EXHIBIT 10.4
COMMONWEALTH BIOTECHNOLOGIES, INC.
WARRANT AGREEMENT
June 25, 1997
Xx. Xxxxxx X. Xxxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx X-00
Xxxxxxxx, Xxxxxxxx 00000
Dear Sir:
Commonwealth Biotechnologies, Inc., a Virginia corporation (the
"Company"), agrees to issue and sell to you warrants (the "Warrants") to
purchase the number of shares of common stock (the "Common Stock"), of the
Company set forth herein, subject to the terms and conditions contained herein.
1. Issuance of Warrants; Exercise Price. The Warrants, which shall
be in the form attached hereto as Exhibit A, shall be issued to you concurrently
with the execution hereof in consideration of the payment by you to the Company
of the sum of $0.001 cash per share of Common Stock subject to the Warrants, the
receipt and sufficiency of which are hereby acknowledged. The Warrants shall
provide that you and such other holder or holders of the Warrants shall have the
right to purchase an aggregate of 13,158 shares of Common Stock for an exercise
price equal to $9.90 per share (the "Exercise Price") or $130,264.20 in the
aggregate. The number, character and Exercise Price of such shares of Common
Stock are subject to adjustment as hereinafter provided, and the term "Common
Stock" shall mean, unless the context otherwise requires, the stock and other
securities and property receivable upon exercise of the Warrants. The term
"Exercise Price" shall mean, unless the context otherwise requires, the price
per share of the Common Stock purchasable under the Warrants as set forth in
this Section 1, as adjusted from time to time pursuant to Section 5.
2. Notices of Record Date; Etc.. In the event of (i) any taking by
the Company of a record date with respect to the holders of any class of
securities of the Company for purposes of determining which of such holders are
entitled to dividends or other distributions (other than regular quarterly
dividends), or any right to subscribe for, purchase or otherwise acquire shares
of stock of any class or any other securities or property, or to receive any
other right, (ii) any capital reorganization of the Company, or reclassification
or recapitalization of capital stock of the Company or any transfer in one or
more related transactions of all or a majority of the assets or revenue or
income generating capacity of the Company to, or
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consolidation or merger of the Company with or into, any other entity or person,
or (iii) any voluntary or involuntary dissolution or winding up of the Company,
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant at the time outstanding a notice specifying, as the case may
be, (A) 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; or (B) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, 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 Common
Stock (or any other class of stock or securities of the Company, or another
issuer pursuant to Section 5, receivable upon the exercise of the Warrants)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such event. Any
such notice shall be deposited in the United States mail, postage prepaid, at
least ten (10) days prior to the date therein specified, and the holder(s) of
the Warrant(s) may exercise the Warrant(s) and participate in such event as a
registered holder of Common Stock, upon exercise of the Warrant(s) so held,
within the ten (10) day period from the date of mailing of such notice.
3. No Impairment. The Company shall not, by amendment of its
organizational documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Agreement or of the Warrants, but will at all times in good faith take
any and all action as may be necessary in order to protect the rights of the
holders of the Warrants against impairment. Without limiting the generality of
the foregoing, the Company (a) will at all times reserve and keep available,
solely for issuance and delivery upon exercise of the Warrants, shares of Common
Stock issuable from time to time upon exercise of the Warrants, (b) will not
increase the par value of any shares of stock receivable upon exercise of the
Warrants above the amount payable in respect thereof upon such exercise, and (c)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable stock upon
the exercise of the Warrants, or any of them.
4. Exercise of Warrants. At any time before June 25, 2007 at 5:00
p.m., Richmond, Virginia time, Warrants may be exercised as to all or any
portion of the whole number of shares of Common Stock covered by the Warrants by
the holder thereof by surrender of the Warrants, accompanied by a subscription
for shares to be purchased in the form attached hereto as Exhibit B and by a
check payable to the order of the Company in the amount required for purchase of
the shares as to which the Warrant is being exercised, delivered to the Company
at its principal office at Commonwealth Biotechnologies, Inc., 000 Xxxx Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Chairman. Upon the exercise of a
Warrant in whole or in part, the Company will within five (5) days thereafter,
at its expense (including the payment by the Company of any applicable issue or
transfer taxes), cause to be issued in the name of and delivered to the Warrant
holder a certificate or certificates for the
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number of fully paid and non-assessable shares of Common Stock to which such
holder is entitled upon exercise of the Warrant. In the event such holder is
entitled to a fractional share, in lieu thereof such holder shall be paid a cash
amount equal to such fraction, multiplied by the Current Value of one full share
of Common Stock on the date of exercise. Certificates for shares of Common Stock
issuable by reason of the exercise of the Warrant or Warrants shall be dated and
shall be effective as of the date of the surrendering of the Warrant for
exercise, notwithstanding any delays in the actual execution, issuance or
delivery of the certificates for the shares so purchased. In the event a Warrant
or Warrants is exercised as to less than the aggregate amount of all shares of
Common Stock issuable upon exercise of all Warrants held by such person, the
Company shall issue a new Warrant to the holder of the Warrant so exercised
covering the aggregate number of shares of Common Stock as to which Warrants
remain unexercised.
