<PAGE> 1
(conformed)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 5, 2000
DEMEGEN, INC.
(Exact name of registrant as specified in this charter)
Colorado 0-25353 84-1065575
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1051 Brinton Road, Pittsburgh, PA 15221
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (412) 241-2150
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ITEM 5 - OTHER EVENTS
On April 5, 2000, Demegen, Inc. (the "Company") closed on a private placement of
its securities to institutional and other accredited investors raising $2.78
million of which $0.38 million was in the form of prepaid services with the
remainder of $2.4 million in cash. The private placement resulted in 5.56
million restricted shares of common stock and warrants to purchase an additional
5.56 million shares of the Company's common stock.
The investors were offered one unit at $0.50 per unit. Each unit consisted of
one share of restricted common stock and a warrant to purchase one share of the
Company's common stock for $0.75 per share. The warrant expires the earlier of
March 31, 2005 or 60 days after a call by the Company. The Company may call the
warrants at any time after March 31, 2001, provided that the price of the
Company's common stock has been in excess of $1.50 per share for each of the
forty consecutive trading days immediately preceding the date of the call. Upon
receipt of the call, warrant holders shall have sixty days to elect to exercise
all or a portion of the warrants.
The Company has agreed to file a registration statement with the Securities &
Exchange Commission to register all common stock which comprise the unit and the
common stock issuable from the exercise of the warrant on or before March 31,
2001,
Pricing of the securities was determined based on several factors, including
reference to market price of the Company's common stock, the holding period
requirement of restricted stock, and the Company's need for additional funding
for development of pharmaceutical products.
Funds raised will be utilized to fund the Company's product development efforts.
ITEM 7 - FINANCIAL STATEMENTS & EXHIBITS
(c) Exhibits
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SEQUENTIAL
EXHIBIT INDEX NUMBERING SYSTEM
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(4a) Subscription Agreement to Purchase Units of Demegen, Inc.
(4b) Warrant for the Purchase of Shares of Common Stock, par value
$0.001 per share of Demegen, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PDG ENVIRONMENTAL, INC.
By /s/Richard D. Ekstrom
----------------------------------------
Richard D. Ekstrom
Chairman and Chief Executive Officer
Date: April 7, 2000
3
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Exhibit 4(a)
SUBSCRIPTION AGREEMENT
THE SHARES REFERRED TO IN
THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE SECURITIES LAWS, AND THEIR
TRANSFER IS RESTRICTED BY THE TERMS OF THIS
AGREEMENT AND BY APPLICABLE LAW.
SUBSCRIPTION AGREEMENT
TO: Demegen, Inc.
1051 Brinton Road
Pittsburgh, PA 15221
Gentlemen:
1. Description of Units; Subscription for Units.
a) Description of Units. Demegen, Inc., a Colorado corporation
(the "Company"), is offering to sell units of its securities,
such units to be comprised of (i) shares of its common stock,
$.001 par value ("Common Stock"), and (ii) warrants to
purchase Common Stock (the "Units"). Each Unit shall consist
of one (1) share of Common Stock and a warrant entitling the
holder to purchase one (1) share of Common Stock at any time
on or before March 31, 2005 at an exercise price of $0.75 per
share (the "Warrants"). The Warrants shall be in the form of
Exhibit A to this Subscription Agreement. The purchase price
of each Unit will be $0.50. The minimum purchase by each
subscriber is 20,000 Units for $10,000 unless the Company, in
its sole discretion, agrees otherwise.
b) Subscription for Units. The undersigned (the "Subscriber")
hereby subscribes for and agrees to purchase the number of
Units set forth on the Signature Page attached to this
Subscription Agreement. The Subscriber is delivering with this
Subscription Agreement a check in the amount of $_________
($0.50 multiplied by the number of Units the Subscriber is
subscribing for) payable to the order of Demegen, Inc.
2. Representations of the Subscriber. By executing this Subscription
Agreement, the Subscriber hereby represents and warrants to the Company
that:
(i) Subscriber understands that Subscriber must bear the economic
risk of an investment in the Units for an indefinite period of
time.
