EXHIBIT 4.1
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. IF THIS WARRANT IS EXERCISED AS AFORESAID, THE
HOLDER OF THIS WARRANT MAY NOT TRANSFER THIS WARRANT UNLESS AND UNTIL SUCH
HOLDER FIRST PHYSICALLY SURRENDERS THIS WARRANT TO VAXGEN, INC., WHEREUPON
VAXGEN, INC. WILL FORTHWITH ISSUE AND DELIVER UPON THE ORDER OF SUCH HOLDER A
REPLACEMENT WARRANT STATING THE NUMBER OF SHARES FOR WHICH THIS WARRANT IS THEN
EXERCISABLE.
THIS WARRANT DOES NOT REQUIRE PHYSICAL SURRENDER OF THE WARRANT UPON ANY PARTIAL
EXERCISE HEREOF. AS A RESULT FOLLOWING ANY EXERCISE OF ANY PORTION OF THIS
WARRANT, THE OUTSTANDING NUMBER OF SHARES AVAILABLE PURSUANT TO THIS WARRANT MAY
BE LESS THAN THE AMOUNT OF SHARES SET FORTH BELOW.
COMMON STOCK PURCHASE WARRANT
To Purchase 222,883
Shares of Common Stock of
VAXGEN, INC.
THIS CERTIFIES that, for value received, HALIFAX FUND, L.P. and its
successors and assigns (the "Holder") is entitled, upon the terms and subject to
the conditions hereinafter set forth, at any time and from time to time on and
after the date hereof ("Commencement Date"), and on and prior to 8:00 p.m.
Eastern Time on the fifth (5th) anniversary of the date of issuance hereof (the
"Expiration Date"), but not thereafter, to subscribe for and purchase from
VAXGEN, INC., a Delaware corporation (the "Company"), 222,883 shares (the
"Warrant Shares") of common stock, $0.01 par value per share ("Common Stock"),
of the Company. The purchase price of one share of Common Stock under this
Warrant shall be the Exercise Price, as defined below and as may be adjusted
from time to time pursuant to the terms hereof. The Exercise Price and the
number of shares for which this Warrant is exercisable shall be subject to
adjustment as provided herein. This Warrant is being issued in connection with
the Securities Purchase Agreement dated on or about the date hereof (the
"Purchase Agreement") entered into between the Company, the Holder and the other
Purchasers named therein (if any).
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1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the meaning ascribed thereto in the Purchase Agreement. As used in
this Warrant, the following terms shall have the following respective meanings:
"Change in Control Transaction" will be deemed to exist if (i) there occurs
any consolidation, merger or other business combination of the Company with or
into any other corporation or other entity or person (whether or not the Company
is the surviving corporation), or any other corporate reorganization or
transaction or series of related transactions in which in any of such events the
voting stockholders of the Company prior to such event cease to own 50% or more
of the voting stock, or corresponding voting equity interests, of the surviving
corporation after such event (including without limitation any "going private"
transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender
offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act
for 20% or more of the Company's Common Stock), (ii) any person (as defined in
Section 13(d) of the Exchange Act), together with its affiliates and associates
(as such terms are defined in Rule 405 under the Act), beneficially owns or is
deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act
without regard to the 60-day exercise period) in excess of 50% of the Company's
voting power, (iii) there is a replacement of more than one-half of the members
of the Company's Board of Directors which is not approved by those individuals
who are members of the Company's Board of Directors on the date thereof, (iv) in
one or a series of related transactions, there is a sale or transfer of all or
substantially all of the assets of the Company, determined on a consolidated
basis, or (v) the execution by the Company of an agreement to which the Company
is a party or by which it is bound providing for an event set forth in (i),
(ii), (iii) or (iv) above, pursuant to which the Common Stock is converted or
reclassified into other securities, cash or property.
"Convertible Securities" means any convertible securities, warrants,
options or other rights to subscribe for or to purchase or exchange for, shares
of Common Stock.
"Effective Registration" shall have the meaning set forth in the Purchase
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exercise Price" means $25.2375 ("Fixed Price"), provided, however, that on
the one-year anniversary of the Commencement Date, the Exercise Price hereunder
shall be automatically adjusted to (and shall thereafter equal, until further
adjusted) a price (the "Adjusted Price") equal to the lesser of (A) the Fixed
Price and (B) the average of the closing bid prices for the Common Stock on the
Principal Market during the Pricing Period (as defined below), provided that the
Exercise Price shall not be adjusted to a figure that is less than the Floor
Price, except pursuant to an adjustment required under Section 13 below; in each
case such Exercise Price shall be subject to adjustment (or further adjustment,
as the case may be) as provided herein.
