Exhibit 4.2
THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE AND THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO IT TO SUCH EFFECT.
GENAISSANCE PHARMACEUTICALS, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, ___________________
or its registered assigns pursuant to Paragraph 11(b) hereof ("Holder") is
entitled to subscribe for and purchase up to ____________ shares (subject to
adjustment as described herein) of the duly authorized, fully paid and
nonassessable Common Stock of Genaissance Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), upon exercise of this Warrant at an initial
exercise price of $_______ per share and subject to the provisions and upon the
terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean (i) the class of
stock designated as voting Common Stock in the Certificate of Incorporation of
the Company as amended through the date hereof, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that the Company shall after the
date hereof issue any new class of Common Stock with greater or superior voting
rights than the shares of Common Stock outstanding as of the date hereof, the
Holder, at its option, may receive upon exercise of any Warrant either Common
Stock or a like number of shares of such new class of Common Stock with greater
or superior voting rights.
1. TERM.
This Warrant is exercisable, in whole or in part, at any time
following the date hereof until 5:00 P.M. Eastern Standard Time on ____________.
2. WARRANT PRICE.
The purchase price payable for each share of Common Stock
deliverable upon exercise of this Warrant is $______ per share, subject to
adjustment as described in Section 5 hereof (the "Warrant Price").
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) Subject to Paragraph 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part, by the surrender of this Warrant (with the Notice of Exercise form
attached hereto as Exhibit 1 duly executed) at the principal office of the
Company (presently located at Five Science Park, New Haven, Connecticut 06511)
and by the payment to the Company of an amount of cash equal to the then
applicable Warrant Price per share multiplied by the number of shares then being
purchased. The Warrant Price shall be paid by wire transfer or by bank or
certified check.
(b) Subject to Paragraph 1 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or
in part, by the surrender of this Warrant (with the Notice of Exercise form
attached hereto as Exhibit 1 duly executed) at the principal office of the
Company and by the delivery to the Company of an amount of the Company's
securities (the "Payment Securities") having a fair market value (as determined
in accordance with Paragraph 5(h) hereof) equal to the then applicable Warrant
Price per share multiplied by the number of shares then being purchased. The
Warrant Price shall be paid by delivery of the duly endorsed Payment Securities
to the Company at the Company's principal office, free and clear of all liens,
security interests and other encumbrances of any kind or nature.
(c) In lieu of delivering the Warrant Price as set forth in
subparagraphs (a) or (b), the Holder may exercise this Warrant by conversion of
this Warrant, in whole or in part, into shares of Common Stock, by instructing
the Company in writing ("Notice of Conversion") to deliver to the Holder
(without payment by the Holder of any Warrant Price or of any other cash or
consideration) that number of shares of Common Stock equal to the quotient
obtained by dividing:
(i) the value of this Warrant at the time the
conversion right is exercised (determined by
subtracting the aggregate Warrant Price in
effect immediately prior to the exercise of
the conversion right from the aggregate
current market price (as determined in
accordance with Paragraph 5(h) hereof) of
the shares of Common Stock issuable upon
exercise of this Warrant immediately prior
to the exercise of the conversion right) by
(ii) the current market price (as determined in
accordance with Paragraph 5(h) hereof) of
one share of Common Stock immediately prior
to the exercise of the conversion right, and
multiplying the quotient so obtained by a fraction equal to the portion of this
Warrant which the Holder desires to exercise.
The Notice of Conversion may be given by circling the
appropriate option in the Notice of Exercise attached as Exhibit 1 to this
Warrant.
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If the Company shall engage an investment banking firm for
advice about the current market price of the Shares of Common Stock issuable
upon exercise of this Warrant in order to afford the Holder with the opportunity
to exercise this Warrant pursuant to this Section 3(c), the Holder, by
acceptance of this Warrant, agrees to promptly reimburse the Company for the
fees and expenses of such firm.
(d) This Warrant may be exercised by the Holder hereof, in
whole or in part, by any combination of the foregoing methods specified in
subparagraphs (a), (b) and (c) above. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant shall have been surrendered to the Company,
with the applicable Warrant Price (if any), and at such time, the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock (or other securities) shall be issuable upon such exercise, shall
be deemed to have become the holder or holders of record thereof.
