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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SHAMAN PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 2834 94-3095806
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
213 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(650) 952-7070
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF THE
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LISA A. CONTE
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
SHAMAN PHARMACEUTICALS, INC.
213 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(650) 952-7070
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
COPIES TO:
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J. STEPHAN DOLEZALEK, ESQ BRIAN W. PUSCH, ESQ.
TIMOTHY R. CURRY, ESQ. LAW OFFICES OF BRIAN W PUSCH
BROBECK, PHLEGER & HARRISON LLP PENTHOUSE SUITE
TWO EMBARCADERO PLACE, 2200 GENG ROAD 29 WEST 57TH STREET
PALO ALTO, CA 94301 NEW YORK, NY 10019
(650) 424-0160 (212) 980-0408
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value
per share................... 137,500 shares $4.9375 $678,907 $201
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</TABLE>
(1) REPRESENTS (I) SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS TO
PURCHASE SHARES OF COMMON STOCK AND (II) AN INDETERMINATE NUMBER OF
ADDITIONAL SHARES OF COMMON STOCK AS MAY FROM TIME TO TIME BECOME ISSUABLE
PURSUANT TO ANTIDILUTION PROVISIONS OF SUCH WARRANTS, WHICH SHARES ARE
REGISTERED HEREUNDER PURSUANT TO RULE 416 UNDER THE SECURITIES ACT.
(2) THE PRICE OF $4.9375 PER SHARE, WHICH WAS THE AVERAGE OF THE HIGH AND LOW
BID PRICES OF THE COMMON STOCK REPORTED BY THE NASDAQ STOCK MARKET ON MARCH
27, 1998, IS SET FORTH SOLELY FOR THE PURPOSE OF CALCULATING THE
REGISTRATION FEE IN ACCORDANCE WITH RULE 457(C) OF THE SECURITIES ACT OF
1933, AS AMENDED.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS (SUBJECT TO COMPLETION)
DATED MARCH 31, 1998
137,500 SHARES
SHAMAN PHARMACEUTICALS, INC.
COMMON STOCK
------------------------
This Prospectus relates to the offer and sale by certain persons listed
herein under "Selling Stockholders" (collectively, the "Selling Stockholders")
of up to 137,500 shares (the "Shares") of Common Stock, par value $0.001 per
share (the "Common Stock"), of Shaman Pharmaceuticals, Inc. (the "Company"),
which may be issued from time to time to the Selling Stockholders upon exercise
of Common Stock Purchase Warrants issued by the Company on March 18, 1998 (the
"Warrants"). The Warrants are exercisable for a period of three years after the
date of issuance at an exercise price of $7.50 per share. The Warrants provide
for adjustment of the number of shares of Common Stock issuable upon exercise
thereof in certain circumstances. All of the Shares may be offered pursuant to
this Prospectus by the Selling Stockholders or by pledgees, donees, transferees
or other successors in interest that receive such shares as a gift, partnership
distribution or other non-sale related transfer. The Warrants and the Common
Stock issuable upon exercise thereof have been and will be issued in
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof. See "Recent Developments," "Selling
Stockholders" and "Plan of Distribution." The Shares are being registered by the
Company pursuant to registration rights granted to the Selling Stockholders.
The Selling Stockholders have not advised the Company of any specific plans
for the distribution of the Shares covered by this Prospectus. It is
anticipated, however, that the Shares will be offered and sold by the Selling
Stockholders from time to time in transactions on The Nasdaq National Market, in
privately negotiated transactions, or by a combination of such methods of sale,
at such fixed prices as may be negotiated from time to time, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration of the Shares being offered by the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act.
The Common Stock of the Company is traded on The Nasdaq National Market
tier of The Nasdaq Stock Market under the symbol "SHMN." On March 30, 1998, the
last sale price for the Common Stock as quoted on The Nasdaq National Market was
$5.0625 per share.
------------------------
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" herein for a description of
agreements by the Company to indemnify the Selling Stockholders against certain
liabilities.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is April , 1998
<PAGE> 3
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, any Selling
Stockholders or by any other person. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than the
shares of Common Stock offered hereby, nor does it constitute an offer to sell
or a solicitation of an offer to buy any of the shares offered hereby to any
person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any date subsequent to the date hereof.
AVAILABLE INFORMATION
This Prospectus, which constitutes a part of a Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), omits certain of the information set forth in
the Registration Statement. For further information with respect to the Company
and the Common Stock offered hereby, reference is hereby made to such
Registration Statement, exhibits and schedules. Statements contained in this
Prospectus regarding the contents of any contract or other document are not
necessarily complete; with respect to each such contract or document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. A copy of the
Registration Statement, including the exhibits and schedules thereto, may be
inspected without charge at the public reference facilities of the Commission
described below, and copies of such material may be obtained from such office
upon payment of the fees prescribed by the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and the following regional offices of
the Commission: New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed rates.
Furthermore, the Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission. Such Web site is located at
http://www.sec.gov. The Company's Common Stock is quoted on The Nasdaq National
Market. Reports, proxy statements and other information concerning the Company
may be inspected at the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company (File
No. 0-21022) with the Commission are hereby incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the year ended December 31,
1997; (b) the Company's Definitive Proxy Statement dated April 23, 1997, filed
in connection with the Company's 1997 Annual Meeting of Stockholders; and (c)
the description of the Company's Common Stock contained in its Registration
Statement on Form 8-A, as amended, filed with the Commission on December 18,
1992, including any amendments or reports filed for the purpose of updating such
description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities remaining unsold, shall be
deemed
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to be incorporated by reference herein and to be a part hereof from the date of
filing of such reports and documents. Any statement contained in a document
incorporated by reference herein shall be deemed modified or superseded for
purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to Shaman Pharmaceuticals, Inc., 213 East Grand Avenue, South
San Francisco, California 94080-4812, telephone (650) 952-7070, facsimile (650)
873-8367, Attn: Vice President, Corporate Communications.
------------------------
Provir(TM) and the Company's stylized logo are trademarks of the Company.
Shaman Pharmaceuticals(R) and Virend(R) are registered U.S. trademarks of the
Company.
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3
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THE COMPANY
The following information is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere herein or incorporated by reference in this Prospectus. This
Prospectus contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ materially from those projected in the forward-looking
statements as a result of certain of the risk factors set forth elsewhere in
this Prospectus. Investors should carefully consider the information set forth
under the heading "Risk Factors."
Shaman is a leader in the identification and development of novel
pharmaceutical products for the treatment of human diseases through the
isolation and optimization of active compounds found in tropical plants. The
Company believes that by focusing on drugs extracted from plants with a long
history of medicinal use, its drug discovery efforts will be quicker and more
likely to lead to safe and effective pharmaceuticals. Shaman has human clinical
trials underway for its three lead product candidates: Provir, nikkomycin Z, and
SP-134101. Shaman has completed Phase II trials showing efficacy for Provir for
the treatment of AIDS-associated and watery diarrhea. In the first quarter of
1998, Provir is scheduled to enter a pivotal Phase III trial for the treatment
of diarrhea in patients with AIDS. This single study, upon completion, is
intended to serve as the basis for the submission of a New Drug Application
("NDA") with the U.S. Food and Drug Administration ("FDA"). With success, Provir
for diarrhea in patients with AIDS will become the first product commercialized
by Shaman. Two additional dose-optimizing Phase II trials for Provir in watery
diarrhea commenced in 1997. These trials are intended to be completed in the
first half of 1998 and, if successful, will lead to Phase III trials.
Nikkomycin Z, an orally-active product for the treatment of endemic mycoses
and other systemic fungal infections, completed a Phase I trial in the UK in
1997, and the Company filed an Investigational New Drug application ("IND") in
the United States in December 1997. The Company intends to continue multi-dose
Phase I testing of this compound.
Shaman's research and preclinical development is principally focused on the
identification and optimization of compounds to treat Type II (adult onset or
non-insulin dependent) diabetes, an effort that has led to the identification of
21 chemically distinct, orally-active compounds which have demonstrated glucose
lowering effects in preclinical animal testing. In October 1997, Shaman filed an
IND for SP-134101, an oral product for the treatment of Type II diabetes. This
first product to emerge from the diabetes discovery program entered clinical
trials in January 1998. Significant funding, as well as milestone payments for
this program, are provided through collaborations with Lipha, s.a., a
wholly-owned subsidiary of Merck KGaA, Darmstadt, Germany ("Lipha/Merck"), and
Ono Pharmaceutical Co., Ltd. ("Ono").
RECENT DEVELOPMENTS
The Shares being registered represent shares underlying the Warrants, which
were issued in connection with an Amendment Agreement dated March 18, 1998 (the
"Amendment Agreement") to the several Note Purchase Agreements dated as of June
30, 1997 between the Company and the Selling Stockholders (the "Purchase
Agreements"). Pursuant to the Purchase Agreements, the Company issued
$10,400,000 in Senior Subordinated Notes due August 29, 2000 (the "Notes") and
bearing interest at a rate of 5.5% per annum. Interest on the Notes, which is
payable in arrears on the first day of each November, February, May and August,
may be paid in Common Stock or in cash at the Company's option. Under the
original terms of the Purchase Agreements, the Notes are convertible into Common
Stock of the Registrant as follows: (i) until November 7, 1997 (the "Fixed
Conversion Period"), the Notes are convertible at the lowest trading price of
the Common Stock during a specified measurement period prior to each conversion,
but in no event less than $5.50 per share, (ii) thereafter the Notes are
convertible at 90% of such trading price during such measurement period prior to
each conversion. The maximum number of shares into which the Notes shall become
convertible in the aggregate is limited to 19.9% of the outstanding shares of
Common Stock on July 9, 1997 (3,485,887 shares), with any excess to be redeemed
by the Registrant. The Registrant has the right, exercisable beginning January
10, 1999, to redeem the then outstanding Notes for 130% of the then outstanding
principal balance on each Note plus accrued interest.
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In March 1998, the Registrant and the purchasers of the Notes entered into
the Amendment Agreement, which extended the Fixed Conversion Period to March 31,
1998. As consideration for entering into the Amendment Agreement, the Company
issued to the Selling Stockholders Warrants to purchase an aggregate of 137,500
shares of Common Stock. The Warrants are exercisable through March 18, 2001 at
an exercise price of $7.50 per share. The Warrants provide for adjustment of the
number of shares of Common Stock issuable upon exercise thereof in certain
circumstances.
At the date of issuance of the Notes, an allocation of a portion of the
proceeds of the Notes equal to the intrinsic value of the conversion feature
that is "in the money" was reflected as a non-cash charge to interest expense.
Such charge was reflected in the financial statements for the year ended
December 31, 1997. The Company believes this accounting treatment is consistent
with that required by the Commission.
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RISK FACTORS
The shares offered hereby involve a high degree of risk. The following risk
factors should be considered carefully in addition to the other information
contained or incorporated by reference in this Prospectus before purchasing the
shares of Common Stock offered hereby. In addition to the historical information
contained herein, the discussion in this Prospectus may contain certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this Prospectus should be read as being applicable
to all related forward-looking statements wherever they appear in this
Prospectus. The Company's actual results could differ materially from those
discussed in this Prospectus. Factors that could cause or contribute to such
differences include those discussed below as well as those cautionary statements
and other factors set forth elsewhere herein.
