Company
from selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Section 3.
(e) If, at any time or from time to time after the effective
date of the Registration Statement, the Company notifies the Holder in writing
of the existence of a Potential Material Event (as hereinafter defined), the
Holder shall not offer or sell any Registrable Securities or engage in any other
transaction involving or relating to Registrable Securities, from the time of
the giving of notice with respect to a Potential Material Event until the Holder
receives written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event; PROVIDED, HOWEVER, that the Company may not so suspend the
rights of the Holder for more than one (1) thirty (30) day period and one (1)
twenty (20) day period in the aggregate during any twelve month period, with at
least a ten (10) business day interval between such periods, during the period
the Registration Statement is required to be in effect.
"Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
registration statement (including disclosure to be made in a document filed
pursuant to the Securities Exchange Act of 1934, as amended, and incorporated by
reference into such registration statement (an "Incorporated Document")), which
shall be evidenced by determinations in good faith by the Chief Executive
Officer or the Board of Directors of the Company that disclosure of such
information in the
2
<PAGE>
Registration Statement (or in an Incorporated Document) would
be detrimental to the business and affairs of the Company; or (b) any material
engagement or activity by the Company which would, in the good faith
determination of the Chief Executive Officer or the Board of Directors of the
Company, be adversely affected by disclosure in a registration statement
(including disclosure to be made in an Incorporated Document) at such time,
which determination shall be accompanied by a good faith determination by the
Chief Executive Officer or the Board of Directors of the Company that the
Registration Statement (including any Incorporated Documents) would be
materially misleading absent the inclusion of such information.
Section 4. COOPERATION WITH COMPANY. The Holder will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 5. REGISTRATION PROCEDURES. In connection with the
registration of the Registrable Securities under the Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective and to comply with the provisions
of the Act with respect to the sale or other disposition of all securities
covered by the Registration Statement whenever the Holder of the Registrable
Securities shall desire to sell or otherwise dispose of the same (including
prospectus supplements with respect to the sales of securities from time to time
pursuant to Rule 415 promulgated under the Act);
(b) furnish to the Holder such numbers of copies of the
Prospectus, including any amendment or supplement thereto, in conformity with
the requirements of the Act, as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
owned by the Holder;
(c) use its best efforts to register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
blue sky laws of such jurisdictions as the Holder shall reasonably request
(subject to the limitations set forth in Section 3(c) above), and do any and all
other acts and things which may be necessary or advisable to enable the Holder
to consummate the public sale or other disposition in such jurisdiction of the
Registrable Securities owned by the Holder, except that the Company shall not
for any such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(d) use its best efforts to list the Registrable Securities on
the Nasdaq National Market or other national securities exchange on which any
securities of the Company are then listed, if the listing of such securities is
then permitted under the rules of Nasdaq or of such exchange;
3
<PAGE>
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering; and
(f) notify the Holder, at any time when a Prospectus relating
thereto covered by the Registration Statement is required to be delivered under
the Act, of the happening of any event of which it has knowledge as a result of
which the Prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
Section 6. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement
with respect to Registrable Securities pursuant to Section 3 hereof, the Company
agrees to indemnify and hold harmless the Holder and each person, if any, who
controls the Holder within the meaning of the Act (the "Distributing Holder")
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
costs of defense and investigation and all attorneys' fees), to which the
Distributing Holder may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, or any related
preliminary prospectus, Prospectus or amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such Registration Statement, preliminary
prospectus, Prospectus or amendment or supplement thereto in reliance upon, and
in conformity with, written information furnished to the Company by the
Distributing Holder specifically for use in the preparation thereof. This
Section 6(a) shall not inure to the benefit of any Distributing Holder with
respect to any person asserting such loss, claim, damage or liability who
purchased the Registrable Securities which are the subject thereof if the
Distributing Holder failed to send or give (in violation of the Act or the rules
and regulations promulgated thereunder) a copy of the Prospectus contained in
the Registration Statement to such person at or prior to the written
confirmation to such person of the sale of such Registrable Securities, where
the Distributing Holder was obligated to do so under the Act or the rules and
regulations promulgated thereunder. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and
hold harmless the Company, and each officer and director of the Company or
person, if any, who controls the Company within the meaning of the Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such officer,
director or controlling person may become subject under the Act or otherwise,
insofar as such
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losses claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, or any related
preliminary prospectus, Prospectus or amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary prospectus,
Prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Distributing Holder specifically for use in the preparation thereof. The
indemnity obligation of the Distributing Holder set forth in this Section
6(b) shall not exceed the proceeds received by the Distributing Holder upon a
sale of Registrable Securities pursuant to the Registration Statement. This
indemnity agreement will be in addition to any liability which the
Distributing Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
except to the extent the indemnified party's failure to so notify in breach of
this Section 6(c) materially prejudices the indemnifying party's ability to
defend such action or claim. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 6 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that if the indemnified party is
the Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, tha the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and
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<PAGE>
expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of any action in respect of which
indemnification may be sought hereunder unless such settlement or compromise
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution under the Act in any case in which (i) the indemnified party makes
a claim for indemnification pursuant to Section 6 hereof but is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Act may be
required on the part of any indemnified party, then the Company and the
applicable Distributing Holder shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Holder on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Section 7 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 8. NOTICES. Any notice pursuant to this Agreement by the
Company or by the Holder shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery, (iii) if mailed by certified mail, return receipt requested, postage
prepaid, or (iv) if sent by overnight courier, addressed as follows:
(a) If to the Holder, to its, his or her address set forth on
the signature page of this Agreement.
(b) If to the Company, at GalaGen Inc., 1275 Red Fox Road, Arden
Hills, Minnesota 55112, Attn: Chief Executive Officer, (tele) (651) 634-4233,
(fax) (651) 634-4814,
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or to such other address as any such party may designate by notice to the other
party. Notices shall be deemed given at the time they are delivered personally
or five (5) days after they are mailed in the manner set forth above or two (2)
days after they are sent by overnight courier in the manner set forth above. If
notice is delivered by facsimile to the Company and followed by mail, delivery
shall be deemed given two (2) days after such facsimile is sent.
Section 9. ASSIGNMENT. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. This Agreement cannot be assigned, amended or modified by the
parties hereto, except by written agreement executed by the parties; provided,
however, that in the event that the Holder transfers any of the Shares to an
Affiliate (as defined in Rule 405 under the Act) of the Holder in accordance
with the provisions of the Subscription Agreement, the Holder may, without the
consent of the Company, concurrently assign the rights under this Agreement with
respect to such Shares to such Affiliate if such Affiliate agrees to pay all
expenses incurred by the Company in connection with such transfer and assignment
including, without limitation, any expenses associated with amending the
Registration Statement.
Section 10. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 11. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 12. GOVERNING LAW, VENUE. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed entirely within such State, without regard
to its principles of conflicts of laws.
Section 13. SEVERABILITY. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, on the day and year first above written.
GALAGEN INC.
By ________________________________
Its ____________________________
HOLDER:
___________________________________
By ________________________________
Its ____________________________
Address: __________________________
___________________________________
___________________________________
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<PAGE>
EXHIBIT 4.6
[Lombard]
SUBSCRIPTION AGREEMENT AND
INVESTMENT LETTER
GalaGen Inc.
1275 Red Fox Road
MS - 7420
Arden Hills, Minnesota 55112-6943
Gentlemen:
The undersigned hereby subscribes for and offers to purchase from GalaGen
Inc., a Delaware corporation (the "Company"), 1,015,000 shares of Common Stock
of the Company, par value $.01 per share (the "Shares"). The undersigned
further understands that the offering is being made without registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), and
is being made only to "accredited investors" (as defined in Rule 501 of
Regulation D under the Securities Act).
1. PURCHASE PRICE. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for the Shares for an aggregate
purchase price of $1,522,500, which amount is payable as described in Section 4
hereof.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is
understood and agreed that the Company shall have the sole right, at its
complete discretion, to accept or reject this subscription, in whole or in part,
for any reason and that the same shall be deemed to be accepted by the Company
only when it is signed by a duly authorized officer of the Company and delivered
to the undersigned at the Closing referred to in Section 3 hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to issue any of the Shares to any person who is a resident of
a jurisdiction in which the issuance of Shares to such person would constitute a
violation of the securities, "blue sky" or other similar laws of such
jurisdiction (collectively referred to as the "State Securities Laws").
3. THE CLOSING. The closing of the purchase and sale of the Shares
(the "Closing") shall take place on April 20, 1999 (the "Closing Date") and at a
place and at a time mutually agreed to by the Company and the undersigned.
4. PAYMENT FOR SHARES. Payment for the Shares shall be received by
the Company from the undersigned by cashier's check or wire transfer of
immediately available funds at or prior to the Closing. The Company shall
deliver the Shares to the undersigned at the Closing.
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the undersigned that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is currently being conducted
and to own its assets. The Company is duly qualified as a foreign
corporation to do business in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification,
except where the failure to so qualify would not materially or adversely
affect the Company, its business, assets, condition (financial or
otherwise) or operations.
(b) The Company has all requisite authority to enter into this
Agreement and the Registration Rights Agreement (as defined in
Section 17) and to perform all the obligations required to be performed
by the Company hereunder and thereunder. All corporate action on the
part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement and the
Registration Rights Agreement, the performance of all the Company's
obligations hereunder and thereunder, and for the authorization,
issuance, sale and delivery of the Shares has been taken or will be taken
prior to the Closing. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall, assuming
due execution and delivery by the undersigned, constitute a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, except as the enforceability hereof and thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, and except
for judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(c) The Shares, when issued and paid for, will represent duly
authorized, validly issued and fully paid and nonassessable shares of
Common Stock of the Company, free of any liens, claims or encumbrances
except for restrictions on transfer imposed by state and federal
securities laws and except for the liens, claims and encumbrances created
by the undersigned, and the issuance of the Shares is not subject to any
preemptive right or right of first refusal that has not been waived.
(d) Assuming the accuracy of the representations and warranties
of the undersigned contained in Section 6 hereof on the date hereof and
on the Closing Date, the offer, issue, and sale of the Shares are exempt
from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or
qualification requirements of all applicable State Securities Laws.
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<PAGE>
(e) The Company has furnished to the undersigned the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1998
(the "SEC Document"). The Company warrants that, as of its date (or if
amended, as of the date of such amendment), the SEC Document complied as
to form in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), and the information contained in
such document, as of its date, did not contain any untrue statement of a
material fact, and did not omit to state any material fact necessary to
make any statement, in light of the circumstances under which such
statement was made, not misleading. The Company has not filed with the
Securities and Exchange Commission (the "SEC") any reports under the 1934
Act since the date of the SEC Document.
(f) The Company has, within the past twelve months, timely
filed with the SEC all reports and other documents required to be so
filed.
(g) The Company is authorized to issue 40,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of March 31,
1999, there were 8,983,996 shares of Common Stock and no shares of
Preferred Stock outstanding. No shares of capital stock of the Company,
or securities convertible into or exercisable for such capital stock,
have been issued by the Company since March 31, 1999 except for issuances
pursuant to the Company's equity compensation plans or pursuant to
outstanding options, warrants, rights or convertible notes, in each case
as disclosed in the SEC Document. All outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of Common Stock were
issued in violation of the preemptive rights, if any, of any stockholders
of the Company.
(h) There is no action, suit or proceeding pending, or, to the
Company's knowledge, threatened, against the Company (a) which questions
the validity of this Agreement or the ability of the Company to
consummate the transactions contemplated hereby or (b) which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties,
prospects, operations, or financial condition of the Company.
(i) To the Company's knowledge, there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the
voting of their respective shares other than proxies which have been or
may be given in connection with the Company's annual meeting of
stockholders and other than as disclosed in documents filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended.