(e) In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the Holder hereof (or the transferee designated in the Notice of
Exercise) within a reasonable time (but not later than three (3) business days
after the date of such exercise) and, unless this Warrant has been fully
exercised or has expired, a new Warrant representing the portion of the shares,
if any, with respect to which this Warrant shall not then have been exercised
shall also be issued to the Holder hereof within such reasonable time.
4. STOCK FULLY PAID; RESERVATION AND LISTING OF SHARES.
(a) All Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issue upon exercise of this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant in full.
(b) If any shares of the Common Stock required to be reserved
for issuance upon exercise of this Warrant require registration or qualification
with any governmental authority under any federal or state law (other than as a
result of a breach by the Holder of its representations, warranties or covenants
set forth in Section 8 hereof) before such shares may be so issued, the Company
will in good faith use its best efforts at its expense to cause such shares to
be duly registered or qualified. If the Company shall list any shares of Common
Stock on any securities exchange it will, at its expense, list thereon, maintain
and increase when necessary such listing, of, all shares of Common Stock from
time to time issued upon exercise of this Warrant, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Common Stock which are at any time issuable hereunder, so long as any shares
of Common Stock shall be so listed. The Company will also so list on each
securities exchange, and will maintain such listing of, any other securities
which the Holder of this Warrant
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shall be entitled to receive upon the exercise thereof if at the time any
securities of the same class shall be listed on such securities exchange by the
Company.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
The number and kind of securities purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time upon the occurrence of certain events as follows:
(a) RECAPITALIZATION, REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION OR MERGER. In case of any recapitalization or reorganization of
the Company or any reclassification or change of outstanding securities of the
class issuable upon exercise of this Warrant (other than a change in par value,
or from par value to no par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation, (other than a merger (i) with another corporation in
which the Company is the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant or (ii) a merger in which the Company is not the surviving
corporation and holders of equity securities of the Company as a result of such
merger receive more than 50% of the equity securities of the surviving
corporation), or in case of any sale of all or substantially all of the assets
of the Company, or in case of a share exchange in which 80% or more of the
outstanding capital stock of the Company is exchanged for capital stock of
another corporation, any of which transactions shall be referred to hereinafter
as a "Corporate Transaction", the Company or such successor or purchasing
company or entity, as the case may be, shall execute with the Holder of this
Warrant an agreement pursuant to which the Holder of the Warrant shall have the
right thereafter to purchase upon exercise of the Warrant the kind and amount of
shares, and/or other securities and property that the Holder of the Warrant
would have owned or have been entitled to receive after the happening of such
Corporate Transaction had the Warrant been exercised immediately prior to such
action. The agreement referred to in this subparagraph (a) shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Paragraph 5. The provisions of this
subparagraph (a) shall similarly apply to successive Corporate Transactions.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be proportionately decreased
in the case of a subdivision or increased in the case of a combination.
(c) CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Company, at
any time while this Warrant is outstanding and unexpired, shall:
(i) STOCK DIVIDENDS. Pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock (except any distribution provided for in the foregoing subparagraphs (a)
or (b)), of Common Stock, then the Warrant Price shall be adjusted, from and
after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(a) the numerator of
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which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution and (b) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution.
(ii) LIQUIDATING DIVIDENDS, ETC. Make a distribution
of its property to the holders of its Common Stock as a dividend in liquidation
or partial liquidation or by way of return of capital other than as a dividend
payable out of funds legally available for dividends under the laws of the State
of the Company's incorporation, the Holder of this Warrant shall, upon exercise
(including, without limitation, payment of the Warrant Price), be entitled to
receive, in addition to the number of shares of Common Stock receivable
thereupon, and without payment of any additional consideration therefor, a sum
equal to the amount of such property as would have been payable to such Holder
had such Holder been the holder of record of such Common Stock on the record
date for such distribution or, if no such record is taken, on the date of such
distribution; and appropriate provision therefor shall be made a part of any
such distribution.
