EXHIBIT 4.35
THIS WARRANT HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS WARRANT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE WARRANT IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THIS WARRANT MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION
UNDER THE PROVISIONS OF THE 1933 ACT AND UNDER PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL THAT SUCH TRANSACTION DOES NOT REQUIRE
REGISTRATION OF THE WARRANT, WHICH OPINION AND WHICH COUNSEL SHALL BE
SATISFACTORY TO THE COMPANY IN ITS SOLE DISCRETION.
STOCK PURCHASE WARRANT
No. _____________
To Purchase 200,000 Shares of Common Stock of
GALAGEN INC.
THIS CERTIFIES that, for value received, American Home Products
Corporation, a Delaware corporation (the "Investor"), is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any time on or
after October 15, 1998 and on or prior to October 15, 2005 (the "Termination
Date") but not thereafter, to subscribe for and purchase from GALAGEN INC., a
corporation incorporated in Delaware (the "Company"), TWO HUNDRED THOUSAND
(200,000) shares (the "Warrant Shares") of Common Stock, par value US$0.01 per
share of the Company (the "Common Stock"). The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be equal to TWO
DOLLARS AND FORTY FIVE CENTS ($2.45). The Exercise Price and the number of
shares for which the Warrant is exercisable (the "Conversion Shares") shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Collaboration and License Agreement, by and between the
Company and Investor acting through its Wyeth-Ayerst Laboratories Division and
of even date herewith, the "License Agreement".
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to, and covenants with, the Investor that the following
are true and correct as of the date hereof.
(1) ORGANIZATION; QUALIFICATION. The Company is a corporation duly
organized and validly existing under the laws of Delaware and is in good
standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted. The Company is qualified to do business as
a foreign corporation in each jurisdiction in the United States in which the
ownership of its property or the nature of its business requires such
qualification, except where failure to so qualify would not have a material
adverse effect on the Company.
(2) AUTHORIZATION. The Company has all requisite corporate right, power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Conversion Shares and the
performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to the indemnification provisions set forth
herein. Upon their issuance and delivery pursuant to this Agreement, the
Conversion Shares will be validly issued, fully paid and nonassessable and will
be free of any liens or encumbrances except for those imposed by or on behalf of
the Investor, its creditors or agents.
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(3) NO CONFLICT. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Certificate of Incorporation, and any amendments thereto,
Bylaws and any amendments thereto of the Company or any material mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree statute, law, ordinance, rule or
regulation applicable to the Company, its properties or assets.
(4) ACCURACY OF REPORTS AND INFORMATION. The Company is in compliance,
to the extent applicable, with all reporting obligations under either Section
12(b), 12 (g) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). The Company has registered its Common Stock pursuant to Section 12
of the 1934 Act and the Common Stock is listed and trades on the NASDAQ National
Market.
The Company has filed all material required to be filed pursuant to all
reporting obligations under either Section 13(a) or 15(d) of the 1934 Act for a
period of at least twelve (12) months immediately preceding the date hereof (or
for such shorter period that the Company has been required to file such
material).
(5) COMMISSION FILINGS/FULL DISCLOSURE. For a period of at least twelve
(12) months immediately preceding the date hereof, or such shorter period that
the Company has been required to file Reports (as defined below), (i) none of
the Company's filings with the Commission contain any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which they were made, not misleading, and (ii) the Company has timely filed all
requisite forms, reports and exhibits thereto with the Commission.
(6) GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement.
B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR. The
Investor represents and warrants to, and covenants with, the Company that the
following are true and correct as of the date hereof.
(1) AUTHORITY. The Investor has all requisite right, power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Investor, its directors, shareholders, members or partners necessary for the
authorization, execution, delivery and performance of this Agreement with regard
to the purchase of the Warrants as well as the conversion and exercise thereof,
and the performance of the Investor's obligations hereunder, has been taken.
The Investor's signatory has all right, power, authority and capacity to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Investor and
will constitute the legal, valid and binding obligation of the Investor,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy as they may apply to the indemnification
provisions set forth in this Agreement.