(ii) Subscriber understands that an investment in Company involves
certain risks and has taken full cognizance of and understands
all of the risk factors relating to the purchase of Shares as
set forth in the investment materials packet dated February
10, 2000 which were delivered to the Subscriber (the
"Investment Materials"), including the document entitled "List
of Recent Developments and Risk Factors" included the
Investment Materials.
(iii) Subscriber acknowledges that Subscriber has read and carefully
reviewed the Investment Materials and has based a decision to
invest solely on the information contained in the Investment
Materials; acknowledges that the Company has made available to
Subscriber the opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions
of the offering and to obtain any additional information
necessary to verify the accuracy of the information given to
Subscriber in the Investment.
(iv) Subscriber is acquiring the Units for Subscriber's own account
as principal for investment and not with a view to resale or
distribution. Subscriber will not sell or otherwise transfer
the Shares except in accordance with applicable securities
laws.
(v) Subscriber is at least 21 years of age, and (a) Subscriber has
adequate means of providing for Subscriber's current needs and
personal contingencies, (b) Subscriber has no need for
liquidity in the investment in the Units, (c) Subscriber
maintains a principal domicile (and is not a transient or
temporary resident) at the
<PAGE> 2
address shown below, (d) all of Subscriber's investments in
and commitments to non-liquid investments are, and after
Subscriber's purchase of the Units will be, reasonable in
relation to Subscriber's net worth and current needs, and (e)
the personal financial information provided by Subscriber to
the Company in the "Accredited Purchaser Questionnaire"
contained in the Investor Materials accurately reflects
Subscriber's current financial condition, with respect to
which Subscriber does not anticipate any material adverse
changes.
(vi) Subscriber understands that the Company shall have the right,
in its sole discretion, to accept or reject this subscription,
in whole or in part, or to allocate to Subscriber only a
portion of the number of Units covered by this subscription.
The Company will notify Subscriber whether this subscription
is accepted or rejected. To the extent that Subscriber's
subscription is rejected, any payment made will be returned to
Subscriber without interest and all of Subscriber's
obligations hereunder with respect to the rejected portion of
the subscription shall terminate.
(vii) Subscriber understands that the neither the shares of Common
Stock nor the Warrants comprising the Units have been
registered under the Securities Act of 1933, as amended (the
"1933 Act"), or the securities laws of any state and, as the
result thereof, are subject to substantial restrictions on
transfer.
(viii) Subscriber understands and agrees that Subscriber will not
sell or otherwise transfer any shares of Common Stock or any
of the Warrants comprising the Units unless the Subscriber
provides the Company with an opinion of counsel which is
reasonably satisfactory to the Company (both as to the issuer
of the opinion and the form and substance thereof) that an
applicable exemption from the registration requirements of the
Securities Act, and any other applicable securities laws is
available for the proposed transfer.
(ix) Subscriber understands that (a) the Company has no obligation
or intention to register any of the shares of Common Stock or
any of the Warrants comprising the Units for resale under any
federal or state securities laws or to take any action (except
to the extent set forth in this Subscription Agreement and
except for the filing of reports or the publication of
information required by Rule 144 under the Securities Act),
which would make available any exemption from the registration
requirements of such laws, and (b) Subscriber therefore may be
precluded from selling or otherwise transferring or disposing
of any shares of Common Stock or any of the Warrants
comprising the Units, or any portion thereof, and may
therefore have to bear the economic risk of investment in the
Shares for an indefinite period of time.
(x) Subscriber understands that no federal or state agency has
approved or disapproved the Units, passed upon or endorsed the
merits of the offering thereof, or made any finding or
determination as to the fairness of the Units for investment.
(xi) Subscriber acknowledges that, if purchasing the Units
subscribed for hereby in a fiduciary capacity, the above
representations and warranties in this Section shall be deemed
to have been made on behalf of the person or persons for whom
the undersigned is so purchasing.
