WARRANT TO PURCHASE COMMON STOCK OF NEURO-HITECH, INC.
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF ANY APPLICABLE STATES. THESE SECURITIES ARE SUBJECT
TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT
TO PURCHASE COMMON STOCK
OF
NEURO-HITECH,
INC.
Warrant No. _____ |
Issued
on November 29, 2006
|
Void
after November 29, 2016
|
This
certifies that in connection with the Merger Agreement (as defined below),
_______ is entitled, subject to the terms and conditions of this Warrant, to
purchase from Neuro-Hitech, Inc., a Delaware corporation (the “Company”),
at
any time prior to November 29, 2016 (the “Expiration
Date”)
up to
_________ shares of the Company’s Common Stock, $0.001 par value per share (the
“Common
Stock”) at
a
price per share equal to the Warrant Price (as defined below), upon surrender
of
this Warrant at the principal offices of the Company, together with a duly
executed subscription form in the form attached hereto as Exhibit
1
and
simultaneous payment of the full Warrant Price for the shares of Common Stock
so
purchased in lawful money of the United States, or as otherwise provided herein.
The Warrant Price and the number and character of shares of Common Stock
purchasable under this Warrant are subject to adjustment as provided
herein.
This
Warrant is issued pursuant to the Agreement and Plan of Merger Agreement, dated
of even date herewith, by and among the Company, QA Acquisition Corp., a
Delaware corporation, QA Merger LLC, a Delaware limited liability company,
Q-RNA, Inc., a Delaware corporation and Xx. Xxxxx Xxxxxxxx, as “Representative”
of the Stockholders (the “Merger
Agreement”),
and
is subject to the indemnity provisions set forth in Section 9 of the Merger
Agreement, which provide for the automatic adjustment of the number of shares
of
Common Stock subject to this Warrant in certain circumstances.
1. DEFINITIONS.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the meanings given to them in the Merger Agreement. The following
definitions shall apply for purposes of this Warrant:
1.1 “Company”
means
the “Company”
as
defined above and includes any corporation which shall succeed to or assume
the
obligations of the Company under this Warrant.
1
1.2 “Corporate
Transaction”
shall
mean (i) an acquisition of the Company by another entity (the “Successor
Entity”) by means of merger, consolidation or stock sale resulting in the
disposition of the Common Stock for securities or other consideration issued,
or
caused to be issued, by the Successor Entity in which the holders of the Common
Stock then hold, directly or indirectly, less than fifty percent (50%) of the
voting securities of the Successor Entity or (ii) a sale by the Company of
all
or substantially all of its assets to the Successor Entity in which the holders
of the Common Stock then hold, directly or indirectly, less than fifty percent
(50%) of the voting securities of the Successor Entity.
1.3 “Fair
Market Value”
on
any
day shall mean (a) if shares of Common Stock are listed or admitted for trading
on a national securities exchange, the reported last sales price or, if no
such
reported sale occurs on such day, the average of the closing bid and asked
prices on such day, in each case on the principal national securities exchange
on which the Common Stock are listed or admitted to trading, (b) if shares
of
Common Stock are not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices in the
over-the-counter market on such day as reported by Nasdaq or any comparable
system or, if not so reported, as reported by any New York Stock Exchange member
firm selected by the Company for such purpose or (c) if no such quotations
are
available on such day, the fair market value of one share of Common Stock on
such day as determined in good faith by the Board of Directors of the
Company.
1.4 “Holder”
means
any person who shall at the time be the registered holder of this
Warrant.
1.5 “Warrant”
means
this Warrant and any warrant(s) delivered in substitution or exchange therefor,
as provided herein.
1.6 “Warrant
Price”
means
$13.00 per share. The Warrant Price is subject to adjustment as provided
herein.
2. EXERCISE.
2.1 Timing
and Method of Exercise.
(a) Method
of Exercise.
Subject
to the terms and conditions of this Warrant, the Holder may exercise this
Warrant on any business day before the Expiration Date for up to _______________
shares of Common Stock, by surrendering this Warrant at the principal offices
of
the Company, with the subscription form attached hereto duly executed by the
Holder, and payment of an amount equal to the product obtained by multiplying
(i) the number of shares of Common Stock to be purchased by the Holder by
(ii) the Warrant Price or adjusted Warrant Price therefor, if applicable,
as determined in accordance with the terms hereof.
2
(b) Cashless
Exercise.
In lieu
of exercising this Warrant as hereinabove permitted, immediately prior to the
closing of a Corporate Transaction the Holder may elect to exercise this Warrant
or a portion hereof and to pay for the Common Stock issuable upon such exercise
by way of cashless exercise by surrendering this Warrant at the principal
executive office of the Company, together with the subscription form attached
hereto electing cashless exercise, in which event the Company shall, immediately
prior to such closing, issue to the Holder that number of shares of Common
Stock
computed using the following formula:
X=
Y
x (A-B)
|
A
|
Where:
X
equals
the number of shares of Common Stock to be issued to the Holder;
Y
equals
the number of shares of Common Stock purchasable under the Warrant, or, if
only
a portion of the Warrant is being exercised, the portion of the Warrant being
exercised at the date of such calculation;
A
equals
the Fair Market Value (at the date of such calculation) of one share of Common
Stock; and
B
equals
the Warrant Price.
