Exhibit 10.6

 

THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF
SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

EXCHANGE AGREEMENT

This Exchange Agreement (this “Agreement”) is entered into as of ____________,
2019 by and among Chicago Venture Partners, L.P.,  a Utah limited partnership
(“Lender”), Jaguar Health, Inc., a Delaware corporation (“Jaguar”), and Napo
Pharmaceuticals, Inc. (“Napo,” and together with Jaguar, “Borrower”).
Capitalized terms used in this Agreement without definition shall have the
meanings given to them in the Original Note  (as defined below).

A.        Borrower previously sold and issued to Lender that certain Secured
Promissory Note dated May 28, 2019 but with an original issuance date of July
31, 2017 in the original principal amount of $10,535,900.42  (the “Original
Note”) pursuant to that certain Exchange Agreement dated May 28, 2019,  by and
between Lender and Borrower (the “Prior Exchange Agreement,” and together with
the Original Note and all other documents entered into in conjunction therewith,
the “Transaction Documents”).

B.         Subject to the terms of this Agreement, Borrower and Lender desire to
partition a new Secured Promissory Note in the original principal amount of
$____________ (the “Partitioned Note”) from the Original Note and then cause the
outstanding balance of the Original Note to be reduced by an amount equal to the
initial outstanding balance of the Partitioned Note.

C.         Borrower and Lender further desire to exchange (such exchange is
referred to as the “Note Exchange”) the Partitioned Note for ____________ shares
of the Jaguar’s Common Stock, par value $0.0001 (the “Common Stock,” and such
____________ shares of Common Stock, the “Exchange Shares”), at an effective
price per Exchange Share equal to $______,  according to the terms and
conditions of this Agreement.

D.        The Note Exchange will consist of Lender surrendering the Partitioned
Note in exchange for the Exchange Shares, which will be issued free of any
restrictive securities legend.

E.         Other than the surrender of the Partitioned Note, no consideration of
any kind whatsoever shall be given by Lender to Borrower in connection with this
Agreement.

F.         Lender and Borrower now desire to exchange the Partitioned Note for
the Exchange Shares on the terms and conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

1.         Recitals and Definitions.  Each of the parties hereto acknowledges
and agrees that the recitals set forth above in this Agreement are true and
accurate, are contractual in nature, and are hereby incorporated into and made a
part of this Agreement.

2.         Partition. Effective as of the date hereof, Borrower and Lender agree
that the Partitioned Note is hereby partitioned from the Original Note.
Following such partition of the

 

 

 

Original Note, Borrower and Lender agree that the Original Note shall remain in
full force and effect, provided that the outstanding balance of the Original
Note shall be reduced by an amount equal to the initial outstanding balance of
the Partitioned Note.

 

3.         Issuance of Shares. Pursuant to the terms and conditions of this
Agreement, the Exchange Shares may not be issued under any circumstances if the
issuance of the Exchange Shares would cause Lender to beneficially own a number
of shares of Common Stock exceeding 9.99% of the number of shares of Common
Stock outstanding on the issuance date (the “Maximum Percentage”). The Note
Exchange shall occur with Lender surrendering the Partitioned Note to Borrower
on the Free Trading Date (as defined below). On the Free Trading Date, the
Partitioned Note shall be cancelled and all obligations of Borrower under the
Partitioned Note shall be deemed fulfilled.  Upon receipt of written
confirmation from Lender that the issuance of the Exchange Shares (or any
portion thereof designated be Lender) will not cause Lender’s ownership of the
Common Stock to exceed the Maximum Percentage, Borrower shall be obligated to
deliver to Lender the number of Exchange Shares requested by Lender within two
(2) business days of receipt of the applicable notice. All Exchange Shares
delivered hereunder shall be delivered via DWAC to Lender’s designated brokerage
account.  Borrower agrees to provide all necessary cooperation or assistance
that may be required to cause all Exchange Shares delivered hereunder to become
Free Trading (the first date on which all Exchange Shares become Free Trading,
the “Free Trading Date”). For purposes hereof, the term “Free Trading” means
that (a) the Exchange Shares have been cleared and approved for public resale by
the compliance departments of Lender’s brokerage firm and the clearing firm
servicing such brokerage, and (b) such shares are held in the name of the
clearing firm servicing Lender’s brokerage firm and have been deposited into
such clearing firm’s account for the benefit of Lender. By written notice to
Borrower, Lender may increase, decrease or waive the Maximum Percentage as to
itself but any such waiver will not be effective until the 61st day after
delivery thereof. The foregoing 61-day notice requirement is enforceable,
unconditional and non-waivable and shall apply to all affiliates and assigns of
Lender.