(2) INVESTMENT EXPERIENCE. Investor is an "accredited investor" as
defined in Rule 501(a) under the 1933 Act. Investor is aware of the Company's
business affairs and financial condition and has had access to and has acquired
sufficient information about the Company, including but not limited to the
Reports. Investor has such business and financial experience as is required to
give it the capacity to protect its own interests in connection with the
purchase of the Warrants and the Conversion Shares.
(3) INVESTMENT INTENT. Without limiting its ability to resell the
underlying Common Stock pursuant to an effective registration statement,
Investor represents that it is purchasing the Warrants for its own account as
principal for investment purposes, and not with a view to a distribution.
Investor understands that its acquisition of the Warrants have not been
registered under the 1933 Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may
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depend upon, among other things, the bona fide nature of Investor's investment
intent as expressed herein. Investor will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) of the Warrants, except in
compliance with the 1933 Act and any applicable state securities laws, and the
rules and regulations promulgated thereunder.
(4) REGISTRATION OR EXEMPTION REQUIREMENTS. Investor further
acknowledges and understands that the Conversion Shares may not be resold or
otherwise transferred except in a transaction registered under the 1933 Act and
any applicable state securities laws or unless an exemption from such
registration is available. Investor understands that the Warrants and, if
exercised, the Conversion Shares will be imprinted with a legend that prohibits
the transfer of such securities unless (i) it is registered or such registration
is not required pursuant to an exemption therefrom, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the 1933
Act and Investor provides an opinion of Investor's inside counsel to the
Company, which opinion and which counsel shall be reasonably satisfactory to the
Company to the effect that the transaction is so exempt.
(5) NO REGISTRATION, REVIEW OR APPROVAL. The Investor acknowledges and
understand that the limited private offering and sale of the Warrants and the
Conversion Shares pursuant to this Agreement has not been reviewed or approved
by the Commission or by any state securities commission, authority or agency,
and is not registered under the 1933 Act or under the securities or "blue sky"
laws, rules or regulations of any state. The Investor acknowledges, understands
and agrees that the Conversion Shares are being offered and sold hereunder
pursuant to (i) a private placement exemption to the registration provisions of
the 1933 Act pursuant to Section 3(b) or Section 4(2) of the 1933 Act and
Regulation D promulgated under the 1933 Act, and (ii) a similar exemption to the
registration provisions of applicable state securities laws.
C. GENERAL TERMS OF WARRANT.
(1) TITLE OF WARRANT. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
(2) AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
(3) EXERCISE OF WARRANT. Except as provided in Section C(4) herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times, before the close of business on the Termination Date, or such
earlier date on which this Warrant may terminate as provided in this Warrant, by
the surrender of this Warrant and the Notice of Exercise Form annexed hereto
duly executed, at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered holder
hereof at the address of such holder appearing on the books of the Company) and
upon payment of the Exercise Price of the shares thereby; whereupon the holder
of this Warrant shall be entitled to receive a certificate for the number of
shares of Common Stock so purchased. Certificates for shares purchased
hereunder shall be delivered to the holder hereof within ten (10) business days
after the date on which this Warrant shall have been exercised as aforesaid.
Payment of the Exercise Price of the shares may be by certified check or
cashier's check or by wire transfer to an account designated by the Company in
an amount equal to the Exercise Price multiplied by the number of Warrant
Shares.
(4) NO FRACTIONAL SHARES OR SCRIP. No fractional shares of Common Stock
(or other securities deliverable hereunder) or scrip shall be issued to any
Holder in connection with the exercise of this Warrant. Instead of any
fractional share of Common Stock (or other securities deliverable hereunder)
that would otherwise be issuable to such Holder, the Company shall pay to such
Holder a cash adjustment in respect of such fractional interest in an amount
equal to such fractional interest multiplied by the
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Exercise Price per share of Common Stock (or other securities deliverable
hereunder) on the date of such exercise.
(5) CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; PROVIDED, HOWEVER, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and PROVIDED FURTHER, that upon any transfer involved in the issuance or
delivery of any certificates for shares of Common Stock, the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
(6) CLOSING OF BOOKS. The Company will not close its shareholder books
or records in any manner which prevents the timely exercise of this Warrant for
a period of time in excess of five (5) trading days per year.