(j) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and consummation of the
transactions contemplated
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<PAGE>
hereby and thereby will not (a) violate or conflict with any provisions
of the Restated Certificate of Incorporation, as amended, or Bylaws of
the Company; (b) result in any breach, violation of or default or loss
of a benefit under, or conflict with, or permit the acceleration of any
obligation under (in each case, upon the giving of notice, the passage
of time, or both) any mortgage, indenture, lease, loan agreement or
other agreement or instrument, permit, franchise, license, judgment,
order, decree, law, ordinance, rule or regulation applicable to the
Company or its properties.
(k) All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings
with, any federal, state or local governmental authority, required on the
part of the Company in connection with the valid execution, delivery and
performance of this Agreement and the Registration Rights Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby and thereby, have been obtained, or will
be effective at the Closing, except for notices required or permitted to
be filed with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and except for
filings and such other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof.
(l) Except as disclosed in or contemplated by the SEC Document
and except for the repurchase from Chiron Corporation on April 1, 1999 of
three warrants to purchase shares of Common Stock of the Company, each
dated March 29, 1995, for $375,000, since December 31, 1998, the Company
has not (i) incurred or become subject to any material liabilities
(absolute or contingent) except liabilities incurred in the ordinary
course of business, consistent with past practices; (ii) mortgaged,
pledged or subjected to lien, charge or any other encumbrance any of its
assets, tangible or intangible other than Permitted Liens (as defined
below); (iii) sold, assigned or transferred any of its assets or canceled
any debts or obligations except in the ordinary course of business,
consistent with past practices; (iv) suffered any extraordinary losses,
or waived any rights of substantial value; (v) sold, assigned or
transferred to a third party that is not an affiliate (within the meaning
set forth in Rule 405 under the Securities Act) any material patents,
trademarks, copyrights, trade secrets or other intangible assets for
compensation less than the fair value of such assets; (vi) declared, paid
or otherwise made any dividend or distribution of any kind on its capital
stock; (vii) entered into any material transaction other than in the
ordinary course of business, consistent with past practices; or
(viii) otherwise had any material change in its condition, financial or
otherwise, except for changes in the ordinary course of business,
consistent with past practices, none of which individually or in the
aggregate has had a material adverse effect on the Company. For purposes
of this Section 5(l), "Permitted Liens" shall mean (i) liens for taxes,
assessments and governmental charges or levies not yet due and payable,
and (ii) inchoate encumbrances imposed by federal or state laws, statutes
or regulations, such as
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<PAGE>
materialmen's, mechanics', carriers', workmen's and repairmen's liens
which are not, in the aggregate, material.
(m) The Common Stock of the Company is currently listed on the
Nasdaq National Market and shall continue to be listed on either the
Nasdaq National Market or The Nasdaq SmallCap Market.
(n) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company contained in any
document, certificate or other writing furnished to the undersigned in
connection with the transactions contemplated hereby, when taken as a
whole, contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements herein or therein not
misleading in light of the circumstances in which they are made.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERSIGNED. The
undersigned hereby represents and warrants to and covenants with the Company
that:
(a) GENERAL:
(i) The undersigned has all requisite authority to enter
into this Agreement and the Registration Rights Agreement and to
perform all the obligations required to be performed by the
undersigned hereunder and thereunder. Each of this Agreement and
the Registration Rights Agreement, when executed and delivered by
the undersigned, shall, assuming due execution and delivery by the
Company, constitute a valid and legally binding obligation of the
undersigned enforceable in accordance with its terms, except as
the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally, and except for judicial limitations on the enforcement
of the remedy of specific performance and other equitable
remedies.
(ii) The undersigned is a resident of or is domiciled in
the state or other jurisdiction set forth on the signature page
hereto and is not acquiring the Shares as an agent or otherwise
for any other person.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The undersigned realizes that purchase of the Shares
is a speculative investment, and that the economic benefits which
may be derived therefrom are uncertain. In determining whether or
not to make an investment in the Company, the undersigned has
relied solely upon the written materials provided to the
undersigned by the Company, receipt of which is hereby
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<PAGE>
acknowledged, and upon independent investigations made by the
undersigned and the undersigned's representatives.
(ii) The opportunity has been made available to the
undersigned to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions
of the Shares and to review the Company's material books and
records.
(iii) The undersigned understands that no federal or state
agency has passed upon the Shares or made any finding or
determination concerning the fairness or advisability of this
investment.
(c) STATUS OF UNDERSIGNED:
(i) The undersigned, if an individual, has attained the
age of majority (as established in the undersigned's state of
residence), and, in any event, is under no disability with respect
to entering into a contractual relationship with the Company and
in executing this Agreement.
(ii) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so that
the undersigned is capable of evaluating the merits and risks of
an investment in the Shares. To the extent necessary, the
undersigned has retained, at the undersigned's own expense, and
relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of this
Agreement and of owning the Shares.
(iii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The undersigned
agrees to furnish any additional information requested to assure
compliance with applicable federal and state securities laws in
connection with the purchase and sale of the Shares. The
undersigned acknowledges that the undersigned has completed
Part I, the Subscriber Information questionnaire, and Part II, the
Accreditation Criteria questionnaire, previously provided to the
undersigned and that the information contained therein is complete
and accurate as of the date thereof and is hereby affirmed as of
the date hereof.
(iv) The information presented and statements made by the
undersigned in the questionnaire referred to in Section 6(c)(iii)
completed and delivered by the undersigned and returned to the
Company with this Agreement are complete and accurate as of this
date and may be relied upon by the Company in determining whether
to accept this offer.
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<PAGE>
(v) The undersigned's commitment to investments that are
not readily marketable is not disproportionate to the
undersigned's net worth, and an investment in the Shares will not
cause such commitment to become excessive. The undersigned has
adequate means of providing for the undersigned's current needs
and contingencies and has no need for liquidity with respect to
the undersigned's investment in the Shares, and can withstand a
complete loss of such investment in the Shares.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES:
(i) The undersigned is acquiring the Shares for the
undersigned's own account for investment purposes and not with a
view to or for resale in connection with any distribution thereof.
The undersigned understands that the Shares have not been
registered under the Securities Act, or any State Securities Laws,
in reliance on exemptions from registration which depend, in part,
on the undersigned's investment intention; and, accordingly, the
truth and accuracy of the foregoing representation will be relied
upon by the Company to establish such exemptions. The undersigned
acknowledges that the Company is not required to recognize any
transfer of the Shares unless, in the opinion of counsel to the
Company, such transfer would not result in a violation of any
federal or state law regarding the offer and sale of securities
and unless the other restrictions on transfer set forth in the
Shares are complied with.
(ii) The undersigned understands that the Shares are
"restricted securities" under applicable federal securities laws
and that the Securities Act and the rules of the SEC provide in
substance that the undersigned may dispose of the Shares only
pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and the undersigned
understands that the Company has no obligation or intention to
register any of the Shares (except for the registration rights
referred to in Section 18 hereof), or to take action so as to
permit sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly, the undersigned understands that, under
the SEC's rules and until the Shares are registered for sale under
the Securities Act, the undersigned may dispose of the Shares
principally only in "private placements" which are exempt from
registration under the Securities Act, in which event the
transferee will acquire "restricted securities" subject to the
same limitations as in the hands of the undersigned. As a
consequence, the undersigned understands that the undersigned must
bear the economic risks of the investment in the Shares for an
indefinite period of time.
(iii) The undersigned agrees: (A) that the undersigned
will not sell, assign, pledge, give, transfer or otherwise dispose
of the Shares or any interest
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<PAGE>
therein, or make any offer or attempt to do any of the foregoing,
except pursuant to a registration of the Shares, as applicable,
under the Securities Act and all applicable State Securities Laws
or in a transaction which is exempt from the registration
provisions of the Securities Act and all applicable State
Securities Laws; (B) that the certificate(s) for the Shares will
bear a legend making reference to the foregoing restrictions;
and (C) that the Company and any transfer agent for the Shares
shall not be required to give effect to any purported transfer of
such Shares except upon compliance with the foregoing
restrictions.
(iv) The undersigned has not offered or sold any portion
of the undersigned's Shares.
(v) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this
private placement at any time prior to the completion of the
offering and to return the previously paid subscription price of
the Shares, without interest thereon, to the undersigned.
(vi) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of SEC Regulation D
to represent it in determining whether it should purchase the
Shares.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED. The
undersigned's obligation to purchase the Shares at the Closing is subject
to the fulfillment, at or prior to the Closing, of all of the following
conditions, any of which may be waived by the undersigned:
(i) The representations and warranties made by the
Company in Section 5 hereof shall be true and correct in all
respects on the date of the Closing with the same force and
effect as if they had been made on and as of said date; and
the Company shall have performed and complied with all
obligations, agreements and conditions herein required to be
performed by it on or prior to the Closing.
(ii) The undersigned shall have received from Faegre &
Benson LLP, counsel to the Company, an opinion letter
substantially in the form attached hereto as Appendix A, addressed
to it, dated the date of the Closing.
(iii) All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be
reasonably satisfactory in
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<PAGE>
substance and form to the undersigned, and the undersigned shall
have received all such counterpart originals or certified or
other copies of such documents as it may reasonably request.
(iv) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of
the Closing, except for notices required or permitted to be filed
with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and except
for filings and other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof. At the time
of the Closing, the sale and issuance of the Shares shall be
legally permitted by all laws and regulations to which the
undersigned and the Company are subject.
(v) No stop order or other order enjoining the sale of
the Shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC or any commissioner of corporations or
similar officer of any other state having jurisdiction over this
transaction.
(vi) The Company shall have delivered to the undersigned
a Certificate, executed by the President of the Company, dated the
Closing Date, certifying to (i) the fulfillment of the conditions
specified in subparagraphs (i) and (v) of this Section 8 and (ii)
the incumbency of the officers of the Company executing this
Agreement and the other instruments delivered by the Company upon
the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. In addition to,
and not in limitation of, the Company's rights set forth in Section 2
hereof, the Company's obligation to issue and sell the Shares at the
Closing is subject to the fulfillment, on or prior to the Closing, of the
following conditions, any of which may be waived by the Company:
(i) The representations and warranties made by the
undersigned in Section 6 hereof shall be true and correct in all
respects on the date of the Closing with the same force and effect
as if they had been made on and as of said date, and the
undersigned shall have performed and complied with all
obligations, agreements and conditions herein required to be
performed by the undersigned on or before the Closing.
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(ii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of
the Closing. No stop order or other order enjoining the sale of
the Shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC or any commissioner of corporations or
similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of
the Shares shall be legally permitted by all laws and regulations
to which the undersigned and the Company are subject.
8. LEGEND. Each certificate for Shares will be imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED
FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES
IS THEN IN EFFECT, OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
9. BROKERS. The undersigned has not entered into any agreement to
pay any broker's or finder's fee to any person with respect to this Agreement or
the transactions contemplated hereby.
10. FILING OF REPORTS. The Company will, so long as it has securities
registered pursuant to Section 12 of the 1934 Act or has securities registered
pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the SEC so that Rule 144 under the Securities
Act or any successor provision thereto will be available to the security holders
of the Company who are otherwise able to take advantage of the provisions of
such Rule.
11. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought, and any waiver, change, discharge or
termination shall be effective only to the extent specifically set forth in
such writing.
10
<PAGE>
12. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, to it at the following address:
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112-6943
Attn: Chief Executive Officer
(b) If to the undersigned, the address set forth on the
signature page hereto;
or at such other address as either party shall have specified by notice in
writing to the other.