Early Stage of Development; Technological Uncertainty. Shaman has not yet
completed the development of any products. Many of the Company's products will
require significant additional clinical testing and investment prior to
commercialization. Products for therapeutic use in human health care must be
evaluated in extensive human clinical trials to determine their safety and
efficacy as part of a lengthy process to obtain government approval. The
Company's Provir, nikkomycin Z and SP-134101 products are each in clinical
development. Positive results for any of these products in a clinical trial do
not necessarily assure that positive results will be obtained in future clinical
trials or that government approval to commercialize the products will be
obtained.
Clinical trials may be terminated at any time for many reasons, including
toxicity or adverse event reporting. There can be no assurance that any of the
Company's products will be successfully developed, enter into human clinical
trials, prove to be safe and efficacious in clinical trials, meet applicable
regulatory standards, obtain required regulatory approvals, be capable of being
produced in commercial quantities at reasonable costs or be successfully
marketed or that the Company will not encounter problems in clinical trials that
will cause the Company to delay or suspend product development. Failure of any
of the Company's products to be commercialized could have a material adverse
effect on the Company's business, financial condition and results of operations.
History of Operating Losses; Products Still in Development; Future
Profitability Uncertain. Shaman was incorporated in 1989 and has experienced
significant operating losses in each of its fiscal years since operations began.
As of December 31, 1997, the Company's accumulated deficit was approximately
$111.9 million. The Company has not generated any product revenues and expects
to incur substantial operating losses over the next several years. All of
Shaman's products and compounds are in research and development, which require
substantial expenditures of funds. In order to generate revenues or profits, the
Company, alone or with others, must successfully develop, test, obtain
regulatory approval for and market its potential products. No assurance can be
given that Shaman's product development efforts will be successful, that
required regulatory approvals will be obtained, or that the products, if
developed and introduced, will be successfully marketed or will achieve market
acceptance.
No Assurance of Successful Product Development. The Company's research and
development programs are at various stages of development, ranging from the
research stage to clinical trials. Substantial additional research and
development will be necessary in order for the Company to move additional
product candidates into clinical testing, and there can be no assurance that any
of the Company's research and development efforts on these or other potential
products, including Provir, nikkomycin Z, and SP-134101 will lead to development
of products that are shown to be safe and effective in clinical trials.
In addition, there can be no assurance that any such products will meet
applicable regulatory standards, be capable of being produced in commercial
quantities at acceptable costs, be eligible for third party reimbursement from
governmental or private insurers, be successfully marketed or achieve market
acceptance. Further, the Company's products may prove to have undesirable or
unintended side effects that may prevent or limit their commercial use. The
Company may find, at any stage of this complex product development process, that
products that appeared promising in preclinical studies or Phase I and Phase II
clinical trials do not demonstrate efficacy in larger-scale, Phase III clinical
trials and do not receive regulatory
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approvals. Accordingly, any product development program undertaken by the
Company may be curtailed, redirected, suspended or eliminated at any time.
In addition, there can be no assurance that the Company's testing and
development schedules will be met. Any failure to meet such schedules could have
a material adverse effect on the Company's business, financial condition and
results of operations. The Company's clinical trials may be delayed by many
factors, including, but not limited to: slower than anticipated patient
enrollment; difficulty in finding a sufficient number of patients fitting the
appropriate trial profile; difficulties in the acquisition of sufficient
supplies of clinical trial materials; or, failure to show efficacy in clinical
trials or adverse events occurring during the clinical trials. Completion of
testing, studies and trials may take several years, and the length of time
varies substantially with the type, complexity, novelty and intended use of the
product. In addition, data obtained from preclinical and clinical activities are
susceptible to varying interpretations, which could delay, limit or prevent
regulatory approval. Delays or rejections may be encountered based upon many
factors, including changes in regulatory policy during the period of product
development and could have a material adverse effect on the Company's business,
financial condition and results of operations.
Future Capital Needs; Uncertainty of Additional Funding. The Company will
require substantial additional funds to conduct the development and testing of
its potential products and to manufacture and market any products that may be
developed. The Company's future capital requirements will depend on numerous
factors, including the progress of its research and development programs, the
progress of preclinical and clinical testing, the time and costs involved in
obtaining regulatory approvals, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in the Company's existing
collaborative and licensing relationships, the ability of the Company to
establish additional collaborative relationships for the manufacture and
marketing of its potential products, and the purchase of additional capital
equipment. In addition, Note Purchase Agreements entered into by the Company in
connection with the 1997 Private Placement, provide that under certain
circumstances, the Company would be required to redeem all or some portion of
the $10.4 million principal due thereunder, which redemption could significantly
accelerate the Company's cash expenditures and capital requirements beyond the
levels currently anticipated.
The Company intends to seek additional funding through public or private
equity or debt financings, collaborative arrangements or from other sources. The
Company may seek additional capital at any time that it deems market conditions
to be favorable. If additional funds are raised by issuing equity securities,
significant dilution to existing stockholders may result. In the event that
additional funds are obtained through collaborative agreements, such agreements
may require the company to relinquish rights to certain of its technologies,
product candidates, products or marketing territories that the Company would
otherwise seek to develop or commercialize itself. There can be no assurance
that additional financing will be available on acceptable terms or at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate one or more of its research, discovery or development
programs, which could have a material adverse effect on the Company's business,
financial condition and results of operations.
Uncertainties Associated with Clinical Trials. Shaman has conducted, and
plans to continue to conduct, extensive and costly clinical trials to assess the
safety and efficacy of its potential products. The rate of completion of the
Company's clinical trials is dependent upon, among other factors, the rate of
completion and approval of trial protocols, the availability of funds for trials
and the rate of patient enrollment. Patient enrollment is a function of many
factors, including the nature of the Company's clinical trial protocols,
existence of competing protocols, size of patient population, proximity of
patients to clinical sites and eligibility criteria for the study. Delays in
patient enrollment will result in increased costs and delays, which could have a
material adverse effect on the Company's ability to complete clinical trials in
a timely fashion.
The Company cannot assure that patients enrolled in its clinical trials
will respond to the Company's product candidates. Setbacks are to be expected in
conducting human clinical trials. Failure to comply with the U.S. FDA
regulations applicable to such testing can result in delay, suspension or
cancellation of such testing, and/or refusal by the FDA to accept the results of
such testing. In addition, the FDA or the Company may suspend clinical trials at
any time if either of them concludes that any patients participating in any such
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trial are being exposed to unacceptable health risks. Further, there can be no
assurance that human clinical testing will demonstrate that any current or
future product candidate is safe or effective or that data derived from any such
study will be suitable for submission to the FDA or other regulatory
authorities. Failure of the Company's clinical trials to demonstrate safety or
efficacy in humans could cause the delay, suspension, or termination of any
product program and could have a material adverse effect on the Company's
business, financial condition and results of operations.
Dependence on Collaborative Relationships. The Company's research and
development efforts in its diabetes program and, to a lesser extent, in its
other programs, is dependent upon its arrangements with Lipha/Merck and Ono and
the compliance of such partners with the terms and conditions of such
collaborative agreements including, without limitation, providing funding for
research and development efforts and the achievement of milestones and assisting
the Company in its research and development efforts. These partners may develop
products that may compete with those of the Company. The amount and timing of
resources they allocate to these programs is not within the Company's control.
There can be no assurance that these partners will perform their obligations as
expected or that any significant revenues will ultimately be derived from such
agreements. The Company's agreement with Ono may be terminated in the event Ono
determines further development of compounds is not warranted, provided certain
other conditions are met. Termination of either agreement is subject to certain
surviving obligations. If one or more such partners elected to terminate their
relationships with the Company, or if the Company or its partners fail to
achieve targeted milestones, it could have a material adverse effect on the
Company's ability to fund such programs, or to develop any products on a
collaborative basis with such partners. In addition, the Company may seek future
collaborative agreements in order to commercialize additional product candidates
or that any such agreements will be successful. There can be no assurance that
the Company will be able to enter into such additional agreements and any
failure could have a material effect on the Company's business, financial
condition, and results of operations.
Rapid Technological Change and Substantial Competition. The pharmaceutical
industry is subject to rapid and substantial technological change. Technological
competition from pharmaceutical and biotechnology companies and universities is
intense. Many of these entities have significantly greater research and
development capabilities, as well as substantial marketing, manufacturing,
financial and managerial resources, and represent significant competition for
the Company. There can be no assurance that developments by others will not
render the Company's products or technologies noncompetitive or that the Company
will be able to keep pace with technological developments. Competitors have
developed or are in the process of developing technologies that are, or in the
future may be, the basis for competitive products. Some of these products may
have an entirely different approach or means of accomplishing the desired
therapeutic effect than products developed by the Company. These competing
products may be more effective and less costly than the products developed by
the Company. In addition, other forms of medical treatment may offer competition
to the Company's products. The development of competing compounds could have a
material adverse effect on the Company's business, financial condition or
results of operations.
Government Regulation; No Assurance of Regulatory Approvals. All new drugs,
including the Company's products under development, are subject to extensive and
rigorous regulation by the federal government, principally the FDA, and
comparable agencies in state and local jurisdictions and in foreign countries.
These authorities impose substantial requirements upon the preclinical and
clinical testing, manufacturing and marketing of pharmaceutical products. The
steps required before a drug may be approved for marketing in the United States
generally include (i) preclinical laboratory and animal tests, (ii) the
submission to the FDA of an IND for human clinical testing, (iii) adequate and
well controlled human clinical trials to establish the safety and efficacy of
the drug, (iv) submission to the FDA of an NDA, and (v) satisfactory completion
of an FDA inspection of the manufacturing facility or facilities at which the
drug is made to assess compliance with current Good Manufacturing Practices
("cGMP").
Lengthy and detailed preclinical and clinical testing, validation of
manufacturing and quality control processes, and other costly and time-consuming
procedures are required. Satisfaction of these requirements typically takes
several years and the time needed to satisfy them may vary substantially, based
on the type, complexity and novelty of the pharmaceutical product. The effect of
government regulation may be to delay or
8
<PAGE> 10
to prevent marketing of potential products for a considerable period of time and
to impose costly procedures upon the Company's activities. There can be no
assurance that the FDA or any other regulatory agency will grant approval for
any products developed by the Company on a timely basis, or at all. Success in
preclinical or early stage clinical trials does not assure success in later
stage clinical trials.
Data obtained from preclinical and clinical activities are susceptible to
varying interpretations which could delay, limit or prevent regulatory approval.
If regulatory approval of a product is granted, such approval may impose
limitations on the indicated uses for which a product may be marketed. Further,
even if regulatory approval is obtained, later discovery of previously unknown
problems with a product may result in restrictions on the product, including
withdrawal of the product from the market. Any delay or failure in obtaining
regulatory approvals would have a material adverse effect on the Company's
business, financial condition and results of operation.
Among the conditions for FDA approval of a pharmaceutical product is the
requirement that the manufacturer's (either the Company's own or a third-party
manufacturer) quality control and manufacturing procedures conform to cGMP,
which must be followed at all times. The FDA strictly enforces cGMP requirements
through periodic unannounced inspections. There can be no assurance that the FDA
will determine that the facilities and manufacturing procedures of the Company
or any third-party manufacturer of the Company's planned products will conform
to cGMP requirements. Additionally, the Company or its third-party manufacturer
must pass a pre-approval inspection of its manufacturing facilities by the FDA
before obtaining marketing approval. Failure to comply with applicable
regulatory requirements may result in penalties such as restrictions on a
product's marketing or withdrawal of a product from the market.
