THIS WARRANT AND THE WARRANT SHARES REFERRED TO HEREIN HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
COVERING THIS WARRANT OR THOSE WARRANT SHARES, AS THE CASE MAY BE, UNDER SAID
ACT OR AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.
VOID AFTER 5:00 P.M. NEW YORK TIME ON SEPTEMBER 12, 2001 ("EXPIRATION
DATE").
HEARx LTD.
WARRANT TO PURCHASE SHARES OF
COMMON STOCK, PAR VALUE $0.10 PER SHARE
This is to certify that, for VALUE RECEIVED, Xxxx Xxxxxxxx
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from HEARx Ltd., a Delaware corporation ("Company"), at any time not
later than 5:00 P.M., New York time, on the Expiration Date, at the exercise
price of Four Dollars per share ($4.00) (the exercise price in effect being
herein called the "Warrant Price"), 35,000 shares ("Warrant Shares") of Common
Stock, par value $0.10 per share ("Common Stock"), of the Company. The number of
Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as described herein.
Section 1. Registration. The Company shall maintain books for the transfer
and registration of the Warrant. Upon the initial issuance of the Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.
Section 2. Transfers. As provided herein, the Warrant may be transferred
only pursuant to a registration statement filed under the Securities Act of
1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer from time
to time, the Warrant, upon the books to be maintained by the Company for that
purpose, upon surrender thereof for transfer properly endorsed or accompanied by
appropriate instructions for transfer upon any such transfer, and a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be cancelled
by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise the Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached thereto, to the Company, at or prior to 5:00 P.M. New
York Time on the Expiration Date, together with payment of the Warrant Price, as
such may be adjusted from time to time in accordance with Section 9, for the
number of Warrant Shares in respect of which the Warrant is then exercisable. To
the extent that this Warrant remains outstanding at 5:01 P.M. on the Expiration
Date, such Warrant shall automatically expire and be of no further force and
effect, and the holders thereof shall have no further right to exercise or
transfer the same. Payment of the Warrant Price shall be made in cash or by
certified check payable in United States dollars, to the order of the Company.
Subject to Section 5, upon such surrender of the Warrant and payment of the
Warrant Price as aforesaid, the Company shall issue and cause to be delivered to
the Warrantholder or to such other person as the Warrantholder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of the Warrant, together with cash, as provided in Section 10
hereof in respect of any fraction of a Warrant Share otherwise issuable upon
such surrender. Such certificate or certificates shall be deemed to have been
issued, and the person to whom they are issued shall be deemed to have become a
holder of record of the Warrant Shares, as of the date of the surrender of the
Warrant and payment of the Warrant Price as aforesaid unless counsel for the
Company advises the Company in writing that an earlier date is permissible for
purposes of applicable securities laws. The rights of purchase represented by
the Warrant shall be exercisable, at the election of the Warrantholder either as
an entirety or from time to time for part only of the Warrant Shares and, in the
event that the Warrant is exercised in respect of less than all of the Warrant
Shares specified herein at any time prior to the Expiration Date, a new Warrant
will be issued to Warrantholder for the remaining number of Warrant Shares
specified in the Warrant so surrendered within five business days.
Section 4. Exercise and Transfer to Company with the Securities Act of
1933. Neither this Warrant nor the Common Stock issued upon exercise hereof nor
any other security issued or issuable upon exercise of this Warrant may be
offered or sold except as provided in this agreement and in conformity with the
Securities Act of 1933, as amended, and then only against receipt of an
agreement of such person to whom such offer of sale is made to comply with the
provisions of this Section 4 with respect to any resale or other disposition of
such security. The Company may cause the legend set forth on the first page of
this Warrant to be set forth on each Warrant or any security issued or issuable
upon exercise of this Warrant, unless counsel for the Company is of the opinion
as to any such security that such legend is unnecessary or such security may
then be sold pursuant to Rule 144(k) under the Securities Act of 1933.
Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of the Warrant in respect of which
such shares are issued, and in such case, the Company shall not be required to
issue or deliver any certificate for Warrant Shares or any Warrant until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid.