17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18. REGISTRATION RIGHTS. The Company and the undersigned agree that
the undersigned shall have the benefit of the registration rights as set forth
in the Registration Rights Agreement of even date herewith, in the form attached
as Appendix B hereto (the "Registration Rights Agreement"), with respect to the
Shares.
19. SURVIVAL. All representations, warranties and covenants contained
in this Agreement shall survive (i) the acceptance of the subscription by the
Company and (ii) if the undersigned is an individual, the death or disability of
the undersigned.
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<PAGE>
20. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing of the purchase of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the undersigned contained in
this Agreement to be false or incorrect.
21. ENTIRE AGREEMENT. This Agreement, the Appendices hereto, and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
23. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to either party or its respective successors and
assigns upon any breach, default or noncompliance of the other party hereto
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that all remedies, either under this
Agreement, by law, or otherwise afforded to either party shall be cumulative and
not alternative.
24. PREVAILING PARTY. If legal action is brought by, or on behalf of,
either party to enforce or interpret this Agreement, the prevailing party shall
be entitled to recover its attorneys' fees and legal costs in connection
therewith.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement and Investment Letter this ____ day of ________________, 1999.
. . . . . . . . . . . . . . . . . . . . . .
Signature
. . . . . . . . . . . . . . . . . . . . . .
Print Name
. . . . . . . . . . . . . . . . . . . . . .
Number and Street
. . . . . . . . . . . . . . . . . . . . . .
City, State and Zip
. . . . . . . . . . . . . . . . . . . . . .
Subscriber's Social Security
or Tax Identification Number
. . . . . . . . . . . . . . . . . . . . . .
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary, Corporation or Partnership, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation ( ) Partnership
13
<PAGE>
Accepted as of __________,1999
GALAGEN INC.
By: ______________________________________
Name: _________________________________
Title: ________________________________
14
<PAGE>
EXHIBIT 4.7
[Severance]
SUBSCRIPTION AGREEMENT AND
INVESTMENT LETTER
GalaGen Inc.
1275 Red Fox Road
MS - 7420
Arden Hills, Minnesota 55112-6943
Gentlemen:
The undersigned hereby subscribes for and offers to purchase from GalaGen
Inc., a Delaware corporation (the "Company"), 50,000 shares of Common Stock of
the Company, par value $.01 per share (the "Shares"). The undersigned further
understands that the offering is being made without registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), and is
being made only to "accredited investors" (as defined in Rule 501 of Regulation
D under the Securities Act).
1. PURCHASE PRICE. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for the Shares for an aggregate
purchase price of $75,000, which amount is payable as described in Section 4
hereof.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is
understood and agreed that the Company shall have the sole right, at its
complete discretion, to accept or reject this subscription, in whole or in part,
for any reason and that the same shall be deemed to be accepted by the Company
only when it is signed by a duly authorized officer of the Company and delivered
to the undersigned at the Closing referred to in Section 3 hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to issue any of the Shares to any person who is a resident of
a jurisdiction in which the issuance of Shares to such person would constitute a
violation of the securities, "blue sky" or other similar laws of such
jurisdiction (collectively referred to as the "State Securities Laws").
3. THE CLOSING. The closing of the purchase and sale of the Shares
(the "Closing") shall take place on April 20, 1999 (the "Closing Date") and at a
place and at a time mutually agreed to by the Company and the undersigned.
4. PAYMENT FOR SHARES. Payment for the Shares shall be received by
the Company from the undersigned by cashier's check or wire transfer of
immediately available funds at or prior to the Closing. The Company shall
deliver the Shares to the undersigned at the Closing.
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the undersigned that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is currently being conducted
and to own its assets. The Company is duly qualified as a foreign
corporation to do business in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification,
except where the failure to so qualify would not materially or adversely
affect the Company, its business, assets, condition (financial or
otherwise) or operations.
(b) The Company has all requisite authority to enter into this
Agreement and the Registration Rights Agreement (as defined in
Section 17) and to perform all the obligations required to be performed
by the Company hereunder and thereunder. All corporate action on the
part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement and the
Registration Rights Agreement, the performance of all the Company's
obligations hereunder and thereunder, and for the authorization,
issuance, sale and delivery of the Shares has been taken or will be taken
prior to the Closing. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall, assuming
due execution and delivery by the undersigned, constitute a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, except as the enforceability hereof and thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, and except
for judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(c) The Shares, when issued and paid for, will represent duly
authorized, validly issued and fully paid and nonassessable shares of
Common Stock of the Company, free of any liens, claims or encumbrances
except for restrictions on transfer imposed by state and federal
securities laws and except for the liens, claims and encumbrances created
by the undersigned, and the issuance of the Shares is not subject to any
preemptive right or right of first refusal that has not been waived.
(d) Assuming the accuracy of the representations and warranties
of the undersigned contained in Section 6 hereof on the date hereof and
on the Closing Date, the offer, issue, and sale of the Shares are exempt
from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or
qualification requirements of all applicable State Securities Laws.
(e) The Company has furnished to the undersigned the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1998
(the "SEC
2
<PAGE>
Document"). The Company warrants that, as of its date (or if amended,
as of the date of such amendment), the SEC Document complied as to form
in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), and the information contained in
such document, as of its date, did not contain any untrue statement of a
material fact, and did not omit to state any material fact necessary to
make any statement, in light of the circumstances under which such
statement was made, not misleading. The Company has not filed with the
Securities and Exchange Commission (the "SEC") any reports under the 1934
Act since the date of the SEC Document.
(f) The Company has, within the past twelve months, timely
filed with the SEC all reports and other documents required to be so
filed.
(g) The Company is authorized to issue 40,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of March 31,
1999, there were 8,983,996 shares of Common Stock and no shares of
Preferred Stock outstanding. No shares of capital stock of the Company,
or securities convertible into or exercisable for such capital stock,
have been issued by the Company since March 31, 1999 except for issuances
pursuant to the Company's equity compensation plans or pursuant to
outstanding options, warrants, rights or convertible notes, in each case
as disclosed in the SEC Document. All outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of Common Stock were
issued in violation of the preemptive rights, if any, of any stockholders
of the Company.
(h) There is no action, suit or proceeding pending, or, to the
Company's knowledge, threatened, against the Company (a) which questions
the validity of this Agreement or the ability of the Company to
consummate the transactions contemplated hereby or (b) which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties,
prospects, operations, or financial condition of the Company.
(i) To the Company's knowledge, there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the
voting of their respective shares other than proxies which have been or
may be given in connection with the Company's annual meeting of
stockholders and other than as disclosed in documents filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended.
(j) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and consummation of the
transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Restated Certificate of
Incorporation, as amended, or Bylaws of the Company; (b) result in any
breach, violation of or default or loss of a benefit under, or conflict
with, or permit the acceleration of any obligation under (in each case,
upon the giving of notice, the
3
<PAGE>
passage of time, or both) any mortgage, indenture, lease, loan agreement
or other agreement or instrument, permit, franchise, license, judgment,
order, decree, law, ordinance, rule or regulation applicable to the
Company or its properties.
(k) All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings
with, any federal, state or local governmental authority, required on the
part of the Company in connection with the valid execution, delivery and
performance of this Agreement and the Registration Rights Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby and thereby, have been obtained, or will
be effective at the Closing, except for notices required or permitted to
be filed with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and except for
filings and such other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof.
(l) Except as disclosed in or contemplated by the SEC Document
and except for the repurchase from Chiron Corporation on April 1, 1999 of
three warrants to purchase shares of Common Stock of the Company, the
Company has not otherwise had any material change in its condition,
financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or
in the aggregate has had a material adverse effect on the Company.
(m) The Common Stock of the Company is currently listed on the
Nasdaq National Market and shall continue to be listed on either the
Nasdaq National Market or The Nasdaq SmallCap Market.
(n) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company contained in any
document, certificate or other writing furnished to the undersigned in
connection with the transactions contemplated hereby, when taken as a
whole, contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements herein or therein not
misleading in light of the circumstances in which they are made.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERSIGNED. The
undersigned hereby represents and warrants to and covenants with the Company
that:
(a) GENERAL:
(i) The undersigned has all requisite authority to enter
into this Agreement and the Registration Rights Agreement and to perform
all the obligations required to be performed by the undersigned hereunder
and thereunder. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the undersigned, shall,
assuming due execution and delivery by the Company, constitute a valid
and legally binding obligation of the undersigned enforceable in
accordance with its terms, except
4
<PAGE>
as the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditors' rights generally, and except for judicial
limitations on the enforcement of the remedy of specific performance and
other equitable remedies.
(ii) The undersigned is a resident of or is domiciled in
the state or other jurisdiction set forth on the signature page hereto
and is not acquiring the Shares as an agent or otherwise for any other
person.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The undersigned realizes that purchase of the Shares
is a speculative investment, and that the economic benefits which may be
derived therefrom are uncertain. In determining whether or not to make
an investment in the Company, the undersigned has relied solely upon the
written materials provided to the undersigned by the Company, receipt of
which is hereby acknowledged, and upon independent investigations made by
the undersigned and the undersigned's representatives.
(ii) The opportunity has been made available to the
undersigned to ask questions of and receive answers from representatives
of the Company concerning the terms and conditions of the Shares and to
review the Company's material books and records.
(iii) The undersigned understands that no federal or state
agency has passed upon the Shares or made any finding or determination
concerning the fairness or advisability of this investment.
(c) STATUS OF UNDERSIGNED:
(i) The undersigned, if an individual, has attained the
age of majority (as established in the undersigned's state of residence),
and, in any event, is under no disability with respect to entering into a
contractual relationship with the Company and in executing this
Agreement.
(ii) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so that the
undersigned is capable of evaluating the merits and risks of an
investment in the Shares. To the extent necessary, the undersigned has
retained, at the undersigned's own expense, and relied upon, appropriate
professional advice regarding the investment, tax and legal merits and
consequences of this Agreement and of owning the Shares.
(iii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The undersigned agrees
to furnish any
5
<PAGE>
additional information requested to assure compliance with applicable
federal and state securities laws in connection with the purchase and
sale of the Shares. The undersigned acknowledges that the undersigned
has completed Part I, the Subscriber Information questionnaire, and
Part II, the Accreditation Criteria questionnaire, previously provided
to the undersigned and that the information contained therein is
complete and accurate as of the date thereof and is hereby affirmed as
of the date hereof.
(iv) The information presented and statements made by the
undersigned in the questionnaire referred to in Section 6(c)(iii)
completed and delivered by the undersigned and returned to the Company
with this Agreement, and any additional information supplied by the
undersigned at the Company's request relating to the undersigned's
income, net worth, investment experience or other matters, are complete
and accurate as of this date and may be relied upon by the Company in
determining whether to accept this offer.
(v) The undersigned's commitment to investments that are
not readily marketable is not disproportionate to the undersigned's net
worth, and an investment in the Shares will not cause such commitment to
become excessive. The undersigned has adequate means of providing for
the undersigned's current needs and contingencies and has no need for
liquidity with respect to the undersigned's investment in the Shares, and
can withstand a complete loss of such investment in the Shares.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES:
(i) The undersigned is acquiring the Shares for the
undersigned's own account for investment purposes and not with a view to
or for resale in connection with any distribution thereof. The
undersigned understands that the Shares have not been registered under
the Securities Act, or any State Securities Laws, in reliance on
exemptions from registration which depend, in part, on the undersigned's
investment intention; and, accordingly, the truth and accuracy of the
foregoing representation will be relied upon by the Company to establish
such exemptions. The undersigned acknowledges that the Company is not
required to recognize any transfer of the Shares unless, in the opinion
of counsel to the Company, such transfer would not result in a violation
of any federal or state law regarding the offer and sale of securities
and unless the other restrictions on transfer set forth in the Shares are
complied with.