(xii) IF SUBSCRIBER IS A PENNSYLVANIA RESIDENT, THE SUBSCRIBER
ACKNOWLEDGES AND UNDERSTANDS THAT SUBSCRIBER HAS THE RIGHT TO
CANCEL AND WITHDRAW THIS SUBSCRIPTION AGREEMENT AND HIS OR HER
PURCHASE OF SHARES UPON WRITTEN NOTICE TO THE COMPANY GIVEN TO
THE COMPANY AT THE ADDRESS SET FORTH ABOVE WITHIN TWO BUSINESS
DAYS FOLLOWING RECEIPT BY THE COMPANY OF AN EXECUTED
SUBSCRIPTION AGREEMENT FOR THE UNITS. UPON SUCH CANCELLATION
OR WITHDRAWAL, THE SUBSCRIBER WILL HAVE NO OBLIGATION OR DUTY
UNDER THIS SUBSCRIPTION AGREEMENT TO THE COMPANY OR TO ANY
OTHER PERSON AND WILL BE ENTITLED TO THE FULL RETURN WITHOUT
INTEREST OF ANY AMOUNT PAID BY THE SUBSCRIBER PURSUANT TO THIS
SUBSCRIPTION AGREEMENT. SUBSCRIBER FURTHER ACKNOWLEDGES AND
UNDERSTANDS THAT ANY NOTICE OF CANCELLATION OR WITHDRAWAL
SHOULD BE MADE BY CERTIFIED OR REGISTERED MAIL OR TELEGRAPH OR
OTHER MESSAGE DELIVERY SERVICE. SUCH NOTICE WILL BE EFFECTIVE
UPON DEPOSIT IN THE UNITED STATES MAILS, SENT REGISTERED OR
CERTIFIED MAIL, OR DELIVERED TO A TELEGRAPH OR OTHER MESSAGE
SERVICE FOR TRANSMITTAL, WITH POSTAGE OR OTHER TRANSMITTAL
FEES PAID BY SUBSCRIBER.
(xiii) If Subscriber is a Pennsylvania resident, Subscriber agrees
that Subscriber will not sell any portion of the
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securities comprising Subscriber's Units purchased pursuant
thereto for one year following the purchase of the Units.
(xiv) Subscriber understands that the Units are being offered and
sold in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the
representations, warranties agreements, acknowledgments and
understandings set forth herein in order to determine the
applicability of such exemptions and the suitability of
Subscriber to acquire Shares.
3. Registration Rights. The Company agrees that on or before March 31,
2001, it shall file a Registration Statement on Form SB-2, or any other
available form or successor form, under the 1933 Act seeking
registration of all shares of Common Stock (i) which comprise the Units
and (ii) issuable upon exercise of the Warrants (collectively, the
"Registerable Shares"), and shall use its commercially reasonable
efforts to cause all such Registerable Shares to be registered under
the 1933 Act. Each holder of any Registerable Shares agrees to
cooperate fully with the Company in effecting registration and
qualification of such holder's Registerable Shares, and shall indemnify
and hold harmless the Company and each person who may control the
Company within the meaning of Section 15 of the 1933 Act, each director
of the Company, and each officer who signed any registration statement
from and against any and all losses, claims, damages, expenses, and
liabilities caused by any untrue statement of fact or omission of a
material fact to the extent that such untrue statement or omission was
made in reliance upon information furnished to the Company by any such
holder.
4. Miscellaneous.
a) Controlling Law. All questions relating to the interpretation,
construction and enforcement of this Agreement will be determined in accordance
with the domestic laws of the Commonwealth of Pennsylvania.
b) Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns , except that the
Subscriber may not assign or transfer Subscriber's rights or obligations under
or interest in this Agreement without the prior written consent of the Company.
c) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. If executed in multiple
counterparts, this Agreement shall become binding when two or more counterparts
hereto, individually or taken together, bear the signatures of all of the
parties reflected hereon as the signatories.
d) Entire Agreement. This Agreement contains the entire understanding
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written.
e) Disclaimer of Representations. Except as expressly set forth in the
Investor Materials, Company has not made any representations or warranties to
Subscriber and Subscriber expressly acknowledges that it is not relying on any
other information received from the Company or its representations (including,
without limitation, any projections, forecasts or forward-looking information.
