Subscription Agreement - Aesgen Inc. and aaiPharma Inc.
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is dated as of October
19, 2001, and is by and between AESGEN, INC., a Delaware corporation ("Aesgen"
or the "Company"), aaiPHARMA INCORPORATED, a Delaware corporation (the
"Purchaser").
WHEREAS, the Purchaser and Aesgen have or will enter into an agreement
(proposal number 01-068-R2) (the "Service Agreement") pursuant to which
Purchaser agrees to perform certain services for Aesgen relating to Aesgen's
Phase III clinical trials for AES-14 (the "Services");
WHEREAS, the Services will be performed by Purchaser over time, and,
pursuant to the Service Agreement, Aesgen will be required to pay Purchaser for
such Services;
WHEREAS, the Purchaser wishes to purchase up to the number of shares of
Series D Convertible Preferred Stock, par value $.01 per share ("Series D
Preferred Stock"), of Aesgen as set forth on the Election Form attached hereto
as Annex A (the "Subscribed Shares") for the purchase price of $100.00 per share
of Series D Preferred Stock (the "Purchase Price");
WHEREAS, the Purchaser has agreed to accept, and Aesgen has agreed to
issue, in lieu of cash for the Services to be performed, Series D Preferred
Stock.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties agree as follows:
SECTION 1. COMMITMENT.
The Purchaser hereby subscribes for and agrees to purchase the
Subscribed Shares, each at the Purchase Price.
SECTION 2. PAYMENT OF THE PURCHASE PRICE AND DELIVERY OF THE SHARES.
(a) Subject to the terms and conditions hereof and on the
basis of the representations and warranties hereinafter set forth, the
Purchaser hereby agrees to purchase, and Aesgen agrees to issue and
sell to the Purchaser, subject to Section 2(c) hereof, such number of
shares of Series D Preferred Stock at the aggregate Purchase Price as
set forth opposite such Purchaser's name on Schedule I hereto (the
"Accepted Shares"); provided such number of shares shall be no greater
than the Subscribed Shares.
(b) Pursuant to the Service Agreement the Purchaser shall
deliver to Aesgen monthly invoices for Services rendered for the month
then ended. Notwithstanding the provisions of the Service Agreement to
the contrary, until the aggregate amount payable to the Purchaser under
the Service Agreement shall exceed the aggregate Purchase Price for the
Accepted Shares, Aesgen shall only be responsible for payment for such
Services as set forth in Section 2(c) hereof.
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(c) The shares of Series D Preferred Stock to be issued
hereunder shall be issued at the following times and in the following
amounts:
(i) As soon as practicable after the interim analysis of
Aesgen's current Phase III clinical trial for AES-14 (the "Trial") is
available, Aesgen shall deliver to the Purchaser Series D Preferred
Stock in an amount (the "First Installment"), the aggregate Purchase
Price for which shall be equal to the aggregate amount of all unpaid
and undisputed invoices delivered pursuant to the Service Agreement to
Aesgen by the Purchaser prior to such date.
(ii) As soon as practicable after the earlier of (i) the
completion or abandonment of the Trial or (ii) the aggregate amount
invoiced under the Service Agreement shall equal or exceed the
aggregate Purchase Price for the Accepted Shares, Aesgen will deliver
to the Purchaser additional Series D Preferred Stock in an amount (the
"Second Installment"), the aggregate Purchase Price for which shall
equal all unpaid and undisputed invoices delivered pursuant to the
Service Agreement prior to such time.
(iii) To the extent the amount of First Installment and the
Second Installment combined is less than the number of the Accepted
Shares, Aesgen shall deliver to the Purchaser shares of Series D
Preferred Stock in an amount equal to the Accepted Shares less the
First Installment and the Second Installment in lieu of any cash
payments that may become due under any services or supply agreement
entered into between Aesgen and the Purchaser.
(iv) Notwithstanding the foregoing, no fractional shares of
Series D Preferred Stock shall be issued and any amount representing a
fraction of a share shall be carried forward until the next payment
made hereunder, and the aggregate amount of shares of Series D
Preferred Stock issued hereunder shall not exceed the number of the
Accepted Shares.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
In order to induce Aesgen to accept this subscription and issue shares
of Series D Preferred Stock to the Purchaser, the Purchaser hereby represents
and warrants to Aesgen that:
(a) The execution, delivery and performance by the Purchaser
of this Agreement and the purchase of the Subscribed Shares have been
duly authorized by all action on the Purchaser's part.
(b) Purchaser understands that the Subscribed Shares to be
purchased by him (i) will not be registered under the Securities Act of
1933, as amended (the "Securities Act") or the securities laws of any
state, by reason of their issuance in a transaction exempt from the
registration or qualification requirements of the Securities Act such
securities laws, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy
of such Purchaser's representations as expressed herein, and (ii) must
be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from registration.
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(c) This Agreement has been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligation of
the Purchaser, enforceable in accordance with its terms subject, as to
enforcement of remedies, to general equity principles and to applicable
bankruptcy, insolvency and similar laws and moratorium from time to
time in effect.