(ii) The undersigned understands that the Shares are
"restricted securities" under applicable federal securities laws and that
the Securities Act and the rules of the SEC provide in substance that the
undersigned may dispose of the Shares only pursuant to an effective
6
<PAGE>
registration statement under the Securities Act or an exemption
therefrom, and the undersigned understands that the Company has no
obligation or intention to register any of the Shares (except for the
registration rights referred to in Section 18 hereof), or to take action
so as to permit sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly, the undersigned understands that, under the
SEC's rules and until the Shares are registered for sale under the
Securities Act, the undersigned may dispose of the Shares principally
only in "private placements" which are exempt from registration under the
Securities Act, in which event the transferee will acquire "restricted
securities" subject to the same limitations as in the hands of the
undersigned. As a consequence, the undersigned understands that the
undersigned must bear the economic risks of the investment in the Shares
for an indefinite period of time.
(iii) The undersigned agrees: (A) that the undersigned
will not sell, assign, pledge, give, transfer or otherwise dispose of the
Shares or any interest therein, or make any offer or attempt to do any of
the foregoing, except pursuant to a registration of the Shares, as
applicable, under the Securities Act and all applicable State Securities
Laws or in a transaction which is exempt from the registration provisions
of the Securities Act and all applicable State Securities Laws; (B) that
the certificate(s) for the Shares will bear a legend making reference to
the foregoing restrictions; and (C) that the Company and any transfer
agent for the Shares shall not be required to give effect to any
purported transfer of such Shares except upon compliance with the
foregoing restrictions.
(iv) The undersigned has not offered or sold any portion
of the undersigned's Shares.
(v) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this private
placement at any time prior to the completion of the offering and to
return the previously paid subscription price of the Shares, without
interest thereon, to the undersigned.
(vi) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of SEC Regulation D to
represent it in determining whether it should purchase the Shares.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED. The
undersigned's obligation to purchase the Shares at the Closing is subject
to the fulfillment, at or prior to the Closing, of all of the following
conditions, any of which may be waived by the undersigned:
7
<PAGE>
(i) The representations and warranties made by the
Company in Section 5 hereof shall be true and correct in all respects on
the date of the Closing with the same force and effect as if they had
been made on and as of said date; and the Company shall have performed
and complied with all obligations, agreements and conditions herein
required to be performed by it on or prior to the Closing.
(ii) All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the undersigned, and the
undersigned shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
(iii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing, except for
notices required or permitted to be filed with certain state and federal
securities commissions after the Closing, which notices will be filed on
a timely basis, and except for filings and other actions required to be
taken pursuant to the Registration Rights Agreement after the date
hereof. At the time of the Closing, the sale and issuance of the Shares
shall be legally permitted by all laws and regulations to which the
undersigned and the Company are subject.
(iv) No stop order or other order enjoining the sale of
the Shares shall have been issued and no proceedings for such purpose
shall be pending or, to the knowledge of the Company, threatened by the
SEC or any commissioner of corporations or similar officer of any other
state having jurisdiction over this transaction.
(v) The Company shall have delivered to the undersigned
a Certificate, executed by the President of the Company, dated the
Closing Date, certifying to (i) the fulfillment of the conditions
specified in subparagraphs (i) and (iv) of this Section 8 and (ii) the
incumbency of the officers of the Company executing this Agreement and
the other instruments delivered by the Company upon the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. In addition to,
and not in limitation of, the Company's rights set forth in Section 2
hereof, the Company's obligation to issue and sell the Shares at the
Closing is subject to the fulfillment, on or prior to the Closing, of the
following conditions, any of which may be waived by the Company:
8
<PAGE>
(i) The representations and warranties made by the
undersigned in Section 6 hereof shall be true and correct in all respects
on the date of the Closing with the same force and effect as if they had
been made on and as of said date, and the undersigned shall have
performed and complied with all obligations, agreements and conditions
herein required to be performed by the undersigned on or before the
Closing.
(ii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing. No stop order
or other order enjoining the sale of the Shares shall have been issued
and no proceedings for such purpose shall be pending or, to the knowledge
of the Company, threatened by the SEC or any commissioner of corporations
or similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the
Shares shall be legally permitted by all laws and regulations to which
the undersigned and the Company are subject.
8. LEGEND. Each certificate for Shares will be imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED
FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES
IS THEN IN EFFECT, OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
9. BROKERS. The undersigned has not entered into any agreement to
pay any broker's or finder's fee to any person with respect to this Agreement or
the transactions contemplated hereby.
10. FILING OF REPORTS. The Company will, so long as it has securities
registered pursuant to Section 12 of the 1934 Act or has securities registered
pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the SEC so that Rule 144 under the Securities
Act or any successor provision thereto will be available to the security holders
of the Company who are otherwise able to take advantage of the provisions of
such Rule.
11. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought, and any
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waiver, change, discharge or termination shall be effective only to the
extent specifically set forth in such writing.
12. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, to it at the following address:
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112-6943
Attn: Chief Executive Officer
(b) If to the undersigned, the address set forth on the
signature page hereto;
or at such other address as either party shall have specified by notice in
writing to the other.
17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18. REGISTRATION RIGHTS. The Company and the undersigned agree that
the undersigned shall have the benefit of the registration rights as set forth
in the Registration Rights Agreement of even date herewith, in the form attached
as Appendix A hereto (the "Registration Rights Agreement"), with respect to the
Shares.
19. SURVIVAL. All representations, warranties and covenants contained
in this Agreement shall survive (i) the acceptance of the subscription by the
Company and (ii) if the undersigned is an individual, the death or disability of
the undersigned.
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20. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing of the purchase of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the undersigned contained in
this Agreement to be false or incorrect.
21. ENTIRE AGREEMENT. This Agreement, the Appendices hereto, and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
23. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to either party or its respective successors and
assigns upon any breach, default or noncompliance of the other party hereto
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that all remedies, either under this
Agreement, by law, or otherwise afforded to either party shall be cumulative and
not alternative.
24. PREVAILING PARTY. If legal action is brought by, or on behalf of,
either party to enforce or interpret this Agreement, the prevailing party shall
be entitled to recover its attorneys' fees and legal costs in connection
therewith.
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IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement and Investment Letter this ____ day of ________________, 1999.
---------------------------------------
Signature
---------------------------------------
Print Name
---------------------------------------
Number and Street
---------------------------------------
City, State and Zip
---------------------------------------
Subscriber's Social Security
or Tax Identification Number
---------------------------------------
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary, Corporation or Partnership, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation ( ) Partnership
12
<PAGE>
Accepted as of __________,1999
GALAGEN INC.
By: _____________________________________
Name: ________________________________
Title: _______________________________
13
<PAGE>
EXHIBIT 4.8
[Profit Sharing]
SUBSCRIPTION AGREEMENT AND
INVESTMENT LETTER
-----------------
GalaGen Inc.
1275 Red Fox Road
MS - 7420
Arden Hills, Minnesota 55112-6943
Gentlemen:
The undersigned hereby subscribes for and offers to purchase from
GalaGen Inc., a Delaware corporation (the "Company"), 35,000 shares of Common
Stock of the Company, par value $.01 per share (the "Shares"). The
undersigned further understands that the offering is being made without
registration of the Shares under the Securities Act of 1933, as amended (the
"Securities Act"), and is being made only to "accredited investors" (as
defined in Rule 501 of Regulation D under the Securities Act).
1. PURCHASE PRICE. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for the Shares for an aggregate
purchase price of $52,500, which amount is payable as described in Section 4
hereof.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is
understood and agreed that the Company shall have the sole right, at its
complete discretion, to accept or reject this subscription, in whole or in
part, for any reason and that the same shall be deemed to be accepted by the
Company only when it is signed by a duly authorized officer of the Company
and delivered to the undersigned at the Closing referred to in Section 3
hereof. Notwithstanding anything in this Agreement to the contrary, the
Company shall have no obligation to issue any of the Shares to any person who
is a resident of a jurisdiction in which the issuance of Shares to such
person would constitute a violation of the securities, "blue sky" or other
similar laws of such jurisdiction (collectively referred to as the "State
Securities Laws").
3. THE CLOSING. The closing of the purchase and sale of the
Shares (the "Closing") shall take place on April 20, 1999 (the "Closing
Date") and at a place and at a time mutually agreed to by the Company and the
undersigned.
4. PAYMENT FOR SHARES. Payment for the Shares shall be received
by the Company from the undersigned by cashier's check or wire transfer of
immediately available funds at or prior to the Closing. The Company shall
deliver the Shares to the undersigned at the Closing.
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the undersigned that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is currently being conducted
and to own its assets. The Company is duly qualified as a foreign
corporation to do business in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification,
except where the failure to so qualify would not materially or adversely
affect the Company, its business, assets, condition (financial or
otherwise) or operations.
(b) The Company has all requisite authority to enter into this
Agreement and the Registration Rights Agreement (as defined in
Section 17) and to perform all the obligations required to be performed
by the Company hereunder and thereunder. All corporate action on the
part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement and the
Registration Rights Agreement, the performance of all the Company's
obligations hereunder and thereunder, and for the authorization,
issuance, sale and delivery of the Shares has been taken or will be taken
prior to the Closing. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall, assuming
due execution and delivery by the undersigned, constitute a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, except as the enforceability hereof and thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, and except
for judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(c) The Shares, when issued and paid for, will represent duly
authorized, validly issued and fully paid and nonassessable shares of
Common Stock of the Company, free of any liens, claims or encumbrances
except for restrictions on transfer imposed by state and federal
securities laws and except for the liens, claims and encumbrances created
by the undersigned, and the issuance of the Shares is not subject to any
preemptive right or right of first refusal that has not been waived.
(d) Assuming the accuracy of the representations and warranties
of the undersigned contained in Section 6 hereof on the date hereof and
on the Closing Date, the offer, issue, and sale of the Shares are exempt
from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or
qualification requirements of all applicable State Securities Laws.
(e) The Company has furnished to the undersigned the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1998
(the "SEC
2
<PAGE>
Document"). The Company warrants that, as of its date (or if
amended, as of the date of such amendment), the SEC Document complied as
to form in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), and the information contained in
such document, as of its date, did not contain any untrue statement of a
material fact, and did not omit to state any material fact necessary to
make any statement, in light of the circumstances under which such
statement was made, not misleading. The Company has not filed with the
Securities and Exchange Commission (the "SEC") any reports under the 1934
Act since the date of the SEC Document.
(f) The Company has, within the past twelve months, timely
filed with the SEC all reports and other documents required to be so
filed.
(g) The Company is authorized to issue 40,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of March
31, 1999, there were 8,983,996 shares of Common Stock and no shares of
Preferred Stock outstanding. No shares of capital stock of the
Company, or securities convertible into or exercisable for such
capital stock, have been issued by the Company since March 31, 1999
except for issuances pursuant to the Company's equity compensation
plans or pursuant to outstanding options, warrants, rights or
convertible notes, in each case as disclosed in the SEC Document. All
outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable; and none of the
outstanding shares of Common Stock were issued in violation of the
preemptive rights, if any, of any stockholders of the Company.
(h) There is no action, suit or proceeding pending, or, to the
Company's knowledge, threatened, against the Company (a) which questions
the validity of this Agreement or the ability of the Company to
consummate the transactions contemplated hereby or (b) which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties,
prospects, operations, or financial condition of the Company.
(i) To the Company's knowledge, there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the
voting of their respective shares other than proxies which have been or
may be given in connection with the Company's annual meeting of
stockholders and other than as disclosed in documents filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended.
