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EXHIBIT 3
Warrant Agreement
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VAXCEL, INC.
SHARE WARRANT
NEITHER THIS WARRANT
NOR THE SHARES ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
____________, 0000 Xxxxxxx to Purchase
Shares of Common Stock
WARRANT
For the Purchase of Shares of the Common Stock,
$0.001 Par Value, of Vaxcel, Inc.,
a Delaware Corporation
This is to certify that, for good and valuable consideration received, CytRx
Corporation, a Delaware corporation ("Investor"), or registered assigns, is
entitled to purchase from Vaxcel, Inc., a Delaware corporation (the "Company"),
a number of shares of common stock of the Company ("Common Stock") equal to:
(i) the amount that the Board of Directors of Investor reasonably determines is
the minimum amount that must be contributed to the capital of the Company in
order for the Company to satisfy or continue to satisfy quantitative
requirements for inclusion or continued inclusion of the Common Stock in the
Nasdaq Small Cap Market divided by (ii) one-half of the Per Share Price and
multiplied by (iii) the Exchange Ratio. This Warrant is subject to the terms
and conditions hereinafter set forth, including, without limitation, the terms
governing exercise of this Warrant set forth in Section 1 below. Unless
otherwise defined herein, capitalized terms that are not defined herein and that
are defined terms in the Agreement and Plan of Merger and Contribution dated
December 6, 1996 among Investor, the Company, Vaxcel Merger Subsidiary, Inc. and
Zynaxis, Inc. (the "Merger and Contribution Agreement") shall have the meanings
given such terms in the Merger and Contribution Agreement.
1. Exercise of Warrant.
1.1 Exercise Period.
Investor shall have the right to purchase shares of Common Stock
under the terms of this Warrant from the time that the Board of Directors of
Investor reasonably determines that the Company's total assets and capital and
surplus are insufficient to satisfy the total assets and capital and surplus
requirements for inclusion of the Common Stock in the Nasdaq Small Cap Market
until 5:00 p.m. Eastern time on the date that is one year after the date of this
Warrant.
1.2 Exercise Price.
The per share price for the shares which may be purchased upon the
exercise of this Warrant (the "Exercise Price") shall be initially equal to: (i)
one-half of the Per Share Price, divided by (ii) the Exchange Ratio, subject to
adjustment from time to time as provided in Section 1.3 hereof.
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1.3 Adjustment.
(a) Upon each adjustment of the Exercise Price, the holder of
this Warrant shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the exercise price resulting from such
adjustment, and rounding down to the nearest whole share.
(b) If the number of outstanding shares of Common Stock is
increased by a stock split, stock dividend, or other similar event, the exercise
price in effect immediately prior to such event shall be proportionately
reduced, and conversely, if the number of outstanding shares of Common Stock is
decreased by a combination or reclassification of shares, or other similar
event, the exercise price in effect immediately prior to such event shall be
proportionately increased.
(c) If the Company shall effect a reorganization, shall merge
with or consolidate into another corporation, or shall sell, transfer or
otherwise dispose of all or substantially all of its property, assets or
business and, pursuant to the terms of such reorganization, merger,
consolidation or disposition of assets, property or assets of the Company,
successor or transferee or an affiliate thereof or cash are to be received by or
distributed to the holders of Common Stock, then the holder of this Warrant
shall have the right thereafter to receive, upon the exercise of this Warrant,
the number of shares of stock or other securities, property or assets of the
Company, successor, transferee or affiliate thereof or cash receivable upon or
as a result of such reorganization, merger, consolidation or disposition of
assets by a holder of the number of shares of Common Stock equal to that to
which the holder of this Warrant upon the exercise thereof immediately prior to
such event would be entitled. The provisions of this paragraph shall similarly
apply to successive reorganizations, mergers, consolidations or dispositions of
assets. Upon any reorganization, consolidation, merger or transfer hereinabove
referred to, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities,
property, assets and cash receivable upon the exercise of this Warrant after the
consummation of such reorganization, consolidation, merger or transfer, as the
case may be. The Company shall not effect any such reorganization,
consolidation, merger or transfer, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting therefrom or the
corporation purchasing such assets shall, by written instrument executed and
mailed to the registered holder hereof at the last address of such holder
appearing on the books of the Company, (i) assume the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to purchase, and (ii)
agree to be bound by all the terms of this Warrant.
1.4 Method of Exercise.
In order to exercise this Warrant, the registered owner hereof
shall present this Warrant to the Company at the office of the Company,
accompanied by written notice to the Company that the owner elects to exercise
this Warrant, in form attached hereto as Schedule A. Such notice shall also
state the name or names (with address) in which the certificate or certificates
for shares which shall be issuable on such exercise shall be issued. As soon as
practicable after the receipt of such notice, the presentation of this Warrant,
and the receipt by the Company of the full Exercise Price for such shares in
current U.S. funds, the Company shall issue and deliver to the owner a
certificate or certificates for the number of full shares which the owner seeks
the Company to issue upon that exercise of this Warrant.
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Such exercise shall be deemed to have been effected immediately
prior to the close of business on the date on which such notice shall have been
received by the Company and this Warrant shall have been presented as aforesaid,
and exercise shall be at the Exercise Price in effect at such time, and at such
time the rights of the owner of this Warrant as such owner shall cease with
respect to that number of shares, and the person or persons in whose name or
names any certificate or certificates for shares, shall be issuable upon such
exercise shall be deemed to have become the owner(s) of record of the shares
represented thereby.