"Floor Price" shall mean $14.133, as such figure may be adjusted pursuant
hereto.
"Pricing Period" shall mean the period of twenty (20) consecutive Trading
Days immediately preceding the one-year anniversary of the Commencement Date.
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"Principal Market" shall mean the Approved Market or such other market or
exchange on which the Common Stock is then principally traded.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Trading Day" shall mean a day on which there is trading on the Principal
Market.
2. Title of Warrant. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose, in the name of the record
holder hereof from time to time. The Company may deem and treat the registered
holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the holder, and for all other purposes,
and the Company shall not be affected by notice to the contrary except as
provided herein.
With the written consent of the Company, such written consent not to be
unreasonably withheld, 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 (a) the Assignment Form annexed hereto properly endorsed, and (b) any other
documentation reasonably necessary to satisfy the Company that such transfer is
in compliance with all applicable securities laws; provided that no such
transfer may be made to a person that is not an "accredited investor" as defined
in Rule 501 of Regulation D of the Securities Act; and provided further that no
consent of the Company is required for any transfer or assignment in whole or in
part from time to time to an "accredited investor" that is an affiliate of the
Purchaser or of the then holder of this Warrant. The term "holder" as used
herein shall refer to the Holder or any subsequent transferee of this Warrant.
If this Warrant is duly assigned in accordance with the terms hereof, then the
Company agrees, upon the request of the assignee, to amend or supplement
promptly any effective registration statement covering the Warrant Shares so
that the such assignee is added as a selling stockholder thereunder, subject to
such assignee providing the information required for such amendment or
supplement and provided that no unreasonable change may be required to the
description of the intended methods of distribution as set forth in such
registration statement by virtue of such transfer.
3. 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 and
payment of the Exercise Price as set forth herein, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens,
encumbrances and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue or otherwise
specified herein).
4. Exercise of Warrant.
(a) Exercise Procedure. Exercise of the purchase rights represented by
this Warrant may be made at any time and from time to time, in whole or in part,
on or after the Commencement Date but before 8:00 p.m. Eastern Time on the
Expiration Date, by delivering the Notice of Exercise annexed hereto duly
completed and executed (which may be by facsimile) to the Company at the
principal office of the Company (or such other office or agency of the
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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 full Exercise Price of the shares thereby purchased (which shall
be paid within two Trading Days following the exercise date) (subject to
subsection (b) below), the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Subject to
subsection (b) below, payment of the Exercise Price of the shares shall be by
certified check or cashier's check or by wire transfer to an account designated
by the Company in an aggregate amount equal to the Exercise Price multiplied by
the number of shares being purchased.
(b) Cashless Exercise. Alternatively, and only in the event (i) the
Warrant Shares are not subject to Effective Registration, and have not been for
a period of at least two (2) full Trading Days, and (ii) the Fair Market Value
exceeds the Exercise Price, the Holder may exercise this Warrant, in whole or in
part in a "cashless" or "net-issue" exercise by delivering to the offices of the
Company or any transfer agent for the Common Stock a Notice of Exercise
specifying the number of Warrant Shares to be delivered to such Warrant holder
(the "Deliverable Shares") and the number of Warrant Shares with respect to
which this Warrant is being exercised (the "Exercised Shares"). The number of
Deliverable Shares shall be calculated as follows:
# of Deliverable Shares = # of Exercised Shares x Fair Market Value
of Common Stock less Exercise Price
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Fair Market Value of Common Stock
"Fair Market Value" shall be deemed to be the last reported sale price of
Common Stock on the Trading Day immediately prior to exercise, or, if not
reported, the fair market value of such Common Stock as reasonably determined by
the Company and such Holder.
(c) Issuance of Warrant Shares and Unexercised Warrants. Subject to
subsection (d) below, in the event that this Warrant is not exercised in full,
the number of Warrant Shares for which this Warrant may be exercised shall be
reduced by the number of such Warrant Shares for which this Warrant is exercised
and/or surrendered, and the Company, at its expense, shall within five (5)
Trading Days, issue and deliver to or upon the order of the Holder a new Warrant
of like tenor in the name of the Holder or as the Holder (upon payment by the
Holder of any applicable transfer taxes) may request, reflecting such adjusted
number of Warrant Shares.