For purposes of this section, Current Value is defined (i) in
the case for which a public market exists for the Common Stock at the time of
such exercise, at a price per share equal to (A) the average of the means
between the closing bid and asked prices of the Common Stock in the
over-the-counter market for 20 consecutive business days commencing 30 business
days before the date of such notice, (B) if the Common Stock is quoted on
Nasdaq, at the average of the means of the daily closing bid and asked prices of
the Common Stock for 20 consecutive business days commencing 30 business days
before the date of such notice, or (C) if the Common Stock is listed on any
national securities exchange or The Nasdaq National Market, at the average of
the daily closing prices of the Common Stock for 20 consecutive business days
commencing 30 business days before the date of such notice, and (ii) in the case
no public market exists at the time of such exercise, at the Appraised Value.
For the purposes of this Agreement, "Appraised Value" is the value determined in
accordance with the following procedures. For a period of five (5) days after
the date of an event (a "Valuation Event") requiring determination of Current
Value at a time when no public market exists for the Common Stock (the
"Negotiation Period"), each party to this Agreement agrees to negotiate in good
faith to reach agreement upon the Appraised Value of the securities or property
at issue, as of the date of the Valuation Event, which will be the fair market
value of such securities or property, without premium for control or discount
for minority interests, illiquidity or restrictions on transfer. In the event
that the parties are unable to agree upon the Appraised Value of such securities
or other property by the end of the Negotiation Period, then the Appraised Value
of such securities or property will be determined for purposes of this Agreement
by a recognized appraisal or investment banking firm mutually agreeable to the
holders of the Warrants and the Company (the "Appraiser"). If the holders of the
Warrants and the Company cannot agree on an Appraiser within two (2) business
days after the end of the Negotiation Period, the Company, on the one hand, and
the holders of the Warrants, on the other hand, will each select an Appraiser
within ten (10) business days after the end of the Negotiation Period and those
Appraisers will determine the fair market value of such securities or property,
without premium for control or discount for minority interests. Such independent
Appraiser(s) will be directed to determine fair market value of such securities
or property as
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soon as practicable, but in no event later than thirty (30) days from the date
of its selection. The determination by Appraiser(s) of the fair market value
will be conclusive and binding on all parties to this Agreement. If there are
two Appraisers, and they do not agree as to fair market value, then fair market
value shall be determined to be the average of the fair market values as
determined by each Appraiser. Appraised Value of each share of Common Stock at a
time when (i) the Company is not a reporting company under the Securities
Exchange Act of 1934 and (ii) the Common Stock is not traded in the organized
securities markets, will, in all cases, be calculated by determining the
Appraised Value of the entire Company taken as a whole and dividing that value
by the number of shares of Common Stock then outstanding, without premium for
control or discount for minority interests, illiquidity or restrictions on
transfer. The costs of the Appraiser(s) will be borne by the Company. In no
event will the Appraised Value of the Common Stock be less than the per share
consideration received or receivable with respect to the Common Stock or
securities or property of the same class in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction.
5. Protection Against Dilution. The Exercise Price for the shares
of Common Stock and number of shares of Common Stock issuable upon exercise of
the Warrants is subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Reclassifications, Etc..
In case at any time or from time to time after the date of execution of this
Agreement, the Company shall (i) take a record of the holders of Common Stock
for the purpose of entitling them to receive a dividend or a distribution on
shares of Common Stock payable in shares of Common Stock or other class of
securities, (ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its outstanding
Common Stock into a smaller number of shares, then, and in each such case, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted in such a manner that the Exercise Price for
the shares issuable upon exercise of the Warrants immediately after such event
shall bear the same ratio to the Exercise Price in effect immediately prior to
any such event as the total number of shares of Common Stock outstanding
immediately prior to such event shall bear to the total number of shares of
Common Stock outstanding immediately after such event.
