ALEXZA PHARMACEUTICALS, INC. WARRANT dated as of August ___, 2010
Exhibit 4.1
ALEXZA PHARMACEUTICALS, INC.
WARRANT
dated as of August ___, 2010
This Certifies That, for value received, [ ] or its
successors or permitted assigns (such Person and such successors and assigns each being the
“Warrant Holder” with respect to the Warrant (as herein defined) held by it), at any time and from
time to time on or after the six-month anniversary of the date of this Warrant and on or prior to
the Expiration Date (as herein defined), is entitled (a) to subscribe for the purchase from Alexza
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), [ ]
Shares (as herein defined) at a price per Share equal to the Exercise Price (as herein defined),
and (b) to the other rights set forth herein; provided that the number of Shares issuable upon any
exercise of this Warrant and the Exercise Price shall be adjusted and readjusted from time to time
in accordance with Section 4. By accepting delivery hereof, the Warrant ▇▇▇▇▇▇ agrees to be
bound by the provisions hereof.
This Warrant (the “Warrant”) is issued as part of a series of similar Warrants
(collectively, the “Warrants”) issued pursuant to that certain Subscription Agreement, dated as of
August 4, 2010, by and among the Company and the other parties identified therein (the
“Subscription Agreement”).
In Furtherance Thereof, the Company irrevocably undertakes and agrees for the
benefit of Warrant Holder as follows:
Section 1. Definitions and Construction.
(a) Certain Definitions. As used herein (the following definitions being
applicable in both singular and plural forms):
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with such Person.
“Appraised Value” means at any time the fair market value thereof determined in good
faith by the Board of Directors of the Company as of a date which is within ten (10) days of the
date as of which the determination is to be made, subject to the rights of the Requisite Holders
pursuant to Section 4(j).
“Business Day” means any day except a Saturday, Sunday or other day on which commercial
banks in New York City are authorized by law to close.
“Closing Price” means, for any trading day with respect to a Share, (a) the last reported
sale price on such day on the principal national securities exchange on which the Shares are listed
or admitted to trading or, if no such reported sale takes place on any such day, the average of the
closing bid and asked prices thereon, as reported in The Wall Street Journal, or (b) if such Shares
shall not be listed or admitted to trading on a national securities exchange, the last reported
sales price on the NASDAQ National Market System or, if no such reported sale takes place on any
such day, the average of the closing bid and asked prices thereon, as reported in The Wall Street
Journal, or (c) if such Shares shall not be quoted on such National Market System nor listed or
admitted to trading on a national securities exchange, then the average of the closing bid and
asked prices, as reported by The Wall Street Journal for the over-the-counter market; provided that
if clause (a), (b), or (c) applies and no price is reported in The Wall
Street Journal for any trading day, then the price reported in The Wall Street Journal for the most
recent prior trading day shall be deemed to be the price reported for such trading day.
“Commission” means the Securities and Exchange Commission or any other Federal agency
administering the Securities Act at the time.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.
“Exercise Amount” means for any number of Warrant Shares as to which this Warrant is
being exercised the product of (i) such number of Warrant Shares times (ii) the Exercise Price.
“Exercise
Price” means $3.30 per Warrant Share, as adjusted from time to time pursuant
to Section 4.
“Expiration Date” means August [___], 2015.
“Initial Holder” means [ ].
“Person” means an individual, a corporation, a partnership, an association, a trust or
any other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.
“Requisite Holders” means at any time holders of Warrant Shares and Warrants representing
at least two-thirds of the Warrant Shares outstanding or issuable upon the exercise of all the
outstanding Warrants.
“Securities Act” means the Securities Act of 1933, as amended, or any successor Federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
“Shares” means shares of the Company’s currently authorized common stock, $0.0001 par
value, and stock of any other class or other consideration into which such currently authorized
common stock may hereafter have been changed into.
“Warrant” means, as the context requires, this warrant and any successor warrant or
warrants issued upon a whole or partial transfer or assignment of any such Share purchase warrant
or of any such successor warrant.
“Warrant Shares” means the number of Shares issued or issuable upon exercise of this
Warrant as set forth in the introduction hereto, as adjusted from time to time pursuant to
Section 4, or in the case of other Warrants, issuable upon exercise of those Warrants.
(b) Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles. When used herein, the term “financial
statements” shall include the notes and schedules thereto. References to fiscal periods are to
fiscal periods of the Company.
(c) Computation of Time Periods. With respect to the computation of periods of
time from a specified date to a later specified date, the word “from” means “from and including”
and the words “to” and “until” each mean “to but excluding.” Periods of days shall be counted in
calendar days unless otherwise stated.
(d) Construction. Unless the context requires otherwise, references to the plural
include the singular and to the singular include the plural, references to any gender include any
other gender, the part includes the whole, the term “including” is not limiting, and the term “or”
has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Warrant refer to
this Warrant as a whole and not to any particular provision of this Warrant. Section, subsection,
clause, exhibit, appendix and schedule references are to this Warrant, unless otherwise specified.
Any reference to this Warrant includes any and all permitted alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as applicable.
(e) Exhibits and Schedules. All of the exhibits, appendices and schedules
attached hereto shall be deemed incorporated herein by reference.