Section 6. Mutilated or Missing Warrants. In case the Warrant shall be
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mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond, if requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby represents and
warrants that there have been reserved, and the Company shall at all applicable
times keep reserved, out of the authorized and unissued Common Stock, a number
of shares sufficient to provide for the exercise of the rights of purchase
represented by the Warrant, and the American Stock Transfer & Trust Company, the
transfer agent for the Common Stock ("Transfer Agent"), and every subsequent
transfer agent for the Common Stock or other shares of the Company's capital
stock issuable upon the exercise of any of the right of purchase aforesaid shall
be irrevocably authorized and directed at all times to reserve such number of
authorized and unissued shares of Common Stock as shall be requisite for such
purpose. The Company agrees that all Warrant Shares issued upon exercise of the
Warrant shall be, at the time of delivery of the certificates for such Warrant
Shares, duly authorized, validly issued, fully paid and non-assessable shares of
Common Stock of the Company. The Company will supply from time to time the
Transfer Agent with duly executed stock certificates required to honor the
outstanding Warrant. After the Expiration Date, no Common Stock shall be subject
to reservation in respect to such Warrant which shall have expired.
Section 8. Warrant Price. The Warrant Price, subject to adjustment as
provided in Section 9, shall, if payment is made in cash or by certified check,
be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions of this
Section 9, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time while the Warrant
is outstanding, pay a dividend or make a distribution on its Common Stock in
shares of Common Stock, subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares into a smaller number
of shares or issue by reclassification of its outstanding shares of Common Stock
any shares of its capital stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then the number of Warrant Shares purchasable upon exercise of the
Warrant and the Warrant Price in effect immediately prior to the date upon which
such change shall become effective, shall be adjusted by the Company so that the
Warrantholder thereafter exercising the Warrant shall be entitled to receive the
number of shares of Common Stock or other capital stock which the Warrantholder
would have received if the Warrant had been exercised immediately prior to such
event. Such adjustment shall be made successively whenever any event listed
above shall occur.
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(b) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation, or sale, transfer or other disposition of all or
substantially all of the Company's properties to another corporation shall be
effected, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter 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 immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or
properties as may be issuable or payable with respect to or in exchange for a
number of outstanding Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of each Warrantholder to the end
that the provisions hereof (including, without limitations, 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, securities
or properties thereafter deliverable upon the exercise thereof. The Company
shall not effect any such consolidation, merger, sale, transfer or other
disposition unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) 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 executed and delivered to the Company, the obligation to deliver to
the holder of the Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase and the other obligations under this Warrant.
The above provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers or
other dispositions.
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(c) In case the Company shall fix a record date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
9(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such record date shall be determined by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the Market Price per share of Common Stock (as determined pursuant to Section
3), less the fair market value (as determined by the Company's Board of
Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such current Market Price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed.
(d) (i) After the date hereof, if the Company shall at any
time or from time to time while the Warrant is outstanding, issue or sell any
shares of Common Stock (other than Excluded Stock, as hereinafter defined) for a
consideration per share less than the Warrant Price in effect immediately prior
to the time of such issue or sale then, forthwith upon such issue or sale, the
Warrant Price shall be reduced (but not increased) to the consideration per
share received by the Company for such shares of Common Stock issued or sold.
Such adjustment shall be made successively whenever such issuance or sale is
made. No adjustment of the Warrant Price, however, shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment. In no event shall the Warrant Price be adjusted so that the Warrant
Price per share is less than the then par value per share of Common Stock. For
purposes hereof, the term "Excluded Stock" shall mean (i) shares of Common Stock
issued pursuant to the exercise or conversion of options, warrants and preferred
stock outstanding on the date hereof or pursuant to the terms of agreements
existing on the date hereof, in accordance with the terms of such securities and
agreements in effect on the date hereof, and (ii) shares of Common Stock issued
pursuant to the exercise of employee stock options granted subsequent to the
date hereof pursuant to the Company's employee stock option plan, subject to
appropriate adjustment in the event of stock splits, stock dividends,
combinations, reclassifications or similar events.
(ii) Upon each adjustment of the Warrant Price, the Warrantholder shall
thereafter be entitled to purchase at the Warrant Price resulting from such
adjustment, that number of Warrant Shares obtained by multiplying the Warrant
Price in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment. Upon each adjustment of the Warrant Price, the number of Warrant
Shares represented by this Warrant shall be adjusted to equal the number of
shares of Common Stock purchasable by the Warrantholder.