(b) Adjustment of Number of Shares Purchasable. When any
adjustment is required to be made in the Exercise Price under this Section 5,
(i) the number of shares of Common Stock issuable upon exercise of the Warrants
shall be changed (upward to the nearest full share) to the number of shares
determined by dividing (x) an amount equal to the number of shares issuable
pursuant to the exercise of the Warrants immediately prior to the
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adjustment, multiplied by the Exercise Price in effect immediately prior to the
adjustment, by (y) the Exercise Price in effect immediately after such
adjustment, and (ii) upon exercise of the Warrant, the holder will be entitled
to receive the number of shares of other securities referred to in Section 5(a)
that such holder would have received had the Warrant been exercised prior to the
events referred to in Section 5(a).
(c) Adjustment for Reorganization, Consolidation, Merger,
Etc.. In case of any reorganization or consolidation of the Company with, or any
merger of the Company with or into, another entity (other than a consolidation
or merger in which the Company is the surviving corporation) or in case of any
sale or transfer to another entity of the majority of assets of the Company, the
entity resulting from such reorganization or consolidation or surviving such
merger or to which such sale or transfer shall be made, as the case may be,
shall make suitable provision (which shall be fair and equitable to the holders
of Warrants) and shall assume the obligations of the Company hereunder (by
written instrument executed and mailed to each holder of the Warrants then
outstanding) pursuant to which, upon exercise of the Warrants, at any time after
the consummation of such reorganization, consolidation, merger or conveyance,
the holder shall be entitled to receive the stock or other securities or
property that such holder would have been entitled to upon consummation if such
holder had exercised the Warrants immediately prior thereto, all subject to
further adjustment as provided in this Section 5.
(d) Certificate as to Adjustments. In the event of
adjustment as herein provided in paragraphs of this Section 5, the Company shall
promptly mail to each Warrant holder a certificate setting forth the Exercise
Price and number of shares of Common Stock issuable upon exercise after such
adjustment and setting forth a brief statement of facts requiring such
adjustment. Such certificate shall also set forth the kind and amount of stock
or other securities or property into which the Warrants shall be exercisable
after any adjustment of the Exercise Price as provided in this Agreement.
(e) Minimum Adjustment. Notwithstanding the foregoing, no
certificate as to adjustment of the Exercise Price hereunder shall be made if
such adjustment results in a change in the Exercise Price then in effect of less
than five cents ($0.05) and any adjustment of less than five cents ($0.05) of
any Exercise Price shall be carried forward and shall be made at the time of and
together with any subsequent adjustment that, together with the adjustment or
adjustments so carried forward, amounts to five cents ($0.05) or more; provided
however, that upon the exercise of a Warrant, the Company shall have made all
necessary adjustments (to the nearest cent) not theretofore made to the Exercise
Price up to and including the date upon which such Warrant is exercised.
6. Representations and Warranties. You hereby acknowledge,
represent and warrant to, and agree with, the Company as follows:
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(a) You are acquiring the Warrants and the Common Stock for
your own account, for investment purposes only, and not with a view to or for
the resale, distribution or fractionalization thereof, in whole or in part, and
no other person has a direct or indirect beneficial interest in the Warrants
herein agreed to be purchased or in the Common Stock.
(b) You acknowledge your understanding that the offering and
sale of the Warrants and the Common Stock is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
furtherance thereof, you represent and warrant and agree with the Company as
follows:
(i) You have the financial abilioty to bear the
economic risk of your investment in the Company (including its possible loss),
have adequate means of providing for your current needs and personal
contingencies and have no need for liquidity with respect to your investment.
(ii) You have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Warrants and the Common Stock and have obtained,
in your judgment, sufficient information from the Company to evaluate the merits
and risks of such an investment.
