Exhibit 10.27
FINANCIAL ADVISORY AND CONSULTING AGREEMENT
This Agreement is made and entered into as of this 4th day of
January, 2000, by and between ATLANTIC PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), and XXXXXX XXXXXXX & COMPANY, INC. (the
"Consultant").
In consideration of and for the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Purpose. The Company hereby retains the Consultant during
the term specified in Section 2 hereof to render consulting advice to the
Company as an investment banker relating to financial and similar matters, upon
the terms and conditions as set forth herein.
2. Term. Other than the provisions of Sections 8, 9, 10 and 12
hereof, which shall survive any termination of this Agreement, this Agreement
shall be effective for a period (the "Term") beginning on the date hereof and
ending on January 4, 2001, unless earlier terminated pursuant to Section 14
hereof.
3. Duties of Consultant. During the term of this Agreement,
the Consultant will provide the Company with such regular and customary
consulting advice as is reasonably requested by the Company, provided that the
Consultant shall not be required to undertake duties not reasonably within the
scope of the consulting advisory service contemplated by this Agreement. In
performance of these duties, the Consultant shall provide the Company with the
benefits of its best judgment and efforts. It is understood and acknowledged by
the parties that the value of the Consultant's advice is not measurable in any
quantitative manner, and that the Consultant shall be obligated to render
advice, upon the request of the Company, in good faith, but shall not be
obligated to spend any specific amount of time in doing so. The Consultant's
duties may include, but will not necessarily be limited to:
A. Providing sponsorship and exposure in connection with the
dissemination of corporate information regarding the Company to the investment
community at large under a systematic planned approach.
B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases.
C. Arranging, on behalf of the Company and its
representatives, at appropriate times, meetings with securities analysts of
major regional investment banking firms.
D. Assisting the Company's financial public relations,
including discussions between the Company and the financial community.
E. Rendering advice with regard to internal operations,
including:
(1) advice regarding formation of corporate goals and
their implementation;
(2) advice regarding the financial structure of the
Company and its divisions or subsidiaries or any
programs and projects;
(3) advice concerning the securing, when necessary and,
if possible, of additional financing through banks
and/or insurance companies; and
(4) advice regarding corporate organization and
personnel.
F. Rendering advice with respect to acquisitions by the
Company and/or mergers of the Company with other companies, joint ventures by
the Company with any third parties, license and royalty agreements and any other
financing (other than the private or public sale of the Company's securities for
cash) including, without limitation, the sale of the Company itself or any
significant percentage, subsidiaries or affiliates thereof (each of the
foregoing being referred to herein as a "Transaction") such advice to include,
without limitation, identifying potential acquisition targets or merger
candidates, and assisting the Company with analyzing, structuring, negotiating
and effecting acquisition and merger opportunities.
G. Rendering advice regarding a future public or private
offering of securities of the Company or of any subsidiary.
4. Relationships with Others. The Company acknowledges that
the Consultant and its affiliates are in the business of providing financial
services and consulting advice (of all types contemplated by this Agreement) to
others. Nothing herein contained shall be construed to limit or restrict the
Consultant or its affiliates from rendering such services or advice to others.
It is clearly understood that the Consultant, for services rendered under this
Agreement, makes no commitment whatsoever to make a market in the securities of
the Company or to recommend or advise its clients to purchase the securities of
the Company. Research reports or corporate finance reports that may be prepared
by the Consultant will, when and if prepared, be done solely on the merits or
judgment of analysts of the Consultant or senior corporate finance personnel of
the Consultant. The Company and the Consultant shall follow reasonable
procedures, to be mutually agreed, to eliminate the sharing of information
between employees of Consultant who are engaged in providing advisory services
to the Company and those who are engaged in such market-making and reporting
activities, if any.
5. Consultant's Liability. In the absence of gross negligence
or willful misconduct on the part of the Consultant, or the Consultant's breach
of this Agreement, the
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Consultant shall not be liable to the Company, or to any officer, director,
employee, shareholder or creditor of the Company, for any act or omission in the
course of or in connection with the rendering or providing of advice or services
hereunder.