All exercises of this Warrant will be deemed to occur as of the date of
receipt by the Company of a validly executed Notice of Exercise (or such later
date as may be indicated on such Notice of Exercise) (such date being referred
to herein as the "Exercise Date"), and certificates for shares of Common Stock
purchased hereunder shall be delivered to the Holder hereof within three (3)
Trading Days after the Exercise Date. The Holder may withdraw its Notice of
Exercise under Section 3(a) or 3(b) at any time thereafter, in whole or in part,
if the Company fails to timely deliver the applicable certificates to the Holder
as provided in this Warrant.
In lieu of delivering physical certificates representing the Warrant Shares
issuable upon conversion of this Warrant, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the holder, the Company
shall use its best efforts to cause its transfer agent to
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electronically transmit the Warrant Shares issuable upon exercise to the holder,
by crediting the account of the holder's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system. The time periods for
delivery described above shall apply to the electronic transmittals through the
DWAC system. The Company agrees to coordinate with DTC to accomplish this
objective.
(d) Book-Entry. Notwithstanding anything to the contrary set forth
herein, upon exercise of any portion of this Warrant in accordance with the
terms hereof, the Holder shall not be required to physically surrender this
Warrant to the Company unless such Holder is purchasing the full amount of
Warrant Shares represented by this Warrant. The Holder and the Company shall
maintain records showing the number of Warrant Shares so purchased hereunder and
the dates of such purchases or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of this Warrant upon each such exercise.
5. No Fractional Shares or Scrip. No fractional Warrant Shares or scrip
representing fractional Warrant Shares shall be issued upon the exercise of this
Warrant. Any fractional share or scrip shall be rounded up to the nearest whole
number.
6. 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 reasonable evidence of compliance with the provisions of Section 2
hereof; and provided further, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issuance of any Warrant certificates or any certificates for the Warrant Shares
in a name other than the name of the holder.
7. Closing of Books. The Company will at no time close its stockholder
books or records in any manner which interferes with the timely exercise of this
Warrant.
8. No Rights as Stockholder until Exercise. Subject to Sections 12 and 13
of this Warrant and the provisions of any other written agreement between the
Company and the Holder, prior to the exercise of this Warrant as provided
herein, the Holder shall not be entitled to vote or receive dividends or be
deemed the holder of Warrant Shares or any other securities of the Company that
may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, or change of stock to no par value, consolidation, merger,
conveyance or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights. However, at the
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time of the exercise of this Warrant pursuant to Section 4 hereof, the Warrant
Shares so purchased hereunder shall be deemed to be issued to such Holder as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been exercised.
9. [Intentionally Omitted].
10. Loss, Theft, Destruction or Mutilation of Warrant; Denomination. In the
event that any holder notifies the Company that its Warrant(s) have been lost,
stolen or destroyed, then replacement Warrant(s) identical in all respects to
the original Warrant(s) (except for any registration number and any adjustments
to Exercise Price or the number of Warrant Shares issuable hereunder pursuant
hereto, if different than that shown on the original Warrant(s)) shall be
delivered to the holder by the Company within five (5) Trading Days, provided
that such holder executes and delivers to the Company an agreement reasonably
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such Warrants. This Warrant is exchangeable for an equal
aggregate number of Warrants of different denominations, as requested by the
holder surrendering the same. No service charge will be made for such
registration, replacement, transfer or exchange.
11. 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.
12. Effect of Certain Events. If at any time while this Warrant or any
portion hereof is outstanding and unexpired there shall be a Change in Control
Transaction, then the Holder 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 Change in Control Transaction, the kind and amount of
consideration including cash, stock, other securities, assets or any other
property, which it would have owned or have been entitled to receive upon or
after the happening of such transaction had this Warrant been exercised
immediately prior thereto, subject to further adjustment as provided in Section
13. The Company shall not consummate a Change in Control Transaction unless the
entity resulting from such transaction (if not the Company), or such transferee
entity, as the case may be, shall expressly assume, by supplemental agreement
reasonably satisfactory in form and substance to the Holder, the due and
punctual performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company, provided, however,
that in lieu of such assumption by such resulting or transferee entity, the
Company or such entity may instead redeem this Warrant for cash on or during the
5 days immediately preceding the consummation of such Change in Control
Transaction at a redemption price equal to the value of this Warrant on such
redemption date using a Black-Scholes valuation model and assumptions in each
case reasonably mutually acceptable to the Company and Holder.