1.5 Notice of Certain Actions.
In case at any time:
(1) the Company shall declare any discretionary dividend upon
any class of its capital stock payable in securities or make any special
dividend or other distribution;
(2) the Company shall offer for subscription pro rata to the
holders of any class of its capital stock any additional securities of any class
or other rights;
(3) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale of all of substantially all its assets or stock to,
another corporation;
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(5) the Company shall enter into an agreement or adopt a plan
for the purpose of effecting a consolidation, merger, or sale of all or
substantially all of its assets or stock, other than a merger where the Company
is the surviving corporation and the terms of the Company's capital stock remain
unchanged; then, in any one or more of said cases, the Company shall give
written notice, by first class mail, postage prepaid, to the registered owner of
this Warrant, of the date on which (a) the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights, or
(b) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up shall take place, as the case may be.
Such notice shall also specify the date as of which the owners of any class of
capital stock of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their capital stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up as the case may be. Such written notice shall be given at least 30
days prior to the action in question if practicable and not less than 30 days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto if practicable.
1.6 Reservation of Shares.
The Company will at all times reserve and keep available out of
its authorized shares of capital stock, solely for the purpose of issuance upon
the exercise of this Warrant as herein provided, such number of Common Shares as
shall then be issuable upon the exercise of this Warrant. The Company covenants
that all shares which shall be so issuable shall, upon the exercise of this
Warrant as herein provided, be duly and validly issued and fully paid and
nonassessable by the Company.
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1.7 Taxes.
The issuance of certificates for shares upon exercise of this
Warrant shall be made without charge to the owner of this Warrant for any
issuance tax in respect thereto, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
registered owner of this Warrant.
1.8 Partial Exercise.
The purchase rights represented by this Warrant are exercisable at
the option of the registered owner hereof in whole at any time, or in part from
time to time, within the period above specified, provided, however, that such
purchase rights shall not be exercisable with respect to a fraction of a share.
In case of the purchase of less than all the shares purchasable under this
Warrant, the Company shall cancel this Warrant upon the surrender hereof and
shall execute and deliver a new Warrant of like tenor and date for the balance
of the shares purchasable hereunder.
2. Shareholder Rights. This Warrant shall not entitle the owner hereof to
any voting rights or other rights as a shareholder of the Company, or to any
other rights whatsoever except the rights herein expressly set forth, and no
dividends shall be payable or accrue in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until or unless, and
except to the extent that, this Warrant shall be exercised. No provision
hereof, in the absence of affirmative action by the owner hereof to exercise
this Warrant, and no mere enumeration herein of the rights or privileges of the
owner hereof, shall give rise to any liability of such owner for the exercise
price or as a shareholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
3. Exchange of Warrant. This Warrant is exchangeable upon the surrender
hereof by the registered owner to the Company for a reasonable number of new
Warrants issued to the registered owner of like tenor and date representing in
the aggregate the right to purchase the number of shares purchasable hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the registered owner at the time of such
surrender.
4. Transfer. This Warrant and the shares which may be purchased by the
exercise of this Warrant have not been registered under the Securities Act of
1933, as amended, or any applicable state securities laws. By accepting this
Warrant, the owner or any successor or assignee of the owner who may hereafter
become the owner of this Warrant, hereby agrees to be bound by the provisions of
such statutes. Except as otherwise provided above, this Warrant and all rights
hereunder are transferable by the registered owner hereof in person or by duly
authorized attorney on the books of the Company upon surrender of this Warrant,
properly endorsed, to the Company.
5. Investment Representation and Legend. The owner of this Warrant, by
acceptance of this Warrant, represents and warrants to the Company that it is
acquiring this Warrant and the shares (or other securities) issuable upon the
exercise hereof for investment purposes only and not with a view towards the
resale or other distribution thereof and agrees that the Company may affix upon
this Warrant the following legend:
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"Neither this Warrant nor the shares issuable upon exercise of this
Warrant have been registered under the Securities Act of 1933, as
amended."
The owner of this Warrant, by acceptance of this Warrant, further agrees that
the Company may affix the following legend (in addition to any other legend(s),
if any, required by applicable state securities laws) to certificates for shares
(or other securities) issued upon exercise of this Warrant ("Warrant Shares"):
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933, as amended. None of such shares may be offered, sold or
transferred in the absence of such registration or an exemption
therefrom."
6. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to
indemnification or otherwise as it may in its discretion reasonably impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute a
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
7. Presentment. Prior to due presentment for registration of transfer of
this Warrant, the Company may deem and treat the registered owner hereof as the
absolute owner of this Warrant, notwithstanding any notation of ownership or
other writing thereon, for the purpose of any exercise thereof and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
8. Notice. Notice or demand pursuant to this Warrant shall be sufficiently
given or made, if sent by first-class mail, postage prepaid, addressed, if to
the owner of this Warrant, to such owner at its last known address as it shall
appear in the records of the Company, and if to the Company, at Vaxcel, Inc.,
000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxx 00000, Attention: President. The
Company may alter the address to which communications are to be sent by giving
notice of such change of address in conformity with the provision of this
Section 8 for the giving of notice.
9. Governing Law. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the State of Delaware.
10. Successors, Assigns. All the terms and provisions of this Warrant shall
be binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
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IN WITNESS WHEREOF, the Company has created this Warrant to be executed by the
signatures of its duly authorized officers and the corporate seal hereunto
affixed.
VAXCEL, INC.
By:
Xxxx X. Xxxxxx, III
President and Chief Executive Officer
[CORPORATE SEAL]
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SCHEDULE A TO WARRANT
Vaxcel, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, III
Re: Warrant dated as of ___________, 1997, issued to CytRx
Corporation (the "Warrant")
Gentlemen:
We hereby exercise the Warrant for _____________ shares of Common Stock, $0.001
par value, at the current exercise price of $___________ per share.
Certificates for such shares should be issued in the name of CytRx Corporation.
Enclosed is a check in the aggregate amount of $___________.
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Holder
Dated:
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