The FDA's policies may change and additional government regulations may be
promulgated which could prevent or delay regulatory approval of the Company's
potential products. Moreover, increased attention to the containment of health
care costs in the United States could result in new government regulations that
could have a material adverse effect on the Company's business. The Company is
unable to predict the likelihood of adverse governmental regulation that might
arise from future legislative or administrative action, either in the United
States or abroad.
Dependence on Sources of Supply. The Company currently imports all of the
plant materials from which its products are derived from countries in South and
Latin America, Africa and Southeast Asia. To the extent that its products cannot
be economically synthesized or otherwise produced, the Company will continue to
be dependent upon a supply of raw plant material. The Company does not have
formal agreements in place with all of its suppliers. In addition, a continued
source of plant supply is subject to the risks inherent in international trade.
These risks include unexpected changes in regulatory requirements, exchange
rates, tariffs and barriers, difficulties in coordinating and managing foreign
operations, political instability and potentially adverse tax consequences.
Interruptions in supply or material increases in the cost of supply could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, tropical rain forests, and certain
irreplaceable plant resources therein, are currently threatened with
destruction. In the event portions of the rain forests are destroyed which
contain the source material from which Shaman's current or future products are
derived, such destruction could have a material adverse effect on the Company's
business, financial condition and results of operations.
Limited Manufacturing and Marketing Experience and Capacity. The Company
currently produces products only in quantities necessary for clinical trials and
does not have the staff or facilities necessary to manufacture products in
commercial quantities. As a result, the Company must rely on collaborative
partners or third-party manufacturing facilities, which may not be available on
commercially acceptable terms adequate for Shaman's long-term needs. If the
Company should encounter delays or difficulties in establishing relationships
with qualified manufacturers to produce, package and distribute its finished
products, clinical trials, regulatory filings, market introduction and
subsequent sales of such products could be adversely affected.
Contract manufacturers must adhere to cGMP regulations strictly enforced by
the FDA on an ongoing basis through its facilities inspection program. Contract
manufacturing facilities must pass a pre-approval plant inspection before the
FDA will approve an NDA. Certain material manufacturing changes that occur
9
<PAGE> 11
after approval are also subject to FDA review and clearance or approval. There
can be no assurance that the FDA or other regulatory agencies will approve the
process or the facilities by which any of the Company's products may be
manufactured. The Company's dependence on third parties for the manufacture of
products may adversely affect the Company's ability to develop and deliver
products on a timely and competitive basis. Should the Company be required to
manufacture products itself, the Company will be subject to the regulatory
requirements described above, to similar risks regarding delays or difficulties
encountered in manufacturing any such products and will require substantial
additional capital. There can be no assurance that the Company will be able to
manufacture any such products successfully or in a cost-effective manner.
The Company currently has no sales staff. To the extent that the Company
does not or is unable to enter into co-promotion agreements or to arrange for
third party distribution of its products, significant additional resources will
be required to develop a complete marketing and sales force. There can be no
assurance that the Company will be able to enter into collaborative agreements
or successfully establish a marketing and sales force.
Uncertainty Regarding Patents and Proprietary Rights. The Company's success
will depend in large part on its ability to obtain and maintain patents, protect
trade secrets and operate without infringing upon the proprietary rights of
others. Moreover, competitors may have filed patent applications, may have been
issued patents or may obtain additional patents and proprietary rights relating
to products or processes competitive with those of the Company. There can be no
assurance that the Company's patent applications will be approved, that the
Company will develop additional proprietary products that are patentable, that
any issued patents will provide the Company with adequate protection for its
inventions or will not be challenged by others, or that the patents of others
will not impair the ability of the Company to commercialize its products. The
patent position of firms in the pharmaceutical industry generally is highly
uncertain, involves complex legal and factual questions, and has recently been
the subject of much litigation. No consistent policy has emerged from the U.S.
Patent and Trademark Office ("PTO") or the courts regarding the breadth of
claims allowed or the degree of protection afforded under pharmaceutical
patents. There can be no assurance that others will not independently develop
similar products, duplicate any of the Company's products or design around any
patents of the Company.
A number of pharmaceutical companies and research and academic institutions
have developed technologies, filed patent applications or received patents on
various technologies that may be related to the Company's business. Some of
these technologies, applications or patents may conflict with the Company's
technologies or patent applications. The European Patent Office, the French
Patent Office, the German Patent Office and the Australian Patent Office, have
each granted a patent containing broad claims to proanthocyanidin polymer
compositions (and methods of use of such compositions), which are similar to the
Company's specific proanthocyanidin polymer composition, to Leon Cariel and the
Institut des Substances Vegetales. The effective filing date of these patents is
prior to the effective filing date of the Company's foreign pending patent
application in Europe. Certain of the foreign patents have been granted in
jurisdictions where examination is not rigorous. The Company has instituted an
Opposition in the European Patent Office against granted European Patent No.
472531 owned by Leon Cariel and Institut des Substances Vegetales. Based on
opinions of foreign counsel, the Company believes that the granted claims are
invalid and intends to vigorously prosecute the Opposition.
There can be no assurance that the Company will be successful in having the
granted European patent revoked or the claims sufficiently narrowed so as not to
potentially cover the Company's proanthocyanidin polymer composition and methods
of use. There can be no assurance that Leon Cariel and the Institut des
Substances Vegetales will not assert claims relating to this patent against the
Company. There can be no assurance that the Company would be able to obtain a
license to this patent at all, or at reasonable cost, or be able to develop or
obtain alternative technology to use in Europe or elsewhere. The earlier
effective filing date of this patent could limit the scope of the patents, if
any, that the Company may be able to obtain or result in the denial of the
Company's patent applications in Europe or elsewhere.
In the United States, the Patent and Trademark Office has rendered judgment
in an Interference declared between the Company's issued patent covering its
specific proanthocyanidin polymer composition
10
<PAGE> 12
and certain claims of U.S. application corresponding to the granted European
patent of Leon Cariel and the Institut des Substances Vegetales by Daniel Jean
and Leon Cariel. Judgment was awarded to the Company. Since the period for
appeal has passed, this judgment is now final.
Additionally, in connection with the Interference proceeding, the Company
has had an opportunity to review the claims and file history of the Daniel Jean
and Leon Cariel patent application which, under U.S. patent law, are kept
confidential. One broad claim, in particular, of the Daniel Jean and Leon Cariel
patent application, which was not involved in the Interference proceeding and
which has been indicated to be allowable, covers a large variety of
proanthocyanidin polymers. Based on opinion of counsel, the Company believes
that this broad claim is subject to attack as invalid in view of prior art.
Based on knowledge of the Company's specific proanthocyanidin polymer
composition, the Company believes that the manufacture, use or sale of its
specific proanthocyanidin polymer composition would not constitute infringement
of this broad claim, once it issues. There can be no assurances, however, that
the Company would prevail should an action for infringement of such claim be
commenced. In addition, if patents that cover the Company's activities have been
or are issued to other companies, there can be no assurance that the Company
would be able to obtain licenses to these patents at a reasonable cost, or at
all, or be able to develop or obtain alternative technology.
If the Company does not obtain such licenses, it could encounter delays or
be precluded from introducing products to the market. Litigation may be
necessary to defend against or assert claims of infringement, to enforce patents
issued to the Company or to protect trade secrets or know-how owned by the
Company. Additional interference proceedings may be declared or necessary to
determine issues of invention; such litigation and/or interference proceedings
could result in substantial cost to and diversion of effort by, and may have a
material adverse effect on, the Company. In addition, there can be no assurance
that these efforts by the Company will be successful.
The Company's competitive position is also dependent upon unpatented trade
secrets. There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets, that such trade secrets will not be
disclosed or that the Company can effectively protect its rights to unpatented
trade secrets. To the extent that the Company or its consultants or research
collaborators use intellectual property owned by others in their work for the
Company, disputes also may arise as to the rights in related or resulting
know-how and inventions.
Patent applications in the United States are generally maintained in
secrecy until patents are issued. Since publication of discoveries in the
scientific or patent literature tends to lag behind actual discoveries by
several months, Shaman cannot be certain that it was the first to discover
compositions covered by its pending patent applications or the first to file
patent applications on such compositions. There can be no assurance that the
Company's patent applications will result in issued patents or that any of its
issued patents will afford comprehensive protection against potential
infringement.
The Company is prosecuting its patent applications with the PTO but the
Company does not know whether any of its applications will result in the
issuance of any patents or, if any patents are issued, whether any issued patent
will provide significant proprietary protection or will be circumvented or
invalidated. During the course of patent prosecution, patent applications are
evaluated, inter alia, for utility, novelty, non-obviousness and enablement. The
PTO may require that the claims of an initially filed patent application be
amended if it is determined that the scope of the claims includes subject matter
that is not useful, novel, non-obvious or enabled.
Furthermore, in certain instances, the practice of a patentable invention
may require a license from the holder of dominant patent rights. In cases where
one party believes that it has a claim to an invention covered by a patent
application or patent of a second party, the first party may provoke an
interference proceeding in the PTO or such a proceeding may be declared by the
PTO. In general, in an interference proceeding, the PTO would review the
competing patents and/or patent applications to determine the validity of the
competing claims, including but not limited to determining priority of
invention. Any such determination would be subject to appeal in the appropriate
U.S. federal courts.
11
<PAGE> 13
There can be no assurance that additional patents will be obtained by the
Company or that issued patents will provide a substantial protection or be of
commercial benefit to the Company. The issuance of a patent is not conclusive as
to its validity or enforceability, nor does it provide the patent holder with
freedom to operate without infringing the patent rights of others. A patent
could be challenged by litigation and, if the outcome of such litigation were
adverse to the patent holder, competitors could be free to use the subject
matter covered by the patent, or the patent holder may license the technology to
others in settlement of such litigation. The invalidation of patents owned by or
licensed to the Company or non-approval of pending patent applications could
create increased competition, with potential adverse effects on the Company and
its business prospects. In addition, there can be no assurance that any
applications of the Company's technology will not infringe patents or
proprietary rights of others or that licenses that might be required as a result
of such infringement for the Company's processes or products would be available
on commercially reasonable terms, if at all.
The Company cannot predict whether its or its competitors' patent
applications will result in valid patents being issued. Litigation, which could
result in substantial cost to the Company, may also be necessary to enforce the
Company's patent and proprietary rights and/or to determine the scope and
validity of others' proprietary rights. The Company may participate in
interference proceedings that may in the future be declared by the U.S. Patent
and Trademark Office, which could result in substantial cost to the Company.
There can be no assurance that the outcome of any such litigation or
interference proceedings will be favorable to the Company or that the Company
will be able to obtain licenses to technology that it may require or that, if
obtainable, such technology can be licensed at a reasonable cost.
Year 2000 Compliance. The Company is in the process of assessing the impact
of year 2000 on its operations and systems, including those of its suppliers and
collaborators and other third parties. Management is in the process of
formalizing its assessment procedures and developing a plan to address
identified issues, if any. To date, the Company has evaluated its financial and
accounting systems and concluded that they are not and will not be materially
affected by the year 2000. The Company does not yet know the extent, if any, of
the impact of the year 2000 on its other systems and equipment or those of third
parties with which the Company does business. There can be no assurance that
third parties, such as suppliers, clinical research organizations and
collaborative parties, are using systems that are year 2000 compliant or will
address any year 2000 issues in a timely fashion, or at all. Any year 2000
compliance problems of either the Company, its suppliers, its clinical research
organizations, or its collaborative partners could have a material adverse
effect on the Company's business, operating results and financial conditions.