(j) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and consummation of the
transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Restated Certificate of
Incorporation, as amended, or Bylaws of the Company; (b) result in any
breach, violation of or default or loss of a benefit under, or conflict
with, or permit the acceleration of any obligation under (in each case,
upon the giving of notice, the
3
<PAGE>
passage of time, or both) any mortgage, indenture, lease, loan
agreement or other agreement or instrument, permit, franchise,
license, judgment, order, decree, law, ordinance, rule or regulation
applicable to the Company or its properties.
(k) All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings
with, any federal, state or local governmental authority, required on the
part of the Company in connection with the valid execution, delivery and
performance of this Agreement and the Registration Rights Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby and thereby, have been obtained, or will
be effective at the Closing, except for notices required or permitted to
be filed with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and except for
filings and such other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof.
(l) Except as disclosed in or contemplated by the SEC Document
and except for the repurchase from Chiron Corporation on April 1, 1999 of
three warrants to purchase shares of Common Stock of the Company, the
Company has not otherwise had any material change in its condition,
financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or
in the aggregate has had a material adverse effect on the Company.
(m) The Common Stock of the Company is currently listed on the
Nasdaq National Market and shall continue to be listed on either the
Nasdaq National Market or The Nasdaq SmallCap Market.
(n) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company contained in any
document, certificate or other writing furnished to the undersigned in
connection with the transactions contemplated hereby, when taken as a
whole, contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements herein or therein not
misleading in light of the circumstances in which they are made.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERSIGNED.
The undersigned hereby represents and warrants to and covenants with the
Company that:
(a) GENERAL:
(i) The undersigned has all requisite authority to enter
into this Agreement and the Registration Rights Agreement and to perform
all the obligations required to be performed by the undersigned hereunder
and thereunder. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the undersigned, shall,
assuming due execution and delivery by the Company, constitute a valid
and legally binding obligation of the undersigned enforceable in
accordance with its terms, except
4
<PAGE>
as the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditors' rights generally, and except for
judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(ii) The undersigned is a resident of or is domiciled in
the state or other jurisdiction set forth on the signature page hereto
and is not acquiring the Shares as an agent or otherwise for any other
person.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The undersigned realizes that purchase of the Shares
is a speculative investment, and that the economic benefits which may be
derived therefrom are uncertain. In determining whether or not to make
an investment in the Company, the undersigned has relied solely upon the
written materials provided to the undersigned by the Company, receipt of
which is hereby acknowledged, and upon independent investigations made by
the undersigned and the undersigned's representatives.
(ii) The opportunity has been made available to the
undersigned to ask questions of and receive answers from representatives
of the Company concerning the terms and conditions of the Shares and to
review the Company's material books and records.
(iii) The undersigned understands that no federal or state
agency has passed upon the Shares or made any finding or determination
concerning the fairness or advisability of this investment.
(c) STATUS OF UNDERSIGNED:
(i) The undersigned, if an individual, has attained the
age of majority (as established in the undersigned's state of residence),
and, in any event, is under no disability with respect to entering into a
contractual relationship with the Company and in executing this
Agreement.
(ii) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so that the
undersigned is capable of evaluating the merits and risks of an
investment in the Shares. To the extent necessary, the undersigned has
retained, at the undersigned's own expense, and relied upon, appropriate
professional advice regarding the investment, tax and legal merits and
consequences of this Agreement and of owning the Shares.
(iii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The undersigned agrees
to furnish any
5
<PAGE>
additional information requested to assure compliance with
applicable federal and state securities laws in connection with the
purchase and sale of the Shares. The undersigned acknowledges that the
undersigned has completed Part I, the Subscriber Information
questionnaire, and Part II, the Accreditation Criteria questionnaire,
previously provided to the undersigned and that the information contained
therein is complete and accurate as of the date thereof and is hereby
affirmed as of the date hereof.
(iv) The information presented and statements made by the
undersigned in the questionnaire referred to in Section 6(c)(iii)
completed and delivered by the undersigned and returned to the Company
with this Agreement, and any additional information supplied by the
undersigned at the Company's request relating to the undersigned's
income, net worth, investment experience or other matters, are complete
and accurate as of this date and may be relied upon by the Company in
determining whether to accept this offer.
(v) The undersigned's commitment to investments that are
not readily marketable is not disproportionate to the undersigned's net
worth, and an investment in the Shares will not cause such commitment to
become excessive. The undersigned has adequate means of providing for
the undersigned's current needs and contingencies and has no need for
liquidity with respect to the undersigned's investment in the Shares, and
can withstand a complete loss of such investment in the Shares.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES:
(i) The undersigned is acquiring the Shares for the
undersigned's own account for investment purposes and not with a view to
or for resale in connection with any distribution thereof. The
undersigned understands that the Shares have not been registered under
the Securities Act, or any State Securities Laws, in reliance on
exemptions from registration which depend, in part, on the undersigned's
investment intention; and, accordingly, the truth and accuracy of the
foregoing representation will be relied upon by the Company to establish
such exemptions. The undersigned acknowledges that the Company is not
required to recognize any transfer of the Shares unless, in the opinion
of counsel to the Company, such transfer would not result in a violation
of any federal or state law regarding the offer and sale of securities
and unless the other restrictions on transfer set forth in the Shares are
complied with.
(ii) The undersigned understands that the Shares are
"restricted securities" under applicable federal securities laws and that
the Securities Act and the rules of the SEC provide in substance that the
undersigned may dispose of the Shares only pursuant to an effective
6
<PAGE>
registration statement under the Securities Act or an exemption
therefrom, and the undersigned understands that the Company has no
obligation or intention to register any of the Shares (except for the
registration rights referred to in Section 18 hereof), or to take action
so as to permit sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly, the undersigned understands that, under the
SEC's rules and until the Shares are registered for sale under the
Securities Act, the undersigned may dispose of the Shares principally
only in "private placements" which are exempt from registration under the
Securities Act, in which event the transferee will acquire "restricted
securities" subject to the same limitations as in the hands of the
undersigned. As a consequence, the undersigned understands that the
undersigned must bear the economic risks of the investment in the Shares
for an indefinite period of time.
(iii) The undersigned agrees: (A) that the undersigned
will not sell, assign, pledge, give, transfer or otherwise dispose of the
Shares or any interest therein, or make any offer or attempt to do any of
the foregoing, except pursuant to a registration of the Shares, as
applicable, under the Securities Act and all applicable State Securities
Laws or in a transaction which is exempt from the registration provisions
of the Securities Act and all applicable State Securities Laws; (B) that
the certificate(s) for the Shares will bear a legend making reference to
the foregoing restrictions; and (C) that the Company and any transfer
agent for the Shares shall not be required to give effect to any
purported transfer of such Shares except upon compliance with the
foregoing restrictions.
(iv) The undersigned has not offered or sold any portion
of the undersigned's Shares.
(v) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this private
placement at any time prior to the completion of the offering and to
return the previously paid subscription price of the Shares, without
interest thereon, to the undersigned.
(vi) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of SEC Regulation D to
represent it in determining whether it should purchase the Shares.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED. The
undersigned's obligation to purchase the Shares at the Closing is subject
to the fulfillment, at or prior to the Closing, of all of the following
conditions, any of which may be waived by the undersigned:
7
<PAGE>
(i) The representations and warranties made by the
Company in Section 5 hereof shall be true and correct in all respects on
the date of the Closing with the same force and effect as if they had
been made on and as of said date; and the Company shall have performed
and complied with all obligations, agreements and conditions herein
required to be performed by it on or prior to the Closing.
(ii) All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the undersigned, and the
undersigned shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
(iii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing, except for
notices required or permitted to be filed with certain state and federal
securities commissions after the Closing, which notices will be filed on
a timely basis, and except for filings and other actions required to be
taken pursuant to the Registration Rights Agreement after the date
hereof. At the time of the Closing, the sale and issuance of the Shares
shall be legally permitted by all laws and regulations to which the
undersigned and the Company are subject.
(iv) No stop order or other order enjoining the sale of
the Shares shall have been issued and no proceedings for such purpose
shall be pending or, to the knowledge of the Company, threatened by the
SEC or any commissioner of corporations or similar officer of any other
state having jurisdiction over this transaction.
(v) The Company shall have delivered to the undersigned
a Certificate, executed by the President of the Company, dated the
Closing Date, certifying to (i) the fulfillment of the conditions
specified in subparagraphs (i) and (iv) of this Section 8 and (ii) the
incumbency of the officers of the Company executing this Agreement and
the other instruments delivered by the Company upon the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. In addition to,
and not in limitation of, the Company's rights set forth in Section 2
hereof, the Company's obligation to issue and sell the Shares at the
Closing is subject to the fulfillment, on or prior to the Closing, of the
following conditions, any of which may be waived by the Company:
8
<PAGE>
(i) The representations and warranties made by the
undersigned in Section 6 hereof shall be true and correct in all respects
on the date of the Closing with the same force and effect as if they had
been made on and as of said date, and the undersigned shall have
performed and complied with all obligations, agreements and conditions
herein required to be performed by the undersigned on or before the
Closing.
(ii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing. No stop order
or other order enjoining the sale of the Shares shall have been issued
and no proceedings for such purpose shall be pending or, to the knowledge
of the Company, threatened by the SEC or any commissioner of corporations
or similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the
Shares shall be legally permitted by all laws and regulations to which
the undersigned and the Company are subject.
8. LEGEND. Each certificate for Shares will be imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED
FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES
IS THEN IN EFFECT, OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
9. BROKERS. The undersigned has not entered into any agreement to
pay any broker's or finder's fee to any person with respect to this Agreement or
the transactions contemplated hereby.
10. FILING OF REPORTS. The Company will, so long as it has securities
registered pursuant to Section 12 of the 1934 Act or has securities registered
pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the SEC so that Rule 144 under the Securities
Act or any successor provision thereto will be available to the security holders
of the Company who are otherwise able to take advantage of the provisions of
such Rule.
11. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought, and any
9
<PAGE>
waiver, change, discharge or termination shall be effective only to the
extent specifically set forth in such writing.
12. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
13. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which together shall be deemed to be one and the
same agreement.
16. NOTICES. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
(a) If to the Company, to it at the following address:
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112-6943
Attn: Chief Executive Officer
(b) If to the undersigned, the address set forth on the
signature page hereto;
or at such other address as either party shall have specified by notice in
writing to the other.
17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18. REGISTRATION RIGHTS. The Company and the undersigned agree that
the undersigned shall have the benefit of the registration rights as set forth
in the Registration Rights Agreement of even date herewith, in the form attached
as Appendix A hereto (the "Registration Rights Agreement"), with respect to the
Shares.
19. SURVIVAL. All representations, warranties and covenants contained
in this Agreement shall survive (i) the acceptance of the subscription by the
Company and (ii) if the undersigned is an individual, the death or disability of
the undersigned.
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20. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing of the purchase of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the undersigned contained
in this Agreement to be false or incorrect.
21. ENTIRE AGREEMENT. This Agreement, the Appendices hereto, and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects
hereof and no party shall be liable or bound to any other party in any manner
by any representations, warranties, covenants, or agreements except as
specifically set forth herein or therein. Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties
hereto and their respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided herein.
22. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable be
modified so as to make it valid, legal and enforceable and to retain as
nearly as practicable the intent of the parties, and the validity, legality,
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
23. DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power, or remedy accruing to either party or its respective successors
and assigns upon any breach, default or noncompliance of the other party
hereto under this Agreement shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default
or noncompliance thereafter occurring. It is further agreed that all
remedies, either under this Agreement, by law, or otherwise afforded to
either party shall be cumulative and not alternative.