(7) NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise thereof. Upon the surrender of this
Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so
purchased shall be and be deemed to be issued to such holder as the record owner
of such shares as of the close of business on the later of the date of such
surrender or payment.
(8) ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company); provided,
however, that the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any expenses of transfer incidental thereto
and that this Warrant may not be resold or otherwise transferred except (i) in a
transaction registered under the 1933 Act, or (ii) in a transaction pursuant to
an exemption, if available, from such registration and whereby, if requested by
the Company, an opinion of counsel reasonably satisfactory to the Company is
obtained by the holder of this Warrant to the effect that the transaction is so
exempt.
(9) LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
certificate or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or
stock certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.
(10) SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
(11) EFFECT OF CERTAIN EVENTS.
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction"), in which
the consideration to be received by the Company or its shareholders consists
solely of cash, then the Warrant shall terminate if the Warrant has not been
exercised by the effective date of such transaction, the Company shall give the
holder of this Warrant thirty (30) days' notice of such termination and of the
proposed effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
shareholders consists in part
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of consideration other than cash, the holder of this Warrant shall have the
right thereafter to purchase, by exercise of this Warrant and payment of the
aggregate Exercise Price in effect immediately prior to such action, the kind
and amount of shares and other securities and property which it would have owned
or have been entitled to receive after the happening of such transaction had
this Warrant been exercised immediately prior thereto.
(12) REGISTRATION OF COMMON STOCK.
12.1(a) Demand Registration. Upon the written request of the Investor,
which request will state the intended method of disposition by the Investor and
will request that the Company effect the registration under the 1933 Act of all
or part of the Conversion Shares, the Company will, within 10 days after receipt
of such request, give written notice of such requested registration to all
record holders of securities who have registration rights, and thereupon (except
as expressly provided herein) will use its reasonable best efforts to effect the
registration ("Demand Registration") under the 1933 Act of (x) the shares of
Conversion Shares included in the initial request for registration (for
disposition in accordance with the intended method of disposition stated in such
request) and (y) all other shares of securities, the record holders of which
have made written request to the Company for registration thereof within 30 days
after the receipt of such written notice from the Company, provided that:
(a) except as set forth below, the Company shall be required to
effect no more than three Demand Registrations hereunder and Investor shall be
required to register all Conversion Shares underlying this Warrant held at the
time of such demand which shall be no less than 50,000 shares of Common Stock at
a time; provided that the Company shall not be required to effect more than one
registration during any one-year period pursuant to this Section 12.1;
(b) if the Investor intends to sell its Conversion Shares by
means of an underwriting (whether on a "best efforts" or a "firm commitment"
basis), it shall so advise the Company as part of its request, and the Company
shall include such information in the notice to the other record holders of
securities who have registration rights. In that event, such other record
holders shall have the right to include their shares of such registrable
securities in the underwriting. The managing underwriter for such offering
shall be selected by the Investor, who shall be reasonably acceptable to the
Company;
(c) if a Demand Registration under this Section 12.1 is in
connection with an underwritten public offering, and if the managing
underwriters advise the Company in writing that in their reasonable opinion the
amount of Conversion Shares, and securities the holders of which have
registration rights requested to be included in such registration exceeds the
amount of such securities which can be successfully sold in such offering, the
Company will nevertheless include in such registration, prior to the inclusion
of any securities which are not Conversion Shares or share of Common Stock with
similar registration rights which are to be included in such registration, the
amount of Conversion Shares and other shares of Common Stock with similar
registration rights which in the opinion of such underwriters can be sold, pro
rata among the holders of Conversion Shares and other Common Stock requesting
inclusion with similar registration rights on the basis of the number of shares
of Conversion Shares and other Common Stock requested to be included in such
registration; provided, however, that if the Investor is unable to include in
such offering at least seventy-five percent (50%) of the Conversion Shares
sought to be registered in a Demand Registration under this Section 12.1, the
Investor will be entitled to an additional Demand Registration under this
Section;
(d) if the Company shall furnish to the Investor requesting a
registration pursuant to this Section 12.1 a certificate signed by the Chief
Executive Officer of the Company stating that, in the good faith judgment of the
Board of Directors of the Company, it would be materially detrimental to the
Company for a registration statement to be filed as requested, the Company shall
have the right to defer such filing for a period of not more than 120 days after
receipt of the initial request for registration under this Section 12.1;
provided, however, that the Company may not utilize this right more than once in
any one-year period; and
(e) registrations under this Section 12.1 will be on a form
reasonably acceptable to Investor (or it may withdraw its demand without losing
such demand right) permitted by the rules and regulations of the Commission
selected by the underwriters if the Demand Registration is in connection with an
underwritten public offering or otherwise
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by the Company, provided, however, that within 15 days of notice from the
Company of the form selected, the Investor shall confirm in writing to the
Company that the form selected for registration is reasonably acceptable to the
Investor and the Investor shall thereafter be precluded from withdrawing its
demand for such registration on the basis of this Section 12.1(f).