13. Adjustments of Exercise Price and Number of Warrant Shares. For
purposes of any adjustment of the Exercise Price pursuant to this Section 13,
the "Exercise Price" shall be deemed to be the Fixed Price, the Adjusted Price,
the Floor Price and each closing bid price during the Pricing Period which
occurs prior to the applicable event set forth below (in each case
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as such Fixed Price, Floor Price and/or closing bid price may have been
previously adjusted hereunder).
(a) Stock Dividends, Splits, Combinations and Reclassifications. If,
to the extent not covered by Section 12 above, the Company or any Subsidiary, at
any time while this Warrant or any portion thereof is issued, outstanding and
unexpired: (A) shall declare or pay a stock dividend or otherwise make a
distribution or distributions on any equity securities (including securities
convertible into or exchangeable or exercisable for such equity securities) in
shares of Common Stock; (B) subdivide outstanding Common Stock into a larger
number of shares; (C) combine outstanding Common Stock into a smaller number of
shares; or (D) issue any shares of its capital stock in a reclassification of
the Common Stock (including without limitation in connection with any merger or
consolidation), then the Exercise Price then in effect hereunder shall be
adjusted by multiplying the Exercise Price by a fraction of which the numerator
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding before such event and of which the denominator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
after such event. Any adjustment made pursuant to this Section 13(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
(b) Distributions. If the Company or any Subsidiary, at any time while
this Warrant is outstanding, shall distribute to all holders of Common Stock
evidences of its indebtedness or assets or cash or rights or warrants to
subscribe for or purchase any security of the Company or any of its
subsidiaries, then the Exercise Price in effect at the opening of business on
the day following the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by multiplying
such Exercise Price by a fraction, the numerator of which shall be the Fair
Market Price (as defined below) per share of the Common Stock less the then fair
market value as reasonably determined by the Board of Directors of the portion
of the evidences of indebtedness or assets or rights or warrants so distributed
(and for which an adjustment to the Exercise Price has not previously been made
pursuant to the terms of this Section 13) applicable to one share of Common
Stock, and the denominator of which shall be such Fair Market Price per share of
the Common Stock, such adjustment to become effective immediately after the
opening of business on the day following the date fixed for the determination of
holders of Common Stock entitled to receive such distribution. "Fair Market
Price" shall mean the closing market price per share of Common Stock on the
Principal Market on the Trading Day next preceding such fixed determination date
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or such other date on which the Fair Market Price is being determined. The
Company shall deliver to each holder of Warrants a notice setting forth the
Exercise Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment and the computation thereof. In the event that
the Exercise Price shall change by more than 5%, the holders of Warrants shall
have the right to have the fair market value determined by an independent
nationally reputable investment banker mutually selected by the Company and the
Holder, at the Company's expense.
(c) Common Stock Issuances. In the event that the Company or any of
its subsidiaries (X) issues or sells any Common Stock or Convertible Securities,
other than:
(i) shares or options issued or which may be issued pursuant to
the Company's duly adopted employee or director stock option,
stock incentive, employee stock purchase or 401(k), plans;
(ii) shares issued upon exercise of options, warrants or rights
outstanding on the date of this Warrant and listed in the
Company's Pre-Agreement SEC Documents);
(iii) shares issued upon conversion of shares of the Company's
Series A 6% Cumulative Convertible Preferred Stock, or as a
dividend or distribution on such shares;
(iv) shares issued pursuant to an event covered by Section 13(a)
above; and
(v) shares issued or issuable in a transaction as to which the
application of this Section 13(c) has been waived by written
consent of holders of 75% of the issuable Warrant Shares;
or (Y) directly or indirectly effectively reduces the conversion, exercise
or exchange price for any Convertible Securities which are currently
outstanding, in any case under clause (X) or (Y) at an effective purchase
price per share which is less than the Exercise Price, then in each such
case, the Exercise Price in effect immediately prior to such issue or sale
or record date, as applicable, shall be reduced effective concurrently with
such issue or sale to an amount determined by multiplying the Exercise
Price then in effect by a fraction, (x) the numerator of which shall be the
sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale, plus (2) the number of shares of Common Stock
which the aggregate consideration received by the Company for such
additional shares would purchase at such Exercise Price or Fair Market
Price, as the case may be, and (y) the denominator of which shall be the
number of shares of Common Stock of the Company outstanding immediately
after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the issuance
of any Convertible Securities, the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible
Securities shall be deemed to be
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outstanding, provided that no further adjustment shall be made upon the
actual issuance of Common Stock upon exercise, exchange or conversion of
such Convertible Securities.