24. PREVAILING PARTY. If legal action is brought by, or on behalf
of, either party to enforce or interpret this Agreement, the prevailing party
shall be entitled to recover its attorneys' fees and legal costs in
connection therewith.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement and Investment Letter this ____ day of ________________, 1999.
---------------------------------------
Signature
---------------------------------------
Print Name
---------------------------------------
Number and Street
---------------------------------------
City, State and Zip
---------------------------------------
Subscriber's Social Security
or Tax Identification Number
---------------------------------------
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary, Corporation or Partnership, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation ( ) Partnership
12
<PAGE>
Accepted as of __________,1999
GALAGEN INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
13
<PAGE>
EXHIBIT 4.9
[Pension]
SUBSCRIPTION AGREEMENT AND
INVESTMENT LETTER
GalaGen Inc.
1275 Red Fox Road
MS - 7420
Arden Hills, Minnesota 55112-6943
Gentlemen:
The undersigned hereby subscribes for and offers to purchase from GalaGen
Inc., a Delaware corporation (the "Company"), 15,000 shares of Common Stock of
the Company, par value $.01 per share (the "Shares"). The undersigned further
understands that the offering is being made without registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), and is
being made only to "accredited investors" (as defined in Rule 501 of Regulation
D under the Securities Act).
1. PURCHASE PRICE. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for the Shares for an aggregate
purchase price of $22,500, which amount is payable as described in Section 4
hereof.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is
understood and agreed that the Company shall have the sole right, at its
complete discretion, to accept or reject this subscription, in whole or in part,
for any reason and that the same shall be deemed to be accepted by the Company
only when it is signed by a duly authorized officer of the Company and delivered
to the undersigned at the Closing referred to in Section 3 hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to issue any of the Shares to any person who is a resident of
a jurisdiction in which the issuance of Shares to such person would constitute a
violation of the securities, "blue sky" or other similar laws of such
jurisdiction (collectively referred to as the "State Securities Laws").
3. THE CLOSING. The closing of the purchase and sale of the Shares
(the "Closing") shall take place on April 20, 1999 (the "Closing Date") and at a
place and at a time mutually agreed to by the Company and the undersigned.
4. PAYMENT FOR SHARES. Payment for the Shares shall be received by
the Company from the undersigned by cashier's check or wire transfer of
immediately available funds at or prior to the Closing. The Company shall
deliver the Shares to the undersigned at the Closing.
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the undersigned that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is currently being conducted
and to own its assets. The Company is duly qualified as a foreign
corporation to do business in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification,
except where the failure to so qualify would not materially or adversely
affect the Company, its business, assets, condition (financial or
otherwise) or operations.
(b) The Company has all requisite authority to enter into this
Agreement and the Registration Rights Agreement (as defined in
Section 17) and to perform all the obligations required to be performed
by the Company hereunder and thereunder. All corporate action on the
part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement and the
Registration Rights Agreement, the performance of all the Company's
obligations hereunder and thereunder, and for the authorization,
issuance, sale and delivery of the Shares has been taken or will be taken
prior to the Closing. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall, assuming
due execution and delivery by the undersigned, constitute a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, except as the enforceability hereof and thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, and except
for judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(c) The Shares, when issued and paid for, will represent duly
authorized, validly issued and fully paid and nonassessable shares of
Common Stock of the Company, free of any liens, claims or encumbrances
except for restrictions on transfer imposed by state and federal
securities laws and except for the liens, claims and encumbrances created
by the undersigned, and the issuance of the Shares is not subject to any
preemptive right or right of first refusal that has not been waived.
(d) Assuming the accuracy of the representations and warranties
of the undersigned contained in Section 6 hereof on the date hereof and
on the Closing Date, the offer, issue, and sale of the Shares are exempt
from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or
qualification requirements of all applicable State Securities Laws.
(e) The Company has furnished to the undersigned the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1998
(the "SEC
2
<PAGE>
Document"). The Company warrants that, as of its date (or if amended,
as of the date of such amendment), the SEC Document complied as to
form in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), and the information contained in
such document, as of its date, did not contain any untrue statement of a
material fact, and did not omit to state any material fact necessary to
make any statement, in light of the circumstances under which such
statement was made, not misleading. The Company has not filed with the
Securities and Exchange Commission (the "SEC") any reports under the 1934
Act since the date of the SEC Document.
(f) The Company has, within the past twelve months, timely
filed with the SEC all reports and other documents required to be so
filed.
(g) The Company is authorized to issue 40,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of March 31,
1999, there were 8,983,996 shares of Common Stock and no shares of
Preferred Stock outstanding. No shares of capital stock of the Company,
or securities convertible into or exercisable for such capital stock,
have been issued by the Company since March 31, 1999 except for issuances
pursuant to the Company's equity compensation plans or pursuant to
outstanding options, warrants, rights or convertible notes, in each case
as disclosed in the SEC Document. All outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of Common Stock were
issued in violation of the preemptive rights, if any, of any stockholders
of the Company.
(h) There is no action, suit or proceeding pending, or, to the
Company's knowledge, threatened, against the Company (a) which questions
the validity of this Agreement or the ability of the Company to
consummate the transactions contemplated hereby or (b) which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties,
prospects, operations, or financial condition of the Company.
(i) To the Company's knowledge, there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the
voting of their respective shares other than proxies which have been or
may be given in connection with the Company's annual meeting of
stockholders and other than as disclosed in documents filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended.
(j) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and consummation of the
transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Restated Certificate of
Incorporation, as amended, or Bylaws of the Company; (b) result in any
breach, violation of or default or loss of a benefit under, or conflict
with, or permit the acceleration of any obligation under (in each case,
upon the giving of notice, the
3
<PAGE>
passage of time, or both) any mortgage, indenture, lease, loan agreement
or other agreement or instrument, permit, franchise, license, judgment,
order, decree, law, ordinance, rule or regulation applicable to the
Company or its properties.
(k) All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings
with, any federal, state or local governmental authority, required on the
part of the Company in connection with the valid execution, delivery and
performance of this Agreement and the Registration Rights Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby and thereby, have been obtained, or will
be effective at the Closing, except for notices required or permitted to
be filed with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and except for
filings and such other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof.
(l) Except as disclosed in or contemplated by the SEC Document
and except for the repurchase from Chiron Corporation on April 1, 1999 of
three warrants to purchase shares of Common Stock of the Company, the
Company has not otherwise had any material change in its condition,
financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or
in the aggregate has had a material adverse effect on the Company.
(m) The Common Stock of the Company is currently listed on the
Nasdaq National Market and shall continue to be listed on either the
Nasdaq National Market or The Nasdaq SmallCap Market.
(n) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company contained in any
document, certificate or other writing furnished to the undersigned in
connection with the transactions contemplated hereby, when taken as a
whole, contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements herein or therein not
misleading in light of the circumstances in which they are made.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERSIGNED. The
undersigned hereby represents and warrants to and covenants with the Company
that:
(a) GENERAL:
(i) The undersigned has all requisite authority to enter
into this Agreement and the Registration Rights Agreement and to
perform all the obligations required to be performed by the
undersigned hereunder and thereunder. Each of this Agreement and
the Registration Rights Agreement, when executed and delivered by
the undersigned, shall, assuming due execution and delivery by
the Company, constitute a valid and legally binding obligation
of the undersigned enforceable in accordance with its terms,
except
4
<PAGE>
as the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally, and except for judicial limitations on the
enforcement of the remedy of specific performance and other
equitable remedies.
(ii) The undersigned is a resident of or is domiciled
in the state or other jurisdiction set forth on the signature
page hereto and is not acquiring the Shares as an agent or
otherwise for any other person.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The undersigned realizes that purchase of the
Shares is a speculative investment, and that the economic
benefits which may be derived therefrom are uncertain. In
determining whether or not to make an investment in the
Company, the undersigned has relied solely upon the written
materials provided to the undersigned by the Company, receipt
of which is hereby acknowledged, and upon independent
investigations made by the undersigned and the undersigned's
representatives.
(ii) The opportunity has been made available to the
undersigned to ask questions of and receive answers from
representatives of the Company concerning the terms and
conditions of the Shares and to review the Company's material
books and records.
(iii) The undersigned understands that no federal or
state agency has passed upon the Shares or made any finding or
determination concerning the fairness or advisability of this
investment.
(c) STATUS OF UNDERSIGNED:
(i) The undersigned, if an individual, has attained
the age of majority (as established in the undersigned's state
of residence), and, in any event, is under no disability with
respect to entering into a contractual relationship with the
Company and in executing this Agreement.
(ii) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so
that the undersigned is capable of evaluating the merits and
risks of an investment in the Shares. To the extent necessary,
the undersigned has retained, at the undersigned's own expense,
and relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of this
Agreement and of owning the Shares.
(iii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The
undersigned agrees to furnish any
5
<PAGE>
additional information requested to assure compliance with
applicable federal and state securities laws in connection
with the purchase and sale of the Shares. The undersigned
acknowledges that the undersigned has completed Part I, the
Subscriber Information questionnaire, and Part II, the
Accreditation Criteria questionnaire, previously provided to
the undersigned and that the information contained therein
is complete and accurate as of the date thereof and is hereby
affirmed as of the date hereof.
(iv) The information presented and statements made by
the undersigned in the questionnaire referred to in Section
6(c)(iii) completed and delivered by the undersigned and
returned to the Company with this Agreement, and any additional
information supplied by the undersigned at the Company's
request relating to the undersigned's income, net worth,
investment experience or other matters, are complete and
accurate as of this date and may be relied upon by the Company
in determining whether to accept this offer.
(v) The undersigned's commitment to investments that
are not readily marketable is not disproportionate to the
undersigned's net worth, and an investment in the Shares will
not cause such commitment to become excessive. The undersigned
has adequate means of providing for the undersigned's current
needs and contingencies and has no need for liquidity with
respect to the undersigned's investment in the Shares, and can
withstand a complete loss of such investment in the Shares.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES:
(i) The undersigned is acquiring the Shares for the
undersigned's own account for investment purposes and not with
a view to or for resale in connection with any distribution
thereof. The undersigned understands that the Shares have not
been registered under the Securities Act, or any State
Securities Laws, in reliance on exemptions from registration
which depend, in part, on the undersigned's investment
intention; and, accordingly, the truth and accuracy of the
foregoing representation will be relied upon by the Company to
establish such exemptions. The undersigned acknowledges that
the Company is not required to recognize any transfer of the
Shares unless, in the opinion of counsel to the Company, such
transfer would not result in a violation of any federal or
state law regarding the offer and sale of securities and unless
the other restrictions on transfer set forth in the Shares are
complied with.
(ii) The undersigned understands that the Shares are
"restricted securities" under applicable federal securities
laws and that the Securities Act and the rules of the SEC
provide in substance that the undersigned may dispose of the
Shares only pursuant to an effective
6
<PAGE>
registration statement under the Securities Act or an exemption
therefrom, and the undersigned understands that the Company has
no obligation or intention to register any of the Shares
(except for the registration rights referred to in Section 18
hereof), or to take action so as to permit sales pursuant to
the Securities Act (including Rule 144 thereunder).
Accordingly, the undersigned understands that, under the SEC's
rules and until the Shares are registered for sale under the
Securities Act, the undersigned may dispose of the Shares
principally only in "private placements" which are exempt from
registration under the Securities Act, in which event the
transferee will acquire "restricted securities" subject to the
same limitations as in the hands of the undersigned. As a
consequence, the undersigned understands that the undersigned
must bear the economic risks of the investment in the Shares
for an indefinite period of time.