2
(f) No Presumption Against Any Party. Neither this Warrant nor any uncertainty or
ambiguity herein or therein shall be construed or resolved using any presumption against any party
hereto or thereto, whether under any rule of construction or otherwise. On the contrary, this
Warrant has been reviewed by each of the parties and their counsel and, in the case of any
ambiguity or uncertainty, shall be construed and interpreted according to the ordinary meaning of
the words used so as to fairly accomplish the purposes and intentions of all parties hereto.
Section 2. Exercise of Warrant.
(a) Exercise and Payment. The Warrant Holder may exercise this Warrant in whole
or in part, at any time or from time to time on any Business Day on or prior to the Expiration
Date, by delivering to the Company a duly executed notice (a “Notice of Exercise”) in the form of
Exhibit A and by payment to the Company of the Exercise Amount, at the election of the
Warrant Holder, either (a) by wire transfer of immediately available funds to the account of the
Company in an amount equal to the Exercise Amount not later than
three Business Days after the Company receives the Notice of Exercise, (b) by receiving from the Company the number of
Warrant Shares equal to (i) the number of Warrant Shares as to which this Warrant is being
exercised minus (ii) the number of Warrant Shares having a value, based on the Closing Price on the
trading day immediately prior to the date of such exercise (or if there is no such Closing Price,
then based on the Appraised Value as of such day), equal to the Exercise Amount, or (c) any
combination of the foregoing. The Company acknowledges that the provisions of clause (b) are
intended, in part, to ensure that a full or partial exchange of this Warrant pursuant to such
clause (b) will qualify as a conversion, within the meaning of paragraph (d)(3)(ii) of Rule 144
under the Securities Act. At the request of any Holder, the Company will accept reasonable
modifications to the exchange procedures provided for in this Section 2 in order to
accomplish such intent. For all purposes of this Warrant (other than this Section 2(a)),
any reference herein to the exercise of this Warrant shall be deemed to include a reference to the
exchange of this Warrant into Shares in accordance with the terms of clause (b).
(b) Effectiveness and Delivery. The Company shall confirm receipt of any Notice
of Exercise delivered pursuant to Section 2(a) within one Business Day of the receipt
thereof. As soon as practicable but not later than three Business Days after the Company shall have
received such Notice of Exercise, and provided that payment of the
Exercise Amount has been received by the Company, the Company shall execute and deliver or cause to be
executed and delivered, in accordance with such Notice of Exercise, a certificate or certificates
representing the number of Shares specified in such Notice of Exercise, issued in the name of the
Warrant Holder or in such other name or names of any Person or Persons designated in such Notice of
Exercise. Without prejudice to the holding periods determined under Rule 144 under the Securities
Act, this Warrant shall be deemed to have been exercised and such Share certificate or certificates
shall be deemed to have been issued, and the Warrant Holder or other Person or Persons designated
in such Notice of Exercise shall be deemed for all purposes to have become a holder of record of
Shares, all as of the date that such Notice of Exercise shall have been received by the
Company.
(c) Surrender of Warrant. The Warrant Holder shall surrender this Warrant to the
Company within five Business Days after it delivers the Notice of Exercise, and in the event of a
partial exercise of the Warrant, the Company shall execute and deliver to the Warrant Holder, at
the time the Company delivers the Share certificate or certificates issued pursuant to such Notice
of Exercise, a new Warrant for the unexercised portion of the Warrant, but in all other respects
identical to this Warrant.
(d) Fractional Shares. The Company shall not be required to issue fractions of
Shares upon an exercise of the Warrant. If any fraction of a Share would, but for this restriction,
be issuable upon an exercise of the Warrant, in lieu of delivering such fractional Share, the
Company shall pay to the Warrant Holder, in cash, an amount equal to the same fraction times the
Closing Price on the trading day immediately prior
to the date of such exercise (or if there is no such Closing Price, then based on the Appraised
Value as of such day).
(e) Expenses and Taxes. The Company shall pay all expenses, taxes and owner
charges payable in connection with the preparation, issuance and delivery of certificates for the
Warrant Shares and any new
3
Warrants, except that if the certificates for the Warrant Shares or the
new Warrants are to be registered in a name or names other than the name of the Warrant Holder,
funds sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by
the Warrant Holder at the time of its delivery of the Notice of Exercise or promptly upon receipt
of a written request by the Company for payment.
(f) Automatic Cashless Exercise. To the extent that the Closing Price on the
trading day immediately prior to the Expiration Date (or if there is no such Closing Price, then
based on the Appraised Value as of such day) is greater than the Exercise Price and there has not
been an exercise by the Warrant Holder pursuant to Section 2(a) hereof, any portion of the
Warrant that remains unexercised shall be exercised automatically in whole (not in part), upon the
Expiration Date. Payment by the Warrant Holder upon such automatic exercise shall be in the form of
the Warrant Holder receiving from the Company the number of Warrant Shares equal to (i) the number
of Warrant Shares as to which this Warrant is being automatically exercised minus (ii) the number
of Warrant Shares having a value, based on the Closing Price on the trading day immediately prior
to the date of such automatic exercise (or if there is no such Closing Price, then based on the
Appraised Value as of such day), equal to the Exercise Amount.
Section 3. Validity of Warrant and Issuance of Shares.
(a) The Company represents and warrants that this Warrant has been duly authorized, is
validly issued, and constitutes the valid and binding obligation of the Company and is enforceable
against the Company in accordance with its terms.