(d) ISSUANCE OF COMMON STOCK FOR LOWER VALUE. If the Company
at any time shall issue to any Affiliate (as defined in Paragraph 5(l) below)
shares of Common Stock other than Excluded Shares (as defined in Paragraph 5(l)
below), or rights, options, warrants or convertible or exchangeable securities
containing the right to acquire, subscribe for or purchase shares of Common
Stock other than Excluded Shares (collectively, "Rights"), and the sale or
issuance price per share of Common Stock (or in the case of any Rights, the sum
of (x) the consideration paid or payable for any such Right entitling the holder
thereof to acquire one share of Common Stock and (y) such additional
consideration paid or payable upon exercise or conversion of any such Right to
acquire one share of Common Stock) is less than the then current market price
per share of the Common Stock in effect immediately prior to such sale or
issuance (as determined pursuant to subparagraph (h) hereof), the Warrant Price
in effect at the time of such issuance shall be proportionately readjusted as of
the effective date of such event by multiplying such Warrant Price by a fraction
(a) the denominator of which shall be the outstanding number of shares of Common
Stock immediately following such event and (b) the numerator of which shall be
the outstanding number of shares of Common Stock immediately prior thereto plus
the number of shares of Common Stock that would be purchasable at the Warrant
Price for the consideration per share being paid for the shares being issued. In
case the Company shall sell or issue Common Stock or Rights for a consideration
consisting, in whole or in part, of property other than cash, then in
determining the "consideration received by the Company" for purposes of this
subparagraph (d), an independent investment banking firm selected by the Company
shall determine the fair value of such property.
(e) PURCHASE OF COMMON STOCK BY THE COMPANY. If the Company at
any time while this Warrant is outstanding shall, directly or indirectly through
a subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock from an Affiliate at a price per share greater than the current
market price per share of Common Stock then in effect, then the Warrant Price
upon each such purchase, redemption or acquisition shall be adjusted to that
price determined by multiplying such Warrant Price by a fraction (i) the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such purchase,
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redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the current market price; and
(ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subparagraph (e), the date as of which the current market price
shall be computed shall be the earlier of (x) the date on which the Company
shall enter into a firm contract for the purchase, redemption or acquisition of
such Common Stock, or (y) the date of actual purchase, redemption or acquisition
of such Common Stock. For the purposes of this subparagraph (e), a purchase,
redemption or acquisition of a Right shall be deemed to be a purchase of the
underlying Common Stock, and the computation herein required shall be made on
the basis of the full exercise, conversion or exchange of such Right on the date
as of which such computation is required hereby to be made, whether or not such
Right is actually exercisable, convertible or exchangeable on such date.
(f) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Warrant Price, the number of shares of Common Stock purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
(g) EXPIRATION OF RIGHTS, OPTIONS AND CONVERSION PRIVILEGES.
Upon the expiration of any Rights, if such shall not have been exercised, the
number of shares of Common Stock subject to exercise shall, upon such
expiration, be readjusted and shall thereafter be such as it would have been had
it been originally adjusted (or had the original adjustment not been required,
as the case may be) on the basis of (A) the fact that the only shares of Common
Stock so issued were the shares of Common Stock, if any, actually issued or sold
upon the exercise of such Rights and (B) such shares of Common Stock, if any,
were issued or sold for the consideration actually received by the Company upon
such exercise plus the consideration, if any, actually received by the Company
(including for purposes hereof, any underwriting discounts or selling
commissions paid by the Company) for the issuance, sale or grant of all such
Rights whether or not exercised; provided, however, that no such readjustment
shall have the effect of decreasing the number of shares of Common Stock subject
to exercise by an amount in excess of the amount of the adjustment initially
made with respect to the issuance, sale or grant of such Rights.