Uncertainty of Product Pricing, Reimbursement and Related Matters. The
Company's business may be materially adversely affected by the continuing
efforts of governmental and third party payers to contain or reduce the costs of
health care through various means. For example, in certain foreign markets, the
pricing or profitability of health care products is subject to government
control. In the United States, there have been, and the Company expects there
will continue to be, a number of federal and state proposals to implement
similar government control. While the Company cannot predict whether any such
legislative or regulatory proposals or reforms will be adopted, the announcement
of such proposals or reforms could have a material adverse effect on the
Company's ability to raise capital or form collaborations, and the adoption of
such proposals or reforms could have a material adverse effect on the Company's
business, financial condition or results of operations.
In addition, in both the United States and elsewhere, sales of health care
products are dependent in part on the availability of reimbursement from third
party payers, such as government and private insurance plans. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and third party payers are increasingly challenging the prices charged
for medical products and services. If the Company succeeds in bringing one or
more products to the market, there can be no assurance that reimbursement from
third party payers will be available or will be sufficient to allow the Company
to sell its products on a competitive or profitable basis.
Possible Volatility of Stock Price. From time to time, the stock market has
experienced significant price and volume fluctuations that may be unrelated to
the operating performance of particular companies or industries. In addition,
the market price of the Company's Common Stock, like the stock prices of many
12
<PAGE> 14
publicly traded biotechnology and smaller pharmaceutical companies, has been and
may continue to be highly volatile. Announcements of technological innovations,
regulatory matters or new commercial products by the Company or its competitors,
developments or disputes concerning patent or proprietary rights, publicity
regarding actual or potential medical results relating to products under
development by the Company or its competitors, regulatory developments in both
the United States and foreign countries, public concern as to the safety of
pharmaceutical products, and economic and other external factors, as well as
period-to-period fluctuations in financial results, may have a significant
impact on the market price of Shaman's Common Stock.
Environmental Regulation. In connection with its research and development
activities and manufacturing of clinical trial materials, the Company is subject
to federal, state and local laws, rules, regulations and policies governing the
use, generation, manufacture, storage, air emission, effluent discharge,
handling and disposal of certain materials and wastes. Although the Company
believes that it has complied with these laws and regulations in all material
respects and has not been required to take any action to correct any
noncompliance, there can be no assurance that the Company will not be required
to incur significant costs to comply with environmental and health and safety
regulations in the future. The Company's research and development activities
involve the controlled use of hazardous materials, chemicals, viruses and
various radioactive compounds. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result and such liability could exceed the resources of the Company.
Anti-Takeover Effect of Delaware Law and Certain Charter and Bylaws
Provisions. Certain provisions of the Company's Certificate of Incorporation and
Bylaws may have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from attempting to acquire, control of
the Company. Such provisions could limit the price that certain investors might
be willing to pay in the future for shares of the Company's Common Stock. The
Company's Board of Directors has the authority to issue up to 600,000 additional
shares of Preferred Stock and to determine the price, rights, preferences,
privileges and restrictions of those shares without any further vote or action
by the stockholders.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any Preferred Stock that may
be issued in the future. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock.
Certain provisions of Delaware law applicable to the Company could also delay or
make more difficult a merger, tender offer or proxy contest involving the
Company, including Section 203 of the Delaware General Corporation Law, which
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years unless certain conditions
are met.
Product Liability Exposure; Limited Insurance Coverage. The Company's
business exposes it to potential product liability risks which are inherent in
the development, testing, manufacture, marketing and sale of pharmaceutical
products. Product liability insurance for the pharmaceutical industry generally
is expensive. There can be no assurance that the Company's present product
liability insurance coverage is adequate. Such existing coverage will not be
adequate as the Company further develops its products, and no assurance can be
given that adequate insurance coverage against all potential claims will be
available in sufficient amounts or at a reasonable cost.
Limitation of Liability and Indemnification. The Company's Certificate of
Incorporation limits, to the maximum extent permitted by Delaware Law, the
personal liability of directors for monetary damages for breach of their
fiduciary duties as a director. The Company's Bylaws provide that the Company
shall indemnify its officers and directors and may indemnify its employees and
other agents to the fullest extent permitted by law. The Company has entered
into indemnification agreements with its officers and directors containing
provisions which are in some respects broader than the specific indemnification
provisions
13
<PAGE> 15
contained in Delaware Law. The indemnification agreements may require the
Company, among other things, to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers (other than liabilities arising from willful misconduct of
a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance, if available on reasonable terms.
Section 145 of the Delaware Law provides that a corporation may indemnify a
director, officer, employee or agent made or threatened to be made a party to an
action by reason of the fact that he was a director, officer, employee or agent
of the corporation or was serving at the request of the corporation against
expenses actually and reasonably incurred in connection with such action if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Delaware Law does not permit a corporation to eliminate a
director's duty of care, and the provisions of the Company's Certificate of
Incorporation have no effect on the availability of equitable remedies, such as
injunction or rescission, for a director's breach of the duty of care.
Dilution. Dilution may occur upon the exercise of outstanding options and
warrants, including the Warrants, and upon conversion of the Notes. Stockholders
may also suffer additional dilution if the Company exercises its right to put
additional shares of its Common Stock to one certain investor, pursuant to its
agreements with such investor.
Dependence on Key Personnel. The Company's ability to maintain its
competitive position depends in part upon the continued contributions of its key
senior management. The Company's future performance also depends on its ability
to attract and retain qualified management and scientific personnel. Competition
for such personnel is intense, and there can be no assurance that the Company
will be able to continue to attract, assimilate or retain other highly qualified
technical and management personnel in the future. The loss of key personnel or
the failure to recruit additional personnel or to develop needed expertise could
have a material adverse effect on the Company's business, financial condition
and results of operations.
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<PAGE> 16
SELLING STOCKHOLDERS
The following table sets forth certain information, as of the date hereof,
with respect to the number of shares of Common Stock beneficially owned by each
of the Selling Stockholders and as adjusted to give effect to the sale of the
Shares offered hereby. The Shares are being registered to permit public
secondary trading of the Shares, and the Selling Stockholders, upon exercise of
the Warrants, may offer the Shares for resale from time to time. See "Plan of
Distribution."
The Shares being offered hereby by the Selling Stockholders may be
acquired, from time to time, upon exercise of the Warrants, which were acquired
by them from the Company in a private placement transaction pursuant to the
Amendment Agreement. This Prospectus covers the resale by the Selling
Stockholders of up to 137,500 Shares, plus, in accordance with Rule 416 under
the Securities Act, such additional number of shares of Common Stock as may be
issued pursuant to the Warrants resulting from stock splits, stock dividends and
similar transactions. See "Recent Developments."
Each Selling Stockholder that is party to the Amendment Agreement
represented to the Company that it will acquire the Shares for investment and
with no present intention of distributing the Shares. In lieu of granting the
Selling Stockholders demand registration rights, the Company has filed with the
Commission, under the Securities Act, a Registration Statement on Form S-3, of
which this Prospectus forms a part, with respect to the resale of the Shares
from time to time on The Nasdaq National Market or in privately-negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep such Registration
Statement effective until the Shares are no longer required to be registered for
the sale thereof by the Selling Stockholders.
The Company has agreed to register a specified number of Shares for resale
by the Selling Stockholders. The Warrants provide for adjustment of the number
of shares of Common Stock issuable upon exercise thereof in certain
circumstances. The number of Shares shown in the following table as being
offered by the Selling Stockholders does not include such presently
indeterminate number of shares of Common Stock as may be issuable (i) upon
conversion of the Notes or payment of interest on the Notes pursuant to the
provisions thereof regarding determination of the applicable conversion price or
(ii) pursuant to the Warrants resulting from stock splits, stock dividends and
similar transactions, but which shares are, in accordance with Rule 416 under
the Securities Act, included in the Registration Statement of which this
Prospectus forms as part. The Shares covered by this Prospectus may be offered
from time to time by the Selling Stockholders named below:
<TABLE>
<CAPTION>
OWNERSHIP
NUMBER OF AFTER OFFERING(1)
SHARES OWNED NUMBER OF -------------------
NAME AND ADDRESS OF PRIOR TO SHARES BEING NUMBER OF
SELLING STOCKHOLDERS OFFERING(1)(2) OFFERED(3) SHARES PERCENT
-------------------- -------------- ------------ --------- -------
<S> <C> <C> <C> <C>
Delta Opportunity Fund, Ltd.(4)(6)............... 634,809 43,900 0 *
Nelson Partners(5)............................... 317,405 21,950 0 *
Olympus Securities, Ltd.(5)...................... 317,405 21,950 0 *
Omicron Partners, L.P............................ 485,334 30,789 0 *
OTATO Limited Partnership(6)..................... 117,196 8,105 0 *
Overbrook Fund I, LLC(6)(7)...................... 78,130 5,403 0 *
Diaz & Altschul Group, LLC(4)(6)................. 78,130 5,403 0 *
--------- ------ -- --
Total.................................. 2,018,409 137,500 0 *
</TABLE>
- ---------------
* Less than one percent.
(1) Percentage of beneficial ownership is calculated assuming 17,861,143 shares
of Common Stock were outstanding as of March 27, 1998. Ownership after this
Offering assumes the sale of all shares held by such Selling Stockholders
that were registered pursuant to and included in that certain Registration
Statement on Form S-3 (Registration No. 333-31843) and all Shares offered
hereby. Beneficial ownership is determined in accordance with the rules of
the Commission and generally includes voting or investment power with
respect to securities. Shares of Common Stock subject to options or warrants
15
<PAGE> 17
currently exercisable or convertible, or exercisable or convertible within
60 days of March 27, 1998, are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated in the footnotes to this table and pursuant to applicable
community property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned.
(2) Represents (i) the number of shares of Common Stock issuable upon conversion
of the Notes calculated using an assumed conversion price of $5.50 with
respect to the face value of the Notes, based upon certain conversion
provisions of the Notes (which price could fluctuate from time to time on
and after March 31, 1998 based on changes in the market price of the Common
Stock) and (ii) the number of shares of Common Stock issuable upon exercise
of the Warrants. Does not include (a) up to 315,000 shares of Common Stock
which may be issued and paid in lieu of cash, at the Company's option, as
interest on the Notes or (b) such presently indeterminate number of
additional shares as may be issuable upon conversion of the Notes or payment
of interest on the Notes, based upon fluctuations in the conversion price of
the Notes.
(3) Represents the number of shares of Common Stock issuable upon exercise of
the Warrants.
(4) Diaz & Altschul Advisors, LLC, a New York limited liability company ("D&Q
Advisors"), serves as investment advisor to Delta Opportunity Fund, Ltd.
("Delta"), and may be deemed to share beneficial ownership of the Shares
beneficially owned by Delta by reason of shared power to dispose of the
Shares beneficially owned by Delta. D&A Advisors is controlled by Diaz &
Altschul Group, LLC ("D&A Group"). D&A Advisors and D&A Group disclaim
beneficial ownership of the Shares beneficially owned by Delta.
(5) Citadel Limited Partnership is the managing general partner of Nelson
Partners ("Nelson"), and the trading manager of Olympus Securities, Ltd.