(b) The Company further represents and warrants that on the date hereof it is duly
authorized and reserved, and the Company hereby agrees that it will at all times until the
Expiration Date have duly authorized and reserved, such number of Shares as will be sufficient to
permit the exercise in full of the Warrant, and that all such Shares are and will be duly
authorized and, when issued upon exercise of the Warrant, will be validly issued, fully paid and
non-assessable, and free and clear of all security interests, claims, liens, equities and other
encumbrances.
Section 4. Adjustment Provisions. The Exercise Price in effect at any time, and
the number of Warrant Shares that may be purchased upon any exercise of the Warrant, shall be
subject to change or adjustment as follows:
(a) Share Reorganization. If the Company shall subdivide its outstanding Shares
into a greater number of Shares, by way of a stock split, stock dividend or otherwise, or
consolidate its outstanding Shares into a smaller number of Shares (any such event being herein
called a “Share Reorganization”), then (i) the Exercise Price shall be adjusted, effective
immediately after the effective date of such Share Reorganization, to a price determined by
multiplying the Exercise Price in effect immediately prior to such effective date by a fraction,
the numerator of which shall be the number of Shares outstanding on such effective date before
giving effect to such Share Reorganization and the denominator of which shall be the number of
Shares outstanding after giving effect to such Share Reorganization, and (ii) the number of Shares
subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a
number determined by multiplying the number of Shares subject to purchase immediately before such
Share Reorganization by a fraction, the numerator of which shall be the number of Shares
outstanding after giving effect to such Share Reorganization and the denominator of which shall be
the number of Shares outstanding immediately before giving effect to such Share Reorganization.
(b) Special Distributions. If the Company shall issue or distribute to any holder
or holders of Shares evidences of indebtedness, any other securities of the Company or any cash,
property or other assets (excluding a Share Reorganization), whether or not accompanied by a
purchase, redemption or other
acquisition of Shares (any such nonexcluded event being herein called a “Special Distribution”),
then the Warrant Holder shall be entitled to
a pro-rata share of such Special Distribution as
though the Warrant Holder had fully exercised this Warrant immediately prior to the record date for
such Special Distribution, and the Company shall pay or distribute such pro-rata share to Warrant
Holder when paid or distributed to
4
the holders of the Shares. A reclassification of the Shares
(other than a change in par value, or from par value to no par value or from no par value to par
value) into shares of any other class of stock shall be deemed to be a distribution by the Company
to the holders of its Shares of such class of stock and, if the outstanding Shares shall be changed
into a larger or smaller number of Shares as part of such reclassification, a Share Reorganization.
(c) Capital Reorganization. Without limiting any of the other provisions hereof,
if any (i) capital reorganization; (ii) reclassification of the capital stock of the Company; (iii)
merger, consolidation or reorganization or other similar transaction or series of related
transactions which results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or by being converted
into voting securities of the surviving or acquiring entity) less than 50% of the combined voting
power of the voting securities of or economic interests in the Company or such surviving or
acquiring entity outstanding immediately after such merger, consolidation or reorganization; (iv)
sale, lease, license, transfer, conveyance or other disposition of all or substantially all of the
assets of the Company; (v) sale of shares of capital stock of the Company, in a single transaction
or series of related transactions, representing at least 50% of the voting power of the voting
securities of or economic interests in the Company; or (vi) the acquisition by any “person”
(together with his, her or its Affiliates) or “group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) acquires, directly or indirectly, the beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of outstanding shares of capital stock
and/or other equity securities of the Company, in a single transaction or series of related
transactions (including, without limitation, one or more tender offers or exchange offers),
representing at least 50% of the voting power of or economic interests in the then outstanding
shares of capital stock of the corporation (each of (i)-(vi) above a “Corporate Reorganization”)
shall be effected, then the Company shall use its commercially reasonable efforts to ensure that
lawful and adequate provision shall be made whereby each Warrant Holder shall thereafter continue
to have the right to purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Warrant Shares issuable upon exercise of the Warrants held by such
Warrant Holder, shares of stock in the surviving or acquiring entity (“Acquirer”), as the case may
be, such that the aggregate value of the Warrant Holder’s warrants to purchase such number of
shares, where the value of each new warrant to purchase one share in the Acquirer is determined in
accordance with the Black-Scholes Option Pricing formula set forth in Appendix A hereto, is
equivalent to the aggregate value of the Warrants held by such Warrant Holder, where the value of
each Warrant to purchase one share in the Company is determined in accordance with the
Black-Scholes Option Pricing formula set forth Appendix B hereto. Furthermore, the new
warrants to purchase shares in the Acquirer referred to herein shall have the same expiration date
as the Warrants, and shall have a strike price, KAcq, that is calculated in accordance
with Appendix A hereto. For the avoidance of doubt, if the surviving or acquiring entity,
as the case may be, is a member of a consolidated group for financial reporting purposes, the
Acquirer shall be deemed to be the parent of such consolidated group for purposes of this
Section 4(c) and Appendix A hereto.
Moreover, appropriate provision shall be made with respect to the rights and interests of each
Warrant Holder to the end that the provisions hereof (including, without limitation, provision for
adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any shares of stock thereafter deliverable upon the exercise thereof.