(h) CURRENT MARKET PRICE. For the purpose of any computation
under this Warrant, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily Closing Prices of the shares
of Common Stock for the thirty (30) consecutive Trading Days preceding the
applicable date. The "Closing Price" for each day shall be (i) the last reported
sale price regular way or, in case no such sale takes place on such date, the
average of the closing bid and asked quotations regular way, in either case on
the New York Stock Exchange, or, if the Common Stock is not listed or admitted
to trading on such exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to
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trading; or (ii) if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last reported sale price regular way or, in
case no such sale takes place on such day, the average of the closing bid and
asked quotations regular way, in either case on the National Market System of
the National Association of Securities Dealers, Inc. ("NASD"); or (iii) if not
authorized for trading or quotation on such system, the average of the highest
reported bid and lowest reported asked quotations as furnished by the NASD or
similar organization if the NASD is no longer reporting such information; or
(iv) if no such prices or quotations are available, the fair market value of the
Common Stock as determined by good faith action of the Board of Directors of the
Company (whose determination shall be conclusive if based on the financial
advice of a nationally recognized investment banking firm and shall be described
in a statement delivered to the Holder). A "Trading Day" shall be any day that
the principal national securities exchange on which the Common Stock is listed
or admitted to trading is open for the transaction of business or, if not so
listed or admitted, that the New York Stock Exchange is open for the transaction
of business.
(i) ADJUSTMENT FOR DE MINIMIS CHANGE. No adjustment in the
Warrant Price shall be required unless such adjustment would require an increase
or decrease of at least $0.05 in such price; provided, however, that any
adjustments which by reason of this subparagraph (f) are not required to be made
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment which, together with any adjustment so carried
forward, would amount to an increase or decrease of at least $0.05 in the
Warrant Price.
(j) OUTSTANDING COMMON STOCK. For purposes of this Section 5,
the number of shares of Common Stock at any time outstanding shall not include
any shares thereof then directly or indirectly owned or held by or for the
account of the Company or any of its subsidiaries.
(k) OTHER ACTION AFFECTING COMMON STOCK. In case after the
date hereof the Company shall take any action affecting its Common Stock, other
than an action described in any of the foregoing subparagraphs (a) through (d)
of this Section 5, inclusive, and the failure to make any adjustment would not
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 5, then the Warrant
Price shall be adjusted in such manner and at such time as the Board of
Directors of the Company may in good faith determine to be equitable in the
circumstances.
(l) CERTAIN Definitions. As used in Paragraphs 5(d) and (e)
hereof, the following terms shall have the following respective meanings:
"Affiliate" shall mean a natural person or artificial entity (other
than a subsidiary of the Company):
(i) who is a director or senior executive officer of the
Company or which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under
common control with, the Company or any such director or
senior executive officer;
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(ii) which beneficially owns or holds 10% or more of any class
of the voting stock of the Company; or
(iii) 10% or more of the voting stock (or in the case of a
person which is not a corporation, 10% or more of the equity
interest) of which is beneficially owned or held by the
Company or one of its subsidiaries or by any director or
senior executive officer of the Company.
The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"Excluded Shares" shall mean shares of Common Stock issued or issuable
to employees of the Company pursuant to an employee stock option plan approved
by the Board of Directors of the Company.
6. NOTICE OF ADJUSTMENTS.
Whenever the Warrant Price or number of shares of Common Stock
purchasable upon exercise of this Warrant shall be adjusted pursuant to
Paragraph 5 hereof, the Company shall make a certificate signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Warrant Price or Prices and number of shares of Common
Stock purchasable hereunder after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
at the address specified in or pursuant to Paragraph 11(d) hereof.
7. FRACTIONAL SHARES.
No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor equal in amount to the product of
the applicable fraction multiplied by the current market price per share of
Common Stock then in effect.
8. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF SHARES OF
COMMON STOCK.
The Holder of this Warrant, by acceptance hereof, agrees that
this Warrant and the securities to be issued upon exercise hereof are being
acquired for investment and that it will not offer, sell or otherwise dispose of
this Warrant or any securities to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "Act") and are in accordance with the legend set forth
below. This Warrant and all securities issued upon exercise of this Warrant
(unless registered under the Act) shall be stamped or imprinted with a legend
substantially in the following form as well as any additional legends required
by applicable securities laws or stockholders' agreements and similar agreements
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encumbering such shares and agrees that the Company may make a notation on its
records so that no transfer of such shares may be made without compliance with
these restrictions:
"THIS WARRANT AND THE SECURITIES PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION, AND MAY NOT BE OFFERED, SOLD, OR
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE AND THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
TO SUCH EFFECT."