12.1(b) Incidental Registrations.
(a) If the Company at any time proposes to register any of its
securities under the 1933 Act (other than pursuant to Section 12.1(a) hereof,
whether of its own accord or at the demand of any holder of securities pursuant
to an agreement with respect to the registration thereof (provided such
agreement does not prohibit third parties from including additional securities
in such registration), and if the form of registration statement proposed to be
used may be used for the registration of Conversion Shares (and provided such
registration statement in connection with a transaction contemplated by Rule
145(a) under the 1993 Act, or is not on a Form S-4 or S-8), the Company will
give notice to the Investor not less than 5 days nor more than 60 days prior to
the filing of such registration statement of its intention to proceed with the
proposed registration (the "Incidental Registration"), and, upon the written
request of the Investor made within 5 days after the receipt of any such notice
(which request will specify the Conversion Shares intended to be disposed of by
such holder and state the intended method of disposition thereof), the Company
will use its reasonable best efforts to cause all Conversion Shares as to which
registration has been requested to be registered under the 1933 Act, provided
that if such registration is in connection with an underwritten public offering,
the Company may require that the Conversion Shares to be included in such
registration be offered upon the same terms and conditions as apply to any other
securities included in such registration. Notwithstanding the foregoing
provisions or any other obligation of the Company contained in this Section 12,
the Company may withdraw or delay any Registration Statement without incurring
any liability to the holder of Conversion Shares. This provision shall expire
at such time as Investor may freely sell all Conversion Shares without
registration under the 1933 Act and Investor holds Warrants or Conversion Shares
which number less than 75,000 shares of Common Stock.
(b) If an Incidental Registration is a primary registration on
behalf of the Company and is in connection with an underwritten public offering,
and if the managing underwriters advise the Company in writing that in their
reasonable opinion the amount of securities requested to be included in such
registration (whether by the Company, the Investor or other holders of its
securities pursuant to any other rights granted by the Company to demand
inclusion of any such securities in such registration) exceeds the amount of
such securities which can be successfully sold in such offering, the Company
will include in such registration the amount of securities requested to be
included which in the opinion of such underwriters can be sold, in the following
order (i) first, all of the securities the Company proposes to sell, and (ii)
second, all of the Conversion Shares and other shares of Common Stock with
similar registration rights requested to be included in such registration, pro
rata among the holders thereof on the basis of the number of shares requested to
be included in such registration.
(c) If an Incidental Registration is a secondary registration on
behalf of holders of securities of the Company and is in connection with an
underwritten public offering, and if the managing underwriters advise the
Company in writing that in their reasonable opinion the amount of securities
requested to be included in such registration (whether by such holders, by the
Investor or by holders of its securities pursuant to any other rights granted by
the Company to demand inclusion of securities in such registration) exceeds the
amount of such securities which can be sold in such offering, the Company will
include in such registration the amount of securities requested to be included
which in the opinion of such underwriters can be sold, in the following order
(i) first, all of the securities requested to be included by holders initially
demanding or requesting such registration, (ii) second, all of the Conversion
Shares and other shares of Common Stock with similar registration rights
requested to be included in such registration, pro rata among the holders
thereof on the basis of the number of shares requested to be included in such
registration, and (iii) third, any other securities requested to be included in
such registration, pro rata among the holders thereof on the basis of the amount
of such securities then owned by such holders.