The Company shall not effect any such Corporate Reorganization unless prior to or simultaneously
with the consummation thereof the successor corporation resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume by written instrument, reasonably deemed by the Board of
Directors of the Company and the Requisite Holders to be satisfactory
in form and substance, the obligation to deliver to the holder of the Warrants, at the last address
of such holder appearing on the books of the Company, such shares of stock, as, in accordance with
the foregoing provisions, such holder may be entitled to purchase, and the other obligations under
these Warrants. The provisions of this Section 4(c) shall similarly apply to successive
Corporate Reorganizations. If the Company, in spite of using its commercially reasonable efforts,
is unable to cause these Warrants to
5
continue in full force and effect until the Expiration Date in
connection with any Corporate Reorganization, then the Company shall pay the Warrant Holders an
amount per Warrant to purchase one share in the Company that is calculated in accordance with the
Black-Scholes Option Pricing formula set forth in Appendix B hereto. Such payment shall be
made, promptly following the closing of the Corporate Reorganization, in cash in the event that the Corporate Reorganization results in the stockholders of the
Company receiving cash from the Acquirer at the closing of the transaction, and shall be made in
shares of the Company (with the value of each share in the Company is determined according to
SCorp in Appendix B hereto) in the event that the Corporate Reorganization
results in the stockholders of the Company receiving shares in the Acquirer or other entity at the
closing of the transaction. In the event that the stockholders of the Company receive both cash and
shares at the closing of the transaction, such payment to the Warrant Holders shall be also be made
in both cash and shares in the same proportion as the consideration received by the stockholders.
(d) Adjustment Rules.
(i) Any adjustments pursuant to this Section 4 shall be made successively
whenever any event referred to herein shall occur, except that, notwithstanding any other provision
of this Section 4, no adjustment shall be made to the number of Warrant Shares to be
delivered to the Warrant Holder (or to the Exercise Price) if such adjustment represents less than
1% of the number of Warrant Shares previously required to be so delivered, but any lesser
adjustment shall be carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward shall amount to 1% or
more of the number of Warrant Shares to be so delivered.
(ii) No adjustments shall be made pursuant to this Section 4 in respect of
the issuance of Warrant Shares upon exercise of the Warrant;
(iii) If the Company shall take a record of the holders of its Shares for any
purpose referred to in this Section 4, then (x) such record date shall be deemed to be the
date of the issuance, sale, distribution or grant in question and (y) if the Company shall legally
abandon such action prior to effecting such action, no adjustment shall be made pursuant to this
Section 4 in respect of such action.
(iv) In computing adjustments under this Section 4, (A) fractional interests
in Shares shall be taken into account to the nearest one-thousandth of a Share, and
(B) calculations of the Exercise Price shall be carried to the nearest one-thousandth of one cent.
(e) Proceedings Prior to Any Action Requiring Adjustment. As a condition
precedent to the taking of any action which would require an adjustment pursuant to this
Section 4, the Company shall take any action which may be necessary, including obtaining
regulatory approvals or exemptions, in order that the Company may thereafter validly and legally
issue as fully paid and nonassessable all Shares which the Warrant Holder is entitled to receive
upon exercise of the Warrant.
(f) Notice of Adjustment. Not less than 20 days prior to the record date or
effective date, as the case may be, of any action which requires or might require an adjustment or
readjustment pursuant to this Section 4, the Company shall give notice to the Warrant
Holder of such event, describing such event in reasonable detail and specifying the record date or
effective date, as the case may be, and, if determinable, the required adjustment and computation
thereof. If the required adjustment is not determinable as the time of such notice, the Company
shall give notice to the Warrant Holder of such adjustment and computation as soon as reasonably
practicable after such adjustment becomes determinable. In connection with any such adjustment or
readjustment, at its sole cost and expense, the Company will also cause independent certified
public accountants of recognized national standing (which may be the regular
auditors of the Company) selected by the Company to verify its computations and confirm that such
computations were made in accordance with this Section 4 and, in connection with the
preparation of the Company’s quarterly financial statements prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method of calculation thereof and
the facts upon which such adjustment or readjustment is based, including a statement of (i) the
number of Shares outstanding or deemed to be outstanding, and (ii) the
6
Exercise Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if required by this
Section 4) on account thereof. The Company will forthwith mail a copy of each such report
to the Warrant Holder and will, upon the written request at any time of the Warrant Holder, furnish
to such holder a like report setting forth the Exercise Price at the time in effect and showing in
reasonable detail how it was calculated. The Company will also keep copies of all such reports at
its office and will cause the same to be available for inspection at such office during normal
business hours by the Warrant Holder or any prospective purchaser of this Warrant designated by the
Warrant Holder.
(g) Disputes. Any dispute which arises between the Warrant Holder and the Company
with respect to the calculation of the adjusted Exercise Price or Warrant Shares issuable upon
exercise shall be determined by the independent auditors of the Company in accordance with the
terms of this Warrant, and such determination shall be binding upon the Company and the holders of
the Warrants and the Warrant Shares if made in good faith and without manifest error.
(h) Other Actions Affecting Shares.
(i) Equitable Equivalent. In case any event shall occur as to which the
provisions of this Section 4 set forth above hereof are not strictly applicable but the
failure to make any adjustment would not, or if the application of the provisions of this
Section 4 otherwise would not, in the opinion of the Warrant Holder, fairly protect the
purchase rights represented by this Warrant in accordance with the essential intent and principles
of this Section 4, then, in each such case, at the request of the Warrant Holder, the
Company shall appoint a firm of independent investment bankers of recognized national standing
(which shall be completely independent of the Company and shall be satisfactory to the Warrant
Holder or the Requisite Holders), which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in this Section 4,
necessary to preserve the purchase rights of such Warrant Holder represented by this Warrant. Upon
receipt of such opinion, the Company will promptly mail a copy thereof to the holder of this
Warrant and shall make the adjustments described therein.