The Holder represents and warrants to the Company that it is
an "accredited investor" as defined in Securities and Exchange Commission Rule
501 issued pursuant to the Act and a sophisticated investor with such knowledge
and experience in financial and business matters as to be able to understand and
evaluate the merits and risks presented by an investment in the Warrant
Securities (as defined in Section 9 hereof).
9. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION. If, at any time commencing after
the date hereof, the Company proposes to register any of its equity securities
under the Act (other than pursuant to Form ▇-▇, ▇▇▇▇ ▇-▇ or a comparable
registration statement) it will give written notice at least thirty (30) days
prior to the filing of each such registration statement, to the Holder of this
Warrant and/or the shares of Common Stock and any other securities issuable upon
exercise of this Warrant (collectively, the "Warrant Securities") of its
intention to do so. If the Holder of this Warrant and/or Warrant Securities
notify the Company within fourteen (14) days after receipt of any such notice of
its or their desire to include any such Securities in such proposed registration
statement, the Company shall afford such Holder the opportunity to have any such
Warrant Securities registered under such registration statement, subject,
however, to the provisions of this (a) below.
Notwithstanding the provisions of this subparagraph
(a), the Company shall have the right at any time after it shall have given
written notice pursuant to this subparagraph (a) (irrespective of whether a
written request for inclusion of any such securities shall have been made) to
elect not to file any such proposed registration statement, or to withdraw the
same after the filing but prior to the effective date thereof.
If the proposed registration by the Company is, in whole or in part, an
underwritten public offering of securities of the Company, any Warrant
Securities shall be included in the underwriting (a) on the same terms and
conditions as the securities, if any, otherwise being sold through underwriters
under such registration or (b) on terms and conditions comparable to those
normally applicable to offerings of securities in reasonably similar
circumstances if no other shares comparable to the Warrant Securities are being
sold through underwriters under such registration; PROVIDED, HOWEVER, that if
the managing underwriter determines and advises in
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writing that the inclusion of all securities requested to be included in such
registration (including the Warrant Securities) would interfere with the
successful marketing (including pricing) of such securities, then the securities
to be included in the underwritten public offering shall be reduced, first,
among the holders of the Warrant Securities on a pro rata basis, second, among
the holders of the Other Securities on a pro rata basis, third, among the
holders of the Series A Securities on a pro rata basis, and fourth, among the
holders of the Senior Securities on a pro rata basis; PROVIDED, FURTHER,
HOWEVER, that this Section shall not be construed so as to require the exclusion
of any Prior Warrant Shares from any offering if such exclusion would conflict
with the terms of any of the Prior Warrants. Those Warrant Securities which are
excluded from the underwritten public offering (either because such Securities
were not requested by the holders thereof to be included or which were excluded
pursuant to the immediately preceding sentence) shall be withheld from the
market by the Holder for a period, not to exceed 180 days, which the managing
underwriter reasonably determines as necessary in order to effect the
underwritten public offering.
As used in the preceding paragraph, the following terms shall have the
following respective meanings:
"Other Securities" shall mean all securities proposed to be included
under the applicable registration statement other than (i) Senior Securities,
(ii) Series A Common Stock, and (iii) securities to be issued by the Company.
"Prior Warrants" shall mean (i) that certain Warrant, dated December
20, 1996, in the name of Technology Investment Fund Incorporated, to purchase an
aggregate of 41,800 shares of Common Stock; (ii) that certain Warrant, dated
November 4, 1998, in the name of Finova Technology Finance, to purchase 26,250
shares of Common Stock; and (iii) that certain Warrant, dated April 30, 1999, in
the name of TBCC Funding Trust II, to purchase 50,000 shares of Common Stock.
"Prior Warrant Shares" shall mean all shares of Common Stock of the
Company that are issuable upon exercise of any of the Prior Warrants and any
shares of capital stock of the Company received in respect thereof, whether by
reason of a stock split, stock dividend, share reclassification or other similar
event.
