1
Exhibit 10(LX)(03)
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES. ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, transferred
OR OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE
SECURITIES ACT OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY IS OBTAINED
STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION.
August 12, 1998
VIRAGEN, INC.
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
--------------------------------------------------
ARC-1
FOR VALUE RECEIVED, VIRAGEN, INC. (the "Company"), a Delaware
corporation, having its principal offices at 000 X.X. 00xx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, grants to THE AMERICAN NATIONAL RED CROSS, a
charitable and not-for-profit corporation having its principal offices in Falls
Xxxxxx, Xxxxxxxx 00000 (the "Holder"), the right to purchase from the Company up
to 500,000 fully paid and non-assessable shares of Common Stock at a price per
share (the "Exercise Price"), term and vesting schedule and conditions
hereinafter set forth.
This Warrant is issued pursuant to that certain Agreement made and
entered into as of August 12, 1998 by and among the Holder, Viragen U.S.A.,
Inc., ("VUSA") and the Company (the "Agreement"). Certain terms and conditions
pertaining to the vesting of the right to purchase shares of Common Stock of the
Company are predicated on the parties to the Agreement agreeing to certain
additional conditions as set forth in the Agreement. In addition, Section 1.2(b)
of the Agreement provides the Company or its affiliates or designees with a
right of first refusal under certain conditions as provided therein.
The term "Common Stock" means the Common Stock, par value $.01 per
share, of the Company. The number of shares of Common Stock to be received upon
the exercise of this Warrant may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter referred to as "Warrant Stock." The
term "Other Securities" means any other equity or debt securities that may be
issued by the Company in addition thereto or in substitution for the Warrant
Stock. The term "Company" means and includes the corporation named above as well
as (i) any immediate or more remote successor corporation resulting from the
merger or consolidation of such corporation (or any immediate or more remote
successor corporation of such corporation) with
1
2
another corporation, or (ii) any corporation to which such corporation (or any
immediate or more remote successor corporation of such corporation) has
transferred its property or assets as an entirety or substantially as an
entirety.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held subject to, all of the conditions,
limitations and provisions of the Agreement to which this Warrant is attached
and as set forth herein.
1. WARRANT SCHEDULE AND EXERCISE PRICES. This Warrant shall vest for
the number of shares of Warrant Stock, for the term and at Exercise Prices set
forth as follows:
GRANT DATE VEST DATE # OF SHARES TERM EXERCISE PRICE
---------- --------- ----------- ---- --------------
August 12, 1998 August 12, 1998 50,000 2 years from vest $ 5.50/share
August 12, 1998 August 12, 2000 100,000 2 years from vest $ 7.50/share
August 12, 1998 August 12, 2002 150,000 3 years from vest $ 9.00/share
August 12, 1998 August 12, 2004 200,000 4 years from vest $11.00/share
The vesting schedule for the above Warrant Stock in the Agreement is
contingent upon the Holder and VUSA executing mutually agreeable two-year
buffycoat pricing schedules and rebate program by the respective vesting dates
for the applicable Warrant Stock as provided for in Section 6.1(d) of the
Agreement. Specifically, the 100,000 block of Warrant Stock is conditioned upon
price agreement for the years (i.e. 24-month period) 2000-2002; the 150,000
block of Warrant Stock is conditioned upon price agreement by the parties for
the years 2002-2004; and the 200,000 block of Warrant Stock is conditioned upon
price agreement for the years 2004-2006. In addition, the 200,000 block of
Warrant Stock is further conditioned upon extension of the Agreement prior to
the end of year 7 as provided in Section 6.1(b) of the Agreement. The foregoing
notwithstanding, in the event the Holder and VUSA shall have failed to come to
an agreement with regard to the pricing schedule and rebate program for the
applicable two-year period supporting the vesting of the Warrant Stock by the
aforementioned vest date, then commencing with each of the respective vest dates
and for each three-month period following the vest date that the Holder and VUSA
have failed to reach such pricing and rebate agreement, one eighth (1/8) of the
proposed Warrants to be vested for that applicable two-year period shall become
null and void.
2. EXERCISE OF WARRANT. Following vesting, this Warrant may be
exercised as to the specified amount of Warrant Stock, in whole or in part, but
if in part, in minimum increments of 50,000 shares at any time, or from time to
time during the period commencing on the vesting date and expiring 5:00 p.m.