(c) You represent, warrant and agree that the you will not
sell or otherwise transfer the Warrants or the Common Stock without registration
under the Act or an exemption therefrom as evidenced by an opinion of legal
counsel having sufficient expertise in the transfer of restricted securities,
which opinion shall be satisfactory to the Company, and fully understands and
agrees that you may bear the economic risk of this investment for an indefinite
period of time because, among other reasons, the Warrants and the Common Stock
have not been registered under the Act or under the securities laws of states
and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Act and under applicable
securities laws of such states or an exemption from such registration is
available. You also understand that sales or transfers of the Warrants and the
Common Stock are further restricted by state securities laws.
The foregoing representations and warranties will be deemed to have been given
on the date of this Agreement and on the date of each exercise of the Warrants.
7. Restrictive Legend. Executed copies of this Agreement shall be
filed in the principal office of the Company. Instruments evidencing all or
part of the Warrants or the Common Stock, whether now or hereafter issued, shall
contain the legend shown on Exhibit A.
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8. Successors and Assigns; Binding Effect. This Agreement shall be
binding upon and inure to the benefit of you and the Company and their
respective successors and permitted assigns.
9. Notices. Any notice hereunder shall be given by registered or
certified mail, if to the Company, at its principal office referred to in
Section 5 and, if to the holders, to their respective addresses shown in the
Warrant ledger of the Company, provided that any holder may at any time on three
(3) days' written notice to the Company designate or substitute another address
where notice is to be given. Notice shall be deemed given and received after a
certified or registered letter, properly addressed with postage prepaid, is
deposited in the U.S. mail.
10. Severability. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the remainder
of this Agreement.
11. Assignment; Replacement of Warrants. If the Warrant or Warrants
are assigned, in whole or in part, the Warrants shall be surrendered at the
principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the holder thereof covering the
number of shares not assigned, and the assignee shall be entitled to receive a
new Warrant covering the number of shares so assigned. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and appropriate bond or indemnification protection,
the Company shall issue a new Warrant of like tenor.
12. Rights of Stockholders. Until exercised, the Warrants shall not
entitle the holders thereof to any of the rights of a stockholder of the
Company.
13. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Virginia without giving
effect to the principles of choice of laws thereof.
14. Definition. All references to the word "you" in this Agreement
shall be deemed to apply with equal effect to any persons or entities to whom
Warrants have been transferred in accordance with the terms hereof, and, where
appropriate, to any persons or entities holding shares of Common Stock issuable
upon exercise of Warrants.
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15. Headings. The headings herein are for purposes of reference
only and shall not limit or otherwise affect the meaning of any of the
provisions hereof.
Very truly yours,
COMMONWEALTH BIOTECHNOLOGIES, INC.
By:
-------------------------------
President
Accepted as of the 25th day of June, 1997.
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Xxxxxx X. Xxxxxxxx
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No. 5
13,158 Shares
COMMONWEALTH BIOTECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
NEITHER THIS SECURITY NOR ANY SECURITY FOR WHICH IT MAY BE EXERCISED HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY SECURITY FOR
WHICH IT MAY BE EXERCISED NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF AT ANY TIME IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.
THIS IS TO CERTIFY that Xxxxxx X. Xxxxxxxx or his assigns as permitted
in that certain Warrant Agreement (the "Warrant Agreement") dated June 25, 1997
between the Company (as hereafter defined) and Xxxxxx X. Xxxxxxxx is entitled to
purchase until 5:00 p.m., Richmond, Virginia time on June 25, 2007, 13,158
shares of Common Stock of Commonwealth Biotechnologies, Inc., a Virginia
corporation (the "Company"), for an exercise price per share as set forth in the
Warrant Agreement referred to herein. This Warrant is issued pursuant to the
Warrant Agreement, and all rights of the holder of this Warrant are further
governed by, and subject to the terms and provisions of such Warrant Agreement,
copies of which are available upon request to the Company. The holder of this
Warrant and the shares issuable upon the exercise hereof shall be entitled to
the benefits, rights and privileges and subject to the obligations, duties and
liabilities provided in the Warrant Agreement.
Subject to the provisions of the Securities Act of 1933, of the Warrant
Agreement and of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, only to the extent expressly permitted in
such documents and then only at the office of the Company at Commonwealth
Biotechnologies, Inc., 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000,
Attention: Chairman, by the holder hereof or by a duly authorized
attorney-in-fact, upon surrender of this Warrant duly endorsed, together with
the Assignment hereof duly endorsed. Until transfer hereof on the books of the
Company, the Company may treat the registered holder hereof as the owner hereof
for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper corporate officers
thereunto duly authorized.