"Series A Securities " shall mean all securities of the Company
registrable pursuant to a Registration Rights Agreement, dated as of August 24,
1998, among the Company and the original purchasers of the Company's Series A
Redeemable Convertible Preferred Stock and Series KBL Nonvoting Redeemable
Convertible Preferred Stock, as amended from time to time.
"Series B Preferred Stock" shall mean and include all shares of the
Company's Series B Convertible Preferred Stock, Series B1 Convertible Preferred
Stock, Series KBH Nonvoting Convertible Preferred Stock, Series KBH1 Nonvoting
Convertible Preferred Stock, and shares of any additional series or subseries of
such Series B and Series KBH Preferred Stock created pursuant to Section 9 (or
any successor provision) of the Certificate of Designations, Preferences and
other Special Rights and Qualifications, Limitations and Restrictions of
Preferred Stock of
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the Company filed with the Delaware Secretary of the State under Section 242 of
the General Corporation Law of the State of Delaware and relating to any of such
Preferred Stock, as amended from time to time (the "Series B Certificate").
"Senior Securities" shall mean (i) all Series B Preferred Stock, (ii)
all shares of Common Stock or other securities of the Company issuable or issued
upon conversion of any of the shares of Series B Preferred Stock, and (ii) any
shares of capital stock of the Company received in respect thereof, whether by
reason of a stock split, stock dividend, share reclassification or other similar
event.
(b) COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with any registration under subparagraph (a) hereof, the Company
covenants and agrees as follows:
(i) The Company shall furnish each Holder desiring to
sell Warrant Securities such number of prospectuses as shall reasonably be
requested.
(ii) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to subparagraph (a) hereof including, without limitation, the Company's legal
and accounting fees, printing expenses and blue sky fees and expenses.
(iii) The Company will take all necessary action
which may be required in qualifying or registering the Warrant Securities
included in a registration statement for offering and sale under the securities
or blue sky laws of such states as reasonably are requested by the Holder(s),
provided that the Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction.
(iv) The Company shall indemnify the Holder(s) of the
Warrant Securities to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from any material
misrepresentation in or omission from such registration statement, except with
respect to information furnished by or on behalf of any Holder for specific
inclusion in such registration statement.
(v) The Holder(s) of the Warrant Securities to be
sold pursuant to a registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
they may become
11
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement.
(vi) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(vii) At the request of any Holder, the Company shall
furnish to each Holder participating in the offering, if the offering is not
being sold through underwriters, or, if the offering is being sold through
underwriters, to each underwriter a signed counterpart, addressed to such Holder
or underwriter, as the case may be, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under the underwriting agreement), and (ii) a "cold comfort"
letter dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(viii) The Company shall as soon as practicable after
the effective date of the registration statement, and in any event within
fifteen (15) months thereafter, make "generally available to its security
holders" (within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the Act and covering
a period of at least twelve (12) consecutive months beginning after the
effective date of the registration statement.
10. PURCHASE RIGHTS.
(a) By acceptance hereof, each Holder, and by acceptance of any Warrant
Securities, each holder thereof, agrees that if such Holder or holder of Warrant
Securities (the "SELLING HOLDER") wishes to dispose of this Warrant or its or
his Warrant Securities or any portion thereof (the "OFFERED SECURITIES") through
a voluntary sale or other disposition, the Selling Holder shall first notify the
Company of the identity of the Selling Holder and the proposed transferee, the
number of Offered Securities, and the proposed price and terms of sale or other
disposition. The Company or its nominee shall thereupon have an option to
purchase all of the Offered Securities at the price and on the terms set forth
in the notice from the Selling Holder by delivery to the Selling Holder, within
14 days after the Company's receipt of the notice from the Selling Holder, of a
written election to make such purchase. The closing of the purchase of the
Offered Securities hereunder shall occur as soon as practicable, but in any
event not later than 30 days after such purchase rights have been exercised.