[The balance of this page is left blank intentionally.]
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DEMEGEN, INC.
COUNTERPART SUBSCRIPTION AGREEMENT SIGNATURE PAGE
Subscriber, desiring to purchase Units offered by the Company, by
executing this Signature Page hereby accepts, adopts and agrees to all terms,
conditions and representations of the foregoing Subscription Agreement and
agrees to subscribe for the number of Units stated below.
Number of Units subscribed for (20,000 Unit minimum): _____ Units
Enclosed is a check payable to Demegen, Inc. for $___________ ($0.50 per Unit,
$10,000 minimum)
Date: February ____ , 2000
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INDIVIDUALS SIGN BELOW:
- ------------------------------- ------------------------------- -------------------------------
Subscriber's Signature Print Subscriber's Name Social Security No.
- ------------------------------- ------------------------------- -------------------------------
Joint Subscriber's Signature* Print Joint Subscriber's Name Social Security No.
* If Shares are to be owned jointly, both Subscribers must sign.
PARTNERSHIPS, TRUSTS AND OTHER ENTITIES SIGN BELOW:
Name of Entity:
-------------------------------------------------------------------------------------------
By:
---------------------------------------------- ------------------------------------------------
Taxpayer Identification Number
Title:
------------------------------------------- ------------------------------------------------
Date
ALL SUBSCRIBERS COMPLETE THE ADDRESS SECTION
Principal Residence Address: Mailing Address, if different from
Residence Address:
---------------------------------------------- ------------------------------------------------
---------------------------------------------- ------------------------------------------------
* * * * * * * * *
The foregoing Subscription is DEMEGEN, INC..
accepted on February _____, 2000
to the extent of _____ Units By
----------------------------------------------
Richard D. Ekstrom, President
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<PAGE> 1
Exhibit 4(b)
NEITHER THIS WARRANT NOR THE WARRANT STOCK HAS BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS WARRANT OR THE
WARRANT STOCK UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION COVERING SUCH
WARRANT OR SUCH WARRANT STOCK, AS THE CASE MAY BE, UNDER THE SECURITIES ACT OF
1933 AND APPLICABLE STATES SECURITIES LAWS, (ii) IT FIRST RECEIVES A LETTER FROM
AN ATTORNEY, ACCEPTABLE TO THE BOARD OF DIRECTORS OR ITS AGENTS, STATING THAT IN
THE OPINION OF THE ATTORNEY THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE STATE SECURITIES LAWS,
OR (iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF
1933.
Series B Warrants
Warrant Certificate No. ___
DEMEGEN, INC.
(a Colorado corporation)
Warrant for the Purchase of [NUMBER] Shares
of Common Stock
par value $.001 per share
Void after the earlier of (i) 5:00 p.m. Pittsburgh, Pennsylvania Time, on March
31, 2005 or (ii) that date which is sixty days after a call of this Warrant is
made in accordance with the provisions of Section 10 of this Warrant.
FOR VALUE RECEIVED, Demegen, Inc. (the "Corporation"), a Colorado corporation,
hereby certifies that ____________________________________, or assigns
("Holder"), is entitled, subject to the provisions of this Warrant, to purchase
from the Corporation at any time, or from time to time during the period
commencing on the date hereof and expiring on the earlier of (i) 5:00 p.m.
Pittsburgh, Pennsylvania Time, on March 31, 2005 or (ii) that date which is
sixty days after a call of this Warrant is made in accordance with the
provisions of Section 10 of this Warrant.
(such earlier date the "Expiration Date"), up to ______________ (________) fully
paid and non-assessable shares of Common Stock at a price of $0.75 per share
("Exercise Price").