COMMONWEALTH BIOTECHNOLOGIES, INC.
By: (SEAL)
--------------------------
President
ATTEST:
---------------------------------
Secretary
EXHIBIT B
FORM OF SUBSCRIPTION
To Commonwealth Biotechnologies, Inc.:
The undersigned, the holder of Warrant Number , hereby
irrevocably elects to exercise the purchase right represented by such Warrant,
and to purchase thereunder * shares of Common Stock of Commonwealth
Biotechnologies, Inc. and herewith makes a payment in cash or by check of
$ thereof and requests that the certificate or certificates for such
shares be issued in the name of and delivered to the undersigned. The
undersigned acknowledges and agrees thatt the shares of Common Stock to be
received by the undersigned are subject to the restrictions on transfer set
forth in the Warrant.
----------------------------
(Signature)
----------------------------
----------------------------
(Address)
Dated:
-----------------
*Insert here the number of shares set forth on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised), in either case without making any adjustment (which
adjustment will be made in the issuance of such Common Stock, other stock,
securities, property, or cash) for additional Common Stock or any other stock or
other securities or property or cash that, pursuant to the adjustment provisions
of the Warrant, is deliverable upon exercise.
FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and
transfers unto the right represented by Warrant Number to purchase
shares of Common Stock of Commonwealth Biotechnologies, Inc. to which
the attached Warrant related,
and appoints as Attorney-in-Fact to transfer such right on
the books of Commonwealth Biotechnologies, Inc. with the full power of
substitution in the premises.
The undersigned represents and warrants that the transfer of the
attached Warrant is permitted by the terms of the Warrant Agreement pursuant to
which the attached Warrant has been issued, and the transferee hereof, by
acceptance of this Assignment, agrees to be bound by the terms of the Warrant
Agreement with the same force and effect as if a signatory thereto.
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(Signature)
------------------------------
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(Address)
Dated:
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FIRST AMENDMENT TO WARRANT AGREEMENT
FIRST AMENDMENT TO WARRANT AGREEMENT (the "Amendment") is made effective as of
the 1st day of October, 1997, by and between COMMONWEALTH BIOTECHNOLOGIES,
INC., a Virginia corporation (the "Company"), and XXXXXX X. XXXXXXXX (the
"Warrantholder").
BACKGROUND
The Company and the Warrantholder are parties to a Warrant Agreement dated June
25, 1997, (the "Warrant Agreement") pursuant to which the Company has issued to
the Warrantholder warrants (the "Warrants") to purchase the number of shares of
Common Stock of the Company set forth in the Warrants. The Warrant Agreement and
the Warrants provide that the Warrants first became exercisable upon the date of
their issuance, which was June 25, 1997 (the "Issuance Date"). In connection
with the Company's initial public offering of shares of Common Stock, the
registration statement for which includes the registration of the shares of
Common Stock issuable to the Warrantholder upon exercise of the Warrants, the
Company and the Warrantholder now wish to provide that the Warrants will not
become exercisable until the first anniversary of the Issuance Date.
AGREEMENT
In consideration of the recitals set forth under "Background" and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Warrantholder hereby agree as follows:
1. The terms and conditions of the Warrants and the Warrant Agreement are
amended to provide that the Warrants will not be exercisable at any time prior
to June 25, 1998. From and after such date, the Warrants will remain exercisable
until June 25, 2007.
2. All terms and conditions of the Warrants and the Warrant Agreement will
remain in full force and effect except to the extent expressly amended hereby.
3. The Warrantholder shall surrender to the Company the certificate
representing the Warrant, whereupon the Company shall execute and deliver to the
Warrantholder a new form of certificate representing the Warrant and reflecting
the changes thereto effected by this Amendment.
4. This Amendment shall be binding upon and insure to the benefit of the
Company and the Warrantholder and their respective successors and permitted
assigns. This Amendment shall be governed by the laws of the Commonwealth of
Virginia without reference to the choice of law principles of any jurisdiction.
IN WITNESS WHEREOF, this Amendment has been executed as a sealed instrument by
the Company, by its duly authorized officer, and by the Warrantholder, as of the
date first above written.
COMMONWEALTH
BIOTECHNOLOGIES, INC.
By: ---------------------------------
Title: ------------------------------
Date: October____, 1997
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Xxxxxx X. Xxxxxxxx
Date: October____, 1997