(ii) No Avoidance. The Company shall not, by amendment of its certificate of
incorporation or bylaws or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this Warrant against
dilution or other impairment as if the holder was a stockholder of the Company entitled to the
benefit of fiduciary duties afforded to stockholders under Delaware law.
(i) Adjustment of Par Value. If for any reason (including the operation of the
adjustment provisions set forth in this Warrant), the Exercise Price on any date of exercise of
this Warrant shall not be lawful and adequate consideration for the issuance of the relevant
Warrant Shares, then the Company shall take such steps as are necessary (including the amendment of
its certificate of incorporation so as to reduce the par value of the Shares) to cause such
Exercise Price to be adequate and lawful consideration on the date the payment thereof is due, but
if the Company shall fail to take such steps, then the Company acknowledges that the Warrant Holder
shall have been damaged by the Company in an amount equal to an amount, that, when added to the
total Exercise Price for the relevant Warrant Shares, would equal lawful and adequate consideration
for the issuance of such Warrant Shares, and the Company irrevocably agrees that if the Warrant
Holder shall then forgive the right to recover such damages from the Company, such forgiveness
shall constitute, and Company shall accept such forgiveness as, additional lawful consideration for
the issuance of the relevant Warrant Shares.
(j) Appraisal.
(i) If the Requisite Holders shall, for any reason whatsoever, disagree with the
Company’s determination of the Appraised Value of a Share, then such holders shall by notice to the
Company (an “Appraisal Notice”) given within sixty (60) days after the Company notifies the holders
of such
7
determination, elect to dispute such determination, and such dispute shall be resolved as
set forth in clause (ii) of this Section.
(ii) The Company shall within ten (10) days after an Appraisal Notice has been
given, engage an independent investment bank of national repute (the “Appraiser”) selected by the
Requisite Holders and retained pursuant to an engagement letter between the Company and the
Appraiser with respect to such valuation in form and substance reasonably acceptable to Requisite
Holders, to make an independent determination of the Appraised Value of a Share; such value shall
be determined without deduction for (a) liquidity considerations, (b) minority stockholder status,
or (c) any liquidation or other preference or any right of redemption in favor of any other equity
securities of the Company. The costs of engagement of such investment bank for any such
determination of Appraised Value shall be paid by the Company.
Section 5. Restrictions on Exercise. The Company shall provide to the Warrant
Holder prompt written notice of any time that the Company is unable to issue the Warrant Shares via
DTC transfer (or otherwise without restrictive legend), because (A) the Commission has issued a
stop order with respect to the Registration Statement on Form S-3 (File No. 333-166514) (the
“Registration Statement”), (B) the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently, (C) the Company has
suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or (D) the Registration Statement is otherwise not then effective (each a “Restrictive
Legend Event”). To the extent that a Restrictive Legend Event occurs after the Warrant Holder has
exercised this Warrant but prior to the delivery of the Warrant Shares, the Company shall (i) if
the average Closing Price of the Shares over the last five consecutive trading days is greater than
the Exercise Price, provide written notice to the Warrant Holder that the Company will deliver that
number of Warrant Shares to the Warrant Holder as should be delivered in a cashless exercise in
accordance with clause (b) of Section 2(a), and return to the Warrant Holder all
consideration paid to the Company in connection with the Warrant ▇▇▇▇▇▇’s attempted exercise of
this Warrant (a “Company-Elected Conversion”), or (ii) at the election of the Warrant Holder to be
given within five (5) days of receipt of notice of a Company-Elected Conversion, the Warrant Holder
shall be entitled to rescind the previously submitted Notice of Exercise and the Company shall
return all consideration paid by Warrant Holder for such shares upon such rescission. The Company
shall provide to the Warrant Holder prompt written notice of the termination of the Restrictive
Legend Event. If a Restricted Legend Event is occurring as of the Expiration Date, the term of this
Warrant shall be extended until the fifth (5th) business day after the termination of
such Restricted Legend Event.
The Warrant Holder understands that if the Company does not file reports pursuant to either
Section 13(a) or Section 15(d) of the Exchange Act, or if a registration statement covering this
Warrant or the Warrant Shares, as applicable, is not in effect when it desires to sell (i) the
rights to purchase Shares pursuant to this Warrant or (ii) the Shares issuable upon exercise of the
right to purchase, the Warrant Holder may be required to hold such securities for an indefinite
period. The Warrant Holder also understands that any sale of (A) its rights hereunder to purchase
Shares or (B) Shares issued or issuable hereunder that might be made by it in reliance upon Rule
144 under the Securities Act may be made only in accordance with the terms and conditions of Rule
144. The Warrant Holder hereby acknowledges and agrees that if a registration statement under the
Securities Act covering the Warrant Shares is not effective at the time this Warrant is exercised,
the Warrant Holder shall only be permitted to exercise this Warrant by means of a net issuance
pursuant to clause (b) of Section 2(a).