The term "Common Stock" means the common stock, par value $.001 per share, of
the Corporation as constituted on February 1, 2000 ("Base Date"), together with
any other equity securities that may be issued by the Corporation in respect
thereof or in substitution therefor. The number of shares of Common Stock to be
received upon the exercise of this Warrant may be
PAGE 1 - WARRANT TO PURCHASE COMMON SHARES
<PAGE> 2
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable or delivered upon such exercise, as adjusted from time to time, are
hereinafter referred to as "Warrant Stock."
Upon receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant certificate, and (in the
case of loss, theft or destruction) of satisfactory indemnification, and upon
surrender and cancellation of this Warrant certificate, if mutilated, the
Corporation shall execute and deliver a new Warrant certificate of like tenor
and date.
Section 1. Exercise of Warrant. Subject to the call provision set forth in
Section 10, this Warrant may be exercised, subject to the requirements set forth
below, in whole, or in part, at any time during the period commencing on the
date hereof and expiring at 5:00 p.m. Pittsburgh, Pennsylvania Time on the
Expiration Date set forth above, or, if such day is a day on which banking
institutions in Pittsburgh, Pennsylvania 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 certificate to the Corporation at its principal
office, or at the office of its stock transfer agent, if any, 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
Corporation) of the aggregate Exercise Price for the number of shares specified
in such form and instruments of transfer, if appropriate, duly executed by the
Holder. If this Warrant should be exercised in part only, the Corporation shall,
upon surrender of this Warrant certificate for cancellation, execute and deliver
a new Warrant certificate evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder. Upon receipt by the
Corporation of this Warrant certificate, together with the Exercise Price, at
its office, or by the stock transfer agent of the Corporation at its office, if
any, in proper form for exercise as described above, together with an agreement
to comply with the restrictions on transfer and related covenants contained
herein and a representation as to investment intent and any other matter
required by counsel to the Corporation, signed by the Holder (and if other than
the original Holder accompanied by proof, satisfactory to counsel for the
Corporation, of the right of such person or persons to exercise the Warrant),
the Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, even if the stock transfer books of the
Corporation shall then be closed or certificates representing such shares of
Common Stock shall not have been delivered to the Holder. The Holder 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. The Corporation shall promptly thereafter issue certificate(s)
evidencing the Common Stock so purchased.
Section 2. Reservation of Shares. The Corporation shall 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 Corporation (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 exercise, shall
be validly issued, fully paid and non-assessable.
PAGE 2 - WARRANT TO PURCHASE COMMON SHARES
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Section 3. No Fractional Shares. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant, but the
Corporation 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 equal the
closing sale price (or if not available the average of the closing bid and asked
prices) on the business day prior to exercise of this Warrant, or, if the Common
Stock is then not publicly traded, then the price determined in good faith by
the Board of Directors of the Corporation.
Section 4. Transfer.
4.1 Securities Laws. Neither this Warrant nor the Warrant Stock have been
registered under the Securities Act of 1933 ("Securities Act") or any state
securities laws. The Corporation will not transfer either this Warrant or the
Warrant Stock unless: (i) there is an effective registration covering such
Warrant or such Warrant Stock, as the case may be, under the Securities Act and
applicable states securities laws; (ii) it first receives a letter from an
attorney, acceptable to the Corporation's board of directors or its agents,
stating that in the opinion of such attorney the proposed transfer is exempt
from registration under the Securities Act and under all applicable state
securities laws; or (iii) the transfer is made pursuant to Rule 144 under the
Securities Act.
4.2 Conditions to Transfer. Prior to any such proposed transfer, and as a
condition thereto, if such transfer is not made pursuant to an effective
registration statement under the Securities Act, the Holder will, if requested
by the Corporation, deliver to the Corporation: (i) an investment covenant
signed by the proposed transferee; (ii) an agreement by such transferee that the
restrictive investment legend set forth above be placed on the certificate or
certificates representing the securities acquired by such transferee; (iii) an
agreement by such transferee that the Corporation may place a "stop transfer
order" with its transfer agent or registrar; and (iv) an agreement by the
transferee to indemnify the Corporation to the same extent as set forth in the
next succeeding Subsection.