Eastern Time on the date of expiration or termination of the Agreement to which
this Warrant is attached (the "Expiration Date") or, if such day is a day on
which banking institutions in New York are authorized by law to close, then on
the next succeeding day that shall not be such a day, by presentation and
surrender of this Warrant to the Company at its principal office with the
Warrant Exercise Form attached hereto duly executed and accompanied by payment
(either in cash or by certified or official bank check, payable to the order of
the Company or by delivery of the Holder's Promissory Note in the form attached
as Exhibit A) of the Exercise Price for the number of shares specified in such
form and instruments of transfer, if appropriate, duly executed by the Holder or
its duly authorized attorney. If this Warrant should be exercised in part
2
3
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder. Upon receipt by the
Company of this Warrant, together with the payment of the Exercise Price at its
office in proper form for exercise, the Holder shall be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on exercise of this Warrant.
3. REGISTRATION RIGHTS. The Company has provided registration rights
with respect to the Warrant Stock as provided in that certain Registration
Rights Agreement dated even date herewith.
4. RESERVATION OF SHARES. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Company (and Other Securities) from time
to time receivable upon exercise of this Warrant. All such shares (and Other
Securities) shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and non-assessable and free of all preemptive
rights.
5. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise Of this Warrant, but the
Company shall pay the holder an amount equal to the fair market value of such
fractional share of Common Stock in lieu of each fraction of a share otherwise
called for upon any exercise of this Warrant. For purposes of this Warrant, the
fair market value of a share of Common Stock shall be determined as follows:
(a) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or
listed for trading on the NASDAQ system, the current market value shall
be the last reported sale price of the Common Stock on such exchange or
system on the last business day prior to the date of exercise of this
Warrant or, if no such sale is made on such day, the average of the
closing bid and asked prices for such day on such exchange or system;
or
(b) if the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the mean
of the last reported bid and asked prices reported by the National
Quotation Bureau, Inc. on the last business day prior to the date of
the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year of the
C6mpany ending prior to the date of the exercise of the Warrant,
determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company.
6. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
3
4
7. ANTI-DILUTION PROVISIONS.
7.1 ADJUSTMENT FOR RECAPITALIZATION. If the Company shall at any time
subdivide its outstanding shares of Common Stock (or Other Securities at the
time receivable upon the exercise of the Warrant) by recapitalization,
reclassification or split-up thereof, or if the Company shall declare a stock
dividend or similar distribution of shares of Common Stock to its stockholders,
the number of shares of Common Stock subject to this Warrant immediately prior
to such subdivision shall be proportionately increased, and the Exercise Price
shall be proportionately decreased, and if the Company shall at any time combine
the outstanding shares of Common Stock by recapitalization, reclassification or
combination thereof, the number of shares of Common Stock subject to this
Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased. Any such
adjustments pursuant to this Section 7.1 shall be effective at the close of
business on the effective date of such subdivision or combination, or if any
adjustment is the result of a stock dividend or distribution, then the effective
date for such adjustment based thereof shall be the record date therefor.
7.2 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
of any reorganization of the Company (or any other a corporation, the securities
of which are at the time receivable on the exercise of this Warrant), or in case
after such date the Company (or any such other corporation) shall consolidate
with or merge into another corporation or convey all or substantially all of its
assets to another corporation, then, and in each such case, the Holder of this
Warrant upon the exercise thereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation, merger or conveyance shall
be entitled to receive, in lieu of the securities and property receivable upon
the exercise of this Warrant prior to such consummation, the securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised this Warrant immediately prior thereto; in each such
case, the terms of this Warrant shall be applicable to the securities or
property receivable upon the exercise of this Warrant after such consummation.
7.3 NOTIFICATION AS TO ADJUSTMENTS. In each case of an adjustment in
the number of shares of Common Stock receivable on the exercise of the Warrant,
the Company at its expense will promptly compute such adjustment in accordance
with the terms of the Warrant and will notify the Holder in writing of such
adjustment within 30 days of the effective date of such adjustment. When
appropriate, notice may be given in advance as part of notices required to be
mailed to the Holder pursuant to Section 7.5 hereof.
7.4 OTHER ISSUANCES. Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or warrants to
subscribe therefore, or upon conversions of shares or obligations of the Company
convertible into such shares or other securities, or as compensation or
otherwise, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of or the exercise price of the Shares that remain
unexercised under the Warrant.
4
5
Without limiting the generality of the foregoing, the existence of
unexercised Shares under the Warrant shall not affect in any manner the right or
power of the Company to make, authorize or consummate (i) any issuances as
described above, (ii) any or all adjustments, recapitalizations, reorganizations
or other changes in the Company's capital structure or its business; (iii) any
merger or consolidation of the Company; (iv) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the Shares
issuable upon exercise of the Warrant; (v) the dissolution or liquidation of the
Company; (vi) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vii) any other corporate act or proceeding,
whether of a similar character or otherwise.