Section 6. Transfer of Warrant. The Warrant Holder upon transfer of the Warrant
must deliver to the Company a duly executed Warrant Assignment in the form of Exhibit B and
upon surrender of this Warrant to the Company, the Company shall execute and deliver a new Warrant
with appropriate changes to reflect such Assignment, in the name or names of the assignee or
assignees specified in the Warrant Assignment or other instrument of assignment and, if the Warrant
Holder’s entire interest is not being transferred or assigned, in the name of the Warrant Holder,
and upon the Company’s execution and delivery of such new Warrant, this Warrant shall promptly be
cancelled; and provided that any assignee shall have all of the
8
rights of the Initial Holder
hereunder. The Warrant Holder shall pay any transfer tax imposed in connection with such assignment
(if any). Any transfer or exchange of this Warrant shall be without charge to the Warrant Holder
(except as provided above with respect to transfer taxes, if any) and any new Warrant issued shall
be dated the date hereof.
Section 7. Assistance in Disposition of Warrant or Warrant Shares.
Notwithstanding any other provision herein, in the event that it becomes unlawful for the Warrant
Holder to continue to hold the Warrant, in whole or in part, or some or all of the Shares held by
it, or restrictions are imposed on the Warrant Holder by any statute, regulation or governmental
authority which, in the judgment of the Warrant Holder, make it unduly burdensome to continue to
hold the Warrant or such Shares, the Warrant Holder may sell or otherwise dispose of the Warrant
(subject to the restrictions on transfer provided in Section 6) or its Shares, and the Company
agrees to provide reasonable assistance to the Warrant Holder in disposing of the Warrant and such
Shares in a prompt and orderly manner and, at the request of the Warrant Holder, to provide (and
authorize the Warrant Holder to provide) financial and other information concerning the Company to
any prospective purchaser of the Warrant or Shares owned by the Warrant Holder.
Section 8. Identity of Transfer Agent. The Transfer Agent for the Shares is
Mellon Investor Services LLC. Upon the appointment of any subsequent transfer agent for the Shares,
the Company will mail to the Warrant Holder a statement setting forth the name and address of such
transfer agent.
Section 9. Lost, Mutilated or Missing Warrants. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any
Warrant, and, in the case of loss, theft or destruction, upon receipt of indemnification
satisfactory to the Company (in the case of the Initial Holder its unsecured, unbonded agreement of
indemnity or affidavit of loss shall be sufficient) or, in the case of mutilation, upon surrender
and cancellation of the mutilated Warrant, the Company shall execute and deliver a new Warrant of
like tenor and representing the right to purchase the same aggregate number of Warrant Shares.
Section 10. Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the Warrant Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary
to ensure that, following such exercise (or other issuance), the total number of Shares then
beneficially owned by the Warrant Holder and any other Persons whose beneficial ownership of Shares
would be aggregated with the Warrant Holder’s for purposes of Section 13(d) of the Exchange Act,
does not exceed 4.999% of the total number of then issued and outstanding Shares (including for
such purpose the Shares issuable upon such exercise). For such purposes, beneficial ownership shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Warrant Holder that the Company is not
representing to such Warrant Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and such Warrant Holder is solely responsible for any schedules required to be
filed in accordance therewith. To the extent that the limitation contained in this Section
10 applies, the determination of whether this Warrant is exercisable (in relation to other
securities owned by such Warrant Holder) and of which portion of this Warrant is exercisable shall
be in the sole discretion of the Warrant Holder, and the submission of a Notice of Exercise shall
be deemed to be the Warrant Holder’s determination of whether this Warrant is exercisable (in
relation to other securities owned by such Warrant Holder) and of which portion of this Warrant is
exercisable, in each case subject
to such aggregate percentage limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 10, in
determining the number of outstanding Shares, the Warrant Holder may rely on the number of
outstanding Shares as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the
case may be, (y) a more recent public announcement by the Company or (z) any other notice by the
Company or the Company’s transfer agent setting forth the number of Shares outstanding. Upon the
written request of the Warrant Holder, the Company shall within three
9
Business Days confirm orally
and in writing to such Warrant Holder the number of Shares. This provision shall not restrict the
number of Shares which a Warrant Holder may receive or beneficially own in order to determine the
amount of securities or other consideration that such Warrant Holder may receive in the event of a
transaction contemplated in Section 4 of this Warrant. By written notice to the Company,
which will not be effective until the 61st day after such notice is delivered to the
Company, the Warrant Holder may waive the provisions of this Section 10 (but such waiver
will not affect any other holder) to change the beneficial ownership limitation to 9.99% of the
number of Shares outstanding immediately after giving effect to the issuance of Shares upon
exercise of this Warrant, and the provisions of this Section 10 shall continue to apply.
Upon such a change by a Warrant Holder of the beneficial ownership limitation from such 4.99%
limitation to such 9.99% limitation, the beneficial ownership limitation may not be further waived
by such Warrant Holder.
Section 12. Waivers; Amendments. Any provision of this Warrant may be amended or
waived with (but only with) the written consent of the Company and the Warrant Holder. No failure
or delay of the Company or the Warrant Holder in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereon or the exercise of any other right or power. No notice or demand on the
Company in any case shall entitle the Company to any other or future notice or demand in similar or
other circumstances. The rights and remedies of the Company and the Warrant Holder hereunder are
cumulative and not exclusive of any rights or remedies which it would otherwise have.
Section 13. Miscellaneous.
(a) Stockholder Rights. The Warrant shall not entitle any Warrant Holder, prior
to the exercise of the Warrant, to any voting rights as a stockholder of the Company.