(d) Notwithstanding anything to contrary contained in this
Section 12, if securities are registered by the Company pursuant to Section 7.1
of that certain Stock and
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Warrant Purchase Agreement dated March 20, 1995 between the Company and Chiron
Corporation, then Conversion Shares shall be included in such offering and
Registration Statement only to the extent that inclusion of the Conversion
shares will not reduce the amount of securities owned by Chiron Corporation to
be registered in such offering.
(e) Any Conversion Shares which are not included in an
underwritten offering pursuant to the foregoing provisions of this Section (and
all other Conversion Shares held by the Investor) shall be withheld from the
market (which shall not include any private sale transaction, provided the
purchaser in such private sale agrees in writing to be bound by the terms of
this subparagraph (e)) by the Investor for a period not to exceed 120 days, if
the underwriter deems such withholding from the market is reasonably necessary
and Investor shall agree to execute an agreement to this effect which is in
customary form; provided, however, that all Executive Officers (as defined under
the Securities Exchange Act of 1934, as amended) of the Company who are not
registering shares in such underwritten offering and other investors similarly
situated with the Investor with respect to registration rights each execute
similar agreements to refrain from selling shares held on the market for the
same time period.
12.2 Registration Procedures. If and whenever the Company is required
to use its reasonable best efforts to effect or cause the registration of any
Conversion Shares under the 1933 Act as provided in this Section (C)(12), the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Conversion Shares and use its reasonable best efforts
(which shall not, in any case, require the Company to incur any unreasonable
expense) to cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than three months or such shorter period in which the
disposition of all securities in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement shall be completed, and to comply with the provisions of the 1933 Act
(to the extent applicable to the Company) with respect to such dispositions;
(c) furnish to the Investor such number of copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus),
in conformity with the requirements of the 1933 Act, and such other documents,
as the Investor may reasonably request, in order to facilitate the disposition
of the Conversion Shares owned by the Investor;
(d) use its reasonable best efforts (which shall not, in any
case, require the Company to incur any unreasonable expense) to register or
qualify such Conversion Shares covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as the Investor
reasonably requests, except that the Company will not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not, but for the requirements of this Section
(C)(12.2)(d) be obligated to be qualified, to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction;
(e) provide a transfer agent and registrar for all such
Conversion Shares covered by such registration statement not later than the
effective date of such registration statement;
(f) notify the Investor at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading;
(g) use its reasonable best efforts to cause all such Conversion
Shares to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
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(h) use its reasonable best efforts to obtain a cold comfort
letter from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by cold comfort letters in
such transactions;
(i) enter into an underwriting agreement in customary form and if
requested by the managing underwriter in an underwritten public offering and if
deemed advisable by the Company, make the Company management reasonably
available to participate in "Roadshows" with respect to such offering (at the
expense of Investor and any other parties who are registering securities in such
underwritten offering in proportion to the dollar value of securities being sold
by the Investor and all persons who are selling registrable Common Stock which
shall only include out-of-pocket expenses and not salaries or professional
fees); and
(j) subject to Investor executing an appropriate Confidentiality
agreement, make available for inspection by the Investor, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Investor and/or
representative of the Investor or underwriter, all reasonably requested
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by the Investor, underwriter, attorney,
accountant or agent in connection with such registration statement.
12.3 Registration and Selling Expenses.
(a) All expenses incurred by the Company in connection with the
Company's performance of or compliance with this Section (C)(12), including,
without limitation (A) all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers, Inc.),
(B) blue sky fees and expenses, (C) all printing expenses and (D) all fees and
disbursements of counsel and accountants for the Company (including the expenses
of any audit of financial statements) retained by the Company (all such expenses
being herein called "Registration Expenses"), will be paid by the Company except
as otherwise expressly provided in this Section (C)(12.3).