4.         Closing. The closing of the transaction contemplated hereby (the
“Closing”) along with the delivery of the Exchange Shares to Lender shall occur
on the date that is mutually agreed to by Borrower and Lender by means of the
exchange by express courier and email of .pdf documents, but shall be deemed to
have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi,
Utah.

5.         Holding Period, Tacking and Legal Opinion.  Borrower represents,
warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the
Securities Act of 1933, as amended (the “Securities Act”), the holding period of
the Partitioned Note and the Exchange Shares will include the prior noteholder’s
holding period of the notes that were exchanged for the Original Note and
Lender’s holding period of the Original Note from July 31, 2017. Borrower agrees
not to take a position contrary to this Section 5 in any document, statement,
setting, or situation. Borrower agrees to take all action necessary to issue the
Exchange Shares without restriction, and not containing any restrictive legend
without the need for any action by Lender; provided that the applicable holding
period has been met. In furtherance thereof, prior to the Closing, counsel to
Lender may, in its sole discretion, provide an opinion that: (a) the Exchange
Shares may be resold pursuant to Rule 144 without volume or manner-of-sale
restrictions; and (b) the transactions contemplated hereby and all other
documents associated with this transaction comport with the

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requirements of Section 3(a)(9) of the Securities Act. Borrower represents that
it is not subject to Rule 144(i). The Exchange Shares are being issued in
substitution of and exchange for and not in satisfaction of the Partitioned
Note. The Exchange Shares shall not constitute a novation or satisfaction and
accord of the Partitioned Note. Borrower acknowledges and understands that the
representations and agreements of Borrower in this Section 5 are a material
inducement to Lender’s decision to consummate the transactions contemplated
herein.

6.         Borrower’s Representations, Warranties and Agreements. In order to
induce Lender to enter into this Agreement, Borrower, for itself, and for its
affiliates, successors and assigns, hereby acknowledges, represents, warrants
and agrees as follows: (a) Borrower has full power and authority to enter into
this Agreement and to incur and perform all obligations and covenants contained
herein, all of which have been duly authorized by all proper and necessary
action, (b) no consent, approval, filing or registration with or notice to any
governmental authority is required as a condition to the validity of this
Agreement or the performance of any of the obligations of Borrower hereunder,
(c) no Event of Default has occurred under the Original Note and any Events of
Default that may have occurred thereunder have not been, and are not hereby,
waived by Lender, (d) except as specifically set forth herein, nothing herein
shall in any manner release, lessen, modify or otherwise affect Borrower’s
obligations under the Original Note, (e) the issuance of the Exchange Shares is
duly authorized by all necessary corporate action and the Exchange Shares are
validly issued, fully paid and non-assessable,  free and clear of all taxes,
liens, claims, pledges, mortgages, restrictions, obligations, security interests
and encumbrances of any kind, nature and description, (f) Borrower has not
received any consideration in any form whatsoever for entering into this
Agreement, other than the surrender of the Partitioned Note, and (g) Borrower
has taken no action which would give rise to any claim by any person for a
brokerage commission, placement agent or finder’s fee or other similar payment
by Borrower related to this Agreement.

7.         Lender’s Representations, Warranties and Agreements. In order to
induce Borrower to enter into this Agreement, Lender, for itself, and for its
affiliates, successors and assigns, hereby acknowledges, represents, warrants
and agrees as follows: (a) Lender has full power and authority to enter into
this Agreement and to incur and perform all obligations and covenants contained
herein, all of which have been duly authorized by all proper and necessary
action, (b) no consent, approval, filing or registration with or notice to any
governmental authority is required as a condition to the validity of this
Agreement or the performance of any of the obligations of Lender hereunder, and
(c)  Lender has taken no action which would give rise to any claim by any person
for a brokerage commission, placement agent or finder’s fee or other similar
payment by Borrower related to this Agreement.