7.5 NOTICES OF RECORD DATE, ETC. In case:
(a) the Company shall take a record of the holders of its
Common Stock (or Other Securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend (other
than a cash dividend at the same rate as the rate of the last cash dividend
theretofore paid) or other distribution, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities,
or to receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution, liquidation
or winding up of the Company, then, and in each such case, the Company shall
mail or cause to be mailed to each Holder of the Warrant at the time outstanding
a notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right, or (ii) the date
on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take place, and the
time, if any, is to be fixed, as to which the holders of record of Common Stock
(or such Other Securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such
Other Securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger conveyance, dissolution,
liquidation or winding up. Such notice shall be mailed at least 20 days prior to
the date therein specified, and the Warrant may be exercised prior to said date
during the term of the Warrant.
8. TRANSFER TO COMPLY WITH THE SECURITIES ACT. The Warrant Stock or
Other Securities may not be sold, transferred, pledged, hypothecated or
otherwise disposed of except as follows: (a) in a transaction exempt from
registration under the Securities Act including pursuant to Rule 144 thereunder;
(b) to a person who, in the opinion of counsel to the Company, is a person to
whom this Warrant or the Warrant Stock or Other Securities may legally be
transferred without registration and without the delivery of a current
prospectus under the Securities Act with respect thereto and then only against
receipt of an agreement of such person to comply with the provisions of this
5
6
Warrant with respect to any resale or other disposition of such securities; or
(c) to any person upon delivery of a prospectus then meeting the requirements of
the Securities Act relating to such securities and the offering thereof for such
sale or disposition.
9. LEGEND. Unless the shares of Warrant Stock or Other Securities have
been registered under the Securities Act, upon exercise of any of the Warrants
and the issuance of any of the shares of Warrant Stock, all certificates
representing shares will bear on the face thereof substantially the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OFFERED
FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR UNLESS AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY IS OBTAINED STATING THAT SUCH DISPOSITION IS IN
COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
10. NOTICES. All notices required hereunder shall be in writing and
shall be deemed given when telegraphed, delivered personally or within two days
after mailing when mailed by certified or registered mail, return receipt
requested, to the Company or the Holder, as the case may be, for whom such
notice is intended at the address of such party as set forth on the first page,
or at such other address of which the Company or the Holder has been advised by
notice hereunder.
11. APPLICABLE LAW. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the State
of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
VIRAGEN, INC.
By:
-------------------------------
Xxxxxx Xxxxx, President
6
7
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing __________ shares of Common Stock at an
exercise price of $_________ per share of Common Stock of Viragen, Inc., a
Delaware corporation, and hereby makes payment of $__________ in payment
therefor.
----------------------------------
Signature
----------------------------------
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
(If in a name other than to the registered holder of the within Warrant)
Name
-------------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Social Security or
Taxpayer Identification Number:
-------------------------------------------------------------------------------
7
8
EXHIBIT A
PROMISSORY NOTE
$ _________________ [DATE]
FOR VALUE RECEIVED, THE AMERICAN NATIONAL RED CROSS, a District of
Columbia Corporation ("Maker"), having an address at 0000 X. Xxxx Xxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, hereby promises to pay to the order of VIRAGEN, INC.,
a Delaware corporation ("Holder"), having an address at 000 X.X. 00xx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, the principal sum of
__________________________________ ($___________), together with simple interest
thereon at the annual rate equal to THE WALL STREET JOURNAL prime rate published
on the date hereof, at the address of Holder set forth above. The entire
principal amount of this Note, together with accrued interest thereon, shall be
payable one (1) year from the date hereof (the "Maturity Date").
Maker may prepay this Note, in whole or in part, at any time or from
time to time, without premium or penalty; provided, however, that any prepayment
will be applied first to pay accrued and unpaid interest and then in reduction
of principal.
Maker hereby waives presentment, demand, protest, notice of dishonor,
notice of nonpayment, notice of protest and diligence in collection. The
non-exercise by Holder of any of Holder's rights hereunder in any particular
instance shall not constitute a waiver thereof in that or any subsequent
instance. Any waiver of any right, term or condition hereby by Holder must be in
writing to be valid. Maker acknowledges that no oral waiver shall be binding,
nor shall Maker have the right to rely on any oral statement purporting to be a
waiver.
This Note shall inure to the benefit of Holder and Holder's successors
and assigns. This Note shall be binding upon Maker and Maker's successors and
assigns.
THE AMERICAN NATIONAL RED CROSS,
a District of Columbia corporation
By:
-------------------------------
Name:
------------------------------
Its:
-------------------------------