(d) Inverse Proportional Adjustments to Exercise Price and Warrant
Shares. In the event of any adjustment in the number of Warrant Shares issuable
hereunder upon exercise, the Exercise Price shall be inversely proportionately
increased or decreased as the case may be, such that aggregate purchase price
for Warrant Shares upon full exercise of this Warrant shall remain the same.
Similarly, in the event of any adjustment in the Exercise Price hereunder,
including without limitation the adjustment to the Adjusted Price on the
one-year anniversary of the Commencement Date, the number of Warrant Shares
issuable hereunder upon exercise shall be inversely proportionately increased or
decreased as the case may be, such that aggregate purchase price for Warrant
Shares upon full exercise of this Warrant shall remain the same.
14. Notices. If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash dividend
on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the
Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company;
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant register of the Company, at
least 15 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined and/or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
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cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up.
15. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
16. 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 (including without limitation the
adjustment to the Adjusted Price), the Company shall promptly mail by registered
or certified mail, return receipt requested, to the holder of this Warrant a
notice 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 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.
17. Authorized Shares. The Company covenants that during the period this
Warrant is outstanding and exercisable, 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 and all 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 Principal Market
or any other domestic securities exchange or market upon which the Common Stock
may be listed.
18. Exercise Limitation.
(a) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by the
Holder upon exercise pursuant to the terms hereof shall not exceed a
number that, when added to the total number of shares of Common Stock
deemed beneficially owned by such Holder (other than by virtue of the
ownership of securities or rights to acquire securities (including the
Warrant Shares) that have limitations on the Holder's right to
convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially
owned (other than by virtue of the ownership of securities or rights
to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) by
the Holder's "affiliates" (as defined in Rule 144 of the Securities
Act) ("Aggregation Parties") that
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would be aggregated for purposes of determining whether a group under
Section 13(d) of the Exchange Act, exists, would exceed 9.9% of the
total issued and outstanding shares of the Common Stock (the
"Restricted Ownership Percentage"). Each Holder shall have the right
(x) at any time and from time to time to reduce its Restricted
Ownership Percentage immediately upon notice to the Company and (y)
(subject to waiver) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the
announcement as pending or planned, of a Change in Control
Transaction.
(b) The Holder covenants at all times on each day (each such day
being referred to as a "Covenant Day") as follows: During the balance
of such Covenant Day and the succeeding sixty-one (61) days (the
balance of such Covenant Day and the succeeding 61 days being referred
to as the "Covenant Period") such Holder will not acquire shares of
Common Stock pursuant to any right (including exercise of Warrants)
existing at the commencement of the Covenant Period to the extent the
number of shares so acquired by such Holder and its Aggregation
Parties (ignoring all dispositions) would exceed:
(i) the Restricted Ownership Percentage of the total number of
shares of Common Stock outstanding at the commencement of
the Covenant Period, minus
(ii) the number of shares of Common Stock actually owned by such
Holder and its Aggregation Parties at the commencement of
the Covenant Period.
A new and independent covenant will be deemed to be given by the
Holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or modify any other covenant. The Holder agrees to
comply with each such covenant. This Section 18 controls in the case
of any conflict with any other provision of the Purchase Agreement or
any agreement entered into in connection therewith.
The Company's obligation to issue Common Stock which would exceed
such limits referred to in this Section 18 shall be suspended to the
extent necessary until such time, if any, as shares of Common Stock
may be issued in compliance with such restrictions.
(c) Notwithstanding anything contained herein, in no event shall
the Company issue shares of Common Stock hereunder to the extent that
the total number of shares issued or deemed issued to the Holder under
the Purchase Agreement would exceed 19.9% of the Company's issued and
outstanding shares of Common Stock on the date of issuance hereof,
unless otherwise approved by the Company's shareholders. Instead, the
Company shall redeem this Warrant to the extent necessary at such
consideration required to place the Holder in the same economic
position they would have been if not for such limitation or as
otherwise provided under the Purchase Agreement.
12
19. Miscellaneous.
(a) Issue Date; Choice of Law; Venue; Jurisdiction; No Jury Trial. 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 WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR MATTERS ARISING UNDER
THE SECURITIES ACT, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF
THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK IN CONNECTION
WITH ANY DISPUTE ARISING UNDER THIS WARRANT AND HEREBY WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION BASED ON FORUM
NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING IN SUCH JURISDICTION.