(iii) The undersigned agrees: (A) that the undersigned
will not sell, assign, pledge, give, transfer or otherwise
dispose of the Shares or any interest therein, or make any
offer or attempt to do any of the foregoing, except pursuant to
a registration of the Shares, as applicable, under the
Securities Act and all applicable State Securities Laws or in a
transaction which is exempt from the registration provisions of
the Securities Act and all applicable State Securities Laws;
(B) that the certificate(s) for the Shares will bear a legend
making reference to the foregoing restrictions; and (C) that
the Company and any transfer agent for the Shares shall not be
required to give effect to any purported transfer of such
Shares except upon compliance with the foregoing restrictions.
(iv) The undersigned has not offered or sold any
portion of the undersigned's Shares.
(v) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this
private placement at any time prior to the completion of the
offering and to return the previously paid subscription price
of the Shares, without interest thereon, to the undersigned.
(vi) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of SEC Regulation
D to represent it in determining whether it should purchase the
Shares.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED. The
undersigned's obligation to purchase the Shares at the Closing is subject
to the fulfillment, at or prior to the Closing, of all of the following
conditions, any of which may be waived by the undersigned:
7
<PAGE>
(i) The representations and warranties made by the
Company in Section 5 hereof shall be true and correct in all
respects on the date of the Closing with the same force and
effect as if they had been made on and as of said date; and the
Company shall have performed and complied with all obligations,
agreements and conditions herein required to be performed by it
on or prior to the Closing.
(ii) All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and
all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the
undersigned, and the undersigned shall have received all such
counterpart originals or certified or other copies of such
documents as it may reasonably request.
(iii) All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection
with the lawful sale and issuance of the Shares pursuant to
this Agreement shall have been duly obtained and shall be
effective on and as of the Closing, except for notices required
or permitted to be filed with certain state and federal
securities commissions after the Closing, which notices will be
filed on a timely basis, and except for filings and other
actions required to be taken pursuant to the Registration
Rights Agreement after the date hereof. At the time of the
Closing, the sale and issuance of the Shares shall be legally
permitted by all laws and regulations to which the undersigned
and the Company are subject.
(iv) No stop order or other order enjoining the sale
of the Shares shall have been issued and no proceedings for
such purpose shall be pending or, to the knowledge of the
Company, threatened by the SEC or any commissioner of
corporations or similar officer of any other state having
jurisdiction over this transaction.
(v) The Company shall have delivered to the
undersigned a Certificate, executed by the President of the
Company, dated the Closing Date, certifying to (i) the
fulfillment of the conditions specified in subparagraphs (i)
and (iv) of this Section 8 and (ii) the incumbency of the
officers of the Company executing this Agreement and the other
instruments delivered by the Company upon the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. In addition to,
and not in limitation of, the Company's rights set forth in Section 2
hereof, the Company's obligation to issue and sell the Shares at the
Closing is subject to the fulfillment, on or prior to the Closing, of the
following conditions, any of which may be waived by the Company:
8
<PAGE>
(i) The representations and warranties made by the
undersigned in Section 6 hereof shall be true and correct in
all respects on the date of the Closing with the same force and
effect as if they had been made on and as of said date, and the
undersigned shall have performed and complied with all
obligations, agreements and conditions herein required to be
performed by the undersigned on or before the Closing.
(ii) All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection
with the lawful sale and issuance of the Shares pursuant to
this Agreement shall have been duly obtained and shall be
effective on and as of the Closing. No stop order or other
order enjoining the sale of the Shares shall have been issued
and no proceedings for such purpose shall be pending or, to the
knowledge of the Company, threatened by the SEC or any
commissioner of corporations or similar officer of any state
having jurisdiction over this transaction. At the time of the
Closing, the sale and issuance of the Shares shall be legally
permitted by all laws and regulations to which the undersigned
and the Company are subject.
8. LEGEND. Each certificate for Shares will be imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED
FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES
IS THEN IN EFFECT, OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
9. BROKERS. The undersigned has not entered into any agreement to
pay any broker's or finder's fee to any person with respect to this Agreement or
the transactions contemplated hereby.
10. FILING OF REPORTS. The Company will, so long as it has securities
registered pursuant to Section 12 of the 1934 Act or has securities registered
pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the SEC so that Rule 144 under the Securities
Act or any successor provision thereto will be available to the security holders
of the Company who are otherwise able to take advantage of the provisions of
such Rule.
11. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought, and any
9
<PAGE>
waiver, change, discharge or termination shall be effective only to the
extent specifically set forth in such writing.
12. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, to it at the following address:
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112-6943
Attn: Chief Executive Officer
(b) If to the undersigned, the address set forth on the
signature page hereto;
or at such other address as either party shall have specified by notice in
writing to the other.
17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18. REGISTRATION RIGHTS. The Company and the undersigned agree that
the undersigned shall have the benefit of the registration rights as set forth
in the Registration Rights Agreement of even date herewith, in the form attached
as Appendix A hereto (the "Registration Rights Agreement"), with respect to the
Shares.
19. SURVIVAL. All representations, warranties and covenants contained
in this Agreement shall survive (i) the acceptance of the subscription by the
Company and (ii) if the undersigned is an individual, the death or disability of
the undersigned.
10
<PAGE>
20. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing of the purchase of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the undersigned contained in
this Agreement to be false or incorrect.
21. ENTIRE AGREEMENT. This Agreement, the Appendices hereto, and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
23. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to either party or its respective successors and
assigns upon any breach, default or noncompliance of the other party hereto
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that all remedies, either under this
Agreement, by law, or otherwise afforded to either party shall be cumulative and
not alternative.
24. PREVAILING PARTY. If legal action is brought by, or on behalf of,
either party to enforce or interpret this Agreement, the prevailing party shall
be entitled to recover its attorneys' fees and legal costs in connection
therewith.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement and Investment Letter this ____ day of ________________, 1999.
-------------------------------------
Signature
-------------------------------------
Print Name
-------------------------------------
Number and Street
-------------------------------------
City, State and Zip
-------------------------------------
Subscriber's Social Security
or Tax Identification Number
-------------------------------------
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary, Corporation or Partnership, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation ( ) Partnership
12
<PAGE>
Accepted as of __________, 1999
GALAGEN INC.
By:
----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
13
<PAGE>
EXHIBIT 4.10
[Wallin]
SUBSCRIPTION AGREEMENT AND
INVESTMENT LETTER
GalaGen Inc.
1275 Red Fox Road
MS - 7420
Arden Hills, Minnesota 55112-6943
Gentlemen:
The undersigned hereby subscribes for and offers to purchase from GalaGen
Inc., a Delaware corporation (the "Company"), 200,000 shares of Common Stock of
the Company, par value $.01 per share (the "Shares"). The undersigned further
understands that the offering is being made without registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), and is
being made only to "accredited investors" (as defined in Rule 501 of Regulation
D under the Securities Act).
1. PURCHASE PRICE. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for the Shares for an aggregate
purchase price of $300,000, which amount is payable as described in Section 4
hereof.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is
understood and agreed that the Company shall have the sole right, at its
complete discretion, to accept or reject this subscription, in whole or in part,
for any reason and that the same shall be deemed to be accepted by the Company
only when it is signed by a duly authorized officer of the Company and delivered
to the undersigned at the Closing referred to in Section 3 hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to issue any of the Shares to any person who is a resident of
a jurisdiction in which the issuance of Shares to such person would constitute a
violation of the securities, "blue sky" or other similar laws of such
jurisdiction (collectively referred to as the "State Securities Laws").
3. THE CLOSING. The closing of the purchase and sale of the Shares
(the "Closing") shall take place on April 20, 1999 (the "Closing Date") and at a
place and at a time mutually agreed to by the Company and the undersigned.
4. PAYMENT FOR SHARES. Payment for the Shares shall be received by
the Company from the undersigned by cashier's check or wire transfer of
immediately available funds at or prior to the Closing. The Company shall
deliver the Shares to the undersigned at the Closing.
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the undersigned that:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is currently being conducted
and to own its assets. The Company is duly qualified as a foreign
corporation to do business in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification,
except where the failure to so qualify would not materially or adversely
affect the Company, its business, assets, condition (financial or
otherwise) or operations.
(b) The Company has all requisite authority to enter into this
Agreement and the Registration Rights Agreement (as defined in
Section 17) and to perform all the obligations required to be performed
by the Company hereunder and thereunder. All corporate action on the
part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement and the
Registration Rights Agreement, the performance of all the Company's
obligations hereunder and thereunder, and for the authorization,
issuance, sale and delivery of the Shares has been taken or will be taken
prior to the Closing. Each of this Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall, assuming
due execution and delivery by the undersigned, constitute a valid and
legally binding obligation of the Company enforceable in accordance with
its terms, except as the enforceability hereof and thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, and except
for judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
(c) The Shares, when issued and paid for, will represent duly
authorized, validly issued and fully paid and nonassessable shares of
Common Stock of the Company, free of any liens, claims or encumbrances
except for restrictions on transfer imposed by state and federal
securities laws and except for the liens, claims and encumbrances created
by the undersigned, and the issuance of the Shares is not subject to any
preemptive right or right of first refusal that has not been waived.
(d) Assuming the accuracy of the representations and warranties
of the undersigned contained in Section 6 hereof on the date hereof and
on the Closing Date, the offer, issue, and sale of the Shares are exempt
from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or
qualification requirements of all applicable State Securities Laws.
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<PAGE>
(e) The Company has furnished to the undersigned the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1998
(the "SEC Document"). The Company warrants that, as of its date (or if
amended, as of the date of such amendment), the SEC Document complied as
to form in all material respects with the requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), and the information contained in
such document, as of its date, did not contain any untrue statement of a
material fact, and did not omit to state any material fact necessary to
make any statement, in light of the circumstances under which such
statement was made, not misleading. The Company has not filed with the
Securities and Exchange Commission (the "SEC") any reports under the 1934
Act since the date of the SEC Document.
(f) The Company has, within the past twelve months, timely
filed with the SEC all reports and other documents required to be so
filed.
(g) The Company is authorized to issue 40,000,000 shares of
Common Stock and 15,000,000 shares of Preferred Stock. As of March 31,
1999, there were 8,983,996 shares of Common Stock and no shares of
Preferred Stock outstanding. No shares of capital stock of the Company,
or securities convertible into or exercisable for such capital stock,
have been issued by the Company since March 31, 1999 except for issuances
pursuant to the Company's equity compensation plans or pursuant to
outstanding options, warrants, rights or convertible notes, in each case
as disclosed in the SEC Document. All outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of Common Stock were
issued in violation of the preemptive rights, if any, of any stockholders
of the Company.
(h) There is no action, suit or proceeding pending, or, to the
Company's knowledge, threatened, against the Company (a) which questions
the validity of this Agreement or the ability of the Company to
consummate the transactions contemplated hereby or (b) which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, properties,
prospects, operations, or financial condition of the Company.
(i) To the Company's knowledge, there are no outstanding
stockholder agreements, voting trusts, proxies or other arrangements or
understandings among the stockholders of the Company relating to the
voting of their respective shares other than proxies which have been or
may be given in connection with the Company's annual meeting of
stockholders and other than as disclosed in documents filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended.
(j) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and consummation of the
transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Restated
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<PAGE>
Certificate of Incorporation, as amended, or Bylaws of the Company;
(b) result in any breach, violation of or default or loss of a benefit
under, or conflict with, or permit the acceleration of any obligation
under (in each case, upon the giving of notice, the passage of time, or
both) any mortgage, indenture, lease, loan agreement or other agreement
or instrument, permit, franchise, license, judgment, order, decree, law,
ordinance, rule or regulation applicable to the Company or its
properties.