4.3 Indemnity. The Holder acknowledges that the Holder understands the meaning
and legal consequences of this Subsection, and the Holder hereby agrees to
indemnify and hold harmless the Corporation, its representatives and each
officer and director thereof from and against any and all loss, damage or
liability (including all attorneys' fees and costs incurred in enforcing this
indemnity provision) due to or arising out of: (i) the inaccuracy of any
representation or the breach of any warranty of the Holder contained in, or any
other breach of, this Warrant; (ii) any transfer of any of this Warrant or the
Warrant Stock in violation of the Securities Act, the Securities Exchange Act of
1934, as amended ("Exchange Act"), or the rules and regulations promulgated
under either of such Acts; (iii) any transfer of this Warrant or any of the
Warrant Stock in a manner inconsistent with this Warrant; or (iv) any untrue
statement or omission to state any material fact in connection with the
investment representations or with respect to the facts and representations
supplied by the Holder to counsel to the Corporation upon which its opinion as
to a proposed transfer shall have been based.
PAGE 3 - WARRANT TO PURCHASE COMMON SHARES
<PAGE> 4
4.4 Holdback Period and Transfer. Except as specifically restricted hereby, this
Warrant and the Warrant Stock issued may be transferred by the Holder in whole
or in part at any time or from time to time. Upon surrender of this Warrant
certificate to the Corporation or at the office of its stock transfer agent, if
any, accompanied by a request for transfer of this Warrant to a transferee, and
accompanied by funds sufficient to pay any documentary stamp or similar issue or
transfer tax, and upon compliance with the provisions of this Section 4, the
Corporation shall, without charge, execute and deliver a new Warrant certificate
in the name of such transferee, and this Warrant certificate shall promptly be
canceled. Any assignment, transfer, pledge, hypothecation or other disposition
of this Warrant attempted contrary to the provisions of this Warrant, or any
levy of execution, attachment or other process attempted upon this Warrant,
shall be null and void and without effect.
Section 5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Corporation, either at law or
equity, unless and until this Warrant is exercised. The rights of the Holder are
limited to those expressed in this Warrant and are not enforceable against the
Corporation except to the extent set forth herein.
Section 6. Anti-Dilution Provisions.
6.1 Stock Splits, Dividends, Etc.
6.1.1 If the Corporation 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 Corporation shall declare a stock dividend or distribute
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 if the Corporation 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. Any such adjustment and adjustment to the Exercise Price pursuant to
this Section 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
thereon shall be the record date therefor.
6.1.2 Whenever the number of shares of Common Stock purchasable upon
the exercise of this Warrant is adjusted, as provided in this Section, the
Exercise Price shall be adjusted to the nearest cent by multiplying such
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise immediately prior to such adjustment, and (y) the denominator
of which shall be the number of shares of Common Stock so purchasable
immediately thereafter.
PAGE 4 - WARRANT TO PURCHASE COMMON SHARES
<PAGE> 5
6.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In case of any
reorganization of the Corporation (or any other corporation, the securities of
which are at the time receivable on the exercise of this Warrant) after the Base
Date or in case after such date the Corporation (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 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 received upon the exercise of this Warrant after such
consummation.
6.3 Certificate as to Adjustments. In each case of an adjustment in the number
of shares of Common Stock receivable on the exercise of this Warrant, the
Corporation at its expense shall promptly compute such adjustment in accordance
with the terms of the Warrant and prepare a certificate executed by an officer
of the Corporation setting forth such adjustment and showing the facts upon
which such adjustment is based. The Corporation shall forthwith mail a copy of
each such certificate to each Holder.
6.4 Notices of Record Date, Etc. In case:
6.4.1 the Corporation 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
6.4.2 of any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation, then, and in each such case, the Corporation
shall mail or cause to be mailed to each Holder 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, 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 this 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 twenty (20) days prior to the date therein specified, and this
Warrant may be exercised prior to said date during the term of the Warrant.