(b) Expenses. The Company shall pay all reasonable expenses of the Warrant
Holder, including reasonable fees and disbursements of counsel, in connection with the preparation
of the Warrant, any waiver or consent hereunder or any amendment or modification hereof (regardless
of whether the same becomes effective), or the enforcement of the provisions hereof; provided that
the Company shall not be required to pay any expenses of the Warrant Holder arising solely in
connection with a transfer of the Warrant.
(c) Successors and Assigns. All the provisions of this Warrant by or for the
benefit of the Company or the Warrant Holder shall bind and inure to the benefit of their
respective successors and assigns.
(d) Severability. In case any one or more of the provisions contained in this
Warrant shall be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.
(e) Notices. Any notice or other communication hereunder shall be in writing and
shall be sufficient if sent by facsimile or first-class mail or courier, postage prepaid, and addressed as
follows: (a) if to the Company,
addressed to the Company at its address for notices as set forth below its signature hereon or any
other address as the Company may hereafter notify to the Warrant Holder and (b) if to the Warrant
Holder, addressed to such address as the Warrant Holder may hereafter from time to time notify to
the Company for the purposes of notice hereunder.
(f) Equitable Remedies. Without limiting the rights of the Company and the
Warrant Holder to pursue all other legal and equitable rights available to such party for the other
parties’ failure to perform its obligations hereunder, the Company and the Warrant Holder each
hereto acknowledge and agree that the remedy at law for any failure to perform any obligations
hereunder would be inadequate and that each shall
10
be entitled to specific performance, injunctive
relief or other equitable remedies in the event of any such failure.
(g) Continued Effect. Rights and benefits conferred on the holders of Warrant
Shares pursuant to the provisions hereof shall continue to inure to the benefit of, and shall be
enforceable by, such holders, notwithstanding the surrender of the Warrant to, and its cancellation
by, the Company upon the full or partial exercise or repurchase hereof.
(h) Confidentiality. The Warrant Holder agrees to keep confidential any
proprietary information relating to the Company delivered by the Company hereunder; provided that
nothing herein shall prevent the Warrant Holder from disclosing such information: (i) to any holder
of Warrants or Warrant Shares, (ii) to any Affiliate of any holder of Warrants or Warrant Shares or
any actual or potential transferee of the rights or obligations hereunder that agrees to be bound
by this Section 13(h), (iii) upon order, subpoena, or other process of any court or
administrative agency or otherwise required by law, (iv) upon the request or demand of any
regulatory agency or authority having jurisdiction over such party, (v) which has been publicly
disclosed, (vi) which has been obtained from any Person that is not a party hereto or an affiliate
of any such party, (vii) in connection with the exercise of any remedy, or the resolution of any
dispute hereunder, (viii) to the legal counsel or certified public accountants for any holder of
Warrants or Warrant Shares, or (ix) as otherwise expressly
contemplated by this Warrant. Notwithstanding the foregoing, the
Company shall not provide material, non-public information to the
Warrant Holder without such Warrant Holder’s written consent.
(i) Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW.
(j) Section Headings. The section headings used herein are for convenience of
reference only and shall not be construed in any way to affect the interpretation of any provisions
of the Warrant.
[Remainder of Page Intentionally Left Blank]
11
In Witness Whereof, the Company has caused this Warrant to be duly executed by
its authorized signatory as of the day and year first above written.
| Alexza Pharmaceuticals, Inc., a Delaware corporation |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Address for Notices:
|
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Mountain View, CA 94043 | ||
Facsimile:
|
(▇▇▇) ▇▇▇-▇▇▇▇ |
Exhibit A to Warrant
Form of Notice of Exercise
,20____
To: Alexza Pharmaceuticals, Inc.
Reference is made to the Warrant dated August ___, 2010. Terms defined therein are used
herein as therein defined.
The undersigned, pursuant to the provisions set forth in the Warrant, hereby irrevocably
elects and agrees to purchase Shares, and makes payment herewith in
full therefor at the Exercise Price of $ in the following form:
.
[If the number of Shares as to which the Warrant is being exercised is less than all of
the Shares purchasable thereunder, the undersigned hereby requests that a new Warrant representing
the remaining balance of the Shares be registered in the name of ,
whose address is:
.]
The undersigned hereby represents that it is exercising the Warrant for its own account or the
account of an Affiliate and not with the view to any sale or distribution and that the Warrant
Holder will not offer, sell or otherwise dispose of the Warrant or any underlying Warrant Shares in
violation of applicable securities laws.
| [NAME OF WARRANT HOLDER] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [ADDRESS OF WARRANT HOLDER] |
||||
Exhibit B to Warrant
Form of Warrant Assignment
Reference is made to the Warrant dated August ___, 2010, issued by Alexza Pharmaceuticals,
Inc. Terms defined therein are used herein as therein defined.
FOR VALUE RECEIVED (the “Assignor”) hereby sells, assigns
and transfers all of the rights of the Assignor as set forth in such Warrant, with respect to the
number of Warrant Shares covered thereby as set forth below, to the Assignee(s) as set forth below:
Number of Warrant Shares
| Number of Warrant | ||||
| Name(s) of Assignee(s) | Address(es) | Shares | ||
All notices to be given by the Company to the Assignor as Warrant Holder shall be sent to
the Assignee(s) at the above listed address(es), and, if the number of Shares being hereby assigned
is less than all of the Shares covered by the Warrant held by the Assignor, then also to the
Assignor.