("Olympus") and consequently has voting control and investment discretion
over securities held by both Nelson and Olympus. The ownership information
for Nelson does not include the Shares owned by Olympus and the ownership
information for Olympus does not include the Shares owned by Nelson.
(6) An affiliate of OTATO Limited Partnership serves as a trading consultant to
Delta, Overbrook Fund I, LLC ("Overbrook") and D&A Group and may be deemed
to share beneficial ownership of the Shares beneficially owned by such
Selling Stockholders by reason of shared power to dispose of the Shares
beneficially owned by such Selling Stockholders. Such affiliate disclaims
beneficial ownership of such Shares.
(7) Mr. Arthur G. Altschul, Jr., a managing member of D&A Group, also serves as
the managing member of Overbrook. Mr. Altschul may be deemed to share
beneficial ownership of all Shares beneficially owned by Overbrook by reason
of the power to dispose of the Shares beneficially owned by Overbrook. Mr.
Altschul disclaims such beneficial ownership.
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares offered
hereby may be sold pursuant to this Prospectus by the Selling Stockholders or by
pledgees, donees, transferees or other successors in interest that receive such
shares as a gift, partnership, distribution or other non-sale related transfer.
The Shares may be sold from time to time in transactions in the over-the-counter
market, in negotiated transactions, or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares to or
through broker-dealers, including block trades in which brokers or dealers will
attempt to sell the Shares as agent but may position and resell the block as
principal to facilitate the transaction, or in one or more underwritten
offerings on a firm commitment or best effort basis.
To the extent required under the Securities Act, the aggregate amount of
Selling Stockholders' Shares being offered and the terms of the offering, the
names of any such agents, brokers, dealers or underwriters and
16
<PAGE> 18
any applicable commission with respect to a particular offer will be set forth
in an accompanying Prospectus supplement. Any underwriters, dealers, brokers or
agents participating in the distribution of the Shares may receive compensation
in the form of underwriting discounts, concessions, commissions or fees from a
Selling Stockholder and/or purchasers of Selling Stockholders' Shares, for whom
they may act (which compensation as to a particular broker-dealer might be in
excess of customary commissions).
From time to time, one or more of the Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be Selling Stockholders hereunder. In addition, a Selling Stockholder may, from
time to time, sell short the Common Stock of the Company, and in such instances,
this Prospectus may be delivered in connection with such short sales and the
Shares offered hereby may be used to cover such short sales.
From time to time one or more of the Selling Stockholders may transfer,
pledge, donate or assign such Selling Stockholders' Shares to lenders or others
and each of such persons will be deemed to be a "Selling Stockholder" for
purposes of this Prospectus. The number of Selling Stockholders' Shares
beneficially owned by those Selling Stockholders who so transfer, pledge, donate
or assign Selling Stockholders' Shares will decrease as and when they take such
actions. The plan of distribution for Selling Stockholders' Shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be Selling Stockholders hereunder.
A Selling Stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with such Selling
Stockholder, including, without limitation, in connection with distributions of
the Common Stock by such broker-dealers. A Selling Stockholder may also enter
into option or other transactions with broker-dealers that involve the delivery
of the Common Stock to the broker-dealers, who may then resell or otherwise
transfer such Common Stock. A Selling Stockholder may also loan or pledge the
Common Stock to a broker-dealer and the broker-dealer may sell the Common Stock
so loaned or upon a default may sell or otherwise transfer the pledged Common
Stock.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not bid for or purchase shares of
Common Stock during a period which commences one business day (five business
days, if the Company's public float is less than $25 million or its average
daily trading volume is less than $100,000) prior to such person's participation
in the distribution, subject to exceptions for certain passive market making
activities. In addition and without limiting the foregoing, each Selling
Stockholder will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including, without limitation, Regulation M,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by such Selling Stockholder.
The Warrants and the Shares were, or will be, as the case may be,
originally issued to the Selling Stockholders pursuant to an exemption from the
registration requirements of the Securities Act provided by Section 4(2)
thereof. The Company agreed to register the Shares under the Securities Act and
to indemnify and hold the Selling Stockholders harmless against certain
liabilities under the Securities Act that could arise in connection with the
sale by the Selling Stockholders of the Shares. The Company has agreed to pay
all reasonable fees and expenses incident to the filing of this Registration
Statement.
17
<PAGE> 19
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, Palo Alto, California.
EXPERTS
The financial statements of the Company appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such financial statements
are incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
18
<PAGE> 20
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Risk Factors.......................... 6
Selling Stockholders.................. 15
Plan of Distribution.................. 16
Legal Matters......................... 18
Experts............................... 18
</TABLE>
======================================================
======================================================
137,500 SHARES
SHAMAN
PHARMACEUTICALS,
INC.
COMMON STOCK
--------------------
PROSPECTUS
--------------------
APRIL , 1988
======================================================
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the securities
being registered hereby. All amounts are estimated except the Securities and
Exchange Commission registration fee and The Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 201.00
NNM listing fees............................................ 2,750.00
Accounting fees and expenses................................ 10,000.00
Legal fees and expenses..................................... 25,000.00
Printing and engraving expenses............................. 25,000.00
Miscellaneous fees and expenses............................. 7,049.00
----------
Total............................................. $70,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
actually and reasonably incurred in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
such other court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Restated Certificate of Incorporation provides that the
Registrant's directors shall not be liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the
extent that exculpation from liabilities is not permitted under the DGCL as in
effect at the time
II-1
<PAGE> 22
such liability is determined. The Registrant has entered into indemnification
agreements with all of its officers and directors, as permitted by the DGCL.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.66 Amendment Agreement, dated as of March 18, 1998, by and
between the Registrant and certain investors.
10.67 Form of Common Stock Purchase Warrant, dated as of March 18,
1998, issued to certain investors.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in the
opinion filed as Exhibit 5.1).
24.1 Power of Attorney (included under the caption "Signatures").
</TABLE>
(b) FINANCIAL STATEMENT SCHEDULES
No financial statement schedules are included because they are not required
or the required information is included in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that (i) and (ii) do not apply
if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i)
and (ii) is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been
II-2
<PAGE> 23
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of South San Francisco, State of California, on the 30th
day of March, 1998.
SHAMAN PHARMACEUTICALS, INC.
By /s/ LISA A. CONTE
------------------------------------
Lisa A. Conte
President, Chief Executive Officer
and
Chief Financial Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint jointly and severally, Lisa A.
Conte and G. Kirk Raab, or either of them, as his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or hear name, place and stead, in any
and all capacities, to sign the Registration Statement filed herewith and any
and all amendments to said Registration Statement (including post-effective
amendments and registration statements filed pursuant to Rule 462 and
otherwise), and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, or their substitute of
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the persons whose signatures
appear below, which persons have signed such Registration Statement in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ LISA A. CONTE Director, President, Chief March 30, 1998
- ----------------------------------------------------- Executive Officer and Chief
Lisa A. Conte Financial Officer (Principal
Executive and Financial
Officer)
Chairman of the Board March , 1998
- -----------------------------------------------------
G. Kirk Raab
/s/ ADRIAN D.P. BELLAMY Director March 30, 1998
- -----------------------------------------------------
Adrian D.P. Bellamy
/s/ HERBERT H. MCDADE, JR. Director March 30, 1998
- -----------------------------------------------------
Herbert H. McDade, Jr.
/s/ M. DAVID TITUS Director March 30, 1998
- -----------------------------------------------------
M. David Titus
/s/ JOHN A. YOUNG Director March 30, 1998
- -----------------------------------------------------
John A. Young
</TABLE>
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<S> <C> <C>
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.66 Amendment Agreement, dated as of March 18, 1998, by and
between the Registrant and certain investors.
10.67 Form of Common Stock Purchase Warrant, dated as of March 18,
1998, issued to certain investors.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in the
opinion filed as Exhibit 5.1).
24.1 Power of Attorney (included under the caption "Signatures").
</TABLE>
<PAGE> 1
[Letterhead of Brobeck, Phleger & Harrison LLP]
March 31, 1998
Shaman Pharmaceuticals, Inc.
213 East Grand Avenue
South San Francisco, CA 94080
Ladies and Gentlemen:
We have acted as counsel to Shaman Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), in connection with the registration of up
to One Hundred Thirty- Seven Thousand Five Hundred (137,500) shares of the
Company's Common Stock (the "Shares"), as described in the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on March 31, 1998 under the Securities Act of 1933, as amended (the
"Registration Statement").
This opinion is being furnished in accordance with the
requirements of Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have examined originals or copies of (i) the Amended and
Restated Certificate of Incorporation of the Company; (ii) the Bylaws of the
Company; (iii) certain resolutions of the Board of Directors of the Company; and
(v) such other documents and records as we have deemed necessary and relevant
for the purposes hereof. In addition, we have relied on certificates of officers
of the Company and certificates of public officials as to certain matters of
fact relating to this opinion and have made such investigations of law as we
have deemed necessary and relevant as a basis hereof.
We have assumed the genuineness of all signatures, the
authenticity of all documents, certificates and records submitted to us as
originals, the conformity to authentic original documents, certificates and
records of all such documentation submitted to us as copies and the truthfulness
of all statements of facts contained therein. Based on the foregoing and subject
to the limitations set forth herein and having due regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares, when
issued and sold in the manner described in the Registration Statement, will be
validly issued, fully paid and nonassessable shares of the Common Stock.
We consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the
<PAGE> 2
Shaman Pharmaceuticals, Inc. March 31, 1998
Page 2
rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or Item 509 of Regulation S-K.
The foregoing opinion is based on and limited to the General
Corporation Law of the State of Delaware and the relevant federal laws of the
United States, and we express no opinion with respect to the laws of any other
jurisdiction.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company or the Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 10.66
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT, dated as of March 18, 1998 (this "Agreement"),
by and between SHAMAN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), and the undersigned holders of the Company's Senior Subordinated
Convertible Notes (each, a "Holder" and collectively, the "Holders").
W I T N E S S E T H:
WHEREAS, the Company and each Holder are parties to a Note Purchase
Agreement, dated as of June 30, 1997 (each, a "Note Purchase Agreement"),
pursuant to which the Company issued to the respective Holder a Senior
Subordinated Convertible Note (each, a "Note" and collectively, the "Notes"),
the outstanding principal amounts of which are set forth on the signature pages
of this Agreement; and
WHEREAS, the Company and each Holder wish to amend such Holder's Note
upon the terms and subject to the conditions of this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AMENDMENTS OF NOTES. On the Effective Date:
(a) the definition of the term "Conversion Price" in Section 7.1(b) of
each Note shall be amended by deleting the existing definition in its entirety
and substituting in lieu thereof the following:
"Conversion Price" means on any date the Computed Price for such
date; provided, however, that during the period from the Issuance Date
to and including March 31, 1998 in no event shall the Conversion Price
be less than $5.50 (subject to equitable adjustment from time to time on
terms reasonably acceptable to the Majority Holders for (i) stock
splits, (ii) stock dividends, (iii) combinations, (iv) capital
reorganizations, (v) issuance to all holders of Common Stock of rights
or warrants to purchase shares of Common Stock at a price per share less
than the Trading Price which would otherwise be applicable, (vi) the
distribution by the Company to all holders of Common Stock of evidences
of indebtedness of the Company or cash (other than regular quarterly
cash dividends), (vii) tender offers by the Company or any subsidiary of
the Company or other repurchases of shares of Common Stock in one or
more transactions which, individually or in the aggregate, result in the
purchase of more than 10% of the Common Stock outstanding and (viii)
similar events relating to the Common Stock, in each such case which
occur on or after the Execution Date) regardless of the Conversion Price
otherwise determined in accordance with the terms of this Note; provided
further, however, that, if at any time (x) an Event of Default shall
have occurred or (y) at any time on or after November 21, 1997 there
shall occur any material adverse change or any material adverse
development in the business, properties, operations, condition
(financial or
<PAGE> 2
other), results of operations or prospects of the Company (provided that
a decline in the market price of the Company's Common Stock price shall
not, in and of itself, constitute such a material adverse change or
material adverse development under clause (y) above), then from and
after the date of occurrence of an event or change referred to in such
clause (x) or clause (y), the Conversion Price shall be determined
without regard to the first proviso to this definition.