PAGE 5 - WARRANT TO PURCHASE COMMON SHARES
<PAGE> 6
Section 7. Legend and Stop Transfer Orders. Unless the shares of Warrant Stock
have been registered under the Securities Act, upon exercise of any of this
Warrant and the issuance of any of the shares of Warrant Stock, the Corporation
shall instruct its transfer agent, if any, to enter stop transfer orders with
respect to such shares, and all certificates representing shares of Warrant
Stock shall bear on the face thereof substantially the following legend:
This certificate has not been registered under the Securities Act of
1933. The Corporation will not transfer this certificate unless (i)
there is an effective registration covering the shares represented by
this certificate under the Securities Act of 1933 and all applicable
state securities laws, (ii) it first receives a letter from an
attorney, acceptable to the board of directors or its agents, stating
that in the opinion of the attorney the proposed transfer is exempt
from registration under the Securities Act of 1933 and under all
applicable state securities laws, (iii) the transfer is made pursuant
to Rule 144 under the Securities Act of 1933.
Section 8. Registration. The Corporation agrees that on or before March 31,
2001, it shall file a Registration Statement on Form SB-2, or any other
available form or successor form, under the Securities Act of 1933, as amended
(the "1933 Act") seeking registration of all shares of Warrant Stock and shall
use its commercially reasonable efforts to cause all such Warrant Shares to be
registered under the 1933 Act. Each Holder agrees to cooperate fully with the
Corporation in effecting registration and qualification of such Holder's Warrant
Shares, and shall indemnify and hold harmless the Corporation and each person
who may control the Corporation within the meaning of Section 15 of the 1933
Act, each director of the Corporation, and each officer who signed any
registration statement from and against any and all losses, claims, damages,
expenses, and liabilities caused by any untrue statement of fact or omission of
a material fact to the extent that such untrue statement or omission was made in
reliance upon information furnished to the Corporation by any such holder.
Section 9. Officer's Certificate. Whenever the number or kind of securities
purchasable upon exercise of this Warrant or the Exercise Price shall be
adjusted as required by the provisions hereof, the Corporation shall forthwith
file with its Secretary or Assistant Secretary at its principal office and with
its stock transfer agent, if any, an officer's certificate showing the adjusted
number of kind of securities purchasable upon exercise of this Warrant and the
adjusted Exercise Price determined as herein provided and setting forth in
reasonable detail such facts as shall be necessary to show the reason for and
the manner of computing such adjustments. Each such officer's certificate shall
be made available at all reasonable times for inspection by the Holder and the
Corporation shall, forthwith after each such adjustment, mail by certified mail
a copy of such certificate to the Holder.
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<PAGE> 7
Section 10. Call Provisions.
10.1 Call of Warrants. At any time after March 31, 2001, the Corporation may
deliver to the Holder a Call Notice (as defined in section 10.3) provided that
the closing price of Corporation's Common Stock is $1.50 or more per share (as
adjusted for any stock splits or stock combination) for each of the forty (40)
consecutive trading days preceding the date of the Call Notice.
10.2 Exercise Following a Call Notice. Upon receipt of a Call Notice, the Holder
shall have a period of sixty (60) calendar days after the date of the Call
Notice to elect to exercise all or a portion of this Warrant in accordance with
the terms of Section 1. Following a Call Notice, any purchase rights under this
Warrant not exercised in accordance with this Section shall expire and this
Warrant shall be terminated.
10.3 Call Notices. A Call Notice shall be delivered by the Corporation in
writing to the Holder and shall specify that it is being submitted pursuant to
this Section 10 and shall include evidence of the closing price of the
Corporation's common stock for each of the forty (40) consecutive trading days
preceding the date of the Call Notice
Section 11. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
PAGE 7 - WARRANT TO PURCHASE COMMON SHARES
<PAGE> 8
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ______________ shares of Common Stock of Demegen, Inc. and
hereby makes payment of $_________________ in payment therefor.
Date:
__________________________
Signature
__________________________
Signature
(if jointly held)
PAGE 8 - WARRANT TO PURCHASE COMMON SHARES