(d) The Purchaser is acquiring the Subscribed Shares for its
own account, for investment and without any intent to make a
distribution thereof, and each certificate representing the Subscribed
Shares, and any other securities issued in respect of such Subscribed
Shares upon any stock split, stock dividend, recapitalization, merger
or similar event, unless no longer required in the opinion of counsel
(which opinion and counsel shall be reasonably satisfactory to Aesgen),
shall bear a legend substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAW
OR UPON DELIVERY TO AESGEN OF AN OPINION OF COUNSEL
SATISFACTORY TO AESGEN THAT REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED.
AESGEN IS AUTHORIZED TO ISSUE DIFFERENT CLASSES OF STOCK AND
WILL FURNISH TO A STOCKHOLDER ON REQUEST AND WITHOUT CHARGE
INFORMATION REGARDING THE DESIGNATIONS, PREFERENCES, AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
EACH CLASS OF STOCK AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR
OTHER DISPOSITION (EACH A "TRANSFER") AND VOTING ANY OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY
THE TERMS OF THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT,
DATED AS OF JANUARY 30, 1998, AMONG AESGEN AND THE
STOCKHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED
AT AESGEN'S PRINCIPAL OFFICE. AESGEN WILL NOT REGISTER THE
TRANSFER OF SUCH SECURITIES ON THE BOOKS OF AESGEN UNLESS AND
UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS
OF THE STOCKHOLDERS' AGREEMENT.
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(e) The Purchaser is an "accredited investor," as defined in
Rule 501 (the provisions of which are known to the Purchaser)
promulgated under the Securities Act.
(f) The Purchaser understands that no public market now exists
for the Subscribed Shares or any other security issued in respect of
such Subscribed Shares.
(g) Based on the Purchaser's knowledge, experience and skill
in evaluating and investing in issues of securities derived from actual
participation in financial, investment, tax and business matters, the
Purchaser is capable of evaluating the merits and risks of an
investment in the Subscribed Shares and the suitability of the
Subscribed Shares as an investment for the Purchaser.
(h) The Purchaser acknowledges that Aesgen has incurred
substantial losses to date and that the Purchaser may lose all or a
substantial portion of his or its investment in Aesgen. The Purchaser
(i) has adequate financial means of providing for current needs and
possible personal contingencies after purchasing the Subscribed Shares,
(ii) has no current need for liquidity in the Purchaser's investment in
the Subscribed Shares, (iii) is able to bear the substantial economic
risks of an investment in the Subscribed Shares for an indefinite
period, and (iv) at the present time, could afford a complete loss of
such investment.
(i) The Purchaser has received the Confidential Offering
Memorandum dated September 17, 2001 ("Offering Memorandum") and has had
an opportunity to discuss the business, management and financial
affairs of Aesgen and the terms and conditions of an investment in the
Subscribed Shares with, and has had access to, the management of
Aesgen. The Purchaser has carefully reviewed the Risk Factors set forth
in the Offering Memorandum.
(j) Neither Aesgen nor any person acting on its behalf has
offered to sell to the Purchaser the Subscribed Shares by means of any
form of general solicitation or advertising such as media advertising
or seminars. The Purchaser acknowledges that his or her investment
decision has not been based on any representation except as set forth
in this Agreement and the Offering Memorandum.
(k) All information which the Purchaser has provided to
Aesgen, including all information contained herein and in the
Questionnaire provided by the Aesgen, is true, correct and complete as
of the date hereof, and if there should be any adverse change in such
information, the Purchaser shall immediately notify Aesgen thereof.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF AESGEN.
Aesgen represents and warrants to the Purchaser that:
(i) Aesgen has all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Aesgen of this Agreement and
the issuance by Aesgen of the Accepted Shares have been duly authorized
by all action on Aesgen's part.
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(ii) This Agreement has been duly executed and delivered by
Aesgen and constitutes the legal, valid and binding obligation of
Aesgen, enforceable in accordance with its terms subject, as to
enforcement of remedies, to general equity principles and to applicable
bankruptcy, insolvency and similar laws and moratorium from time to
time in effect.
(iii) The Accepted Shares, when issued and delivered in
accordance with this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable shares of Series D Preferred
Stock of Aesgen, with no personal liability attaching to the ownership
thereof. Upon issuance, sale and delivery of, and payment for, the
Accepted Shares, the Purchaser will acquire good and marketable title
thereto, free and clear of all liens, encumbrances, restrictions on
transfer, options, charges, security interests, equities and claims
whatsoever other than as may arise solely pursuant to the terms of the
Amended and Restated Stockholders' Agreement dated as of January 30,
1998 among Aesgen and the stockholders named therein. The issuance,
sale and delivery of the Accepted Shares by Aesgen pursuant to this
Agreement is not subject to any preemptive rights of stockholders of
Aesgen or to any right of first refusal, transfer agreement or other
similar right in favor of any person.
SECTION 5. MISCELLANEOUS.
(a) This Agreement and the Service Agreement constitute the
entire agreement between the parties hereto with respect to the subject
matter hereof. This Agreement may be amended only by a writing executed
by all of the parties hereto.
(b) This Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of the State of Delaware.
(c) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(d) Each party hereto represents that no broker, finder or
other party has been retained by it and no broker or finder's fees or
commissions have been agreed to be paid in connection with this
Agreement or the transactions contemplated hereby, and each party
agrees to indemnify and hold harmless each other party from and against
any and all losses and other expenses caused by a violation of this
representation.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the first date written above.
aaiPHARMA INCORPORATED
By:
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Name:
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Title:
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AESGEN, INC.
By:
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Paul McGarty
President
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