(b) The definition of the term "Maximum Share Amount" in each
Note shall be amended by changing the respective figure therein for the
Note registered in the name of each Holder listed below to be as
follows:
<TABLE>
<CAPTION>
Name of Registered Holder New Maximum Share Amount
------------------------- ------------------------
<S> <C>
Delta Opportunity Fund, Ltd. 1,042,036
Diaz & Altschul Group, LLC 128,251
Nelson Partners 521,019
Olympus Securities, Ltd. 521,019
Omicron Partners, LP 804,548
OTATO Limited Partnership 192,376
Overbrook Fund I, LLC 128,251
</TABLE>
; provided, however, that if the Nasdaq determines that the issuance of shares
of Common Stock upon exercise of the Warrants (as defined herein) need not be
integrated with the issuance of shares of Common Stock upon conversion of, and
in payment of interest on, the Notes for purposes of Rule 4460(i) of the Nasdaq
(or any successor, replacement or similar provision), then the definition of the
term Maximum Share Amount shall have the meaning originally provided in each
Note. Upon the request of any Holder, the Company shall seek such determination
from Nasdaq.
2. WARRANTS. (a) On the Effective Date, the Company shall issue to each
Holder Common Stock Purchase Warrants in the form attached hereto as EXHIBIT A
(the "Warrants"), entitling the holders thereof to purchase the respective
numbers of shares of Common Stock set forth opposite their names below:
<TABLE>
<CAPTION>
Holder Number
------ ------
<S> <C>
Delta Opportunity Fund, Ltd. 43,900
Diaz & Altschul Group, LLC 5,403
</TABLE>
-2-
<PAGE> 3
<TABLE>
<S> <C>
Nelson Partners 21,950
Olympus Securities, Ltd. 21,950
Omicron Partners, LP 30,789
OTATO Limited Partnership 8,105
Overbrook Fund I, LLC 5,403
</TABLE>
(b) On or before the Filing Date, the Company will file with the SEC a
Registration Statement on Form S-3 (the "Warrant Share Registration Statement")
relating to the resale by each Holder of the shares of Common Stock issued or
issuable upon exercise of the Warrants (the "Warrant Shares") and shall
thereafter use its best efforts to obtain SEC effectiveness of the Warrant Share
Registration Statement as promptly as possible after such filing. As used
herein, "Filing Date" means the earlier of (i) March 31, 1998 and (ii) the date
which is 15 Business Days after the date on which the arithmetic average of the
Market Price of the Common Stock for five consecutive Trading Days shall have
been at least equal to 90% of the Purchase Price (as defined in the Warrants) in
effect at such time. The Warrant Share Registration Statement shall otherwise be
subject in all respects to the provisions of Section 8 of each Holder's Note
Purchase Agreement as if the Warrant Share Registration Statement were the
Registration Statement.
(c) NASDAQ LISTING. Promptly after the Effective Date, the Company will
file with Nasdaq an application or other document required by Nasdaq for the
listing of the Warrant Shares with Nasdaq and shall provide evidence of such
filing to each Holder.
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY.
The Company represents and warrants to each Holder that the following
matters are true and correct on the date of execution and delivery of this
Agreement and will be true and correct on the Effective Date, and the Company
covenants and agrees with each Holder as follows:
(a) ORGANIZATION AND AUTHORITY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to (i) own, lease
and operate its properties and to carry on its business as described in the SEC
Reports and as currently conducted, and (ii) to execute, deliver and perform its
obligations under this Agreement, the Warrants and the other Transaction
Documents, and to consummate the transactions contemplated hereby and thereby.
(b) CONCERNING THE WARRANT SHARES. The Warrant Shares have been duly
authorized and, when issued upon exercise of the Warrants, will be duly and
validly issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder. The holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Warrants or the Warrant Shares.
The
-3-
<PAGE> 4
Company has duly reserved 137,500 shares of Common Stock as the Warrant
Shares, and such shares shall remain so reserved, and the Company shall from
time to time reserve such additional shares of Common Stock as shall be required
to be reserved pursuant to the Warrants, so long as the Warrants are
outstanding. The Common Stock is listed for trading on Nasdaq and no suspension
of trading in the Common Stock is in effect. The Company knows of no reason why
the Warrant Shares will not be eligible for listing on Nasdaq.
(c) CORPORATE AUTHORIZATION. This Agreement, the Warrants and the other
Transaction Documents have been duly and validly authorized by the Company; this
Agreement has been duly executed and delivered by the Company and, assuming due
execution and delivery by each Holder, this Agreement is, and the Warrants will
be, when executed and delivered by the Company, valid and binding obligations of
the Company enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and general
principles of equity, regardless of whether enforcement is considered in a
proceeding in equity or at law.
(d) NON-CONTRAVENTION. The execution and delivery of this Agreement and
the Warrants by the Company and the consummation by the Company of the issuance
of the Warrants and the Warrant Shares and the other transactions contemplated
by this Agreement and the Warrants do not and will not, with or without the
giving of notice or the lapse of time, or both, (i) result in any violation of
any provision of the certificate of incorporation or by-laws of the Company,
(ii) conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under, or result in the modification of,
or result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company pursuant to,
any indenture, mortgage, deed of trust or other agreement or instrument to which
the Company is a party or by which the Company or any of its properties or
assets are bound or affected which would have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company or (iii) violate or contravene any
applicable law, rule or regulation or any applicable decree, judgment or order
of any court, United States federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of
its properties or assets which would have a material adverse effect on the
business, properties, operations, condition (financial or other), results of
operations or prospects of the Company or (iv) have any material adverse effect
on any permit, certification, registration, approval, consent, license or
franchise necessary for the Company to own or lease and operate any of its
properties and to conduct any of its business or the ability of the Company to
make use thereof.
(e) APPROVALS. No authorization, approval or consent of, or filing with,
any court, governmental body, regulatory agency, self-regulatory organization,
or stock exchange or market or the stockholders of the Company is required to be
obtained or made by the Company in connection with the execution, delivery and
performance of this Agreement and the Warrants and the issuance and sale of the
Warrants and the Warrant Shares as contemplated by this Agreement and the terms
of the Warrants, other than (1) listing of the Warrant Shares on Nasdaq, (2)
registration of the resale of the Warrant Shares under the 1933 Act as
contemplated by Section 2(b) and (3) as may be required under applicable state
securities or "blue sky" laws.
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<PAGE> 5
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE HOLDERS.
Each Holder severally and not jointly represents and severally and not
jointly warrants to, and covenants and agrees with, the Company as follows:
(a) PURCHASE FOR INVESTMENT; CIRCUMSTANCES OF OFFER. Such Holder is
acquiring the Warrants to be issued to such Holder for its own account for
investment and not with a view towards the public sale or distribution thereof;
any Warrant Shares acquired by such Holder will be acquired only for its own
account for investment; and such Holder has no intention of making any
distribution, within the meaning of the 1933 Act, of Warrant Shares except in
compliance with the registration requirements of the 1933 Act or pursuant to an
exemption therefrom;
(b) ACCREDITED INVESTOR. Such Holder is an "accredited investor" as that
term is defined in Rule 501 of Regulation D by reason of Rule 501(a)(3) thereof;
(c) REOFFERS AND RESALES. The Buyer will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of such Holder's
Warrants or Warrant Shares unless registered under the 1933 Act and the rules
and regulations promulgated thereunder or pursuant to an exemption from
registration;
(d) COMPANY RELIANCE. Such Holder understands that the Warrants to be
issued to such Holder are being offered and issued, the Warrant Shares issuable
upon exercise of such Warrants are being offered and, upon exercise of the
Warrants to be issued to such Holder, the Warrant Shares issued upon exercise of
such Warrants will be sold in reliance on one or more exemptions from the
registration requirements of the 1933 Act, including, without limitation,
Regulation D, and exemptions from state securities laws and that the Company is
relying upon the truth and accuracy of, and such Holder's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Holder set forth herein in order to determine the availability of such
exemptions and the eligibility of such Holder to acquire such Warrants and
Warrant Shares;
(e) INFORMATION PROVIDED. Such Holder and its advisors have requested,
received and considered all information relating to the business, properties,
operations, condition (financial or other), results of operations and prospects
of the Company and information relating to the offer and issuance of the
Warrants to be issued to such Holder and the offer and, upon exercise of such
Warrants, sale of the Warrant Shares issuable upon exercise of such Warrants
deemed relevant by them; such Holder and its advisors have been afforded the
opportunity to ask questions of the Company concerning the terms of such
Warrants and Warrant Shares and the business, properties, operations, condition
(financial or other), results of operations and prospects of the Company and
have received satisfactory answers to any such inquiries; without limiting the
generality of the foregoing, such Holder has had the opportunity to obtain and
to review the SEC Reports; such Holder has, in connection with its decision to
acquire the Warrants to be issued to such Holder, relied solely upon the SEC
Reports, the representations, warranties,
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<PAGE> 6
covenants and agreements of the Company set forth in this Agreement and to be
contained in the Warrants, as well as any investigation of the Company completed
by such Holder or its advisors; and such Holder understands that its investment
in the Securities involves a high degree of risk;
(f) ABSENCE OF APPROVALS. Such Holder understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Warrants to be issued
to such Holder;
(g) AGREEMENT. Such Holder has all requisite power and authority,
corporate or otherwise, to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby; and this
Agreement has been duly and validly authorized, duly executed and delivered by
such Holder and, assuming due execution and delivery by the Company, is a valid
and binding agreement of such Holder enforceable in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
general principles of equity, regardless of whether enforcement is considered in
a proceeding in equity or at law; and
(h) BUYER STATUS. Such Holder is not a "broker" or "dealer" as those
terms are defined in the 1934 Act which is required to be registered with the
SEC pursuant to Section 15 of the 1934 Act.
5. LIMITATION ON CERTAIN ACTIONS. During the period from the date of
this Agreement to March 31, 1998 the Company shall not offer, sell, contract to
sell or issue (or engage any person to assist the Company in taking any such
action) any equity securities or securities convertible into, exchangeable for,
or otherwise entitling the holder to acquire, any Common Stock at a price below
the market price of the Common Stock provided, however, that nothing in this
Section 5 shall prohibit the Company from offering, selling or issuing (or
engaging a person to assist the Company in taking such action) securities (x)
pursuant to compensation plans for employees, directors, officers, advisers or
consultants of the Company and in accordance with the terms of such plans as in
effect as of the date of this Agreement, (y) upon exercise of conversion,
exchange, purchase or similar rights issued, granted or given by the Company and
outstanding as of the date of this Agreement or (z) pursuant to a public
offering made directly by the Company on a basis similar to the offerings made
pursuant to the 1997 Registration Statements or underwritten on a firm
commitment basis and, in each case, registered under the 1933 Act; and provided
further, however, that nothing in this Section 5 shall prohibit the Company from
offering or engaging a person to assist the Company in offering equity
securities or securities convertible into, exchangeable for, or otherwise
entitling the holder to acquire, any Common Stock at a price below the market
price of the Common Stock in a single such transaction.