12
(b) If the Company does not exercise its purchase rights within the
time period as provided above with respect to all of the Offered Securities, the
Selling Holder shall be free for a period of 60 days thereafter to sell all of
the Offered Securities to the same transferee at the same price and on all the
same terms as set forth in the Selling Holder's notice of intended transfer. The
transferee will hold the Offered Securities subject to the provisions of this
Agreement and become a party hereto. If the Selling Holder does not sell the
Offered Securities within said 60 day period, the Offered Securities may not be
transferred unless the Selling Holder again complies with all the requirements
of this Section.
(c) The Company may place an appropriate legend on the certificates
evidencing any Warrant Securities referring to the provisions of this Section
10.
(d) The provisions of this Section 10 shall terminate upon the
consummation of a "Qualified IPO" as defined in the Series B Certificate.
11. MISCELLANEOUS.
(a) NO RIGHTS AS STOCKHOLDER. No Holder of this Warrant shall
be entitled to vote or receive dividends or be deemed the Holder of Common Stock
or any other securities of the Company which 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 of this Warrant, 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 or otherwise until this Warrant shall have been exercised
and the shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. If, however, at any time prior to the
expiration of this Warrant and its exercise, any of the following events shall
occur:
(i) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings or
capital surplus (in accordance with applicable law), as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(ii) the Company shall offer to all the holders of
its Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(iii) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an entirety
shall be proposed;
13
then, in any one or more of said events, the Company shall give written notice
of such event to the Holder at least thirty (30) days prior to the date fixed as
a record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
(b) EXCHANGE, TRANSFER AND REPLACEMENT OF WARRANT. Subject to
Paragraph 8 hereof, the Holder may transfer or assign this Warrant, in whole or
in part and from time to time. Upon the surrender of this Warrant, properly
endorsed, for registration of transfer or for exchange at the principal office
of the Company, the Company at its expense will execute and deliver to or upon
the order of the Holder thereof a new Warrant or Warrants of like tenor, in the
name of such Holder or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or
faces of this Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of loss, theft or destruction, on delivery of any indemnity agreement
or bond reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, on surrender and cancellation of this Warrant, the Company,
at its expense, will execute and deliver, in lieu of this Warrant, a new Warrant
of like tenor.
(c) AMENDMENT AND WAIVER. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Company and a Majority of the Holders; PROVIDED, HOWEVER, that no such amendment
or waiver shall reduce the number of shares of Common Stock issuable upon
exercise of this Warrant, increase the Warrant Price, shorten the period during
which this Warrant may be exercised or modify any provision of this subparagraph
(c) without the consent of the Holder of this Warrant.
(d) NOTICE. All notices and other communications provided for
hereunder shall be in writing and delivered by hand or sent by first class mail
or sent by telecopy (with such telecopy to be confirmed promptly in writing sent
by first class mail), and if to the Holder of this Warrant or of Common Stock
issued pursuant hereto, addressed to such Holder at its last known address or
telecopy number appearing on the books of the Company maintained for such
purposes, and if to the Company, addressed to:
Genaissance Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
14
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses or telecopy number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. All such communications shall be deemed to have been given or
made when so delivered by hand or sent by telecopy, or three (3) business days
after being so mailed.
(e) REMEDIES. The Company stipulates that the remedies at law
of the Holder of this Warrant in the event of a default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
(f) SUCCESSORS AND ASSIGNS. This Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Company, subject to Section 8 hereof, the Holder
hereof and (to the extent provided herein) the Holders of Common Stock issued
pursuant hereto, and shall be enforceable by any such Holder or Holder of Common
Stock.
(g) MODIFICATION AND SEVERABILITY. If, in any action before
any court or agency legally empowered to enforce any provision contained herein,
any provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
(h) INTEGRATION. This Warrant and any other Warrants replace
all prior agreements, supersede all prior negotiations and constitute the entire
agreement of the parties with respect to the transactions contemplated herein.
(i) NO IMPAIRMENT. The Company shall not by any action
including, without limitation, amending its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect
the rights of the Holder hereof against impairment.