8.         Governing Law; Venue.  This Agreement shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the
internal laws of the State of Utah, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Utah or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Utah. The provisions set forth in the Prior Exchange
Agreement to determine the proper venue for any disputes are incorporated herein
by this reference.  BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN 

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CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

9.         Arbitration of Claims. This Agreement shall be subject to the
arbitration of claims provisions set forth in Section 9.1 of the Prior Exchange
Agreement.

10.       Counterparts.  This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or other electronic transmission (including email) shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes. Signatures
of the parties transmitted by facsimile transmission or other electronic
transmission (including email) shall be deemed to be their original signatures
for all purposes.

11.       Attorneys’ Fees. In the event of any arbitration or action at law or
in equity to enforce or interpret the terms of this Agreement, the parties agree
that the party who is awarded the most money shall be deemed the prevailing
party for all purposes and shall therefore be entitled to an additional award of
the full amount of the attorneys’ fees and expenses  paid by such prevailing
party in connection with the arbitration, litigation and/or dispute without
reduction or apportionment based upon the individual claims or defenses  giving
rise to the fees and expenses.  Nothing herein shall restrict or impair an
arbitrator’s or a court’s power to award fees and expenses for frivolous or bad
faith pleading.

12.       No Reliance.  Borrower acknowledges and agrees that neither Lender nor
any of its officers, directors, members, managers, equity holders,
representatives or agents has made any representations or warranties to Borrower
or any of its agents, representatives, officers, directors, or employees except
as expressly set forth in this Agreement and the Transaction Documents and, in
making its decision to enter into the transactions contemplated by this
Agreement, Borrower is not relying on any representation, warranty, covenant or
promise of Lender or its officers, directors, members, managers, equity holders,
agents or representatives other than as set forth in this Agreement.

13.       Severability. If any part of this Agreement is construed to be in
violation of any law, such part shall be modified to achieve the objective of
the parties to the fullest extent permitted and the balance of this Agreement
shall remain in full force and effect.

14.       Entire Agreement. This Agreement, together with the Transaction
Documents,  and all other documents referred to herein, supersedes all other
prior oral or written agreements between Borrower,  Lender,  its affiliates and
persons acting on its behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither Lender
nor Borrower makes any representation, warranty, covenant or undertaking with
respect to such matters.

15.       Amendments.  This Agreement may be amended, modified, or supplemented
only by written agreement of the parties. No provision of this Agreement may be
waived except in writing signed by the party against whom such waiver is sought
to be enforced.

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16.       Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
This Agreement or any of the severable rights and obligations inuring to the
benefit of or to be performed by Lender hereunder may be assigned by Lender to a
third party, including its financing sources, in whole or in part. Borrower may
not assign this Agreement or any of its obligations herein without the prior
written consent of Lender.

17.       Continuing Enforceability; Conflict Between Documents. Except as
otherwise modified by this Agreement, the Original Note and each of the other
Transaction Documents shall remain in full force and effect, enforceable in
accordance with all of its original terms and provisions.  This Agreement shall
not be effective or binding unless and until it is fully executed and delivered
by Lender and Borrower.  If there is any conflict between the terms of this
Agreement, on the one hand, and the Original Note or any other Transaction
Document, on the other hand, the terms of this Agreement shall prevail.

18.       Time of Essence.  Time is of the essence with respect to each and
every provision of this Agreement.

19.       Notices.  Unless otherwise specifically provided for herein, all
notices, demands or requests required or permitted under this Agreement to be
given to Borrower or Lender shall be given as set forth in the “Notices” section
of the Prior Exchange Agreement.

20.       Further Assurances. Each party shall do and perform or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.

 

 

 

 

 

BORROWER:

 

 

 

JAGUAR HEALTH, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

NAPO PHARMACEUTICALS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

LENDER:

 

 

 

CHICAGO VENTURE PARTNERS, L.P.

 

 

 

By: Chicago Venture Management, L.L.C.,

 

its General Partner

 

 

 

By: CVM, Inc., its Manager

 

 

 

By: 

 

 

 

John M. Fife, President

 

[Signature Page to Exchange Agreement]