2.2 Form
of Payment.
Except
as otherwise provided in Section 2.1(b) above, payment may be made by (i) a
check payable to the Company’s order, (ii) wire transfer of funds to the
Company, or (iii) any combination of the foregoing.
2.3 No
Fractional Shares.
No
fractional shares may be issued upon any exercise of this Warrant, and any
fractions shall be rounded down to the nearest whole number of shares. If upon
any exercise of this Warrant a fraction of a share results, the Company will
pay
the cash value of any such fractional share, calculated on the basis of the
difference between the Fair Market Value and the Warrant Price.
2.4 Restrictions
on Exercise.
This
Warrant may not be exercised if the issuance of the Warrant Stock upon such
exercise would constitute a violation of any applicable federal or state
securities laws or other laws or regulations. As a condition to the exercise
of
this Warrant, the Holder shall execute the subscription form attached hereto
as
Exhibit 1,
confirming and acknowledging that the representations and warranties made by
the
Holder in the “accredited investor” questionnaire described in Section 7.15 of
the Merger Agreement are true and correct as of the date of
exercise.
3. ISSUANCE
OF STOCK.
This
Warrant shall be deemed to have been exercised immediately prior to the close
of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date. As soon as practicable on
or
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
whole shares of Warrant Stock issuable upon such exercise.
3
4. ADJUSTMENT
PROVISIONS.
The
number and character of shares of Common Stock issuable upon exercise of this
Warrant (or any shares of stock or other securities or property at the time
receivable or issuable upon exercise of this Warrant) and the Warrant Price
therefor, are subject to adjustment pursuant to the terms of the indemnity
provisions of the Merger Agreement and upon the occurrence of the following
events between the date this Warrant is issued and the date it is
exercised:
4.1 Adjustment
for Stock Splits and Stock Dividends.
The
Warrant Price of this Warrant and the number of shares of Warrant Stock issuable
upon exercise of this Warrant (or any shares of stock or other securities at
the
time issuable upon exercise of this Warrant) shall each be proportionally
adjusted to reflect any stock dividend, stock split or reverse stock split,
or
other similar event affecting the number of outstanding shares of Common Stock
(or such other stock or securities).
4.2 Adjustment
for Other Dividends and Distributions.
In case
the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution payable respect to the Common Stock that is payable in
(a) securities of the Company (other than issuances with respect to which
adjustment is made under Sections 4.1 or 4.3) or (b) assets (other
than cash dividends paid or payable solely out of retained earnings), then,
and
in each such case, the Holder, upon exercise of this Warrant at any time after
the consummation, effective date or record date of such event, shall receive,
in
addition to the shares of Common Stock issuable upon such exercise prior to
such
date, the securities or such other assets of the Company to which the Holder
would have been entitled upon such date if the Holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in
this
Warrant).
4.3 Adjustment
for Reorganization, Consolidation, Merger.
In case
of any recapitalization or reorganization of the Company after the date of
this
Warrant, or in case, after such date, the Company shall consolidate with or
merge into another corporation, then, and in each such case, the Holder, upon
the exercise of this Warrant (as provided in Section 2), at any time after
the consummation of such recapitalization, reorganization, consolidation or
merger, shall be entitled to receive, in lieu of the stock or other securities
and property receivable upon the exercise of this Warrant prior to such
consummation, the stock or other securities or property to which the Holder
would have been entitled upon the consummation of such recapitalization,
reorganization, consolidation or merger if the Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
this
Warrant, and the successor or purchasing corporation in such reorganization,
consolidation or merger (if other than the Company) shall duly execute and
deliver to the Holder a supplement hereto acknowledging such corporation’s
obligations under this Warrant; and in each such case, the terms of this Warrant
shall be applicable to the shares of stock or other securities or property
receivable upon the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger.
4.4 Conversion
of Stock.
In case
all the authorized Common Stock of the Company is converted, pursuant to the
Company’s certificate of incorporation, into other securities or property of the
Company, or the Common Stock otherwise ceases to exist, then, in such case,
the
Holder, upon exercise of this Warrant at any time after the date on which the
Common Stock is so converted or ceases to exist (the “Termination
Date”),
shall
receive, in lieu of the number of shares of Common Stock that would have been
issuable upon such exercise immediately prior to the Termination Date (the
“Former
Number of Shares of Common Stock”),
the
stock and other securities and property which the Holder would have been
entitled to receive upon the Termination Date if the Holder had exercised this
Warrant with respect to the Former Number of Shares of Common Stock immediately
prior to the Termination Date (all subject to further adjustment as provided
in
this Warrant).
4
4.5 Notice
of Adjustments.
The
Company shall promptly give written notice of each adjustment or readjustment
of
the Warrant Price or the number of shares of Common Stock or other securities
issuable upon exercise of this Warrant. The notice shall describe the adjustment
or readjustment and show in reasonable detail the facts on which the adjustment
or readjustment is based.