6. EFFECT OF AMENDMENT. From and after the Effective Date, (a) the
rights and obligations of the Company and each Holder with respect to such
Holder's Note set forth in such Holder's Note Purchase Agreement and Note and in
the Security Agreement, the Transfer Agent Agreement and all other agreements,
documents and instruments contemplated hereby and thereby (collectively, the
"Transaction Documents") shall apply with full force and effect to such
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<PAGE> 7
Holder's Note as amended hereby and (b) the Transaction Documents shall be
deemed amended hereby such that all applicable references therein to such
Holder's Note shall refer to such Holder's Note as amended hereby.
7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall become
effective on the date and time when the following shall have occurred (the
"Effective Date"):
(a) counterparts of this Agreement shall have been executed and
delivered by the Company and each Holder;
(b) the Company shall have issued to each Holder the number of Warrants
provided in Section 3 hereof;
(c) the conditions to the Company's obligations set forth in Section 7
shall have been satisfied or waived by the Company; and
(d) the conditions to the obligations of the Holders set forth in
Section 8 shall have been satisfied or waived by the Holders.
8. CONDITIONS TO THE COMPANY'S OBLIGATION. The Company's obligations
under this Agreement are conditioned upon satisfaction of the following
conditions precedent on or before the Effective Date (any one or more of which
may be waived by the Company in its sole discretion):
(a) On the Effective Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement; and
(b) The representations and warranties of each Holder contained in this
Agreement shall have been true and correct on the date of this Agreement and
shall be true and correct on the Effective Date as if given on and as of the
Effective Date (except for representations given as of a specific date which
representations shall be true and correct as of such date), and on or before the
Effective Date each Holder shall have performed all covenants and agreements of
such Holder contained herein required to be performed by such Holder on or
before the Effective Date.
9. CONDITIONS TO THE HOLDER'S OBLIGATION. The several obligations of the
Holders under this Agreement are conditioned upon satisfaction of the following
conditions precedent for all Holders on or before the Effective Date (any one or
more of which may be waived by such Holder in its sole discretion):
(a) On the Effective Date, no legal action, suit or proceeding shall be
pending or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
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<PAGE> 8
(b) The representations and warranties of the Company contained in this
Agreement shall have been true and correct on the date of this Agreement and,
except for the approvals referred to in clause (3) of Section 3(e), which shall
have been obtained, shall be true and correct on the Effective Date as if given
on and as of the Effective Date (except for representations given as of a
specific date which representations shall be true and correct as of such date),
and on or before the Effective Date the Company shall have performed all
covenants and agreements of the Company contained herein required to be
performed by the Company on or before the Effective Date; and
(c) No event which, (1) would constitute an Event of Default under any
Note or, with the giving of notice or the passage of time or both, would
constitute an Event of Default under any Note shall have occurred and be
continuing or (2) would constitute a Repurchase Event under any Note or, with
the giving of notice or the lapse of time, or both, would constitute a
Repurchase Event under any Note shall have occurred and be continuing.
10. CONFIRMATION OF AGREEMENTS. Except as amended by this Agreement, the
Notes and the other Transaction Documents shall remain in full force and effect
in accordance with their respective terms.
11. MISCELLANEOUS. (a) Capitalized terms used in this Agreement and
defined herein shall have the respective meanings provided herein. Capitalized
terms used in this Agreement and not otherwise defined in this Agreement shall
have the respective meanings provided in the Notes and, if not defined in the
Notes, the Note Purchase Agreements.
(b) This Agreement shall be construed and interpreted in accordance with
the laws of the State of New York.
(c) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
instrument. This Agreement may be executed and delivered by a party by a
telephone line facsimile transmission bearing a signature on behalf of such
party transmitted by such party to the other party.
(d) Section and paragraph headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(e) Any provision of this Agreement that is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
(f) No amendment or waiver of any provision of this Agreement shall in
any event be effective unless the same shall be in writing and signed by the
party to be charged with
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<PAGE> 9
enforcement thereof and any such waiver shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
any party to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof by such party. No single or partial
exercise of any right under this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
SHAMAN PHARMACEUTICALS, INC.
By_____________________________________
Name:
Title:
$3,250,000.00 DELTA OPPORTUNITY FUND, LTD.
By_____________________________________
Name:
Title:
$400,000.00 DIAZ & ALTSCHUL GROUP, LLC
By_____________________________________
Name:
Title:
$1,625,000.00 NELSON PARTNERS
By_____________________________________
Name:
Title:
$1,625,000.00 OLYMPUS SECURITIES, LTD.
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<PAGE> 11
By_____________________________________
Name:
Title:
$2,279,334.06 OMICRON PARTNERS, LP
By_____________________________________
Name:
Title:
$600,000.00 OTATO LIMITED PARTNERSHIP
By_____________________________________
Name:
Title:
$400,000.00 OVERBROOK FUND I, LLC
By_____________________________________
Name:
Title:
-11-
<PAGE> 1
EXHIBIT 10.67
FORM OF
COMMON STOCK PURCHASE WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SAID ACT.
No. W-___ Right to Purchase ________ shares of Common
Stock of Shaman Pharmaceuticals, Inc.
SHAMAN PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE WARRANT
SHAMAN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), hereby certifies that, for value received,
_________________________________ or registered assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company at
any time or from time to time after the date hereof, and before the Expiration
Date (as hereinafter defined), 43,900 fully paid and nonassessable shares of
Common Stock at a purchase price per share equal to the Purchase Price (as
hereinafter defined). Such number of shares of Common Stock and the Purchase
Price are subject to adjustment as provided in this Warrant.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
"Amendment Agreement" means the Amendment Agreement, dated as of
March 18, 1998, by and between the Company and the original Holder of
this Warrant.
"Business Day" means a day on which the New York Stock Exchange
is open for business for general trading of securities.
"Closing Sale Price" means the closing sale price of the Common
Stock on the principal securities market on which the Common Stock may
at the time be listed or, if there have been no sales on any such
exchange on such day, the average of the highest bid and lowest asked
prices on the principal securities market at the end of such day, or, if
on such day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the Nasdaq System as of
4:00 p.m., New York City time, or, if on such day the Common Stock is
not quoted in the Nasdaq System, the average of the highest bid and
lowest asked price on such day in the domestic over-the-counter market
<PAGE> 2
as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization.
"Common Stock" includes the Company's Common Stock, par value
$.001 per share, as authorized on the date hereof, and any other
securities into which or for which the Common Stock may be converted or
exchanged pursuant to a plan of recapitalization, reorganization,
merger, amalgamation, sale of assets or otherwise.
"Company" shall include Shaman Pharmaceuticals, Inc. and any
corporation that shall succeed to or assume the obligation of Shaman
Pharmaceuticals, Inc. hereunder in accordance with the terms hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" means 5:00 p.m., San Francisco, California
time on March 18, 2001.
"Other Securities" means any stock (other than the Common Stock)
and other securities of the Company or any other person (corporate or
otherwise) which the Holder at any time shall be entitled to receive, or
shall have received, on the exercise of this Warrant, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or
shall have been issued in exchange for or in replacement of Common Stock
or Other Securities pursuant to Section 4.
"Purchase Price" shall mean $7.50, subject to adjustment as
provided in this Warrant.
"Securities Act" means the Securities Act of 1933, as amended.
1. EXERCISE OF WARRANT.
1.1 EXERCISE. (a) This Warrant may be exercised by the Holder in
full or in part at any time or from time to time during the exercise period
specified in the first paragraph hereof until the Expiration Date by surrender
of this Warrant and the subscription form annexed hereto (duly executed by the
Holder), to the Company, and by making payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount obtained
by multiplying (a) the number of shares of Common Stock designated by the Holder
in the Subscription Form in the form attached hereto by (b) the Purchase Price
then in effect. On any partial exercise, the Company will forthwith issue and
deliver to or upon the order of the Holder a new Warrant or Warrants of like
tenor, in the name of the Holder or as the Holder (upon payment by the Holder of
any applicable transfer taxes) may request, providing in the aggregate on the
face or faces thereof for the purchase of the number of shares of Common Stock
for which such Warrant or Warrants may still be exercised.
(b) Notwithstanding any other provision of this Warrant, in no
event shall the Holder be entitled at any time to purchase a number of shares of
Common Stock on exercise of
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<PAGE> 3
this Warrant in excess of that number of shares upon purchase of which the sum
of (1) the number of shares of Common Stock beneficially owned by the Holder and
any person whose beneficial ownership of shares of Common Stock would be
aggregated with the Holder's beneficial ownership of shares of Common Stock for
purposes of Section 13(d) of the Exchange Act and Regulation 13D-G thereunder
(each such person other than the Holder an "Aggregated Person" and all such
persons other than the Holder, collectively, the "Aggregated Persons") (other
than shares of Common Stock deemed beneficially owned through the ownership of
the unexercised portion of this Warrant and any of the Company's Senior
Subordinated Convertible Notes by the Holder and any Aggregated Persons) and (2)
the number of shares of Common Stock issuable upon exercise of the portion of
this Warrant with respect to which the determination in this sentence is being
made, would result in beneficial ownership by the Holder and all Aggregated
Persons of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and Regulation
13D-G thereunder, except as otherwise provided in clause (1) of the immediately
preceding sentence. For purposes of the second preceding sentence, the Company
shall be entitled to rely, and shall be fully protected in relying, on any
statement or representation made by the Holder to the Company in connection with
a particular exercise of this Warrant, without any obligation on the part of the
Company to make any inquiry or investigation or to examine its records or the
records of any transfer agent for the shares of Common Stock.