In accordance with Section 6 of the Warrant, the Assignor requests that the Company
execute and deliver a new Warrant or Warrants in the name or names of the assignee or assignees, as
is appropriate, or, if the number of Shares being hereby assigned is less than all of the Shares
covered by the Warrant held by the Assignor, new Warrants in the name or names of the assignee or
the assignees, as is appropriate, and in the name of the Assignor.
The undersigned represents that the Assignee has represented to the Assignor that the
Assignee is acquiring the Warrant for its own account or the account of an Affiliate for investment
purposes and not with the view to any sale or distribution, and that the Assignee will not offer,
sell or otherwise dispose of the Warrant or the Warrant Shares except under circumstances as will
not result in a violation of applicable securities laws.
Dated: , 20___
| [NAME OF ASSIGNOR] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [ADDRESS OF ASSIGNOR] |
||||
Appendix A
Black Scholes Option Pricing formula to be used when calculating the value of each new warrant to
purchase one share in the Acquirer shall be:
CAcq = value of each warrant to purchase one share in the Acquirer
SAcq = price of Acquirer’s stock as determined by reference to the average of the
closing prices on the securities exchange or Nasdaq Global Market over the 20-day period ending
three trading days prior to the closing of the Corporate Reorganization described in Section
4(c) if the Acquirer’s stock is then traded on such exchange or system, or the average of the
closing bid or sale prices (whichever is applicable) in the over-the-counter market over the 20-day
period ending three trading days prior to the closing of the Corporate Reorganization if the
Acquirer’s stock is then actively traded in the over-the-counter market, or the then most recently
completed financing if the Acquirer’s stock is not then traded on a securities exchange or system
or in the over-the-counter market.
TAcq =
expiration date of new warrants to purchase shares in the Acquirer =
TCorp
tAcq = date of issue of new warrants to purchase shares in the Acquirer
TAcq-tAcq = time until warrant expiration, expressed in years
s = volatility = annualized standard deviation of daily log-returns (using a 262-day annualization
factor) of the Acquirer’s stock price on the securities exchange or Nasdaq Global Market over a
20-day trading period, determined by the Warrant Holders, that is within the 100-day trading period
ending on the trading day immediately after the public announcement of the Corporate Reorganization
described in Section 4(c) if the Acquirer’s stock is then traded on such exchange or
system, or the annualized standard deviation of daily-log returns (using a 262-day annualization
factor) of the closing bid or sale prices (whichever is applicable) in the over-the-counter market
over a 20-day trading period, determined by the Warrant Holder, that is within the 100-day trading
period ending on the trading day immediately after the public announcement of the Corporate
Reorganization if the Acquirer’s stock is then actively traded in the over-the-counter market, or
0.6 (or 60%) if the Acquirer’s stock is not then traded on a securities exchange or system or in
the over-the-counter market.
N = cumulative normal distribution function
ln = natural logarithm
λ = dividend rate of the Acquirer for the most recent 12-month period at the time of closing of the
Corporate Reorganization.
KAcq
= strike price of new warrants to purchase shares in the Acquirer =
KCorp
* (SAcq
/ SCorp)
r = annual yield, as reported by Bloomberg at time tAcq, of the United States Treasury
security measuring the nearest time TAcq
Appendix B
Black Scholes Option Pricing formula to be used when calculating the value of each Warrant to
purchase one share in the Company shall be:
CCorp =
value of each Warrant to purchase one share in the Company
SCorp = price of Company stock as determined by reference to the average of the closing
prices on the securities exchange or Nasdaq Global Market over the 20-day period ending three
trading days prior to the closing of the Corporate Reorganization described in Section 4(c)
if the Company’s stock is then traded on such exchange or system, or the average of the closing bid
or sale prices (whichever is applicable) in the over-the-counter market over the 20-day period
ending three trading days prior to the closing of the Corporate Reorganization if the Company’s
stock is then actively traded in the over-the-counter market, or the then most recently completed
financing if the Company’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.
TCorp = expiration date of Warrants to purchase shares in the Company
tCorp = date of public announcement of transaction
TCorp-tCorp = time until Warrant expiration, expressed in years
s = volatility = the annualized standard deviation of daily log-returns (using a 262-day
annualization factor) of the Company’s stock price on the securities exchange or Nasdaq Global
Market over a 20-day trading period, determined by the Warrant Holders, that is within the 100-day
trading period ending on the trading day immediately after the public announcement of the Corporate
Reorganization described in Section 4(c) if the Company’s stock is then traded on such
exchange or system, or the annualized standard deviation of daily-log returns (using a 262-day
annualization factor) of the closing bid or sale prices (whichever is applicable) in the
over-the-counter market over a 20-day trading period, determined by the Warrant Holder, that is
within the 100-day trading period ending on the trading day immediately after the public
announcement of the Corporate Reorganization if the Company’s stock is then actively traded in the
over-the-counter market, or 0.6 (or 60%) if the Company’s stock is not then traded on a securities
exchange or system or in the over-the-counter market.
N = cumulative normal distribution function
ln = natural logarithm
λ = dividend rate of the Company for the most recent 12-month period at the time of closing of the
Corporate Reorganization.
KCorp = strike price of warrant
r = annual yield, as reported by Bloomberg at time tCorp, of the United States Treasury
security measuring the nearest time T Corp