EACH PARTY HEREBY AGREES THAT IF THE OTHER PARTY TO THIS WARRANT OBTAINS A
JUDGMENT AGAINST IT IN SUCH A PROCEEDING, THE PARTY WHICH OBTAINED SUCH JUDGMENT
MAY ENFORCE SAME BY SUMMARY JUDGMENT IN THE COURTS OF ANY COUNTRY HAVING
JURISDICTION OVER THE PARTY AGAINST WHOM SUCH JUDGMENT WAS OBTAINED, AND EACH
PARTY HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT UNDER LOCAL LAW AND AGREES TO
THE ENFORCEMENT OF SUCH A JUDGMENT. EACH PARTY TO THIS WARRANT IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY
AT ITS ADDRESS IN ACCORDANCE WITH SECTION 19(C). NOTHING HEREIN SHALL AFFECT THE
RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH
PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY.
(b) Modification and Waiver. This Warrant and any provisions hereof
may be changed, waived, discharged or terminated only with the written approval
of the holder hereof. Any amendment effected in accordance with this paragraph
shall be binding upon the Holder, each future holder of this Warrant and the
Company. No waivers of, or exceptions to, any term, condition or provision of
this Warrant, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such term, condition or provision.
(c) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder or future holders hereof or the
Company shall be personally delivered or facsimiled or shall be sent by
reputable overnight courier or certified or registered mail, postage prepaid, to
the Holder or 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 Purchase Agreement.
All notices under this Warrant shall be deemed to have been given (i) in the
case of personal delivery or facsimile, on the date of such delivery, (ii) in
the case of mailing, on the fifth business day following the date of such
mailing, and (iii) in the case of overnight courier, upon receipt. A party may
from time to time change the address to which notices to it are to be delivered
or mailed hereunder by notice in accordance with the provisions of this Section
19(c).
13
(d) Severability. Whenever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this Warrant
in such jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(e) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but shall at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrant holder
against impairment. Without limiting the generality of the foregoing, the
Company (a) shall not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) shall take all such action as
may be reasonably necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
(f) Specific Performance. The Company acknowledges and agrees that
irreparable damage would occur in the event that the Company failed to perform
any of the provisions of this Warrant in accordance with its specific terms. It
is accordingly agreed that the Holder shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Warrant and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which the Holder may be entitled by law or equity.
[Signature Page Follows]
14
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of this 22nd day of May, 2001.
VAXGEN, INC.
By: ______________________________
Name:
Title:
ATTEST:
Sign:__________________________
Print Name:
HOLDER:
HALIFAX FUND, L.P.
By: ______________________________
Name:
Title:
15
NOTICE OF EXERCISE
(To be executed by the Holder to exercise the right to
purchase shares of Common Stock under the foregoing Warrant)
To: VAXGEN, INC.
Re: COMMON STOCK PURCHASE WARRANT issued to Halifax Fund, L.P. on May 22, 2001
to purchase shares of Common Stock (the "Warrant")
(1) CHECK ONE:
_______ (a) The undersigned hereby elects to purchase ________ shares of
Common Stock of VAXGEN, INC. pursuant to Section 4(a) of the Warrant,
and will tender payment of the purchase price in full, together with
all applicable transfer taxes payable pursuant to the Warrant, if any.
OR
_______ (b) The undersigned hereby exercises the Warrant with respect ________
shares of Common Stock of VAXGEN, INC. on a cashless, "net basis"
pursuant to Section 4(b) of the Warrant, and hereby instructs the
Company to deliver _______ shares of Common Stock to the holder of the
Warrant based on a Fair Market Value of $____.
(2) The number of Warrant Shares issuable under the Warrant immediately prior
this exercise:________________
The number of Warrant Shares for which the Warrant is being exercised
hereby:______________
The number of Warrant Shares issuable under the Warrant immediately
following this exercise:_________________
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_____________________________________
Name
_____________________________________
Address
_____________________________________
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is
specified below:
_____________________________________
Name
_____________________________________
Address
_____________________________________
(5) The undersigned represents as of the date hereof that, after giving effect
to the exercise of this Warrant pursuant to this Notice of Exercise, the
undersigned will remain in compliance with Section 18(b) of the Warrant and
not exceed the "Restricted Ownership Percentage" contained in Section 18(a)
of the Warrant.
Dated: ______________ Print Name of Holder:
_____________________________________
(Sign) By:___________________________
Print Name:
Print Title:
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to exercise the Warrant.)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of VAXGEN, INC. to which
the within Warrant relates and appoints ________________ attorney to transfer
said right on the books of VAXGEN, INC. with full power of substitution in the
premises.
Dated:
_________________
__________________________________________________
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant)
__________________________________________________
Address of Transferee
__________________________________________________
__________________________________________________
In the presence of:
________________________