1.2 NET ISSUANCE. Notwithstanding anything to the contrary
contained in Section 1.1, the Holder may elect to exercise this Warrant in whole
or in part by receiving shares of Common Stock equal to the net issuance value
(as determined below) of this Warrant, or any part hereof, upon surrender of
this Warrant to the Company's transfer agent and registrar for the shares of
Common Stock together with the subscription form annexed hereto (duly executed
by the Holder), in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:
X = Y (A-B)
A
Where: X = the number of shares of Common Stock to be issued
to the Holder
Y = the number of shares of Common Stock as to which
this Warrant is to be exercised
A = the current fair market value of one share of
Common Stock calculated as of the last trading day
immediately preceding the exercise of this Warrant
B = the Purchase Price
As used herein, current fair market value of one share of Common
Stock as of a specified date shall mean the arithmetic average of the Closing
Sale Price over a period of five consecutive Business Days consisting of the day
as of which the current fair market value of one
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<PAGE> 4
share of Common Stock is being determined (or if such day is not a Business Day,
the Business Day next preceding such day) and the four consecutive Business Days
prior to such day. If on the date for which current fair market value is to be
determined the Common Stock is not listed on any securities exchange or quoted
in the Nasdaq System or the over-the-counter market, the current fair market
value of one share of Common Stock shall be the highest price per share which
the Company could then obtain from a willing buyer (not a current employee or
director) for Common Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by the Board of Directors of the Company,
unless prior to such date the Company has become subject to a merger,
acquisition, amalgamation or consolidation pursuant to which the Company is not
the surviving party, in which case the current fair market value of one share of
Common Stock shall be deemed to be the value received by the holders of the
shares of Common Stock for each share pursuant to the Company's acquisition.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant, and in any event within three
Business Days thereafter, the Company at its expense (including the payment by
it of any applicable issue or stamp taxes) will cause to be issued in the name
of and delivered to the Holder, or as the Holder (upon payment by the Holder of
any applicable transfer taxes) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such exercise, in such
denominations as may be requested by the Holder, plus, in lieu of any fractional
share to which the Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then current fair market value (as determined in
accordance with subsection 1.2) of one full share, together with any other stock
or other securities any property (including cash, where applicable) to which the
Holder is entitled upon such exercise pursuant to Section 1 or otherwise. Upon
exercise of this Warrant as provided herein, the Company's obligation to issue
and deliver the certificates for shares of Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision thereof,
the recovery of any judgment against any person or any action to enforce the
same, any failure or delay in the enforcement of any other obligation of the
Company to the Holder, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with such
exercise; provided, however, that nothing herein shall limit or prejudice the
right of the Company to pursue any such claim in any other manner permitted by
applicable law. If the Company fails to issue and deliver the certificates for
the shares of Common Stock to the Holder pursuant to the first sentence of this
paragraph as and when required to do so, in addition to any other liabilities
the Company may have hereunder and under applicable law, the Company shall pay
or reimburse the Holder on demand for all out-of-pocket expenses including,
without limitation, fees and expenses of legal counsel, incurred by the Holder
as a result of such failure and in connection with enforcement by the Holder of
its rights under this Warrant.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time, all the holders
of Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the
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<PAGE> 5
determination of stockholders eligible to receive) shall have become entitled to
receive, without payment therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5), then and in each such case the Holder, on the exercise hereof
as provided in Section 1, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
subdivisions (b) and (c) of this Section 3) which the Holder would hold on the
date of such exercise if on the date of the event listed in subdivisions (a)
through (c) the Holder had been the holder of record of the number of shares of
Common Stock called for on the face of this Warrant and had thereafter, during
the period from the date of the event listed in subdivisions (a) through (c) to
and including the date of such exercise, retained such shares and all such other
or additional stock and other securities and property (including cash in the
case referred to in subdivisions (b) and (c) of this Section 3) receivable by
the Holder as aforesaid during such period, giving effect to all adjustments
called for during such period by Section 4.
4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER, ETC. In
case at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate or amalgamate with or merge into any other
person, or (c) transfer all or substantially all of its properties or assets to
any other person under any plan or arrangement contemplating the dissolution of
the Company, then, in each such case, as a condition of such reorganization,
consolidation, amalgamation, merger, sale or conveyance, the Company shall give
at least 30 days notice to the Holder of such pending transaction whereby the
Holder shall have the right to exercise this Warrant prior to any such
reorganization, consolidation, amalgamation, merger, sale or conveyance. Any
exercise of this Warrant pursuant to notice under this Section shall be
conditioned upon the closing of such reorganization, consolidation,
amalgamation, merger, sale or conveyance which is the subject of the notice and
the exercise of this Warrant shall not be deemed to have occurred until
immediately prior to the closing of such transaction.
5. ADJUSTMENT FOR EXTRAORDINARY EVENTS. In the event that the
Company shall (i) issue additional shares of Common Stock as a dividend or other
distribution on outstanding shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock, or (iii) combine its outstanding shares
of Common Stock into a smaller number of
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<PAGE> 6
shares of Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 5.
The Holder shall thereafter, on the exercise hereof as provided in Section 1, be
entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock which would be issuable on such
exercise immediately prior to such issuance by a fraction of which (i) the
numerator is the Purchase Price in effect immediately prior to such issuance and
(ii) the denominator is the Purchase Price in effect on the date of such
exercise.
6. FURTHER ASSURANCES. The Company will take all action that may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock, free from all taxes, liens
and charges with respect to the issue thereof, on the exercise of all or any
portion of this Warrant from time to time outstanding.
7. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend on, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company
or any transfer of all or substantially all of the assets of the Company
to or consolidation, amalgamation or merger of the Company with or into
any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder, at least ten days prior to such record date, a notice specifying (i) the
date on which any such 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, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, amalgamation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of shares of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
amalgamation, merger, dissolution, liquidation or winding-up, and (iii) the
amount and character of any stock or other securities, or rights or options with
respect thereto, proposed to be issued or granted, the date of such proposed
issue or grant and the persons or class of persons to whom such proposed issue
or grant is to be offered or made. Such notice shall also state that the action
in question or the record date is subject to the effectiveness of a registration
statement under the Securities Act or a favorable vote of stockholders if either
is required. Such notice shall be mailed at least ten
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days prior to the date specified in such notice on which any such action is to
be taken or the record date, whichever is earlier.
8. RESERVATION OF SHARES, ETC., ISSUABLE ON EXERCISE OF
WARRANTS. The Company will at all times reserve and keep available out of its
authorized but unissued shares of capital stock, solely for issuance and
delivery on the exercise of this Warrant, a sufficient number of shares of
Common Stock (or Other Securities) to effect the full exercise of this Warrant
and the exercise, conversion or exchange of any other warrant or security of the
Company exercisable for, convertible into, exchangeable for or otherwise
entitling the holder to acquire shares of Common Stock (or Other Securities),
and if at any time the number of authorized but unissued shares of Common Stock
(or Other Securities) shall not be sufficient to effect such exercise,
conversion or exchange, the Company shall take such action as may be necessary
to increase its authorized but unissued shares of Common Stock (or Other
Securities) to such number as shall be sufficient for such purposes.
9. TRANSFER OF WARRANT. This Warrant shall inure to the benefit
of the successors to and assigns of the Holder. This Warrant and all rights
hereunder, in whole or in part, are registrable at the office or agency of the
Company referred to below by the Holder hereof in person or by his duly
authorized attorney, upon surrender of this Warrant properly endorsed.
10. REGISTER OF WARRANTS. The Company shall maintain, at the
principal office of the Company (or such other office as it may designate by
notice to the Holder hereof), a register in which the Company shall record the
name and address of the person in whose name this Warrant has been issued, as
well as the name and address of each successor and prior owner of such Warrant.
The Company shall be entitled to treat the person in whose name this Warrant is
so registered as the sole and absolute owner of this Warrant for all purposes.
11. EXCHANGE OF WARRANT. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the office or agency of the Company referred
to in Section 10, for one or more new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by the Holder at the time of such surrender.
12. REPLACEMENT OF 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 any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. WARRANT AGENT. The Company may, by written notice to the
Holder, appoint an agent having an office in the United States of America for
the purpose of exercising this Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 11, and
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replacing this Warrant pursuant to Section 12, and thereafter any such exercise,
exchange or replacement, as the case may be, shall be made at such office by
such agent.
14. REMEDIES. The Company stipulates that the remedies at law of
the Holder in the event of any 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 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.
15. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant
shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the Purchase Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
16. NOTICES, ETC. All notices and other communications from the
Company to the registered Holder shall be in writing and shall be mailed by
first class certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by the Holder or at the address shown for
the Holder on the register of Warrants referred to in Section 10.
17. TRANSFER RESTRICTIONS. By acceptance of this Warrant, the
Holder represents to the Company that (x) this Warrant is being acquired for the
Holder's own account and for the purpose of investment and not with a view to,
or for sale in connection with, the distribution hereof, nor with any present
intention of distributing or selling this Warrant and (y) the shares of Common
Stock (or Other Securities) issuable upon exercise of this Warrant will be
acquired only for the Holder's own account for investment and the Holder has no
intention of making any distribution, within the meaning of the Securities Act,
of such shares of Common Stock (or Other Securities) except in compliance with
the registration requirements of the Securities Act or pursuant to an exemption
therefrom. The Holder acknowledges and agrees that this Warrant and, except as
otherwise provided in the Amendment Agreement, the shares of Common Stock (or
Other Securities) issuable upon exercise of this Warrant (if any) have not been
(and at the time of acquisition by the Holder, will not have been or will not
be), registered under the Securities Act or under the securities laws of any
state, in reliance upon certain exemptive provisions of such statutes. The
Holder further recognizes and acknowledges that because this Warrant and, except
as provided in the Amendment Agreement, the shares of Common Stock (or Other
Securities) issuable upon exercise of this Warrant (if any) are unregistered,
they may not be eligible for resale, and may only be resold in the future
pursuant to an effective registration statement under the Securities Act and any
applicable state securities laws, or pursuant to a valid exemption from such
registration requirements. Unless the shares of Common Stock (or Other
Securities) issuable upon exercise of this Warrant have theretofore been
registered for resale under the Securities Act, the Company may require, as a
condition to the issuance of shares of Common Stock (or Other Securities) upon
the exercise of this Warrant (i) in the case of an exercise in accordance with
Section 1.1 hereof, a confirmation as of the date of exercise of the Holder's
representations pursuant to this Section 17, or (ii) in the case of an exercise
in accordance with Section 1.2 hereof, an opinion of counsel reasonably
satisfactory to
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the Company that the shares of Common Stock (or Other Securities) to be issued
upon such exercise may be issued without registration under the Securities Act.
18. LEGEND. Unless theretofore registered for resale under the
Securities Act, each certificate for shares of Common Stock (or Other
Securities) issued upon exercise of this Warrant shall bear the following
legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned
in the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
19. MISCELLANEOUS. This Warrant and any terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed on its behalf by one of its officers thereunto duly authorized.
Dated: SHAMAN PHARMACEUTICALS, INC.
By:__________________________________
Title:_______________________________
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FORM OF SUBSCRIPTION
SHAMAN PHARMACEUTICALS, INC.
(To be signed only on exercise of Warrant)
TO: SHAMAN PHARMACEUTICALS, INC.,
213 East Grand Avenue
South San Francisco, California 94080
Attention:
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
______________ shares of Common Stock, as defined in the Warrant, of Shaman
Pharmaceuticals, Inc., a Delaware corporation (the "Company").
2. The undersigned Holder (check one):
[ ] (a) elects to pay the aggregate purchase price for such shares of
Common Stock (the "Exercise Shares") (i) by lawful money of the
United States or the enclosed certified or official bank check
payable in United States dollars to the order of the Company in
the amount of $___________, or (ii) by wire transfer of United
States funds to the account of the Company in the amount of
$____________, which transfer has been made before or
simultaneously with the delivery of this Form of Subscription
pursuant to the instructions of the Company;
or
[ ] (b) elects to receive shares of Common Stock having a value equal to
the value of the Warrant calculated in accordance with Section
1.2 of the Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other names as is specified below:
4. The undersigned Holder hereby represents to the Company that the
exercise of the Warrant elected hereby does not violate Section 1.1(b) of the
Warrant.
Name: ____________________________________
Address: ____________________________________
____________________________________
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<PAGE> 12
Dated:____________ ___, ____ ___________________________________
(Signature must conform to name
of Holder as specified on the face
of the Warrant)
___________________________________
___________________________________
(Address)
S-12
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of Shaman
Pharmaceuticals, Inc. for the registration of 137,500 shares of its common stock
and to the incorporation by reference therein of our report dated January 29,
1998, with respect to the financial statements of Shaman Pharmaceuticals, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1997,
filed with the Securities and Exchange Commission.
March 31, 1998
Palo Alto, California ERNST & YOUNG LLP