(k) All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings
with, any federal, state or local governmental authority, required on the
part of the Company in connection with the valid execution, delivery and
performance of this Agreement and the Registration Rights Agreement, the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby and thereby, have been obtained, or will
be effective at the Closing, except for notices required or permitted to
be filed with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis and except for
filings and such other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof.
(l) Except as disclosed in or contemplated by the SEC Document
and except for the repurchase from Chiron Corporation on April 1, 1999 of
three warrants to purchase shares of Common Stock of the Company, the
Company has not otherwise had any material change in its condition,
financial or otherwise, except for changes in the ordinary course of
business, consistent with past practices, none of which individually or
in the aggregate has had a material adverse effect on the Company.
(m) The Common Stock of the Company is currently listed on the
Nasdaq National Market and shall continue to be listed on either the
Nasdaq National Market or The Nasdaq SmallCap Market.
(n) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company contained in any
document, certificate or other writing furnished to the undersigned in
connection with the transactions contemplated hereby, when taken as a
whole, contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements herein or therein not
misleading in light of the circumstances in which they are made.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERSIGNED. The
undersigned hereby represents and warrants to and covenants with the Company
that:
(a) GENERAL:
(i) The undersigned has all requisite authority to enter
into this Agreement and the Registration Rights Agreement and to
perform all the
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<PAGE>
obligations required to be performed by the undersigned hereunder
and thereunder. Each of this Agreement and the Registration
Rights Agreement, when executed and delivered by the undersigned,
shall, assuming due execution and delivery by the Company,
constitute a valid and legally binding obligation of the
undersigned enforceable in accordance with its terms, except as
the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally, and except for judicial limitations on the enforcement
of the remedy of specific performance and other equitable
remedies.
(ii) The undersigned is a resident of or is domiciled in
the state or other jurisdiction set forth on the signature page
hereto and is not acquiring the Shares as an agent or otherwise
for any other person.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The undersigned realizes that purchase of the Shares
is a speculative investment, and that the economic benefits which
may be derived therefrom are uncertain. In determining whether or
not to make an investment in the Company, the undersigned has
relied solely upon the written materials provided to the
undersigned by the Company, receipt of which is hereby
acknowledged, and upon independent investigations made by the
undersigned and the undersigned's representatives.
(ii) The opportunity has been made available to the
undersigned to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions
of the Shares and to review the Company's material books and
records.
(iii) The undersigned understands that no federal or state
agency has passed upon the Shares or made any finding or
determination concerning the fairness or advisability of this
investment.
(c) STATUS OF UNDERSIGNED:
(i) The undersigned, if an individual, has attained the
age of majority (as established in the undersigned's state of
residence), and, in any event, is under no disability with respect
to entering into a contractual relationship with the Company and
in executing this Agreement.
(ii) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so that
the undersigned is capable of evaluating the merits and risks of
an investment in the Shares. To the extent
5
<PAGE>
necessary, the undersigned has retained, at the undersigned's own
expense, and relied upon, appropriate professional advice
regarding the investment, tax and legal merits and consequences
of this Agreement and of owning the Shares.
(iii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The undersigned
agrees to furnish any additional information requested to assure
compliance with applicable federal and state securities laws in
connection with the purchase and sale of the Shares. The
undersigned acknowledges that the undersigned has completed
Part I, the Subscriber Information questionnaire, and Part II, the
Accreditation Criteria questionnaire, previously provided to the
undersigned and that the information contained therein is complete
and accurate as of the date thereof and is hereby affirmed as of
the date hereof.
(iv) The information presented and statements made by the
undersigned in the questionnaire referred to in Section 6(c)(iii)
completed and delivered by the undersigned and returned to the
Company with this Agreement, and any additional information
supplied by the undersigned at the Company's request relating to
the undersigned's income, net worth, investment experience or
other matters, are complete and accurate as of this date and may
be relied upon by the Company in determining whether to accept
this offer.
(v) The undersigned's commitment to investments that are
not readily marketable is not disproportionate to the
undersigned's net worth, and an investment in the Shares will not
cause such commitment to become excessive. The undersigned has
adequate means of providing for the undersigned's current needs
and contingencies and has no need for liquidity with respect to
the undersigned's investment in the Shares, and can withstand a
complete loss of such investment in the Shares.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES:
(i) The undersigned is acquiring the Shares for the
undersigned's own account for investment purposes and not with a
view to or for resale in connection with any distribution thereof.
The undersigned understands that the Shares have not been
registered under the Securities Act, or any State Securities Laws,
in reliance on exemptions from registration which depend, in part,
on the undersigned's investment intention; and, accordingly, the
truth and accuracy of the foregoing representation will be relied
upon by the Company to establish such exemptions. The undersigned
acknowledges that the Company is not required to recognize any
transfer of the Shares unless, in the opinion of counsel to the
Company, such transfer would not result in a violation of any
federal or state law regarding the offer and sale of securities
6
<PAGE>
and unless the other restrictions on transfer set forth in the
Shares are complied with.
(ii) The undersigned understands that the Shares are
"restricted securities" under applicable federal securities laws
and that the Securities Act and the rules of the SEC provide in
substance that the undersigned may dispose of the Shares only
pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and the undersigned
understands that the Company has no obligation or intention to
register any of the Shares (except for the registration rights
referred to in Section 18 hereof), or to take action so as to
permit sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly, the undersigned understands that, under
the SEC's rules and until the Shares are registered for sale under
the Securities Act, the undersigned may dispose of the Shares
principally only in "private placements" which are exempt from
registration under the Securities Act, in which event the
transferee will acquire "restricted securities" subject to the
same limitations as in the hands of the undersigned. As a
consequence, the undersigned understands that the undersigned must
bear the economic risks of the investment in the Shares for an
indefinite period of time.
(iii) The undersigned agrees: (A) that the undersigned
will not sell, assign, pledge, give, transfer or otherwise dispose
of the Shares or any interest therein, or make any offer or
attempt to do any of the foregoing, except pursuant to a
registration of the Shares, as applicable, under the Securities
Act and all applicable State Securities Laws or in a transaction
which is exempt from the registration provisions of the Securities
Act and all applicable State Securities Laws; (B) that the
certificate(s) for the Shares will bear a legend making reference
to the foregoing restrictions; and (C) that the Company and any
transfer agent for the Shares shall not be required to give effect
to any purported transfer of such Shares except upon compliance
with the foregoing restrictions.
(iv) The undersigned has not offered or sold any portion
of the undersigned's Shares.
(v) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this
private placement at any time prior to the completion of the
offering and to return the previously paid subscription price of
the Shares, without interest thereon, to the undersigned.
(vi) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of SEC Regulation D
to represent it in determining whether it should purchase the
Shares.
7
<PAGE>
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED. The
undersigned's obligation to purchase the Shares at the Closing is subject
to the fulfillment, at or prior to the Closing, of all of the following
conditions, any of which may be waived by the undersigned:
(i) The representations and warranties made by the
Company in Section 5 hereof shall be true and correct in all
respects on the date of the Closing with the same force and effect
as if they had been made on and as of said date; and the Company
shall have performed and complied with all obligations, agreements
and conditions herein required to be performed by it on or prior
to the Closing.
(ii) All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the undersigned,
and the undersigned shall have received all such counterpart
originals or certified or other copies of such documents as it may
reasonably request.
(iii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of
the Closing, except for notices required or permitted to be filed
with certain state and federal securities commissions after the
Closing, which notices will be filed on a timely basis, and except
for filings and other actions required to be taken pursuant to the
Registration Rights Agreement after the date hereof. At the time
of the Closing, the sale and issuance of the Shares shall be
legally permitted by all laws and regulations to which the
undersigned and the Company are subject.
(iv) No stop order or other order enjoining the sale of
the Shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC or any commissioner of corporations or
similar officer of any other state having jurisdiction over this
transaction.
(v) The Company shall have delivered to the undersigned
a Certificate, executed by the President of the Company, dated the
Closing Date, certifying to (i) the fulfillment of the conditions
specified in subparagraphs (i) and (iv) of this Section 8 and (ii)
the incumbency of the officers of the
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<PAGE>
Company executing this Agreement and the other instruments
delivered by the Company upon the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. In addition to,
and not in limitation of, the Company's rights set forth in Section 2
hereof, the Company's obligation to issue and sell the Shares at the
Closing is subject to the fulfillment, on or prior to the Closing, of the
following conditions, any of which may be waived by the Company:
(i) The representations and warranties made by the
undersigned in Section 6 hereof shall be true and correct in all
respects on the date of the Closing with the same force and effect
as if they had been made on and as of said date, and the
undersigned shall have performed and complied with all
obligations, agreements and conditions herein required to be
performed by the undersigned on or before the Closing.
(ii) All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of
the Closing. No stop order or other order enjoining the sale of
the Shares shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC or any commissioner of corporations or
similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of
the Shares shall be legally permitted by all laws and regulations
to which the undersigned and the Company are subject.
8. LEGEND. Each certificate for Shares will be imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED
FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES
IS THEN IN EFFECT, OR, IN THE OPINION OF COUNSEL, SUCH REGISTRATION UNDER
THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
9. BROKERS. The undersigned has not entered into any agreement to
pay any broker's or finder's fee to any person with respect to this Agreement or
the transactions contemplated hereby.
9
<PAGE>
10. FILING OF REPORTS. The Company will, so long as it has securities
registered pursuant to Section 12 of the 1934 Act or has securities registered
pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the SEC so that Rule 144 under the Securities
Act or any successor provision thereto will be available to the security holders
of the Company who are otherwise able to take advantage of the provisions of
such Rule.
11. WAIVER, AMENDMENT. Neither this Agreement nor any provisions
hereof shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought, and any waiver, change, discharge or
termination shall be effective only to the extent specifically set forth in such
writing.
12. ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, to it at the following address:
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112-6943
Attn: Chief Executive Officer
(b) If to the undersigned, the address set forth on the
signature page hereto;
or at such other address as either party shall have specified by notice in
writing to the other.
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<PAGE>
17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
18. REGISTRATION RIGHTS. The Company and the undersigned agree that
the undersigned shall have the benefit of the registration rights as set forth
in the Registration Rights Agreement of even date herewith, in the form attached
as Appendix A hereto (the "Registration Rights Agreement"), with respect to the
Shares.
19. SURVIVAL. All representations, warranties and covenants contained
in this Agreement shall survive (i) the acceptance of the subscription by the
Company and (ii) if the undersigned is an individual, the death or disability of
the undersigned.
20. NOTIFICATION OF CHANGES. The undersigned hereby covenants and
agrees to notify the Company upon the occurrence of any event prior to the
Closing of the purchase of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the undersigned contained in
this Agreement to be false or incorrect.
21. ENTIRE AGREEMENT. This Agreement, the Appendices hereto, and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically set
forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
23. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to either party or its respective successors and
assigns upon any breach, default or noncompliance of the other party hereto
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that all remedies, either under this
Agreement, by law, or otherwise afforded to either party shall be cumulative and
not alternative.
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24. PREVAILING PARTY. If legal action is brought by, or on behalf of,
either party to enforce or interpret this Agreement, the prevailing party shall
be entitled to recover its attorneys' fees and legal costs in connection
therewith.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement and Investment Letter this ____ day of ________________, 1999.
-------------------------------------
Signature
-------------------------------------
Print Name
-------------------------------------
Number and Street
-------------------------------------
City, State and Zip
-------------------------------------
Subscriber's Social Security
or Tax Identification Number
-------------------------------------
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary, Corporation or Partnership, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation ( ) Partnership
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Accepted as of __________,1999
GALAGEN INC.
By:
----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
14