15
Without limiting the generality of the foregoing, the Company will (i) not
permit the par value, if any, of its Common Stock to exceed the then effective
Warrant Price, (ii) take all such action as may be reasonably necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein), upon the exercise of this Warrant,
and (iii) use reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof as may
be reasonably necessary to enable the Company to perform its obligations under
this Warrant.
(j) SURVIVAL. The provisions of Sections 8, 9 and 10 of this
Warrant and of this Section 11 shall survive the full exercise of this Warrant.
(k) GOVERNING LAW. This Warrant shall be governed by and
construed under the laws of the State of Connecticut without regard to such
state's principles of conflicts of law.
[THIS PAGE ENDS HERE. THE NEXT PAGE IS THE SIGNATURE PAGE.]
16
Date:
GENAISSANCE PHARMACEUTICALS, INC.
By:
-------------------------------
Name:
Title:
17
EXHIBIT 1
NOTICE OF EXERCISE
TO: Genaissance Pharmaceuticals, Inc.
1. The undersigned hereby elects to acquire _________ shares of Common
Stock of ____________________, pursuant to the terms of the attached Warrant,
and [CIRCLE EITHER (A), (B) OR (C)]
(a) tenders herewith payment in full of the purchase
price of such shares in cash;
(b) tenders herewith payment in full of the purchase
price of such shares in the form of securities of the
issuer; or
(c) elects to exercise its right of conversion set
forth in Paragraph 3(c) of the attached Warrant.
2. 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)
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares. In support thereof, the undersigned agrees to execute an Investment
Representation Statement substantially in the form attached as Exhibit A.
18
4. The Purchaser is an "accredited investor" as defined in Securities
and Exchange Commission Rule 501(a) issued pursuant to the Securities Act of
1933, as amended, and a sophisticated investor with such knowledge and
experience in financial and business matters as to be able to understand and
evaluate the merits and risks presented by an investment in the shares of Common
Stock.
Date:
----------------- ---------------------------
19
EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
TO: Genaissance Pharmaceuticals, Inc.
With respect to the __________ shares of Common Stock ("Shares") of Genaissance
Pharmaceuticals, Inc. (the "Company") which the undersigned ("Purchaser") has
purchased from the Company today, the Purchaser hereby represents and warrants
as follows:
1. The Purchaser acknowledges that he has received no formal prospectus
or offering memorandum describing the business and operations of the Company. He
has, however, by virtue of his relationship with the Company, been given access
to all information that he believes is material to his decision to purchase the
Shares. The Purchaser has had the opportunity to ask questions of, and receive
answers from, representatives of the Company concerning its business operations.
Any questions raised by the Purchaser have been answered to his satisfaction.
2. The Shares are being acquired by the Purchaser for his account, for
investment purposes only, and not with a view to the distribution or resale
thereof.
3. No representations or promises have been made concerning the
marketability or value of the Shares. The Purchaser understands that there is
currently no market for the transfer of the Shares. The Purchaser further
acknowledges that, because the Shares have not been registered under the
Securities Act of 1933, or applicable state securities laws, and cannot be
resold unless they are subsequently registered under said Act or applicable
state securities laws, or an exemption from registration is available, the
Purchaser must continue to bear the economic risk of his investment in the
Shares for an indefinite period of time. Specifically, the Purchaser agrees that
the Shares may not be transferred until the Company has received an opinion of
counsel reasonably satisfactory to it that the proposed transfer will not
violate federal or state securities laws. The Company has not agreed or
represented to the Purchaser that the Shares will be purchased or redeemed from
the Purchaser at any time in the future. The Purchaser further understands that
a notation will be made on the appropriate records of the Company and on the
stock certificate representing the Shares so that the transfer of Shares will
not be effected on those records without compliance with the restrictions
referred to above.
Date:
--------------------
-------------------------
20
WARRANT HOLDERS
Connecticut Innovations, Inc.
Kleinwort ▇▇▇▇▇▇ Holdings, Inc.
Finova Capital Corporation
International BM Biomedicine Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Inc.
Mantis Partners III, LP
Merifin Capital N.V.
Phoenixcor, Inc.
Technology Investment Fund, Inc.
TBCC Funding Trust II
▇. ▇▇▇▇