6. Expenses. The Company, upon receipt of appropriate
supporting documentation, shall reimburse the Consultant for any and all
reasonable out-of-pocket expenses incurred by the Consultant in connection with
services rendered by the Consultant to the Company pursuant to this Agreement,
including, but not limited to, hotel, food and associated expenses, all charges
for travel and long-distance telephone calls, reasonable attorneys' fees and all
other expenses incurred by the Consultant in connection with services rendered
by the Consultant to the Company pursuant to this Agreement. Notwithstanding the
foregoing, the Company shall not be obligated to reimburse the Consultant for
expenses in excess of $1000 individually or $10,000 in the aggregate, unless
such expenses were incurred with the Company's prior written consent. Expenses
payable under this Section 6 shall not include allocable overhead expenses of
the Consultant, including, but not limited to, secretarial charges and rent.
7. Compensation. As partial compensation for the services to
be rendered by the Consultant to the Company pursuant to Section 3 hereof, the
Company shall issue on the date hereof to the Consultant, or to such person as
the Consultant shall designate in writing subject to the approval of the
Company, warrants in the form of Exhibit A hereto ("Warrants") to purchase an
aggregate of 450,000 shares of common stock, par value $.001 per share of the
Company ("Common Stock"), with an exercise price and term of exercisability as
follows:
# Shares Exercise Price Exercise Period
-------- -------------- ---------------
150,000 $2.50 1/4/00 through 1/4/05
150,000 $3.50 1/4/01 through 1/4/06,
(subject to vesting in
equal monthly increments
during the Term)
150,000 $4.50 1/4/02 through 1/4/07,
(subject to vesting in
equal monthly increments
during the Term)
In addition, each Warrant shall only be exercisable when the
market price of a share of Common Stock is at least $1.00 greater than the
relevant Exercise Price, as provided in the Warrant. In connection with the
issuance of the Warrants, the Company shall execute a letter agreement in the
form of Exhibit B hereto, which shall provide for
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registration rights in respect of the shares of Common Stock issuable upon
exercise of the Warrants.
8. Success Fee. In addition to the compensation described in
Section 7 hereof, the Company agrees to pay to Consultant a success fee as
described below upon the closing of any Transaction with one or more parties
introduced to the Company by Consultant during the Term for which definitive
documentation is signed during the Term or within twelve (12) months after the
termination or non-renewal of the Term. The success fee described in this
Section 8 will not become payable in connection with any Transaction unless the
aggregate legal consideration (as defined below) payable to the Company in
connection with such Transaction is equal to or greater than $10 million.
Legal Consideration Fee
------------------- ---
1. $-0- - $3,000,000 5% of legal consideration
2. $3,000,000.01 - $4,000,000 Amount calculated pursuant to
line 1 of this computation,
plus 4% of excess over
$3,000,000
3. $4,000,000.01 - $5,000,000 Amount calculated pursuant to
lines 1 and 2 of this
computation, plus 3% of excess
over $4,000,000
4. above $5,000,000 Amount calculated pursuant to
lines 1, 2 and 3 of this
computation, plus 2% of excess
over $5,000,000.
Legal consideration is defined, for purposes of this Agreement, as the total of
stock (valued at market on the day of closing, or if there is no public market,
valued as set forth herein for other property), cash and assets and property or
other benefits received by the Company or its shareholders in the Transaction
(all valued at fair market value as agreed or, if not, by any independent
appraiser), irrespective of period of payment or terms.
9. Sales or Distributions of Securities. If the Consultant
assists the Company in the sale or distribution
a private transaction, the Consultant shall receive fees in the amount and form
to be arranged separately at the time of such transaction.
10. Form of Payment. All fees due to the Consultant pursuant
to Section 8 hereof are due and payable to the Consultant, in cash or by
certified check, at the closing or closings of the Transaction, whether during
or after the Term, or as otherwise agreed between the parties hereto; provided,
however, that in the case of license and royalty agreements specified in Section
8 hereof, the fees due the Consultant in receipt of such license and royalty
agreements shall be paid as and when license and/or royalty payments are
received by the Company.
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11. Limitation Upon the Use of Advice and Services.
A. No person or entity, other than the Company or any of its
subsidiaries, shall be entitled to make use of or rely upon the advice of the
Consultant to be given hereunder, and the Company shall not transmit such advice
to others, or encourage or facilitate the use of or reliance upon such advice by
others, without the prior written consent of the Consultant.