(b) The Company will, in any event, in connection with any
registration statement, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal, accounting or other duties in connection therewith and expenses of audits
of year-end financial statements), and the expenses and fees for listing the
securities to be registered on one or more securities exchanges on which similar
securities issued by the Company are then listed.
(c) The Company shall bear the Registration Expenses of each
Incidental Registration hereunder.
(d) Fees and disbursement of counsel and accountants of Investor,
underwriters discounts and commissions relating to the Conversion Shares
included in any offering by Investor shall be borne by Investor. In conjunction
with any Demand Registration which is effected in the form of an underwritten
public offering, however, Investor agrees that it shall also pay in proportion
to the dollar value of securities being sold by the Investor and all persons who
are selling registrable Common Stock, all reasonable fees for counsel to the
underwriters effecting such underwritten public offering.
12.4 Other Conditions Relating to Registrations. Except as otherwise
provided in this Agreement, the Company shall not be required to furnish any
audited financial statements at the request of the Investor other than those
statements customarily prepared at the end of its fiscal year, unless the
Investor shall agree to reimburse the Company for the out-of-pocket costs
incurred by the Company in the preparation of such other audited financial
statements.
12.5 Indemnification.
(a) The Company hereby agrees to indemnify, to the extent
permitted by law, the Investor, its officers, directors and employees, and each
person, if any, who controls such holder within the meaning of the 1933 Act,
against all losses, claims, damages, liabilities and expenses under the 1933
Act, applicable state securities laws, common law or otherwise (including, as
incurred, legal and other expenses reasonably
8
incurred in connection with investigating, preparing or defending any such
claim, except to the extent limited by Section (C)(12.5)(c) below) caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented if the
Company has furnished any amendments or supplements thereto) which registration
statement or prospectus shall be prepared in connection with a Demand
Registration or an Incidental Registration, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement contained in or by any omission or alleged
omission from information furnished in writing to the Company by such holder for
the particular purpose of use in connection with a Demand Registration or an
Incidental Registration, provided the Company will not be liable pursuant to
this Section (C)(12.5) if such losses, claims, damages, liabilities or expenses
have been caused by the Investor's failure to deliver a copy of the registration
statement or prospectus, or any amendments or supplements thereto, after the
Company has furnished the Investor with a sufficient number of copies of the
same.
(b) In connection with any registration statement in which the
Investor is participating, the Investor shall furnish to the Company in writing
such information as is reasonably requested by the Company for the particular
purpose of use in any such registration statement or prospectus and shall
indemnify, to the extent permitted by law, the Company, its directors, officers
and employees and each person, if any, who controls the Company within the
meaning of the 1933 Act, against any losses, claims, damages, liabilities and
expenses under the 1933 Act, applicable state securities laws, common law or
otherwise (including, as incurred, legal and other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, except
to the extent limited by Section (C)(12.5)(c) below) caused by any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the extent
such losses, claims, damages, liabilities or expenses are caused by an untrue
statement or alleged untrue statement contained in or by an omission or alleged
omission from information so furnished in writing by the Investor for the
particular purpose of use in connection with the Demand Registration or
Incidental Registration. If the offering pursuant to any such registration is
made through underwriters, the Investor agrees to enter into an underwriting
agreement in customary form with such underwriters. Notwithstanding the
foregoing, the Investor shall not be liable under this Section (C)(12.5)(b) for
any amounts exceeding the product of (i) the offering price per share of
Conversion Shares pursuant to the registration statement in which the Investor
is participating (less any underwriting discounts or commissions which reduce
the amount the Investor receives), multiplied by (ii) the number of shares of
Conversion Shares being sold by the Investor pursuant to such registration
statement; it being understood that the Company shall not be in breach of this
Agreement in the event that it is unable to secure an underwriter which is
willing to agree the limitations set forth in this sentence.