4.6 No
Change Necessary.
The
form of this Warrant need not be changed because of any adjustment in the
Warrant Price or in the number of shares of Common Stock issuable upon its
exercise.
4.7 Reservation
of Stock.
The
Company shall at all times reserve and keep available, solely for the issuance
and delivery upon the exercise of this Warrant, such shares of Common Stock
and
other stock, securities and property, as from time to time shall be issuable
upon the exercise of this Warrant. If
at any
time the number of shares of Common Stock or other securities issuable upon
exercise of this Warrant shall not be sufficient to effect the exercise of
this
Warrant, the Company will take such corporate action as may, in the opinion
of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock or other securities issuable upon exercise of this Warrant as
shall
be sufficient for such purpose. All
shares of Common Stock issued upon exercise of the Warrant shall be validly
issued, fully paid and nonassessable.
5. NO
RIGHTS OR LIABILITIES AS STOCKHOLDER.
This
Warrant does not by itself entitle the Holder to any voting rights or other
rights as a stockholder of the Company. In the absence of affirmative action
by
the Holder to purchase Common Stock by exercise of this Warrant, no provisions
of this Warrant, and no enumeration herein of the rights or privileges of the
Holder, shall cause the Holder to be a stockholder of the Company for any
purpose.
6. NO
IMPAIRMENT.
The
Company will not, by amendment of its certificate of incorporation or bylaws,
or
through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, willfully 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 against wrongful impairment. Without
limiting the generality of the foregoing, the Company will take all such action
as may be necessary or appropriate in order that the Company may duly and
validly issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
7. TRANSFER.
Neither
this Warrant nor any rights hereunder may be assigned, conveyed or transferred,
in whole or in part, without the Company’s prior written consent, which the
Company may withhold in its sole discretion. The rights and obligations of
the
Company and the Holder under this Warrant and the Merger Agreement shall be
binding upon and benefit their respective permitted successors, assigns, heirs,
administrators and transferees.
5
8. GOVERNING
LAW.
The
internal laws of the State of Delaware (irrespective of its choice of law
principles) will govern the validity of this Warrant, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
9. HEADINGS.
The
headings and captions used in this Warrant are used only for convenience and
are
not to be considered in construing or interpreting this Warrant. All references
in this Warrant to sections and exhibits shall, unless otherwise provided,
refer
to sections hereof and exhibits attached hereto, all of which exhibits are
incorporated herein by this reference.
10. NOTICES.
Any
notice or other communication required or permitted to be given under this
Warrant will be in writing, will be delivered personally or by registered or
certified mail, postage prepaid and will be deemed given upon delivery, if
delivered personally, or three days after deposit in the mails, if mailed,
to
the address indicated for the Holder on the signature page to this Warrant,
or
in the case of the Company, at Xxx Xxxx Xxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000,
Attn: Chief Financial Officer, or at such other address as any party or the
Company may designate by giving ten (10) days’ advance written notice to all
other parties
11. AMENDMENT;
WAIVER.
This
Warrant and all other Warrants issued under the Merger Agreement may be amended
and provisions may be waived by the Company and the warrant holders of at least
a majority of the Common Stock underlying the Warrants. Any
amendment or waiver effected in accordance with this Section shall be binding
upon the
Holder and
each
future holder of such securities, and the Company.
12. SEVERABILITY.
If any
provision of this Warrant, or the application thereof, will for any reason
and
to any extent be invalid or unenforceable, the remainder of this Warrant and
application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.
13. TERMS
BINDING.
By
acceptance of this Warrant, the Holder accepts and agrees to be bound by all
the
terms and conditions of this Warrant.
6
IN
WITNESS WHEREOF, the
parties hereto have executed this Warrant as of the date first above
written.
THE
COMPANY:
NEURO-HITECH,
INC.
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|||
By:
|
|||
Name:
|
Xxxxx
Xxxxxxx
|
||
Title:
|
Chief
Financial Officer
|
EXHIBIT 1
FORM
OF SUBSCRIPTION
(To
be signed only upon exercise of Warrant)
To:
Neuro-Hitech, Inc.
(1) The
undersigned Holder hereby elects to purchase
shares
of Common Stock of Neuro-Hitech, Inc. (the “Warrant
Stock”),
pursuant to the terms of the attached Warrant, and:
_______
tenders herewith payment of the purchase price for such shares in full;
or
_______
elects cashless exercise pursuant to Section 2.1(b) of the attached
Warrant.
(Please
check one)
(2) In
exercising the Warrant, the undersigned Xxxxxx hereby confirms and acknowledges
that the representations made by the Holder in the “accredited investor”
questionnaire described in Section 7.15 of the Merger Agreement (as defined
in
the Warrant) continue to be true and correct as of this date.
(3) Please
issue a certificate or certificates representing such shares of Warrant Stock
in
the name specified below:
(Name)
|
(Address)
|
(City,
State, Zip Code)
|
(Federal
Tax Identification Number)
|
(Date)
|