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(e) An adjustment shall become effective immediately after the
record date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.
(f) The form of Warrant need not be changed because of any
change pursuant to this Section 9, and Warrants issued after such change may
state the same Warrant Price and the same number of Warrant Shares as is stated
in the Warrant initially issued pursuant hereto. However, subject to the consent
of the Warrantholder, which shall not be unreasonably withheld, the Company may
at any time in its sole discretion make any change on the Warrant that the
Company may deem appropriate which does not affect the substance thereof, and
any Warrants thereafter issued, whether in exchange or substitution for any
outstanding Warrant Shares or otherwise, may be in the form as so changed.
(g) In the event that, as a result of an adjustment made
pursuant to Section 9(a), the holder of the Warrant shall become entitled to
receive any shares of capital stock of the Company other than shares of Common
Stock, the number of such other shares so receivable upon exercise of the
Warrant shall be subject thereafter to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in this Warrant.
(h) Shares of Common Stock owned by or held for the account of
the Company or any majority-owned subsidiary shall not be deemed outstanding for
the purpose of any computation under this Agreement.
Section 10. Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of the Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions thereof), the
Company shall purchase such fraction for an amount in cash equal to the current
market value of such fraction based upon the current Market Price (determined
pursuant to Section 3) of a Warrant Share. All calculations under this Section
10 shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
Section 11. Benefits. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
-6-
Section 12. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall forthwith give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The certificate of the Company's independent certified
public accountants shall be conclusive evidence of the correctness of any
computation made, absent manifest error. Failure to give such notice to the
Warrantholder or any defect therein shall not affect the legality or validity of
the subject adjustment.
Section 13. Identity of Transfer Agent. The Transfer Agent for the
Common Stock is American Stock Transfer & Trust Company, 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. Forthwith upon the appointment of any subsequent transfer
agent for the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the Warrant,
the Company will mail to the Warrantholder a statement setting forth the name
and address of such transfer agent.
Section 14. Notices. Any notice pursuant hereto to be given or made by
the Warrantholder to or on the Company shall be sufficiently given or made if
sent by certified mail, return receipt requested, postage prepaid, addressed as
follows:
HEARx LTD.
Attention: Xxxx X. Xxxxx, M.D.
Chairman and Chief Executive Officer
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to or on
the Warrantholder shall be sufficiently given or made if sent by certified mail,
return receipt requested, postage prepaid, to the address set forth on the books
of the Company or, as to each of the Company and the Warrantholder, at such
other address as shall be designated by such party by written notice to the
other party complying as to delivery with the terms of this Section 14. All such
notices, requests, demands, directions and other communications shall, when
mailed be effective when deposited in the mails addressed as aforesaid.
Section 15. Supplements and Amendments. The Company may from time to
time supplement or amend this Warrant without the approval of the Warrantholder
in order to cure any ambiguity or to correct or supplement any provisions
contained herein which may be defective or inconsistent with any other provision
herein or to make any other provisions in regard to matters or questions arising
hereunder which shall not be inconsistent with the
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provisions of the Warrant and which shall not in any manner adversely affect the
interests of the Warrantholder.
Section 16. Successors. All the covenants and provisions hereof by or for
the benefit of the Company shall bind and inure to the benefit of its respective
successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
construed in accordance with the laws of said State.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
duly executed, as of September 12, 1996.
HEARx LTD.
By:
------------------------------
Xxxx X. Xxxxx M.D.
Chairman of the Board
Attest:
------------------------------
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HEARx LTD.
WARRANT EXERCISE FORM
HEARx LTD.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by cash or certified check _______________ shares of Common Stock
("Warrant Shares") provided for therein, and requests that certificates for the
Warrant Shares be issued as follows:
-------------------------------
Name
--------------------------------
Address
--------------------------------
--------------------------------
--------------------------------
Federal Tax Identification No.
or Social Security No.
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of such Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.
Dated:___________________, ____
Signature:______________________________
------------------------------
Name (please print)
------------------------------
Address
------------------------------
------------------------------
Federal Identification or
Social Security No.
Note: The above signature must
correspond with the name of
the registered holder as
written on the first page of
the Warrant in every
particular, without
alteration or enlargement or
any change whatever, unless
the Warrant has been
assigned.