(c) Promptly after receipt by an indemnified party under Section
(C)(12.5)(a) or Section (C)(12.5)(b) of notice of the commencement of any action
or proceeding, such indemnified party will, if a claim in respect thereof is or
is to be made against the indemnifying party under such Section, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under such Section. In case
any such action or proceeding is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and, to the extent that it
wishes, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, 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 such Section for any legal or any
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof (other than reasonable costs of investigation) unless
incurred at the written request of the indemnifying party. Notwithstanding the
above, the indemnified party will have the right to employ one counsel
(exclusive of local counsel) of its own choice in any such action or proceeding
if the indemnified party has reasonably concluded that there may be defenses
available to it which are different from or additional to those of the
indemnifying party, or counsel to the indemnified party is of the opinion that
it would not be desirable for
9
the same counsel to represent both the indemnifying party and the indemnified
party because such representation might result in a conflict of interest (in
either of which cases the indemnifying party will not have the right to assume
the defense of any such action or proceeding on behalf of the indemnified party
or parties and such legal and other expenses will be borne by the indemnifying
party). An indemnifying party will not be liable to any indemnified party for
any settlement of any such action or proceeding effected without the consent of
such indemnifying party which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in Section (C)(12.5)(a)
or Section (C)(12.5)(b) is unavailable under applicable law to an indemnified
party in respect of any losses, claims, damages or liabilities referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of the Investor on the other in connection with the
statements or omissions which resulted in such losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Investor on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Company or by the Investor and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include, subject to the limitations set forth in
Section (C)(12.5)(c), any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) will be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.
(e) Promptly after receipt by the Company or the Investor of
notice of the commencement of any action or proceeding, such party will, if a
claim for contribution in respect thereof is to be made against another party
(the "contributing party"), notify the contributing party of the commencement
thereof; but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit, or proceeding is brought
against any party, and such party notifies a contributing party of the
commencement thereof, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party similarly
notified. No party shall be liable for contribution with regard to the
settlement of any action or proceeding effected without its consent.
(13) ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.
In case the Company shall (i) declare or pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per such Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
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(14) ANTI-DILUTION
14.1 Reorganization Event. Except as set forth in Section (C)(11)(a),
in case of any reorganization event including any merger, sale of substantially
all of the assets of the Company, the Company shall, as a condition precedent to
the consummation of the transaction constituting, or announced as, such
Reorganization Event, cause effective provisions to be made so that the Holder
shall have the right immediately thereafter, by exercising this Warrant, to
receive the aggregate amount and kind of shares of stock and other securities
and property that were receivable upon such Reorganization Event by a holder of
the number of shares of Common Stock that would have been received immediately
prior to such Reorganization Event upon exercise of this Warrant.
14.2 Carryover. Notwithstanding any other provision of this Section
(C)(14.2), no adjustment shall be made to the number of shares of Common Stock
(or other securities deliverable hereunder) to be delivered to each Holder (or
to the Exercise Price) if such adjustment would represent less than one percent
of the number of shares to be so delivered, but any such adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried forward,
shall amount to one percent or more of the number of shares to be so delivered.
14.3 Notices of Certain Events. If at any time after the date hereof
and before the expiration of the Exercise Period:
(a) the Company authorizes the issuance to all holders of its
Common Stock of (i) rights or warrants to subscribe for or purchase shares of
its Common Stock or (ii) any other subscription rights or warrants;
(b) the Company authorizes the distribution to all holders of its
Common Stock of evidences of its indebtedness or assets (other than cash
dividends);
(c) there shall be any capital reorganization of the Company or
reclassification of the Common Stock (other than a change in par value of the
Common Stock or an increase in the authorized capital stock of the Company not
involving the issuance of any shares thereof) or any consolidation or merger to
which the Company is a party (other than a consolidation or merger with a
subsidiary in which the Company is the continuing corporation and that does not
result in any reclassification or change in the Common Stock outstanding) or a
conveyance or transfer of all or substantially all of the properties and assets
of the Company;
(d) there shall be any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) there shall be any other event that would result in an
adjustment pursuant to this Section (C)(14.3) in the Exercise Price or the
number of Warrant Shares that may be purchased upon the exercise hereof;
the Company will cause to be mailed to the Holder, at least fifteen days
(or ten days in any case specified in clauses (a) or (b) above) before the
applicable record or effective date hereinafter specified, a notice stating (i)
the date as of which the holders of Common Stock of record entitled to receive
any such rights, warrants or distributions is to be determined, or (ii) the date
on which any such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record will be entitled to exchange their shares of Common Stock for
securities or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding-up.
14.4 Failure to Give Notice. The failure to give the notice required by
Subsection (C)(14.3) or any defect therein shall not affect the legality or
validity of any distribution right, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding-up or the vote upon any such
action.
(15) NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by
11
registered or certified mail, return receipt requested, to the holder of this
Warrant notice of such adjustment or adjustments setting forth the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made. Such notice, in absence of manifest error,
shall be conclusive evidence of the correctness of such adjustment.
(16) AUTHORIZED SHARES. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Nasdaq National
Market or any domestic securities exchange upon which the Common Stock may be
listed.
(17) MISCELLANEOUS.
(a) ISSUE DATE; JURISDICTION. The provisions of this Warrant shall be
construed and shall be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant shall be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of Delaware without regard to its conflict of law,
principles or rules.
(b) RESTRICTIONS. The holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) MODIFICATION AND WAIVER. This Warrant and any provisions hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof by the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
(e) COMPETITION LAWS. At the time of exercise of this Warrant, it will be
necessary for the Company to undertake a review of such exercise to determine if
a filing with the U.S. Federal Trade Commission and the U.S. Department of
Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules promulgated thereunder (16 C.F.R. Sections 801.1 ET SEQ.)
is required, and if such filing is required, the Company and Investor (or its
successor) shall promptly make any such required filings.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: October 15, 1998
GALAGEN INC.
BY: /s/ Gregg A. Waldon
-----------------------------------
Chief Financial Officer
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FORM OF EXERCISE NOTICE
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: GalaGen Inc. (the "Company")
The undersigned
---------------------------
Please insert Social Security or other
identifying number of Purchaser
__________-______-_________
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, _______________________shares of the
Common Stock provided for therein and tenders payment herewith to the order of
the Company in the amount of $_______________________, such payment being made
as provided on the face of the Warrant.
In order to induce the Company to consent to the exercise of this
Warrant, the undersigned hereby represents, warrants and agrees as follows:
1. The undersigned acknowledges that neither this Warrant nor any of
the shares of Common Stock issuable upon exercise hereof have been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and that, accordingly, this Warrant may be exercised and the
share of Common Stock issued pursuant to this exercise may only be transferred
in accordance with the terms of this Warrant.
2. The undersigned is acquiring the shares of Common Stock issued
pursuant to this exercise for investment and not with a view to distribution of
such shares within the meaning of the Act and the rules and regulations
thereunder.
3. The undersigned is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Act.
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FORM OF WARRANT TRANSFER LETTER
To: GalaGen Inc.
Ladies and Gentlemen:
The undersigned is a proposed transferee of the warrant (the
"Warrant") to purchase ____________________ shares of Common Stock, no par
value ("Common Stock"), of GalaGen, Inc. a Delaware corporation (the
"Company"), currently registered in the name of________________________. In
order to induce the Company to consent to the transfer of the Warrant, the
undersigned hereby represents, warrants and agrees as follows;
1. The undersigned acknowledges that neither the Warrant nor any of
the shares of Common Stock issuable upon exercise thereof have been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and that, accordingly, the Warrant and such shares of Common
Stock may only be transferred in accordance with the terms of the Warrant.
2. The undersigned is acquiring the Warrant for investment and not
with a view to distribution of the Warrant or the shares of Common Stock
issuable upon exercise thereof within the meaning of the Act and the rules and
regulations thereunder.
3. The undersigned is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Act.
Signature:
------------------------------
Address:
------------------------------
Date:
------------------------------
14
The undersigned requests that certificates for such shares of Common
Stock be issued as follows:
Name:
----------------------------------------------------------------
Address:
----------------------------------------------------------------
Deliver to:
----------------------------------------------------------------
Address:
----------------------------------------------------------------
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated below.
Address:
----------------------------------------------------------------
Signature:
---------------------------------------
(Signature must conform in all respects
to the name of the holder as written
specified on the face of this Warrant
without any alteration or change
whatsoever)
Date:
----------------------------
15