B. The use of the Consultant's name in any annual report or
other report of the Company, or any release or similar document prepared by or
on behalf of the Company, must have the prior written approval of the Consultant
unless the Company is required by law to include the Consultant's name in such
annual report, other report or release, in which event the Consultant will be
furnished with a copy of such annual report, other report or release using the
Consultant's name in advance of publication by or on behalf of the Company.
C. Should any purchases of securities be requested to be
effected through the Consultant by the Company, its officers, directors,
employees or other affiliates, or by any person on behalf of any profit sharing,
pension or similar plan of the Company, for the account of the Company or the
individuals or entities involved, such orders shall be taken by a registered
account executive of the Consultant, shall not be subject to the terms of this
Agreement, and the normal brokerage commission as charged by the Consultant will
apply in conformity with all rules and regulations of the New York Stock
Exchange, the National Association of Securities Dealers, Inc. or other
regulatory bodies. Where no regulatory body sets the fee, the normal established
fee as used by the Consultant shall apply.
D. The Consultant shall not disclose confidential information
which it learns about the Company as a result of its engagement hereunder, and
which is not available from any other source not subject to a confidentiality
obligation, except for such disclosure as may be required for Consultant to
perform its duties hereunder.
12. Indemnification. Since the Consultant will be acting on
behalf of the Company in connection with its engagement hereunder, the Company
and Consultant have entered into a separate indemnification agreement
substantially in the form attached hereto as Exhibit C and dated the date
hereof, providing for the indemnification of Consultant by the Company. The
Consultant has entered into this Agreement in reliance on the indemnities set
forth in such indemnification agreement.
13. Severability. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is deemed unlawful or
invalid for any reason whatsoever, such unlawfulness or invalidity shall not
affect the validity of the remainder of this Agreement.
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14. Termination. This Agreement may be terminated by either
party at any time for any reason, provided that 30 days written notice of
termination has been given to the other party.
15. Miscellaneous.
A. Any notice or other communication between the parties
hereto shall be sent by certified or registered mail, postage prepaid, if to the
Company, addressed to it at 000 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000,
Attention: A. Xxxxxx Xxxxxx, with a copy to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx X. Xxxxx, Esq., or, if to the
Consultant, addressed to it at 00 Xxxxxx Xxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx Xxxxxxx, Chief Executive Officer, with a copy to Weil,
Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxx Xxxxxx, Esq., or to such address as may hereafter be designated in writing
by one party to the other. Such notice or other communication shall be deemed to
be given on the date of receipt.
B. If, during the term hereof, the Consultant shall cease to
do business, the provisions hereof relating to the duties of the Consultant and
the compensation by the Company as it applies to the Consultant shall thereupon
cease to be in effect, except for the Company's obligation of payment for
services rendered prior thereto. This Agreement shall survive any merger of,
acquisition of, or acquisition by the Consultant and, after any such merger or
acquisition, shall be binding upon the Company and the corporation surviving
such merger or acquisition.
C. This Agreement embodies the entire agreement and
understanding between the Company and the Consultant and supersedes any and all
negotiations, prior discussions and preliminary and prior agreements and
understandings related to the central subject matter hereof.
D. This Agreement has been duly authorized, executed and
delivered by and on behalf of the Company and the Consultant.
E. This Agreement shall be governed by and construed in all
respects under the laws of the State of New York, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or litigation
arising out of or relating to this Agreement shall be brought and prosecuted in
such federal or state court or courts located within the State of New York as
provided by law. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the State of New
York and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
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F. This Agreement and the rights hereunder may not be assigned
by either party (except by operation of law) and shall be binding upon and inure
to the benefit of the parties and their respective successors, assigns and legal
representatives.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date hereof.
ATLANTIC PHARMACEUTICALS, INC.
By: /s/ A. Xxxxxx Xxxxxx
----------------------------
Name: A. Xxxxxx Xxxxxx
Title: President
XXXXXX XXXXXXX & COMPANY, INC.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chairman
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EXHIBIT A
FORM OF WARRANT
--------------------------------------------------------------------------------
WARRANT
To Purchase Common Stock of
ATLANTIC PHARMACEUTICALS, INC.
Warrant No. ____
No. of Shares of Common Stock: _____
--------------------------------------------------------------------------------
B-1
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
No. of Shares of Common Stock: _________ Warrant No. _____
WARRANT
To Purchase Common Stock of
ATLANTIC PHARMACEUTICALS, INC.
THIS IS TO CERTIFY THAT Xxxxxx Xxxxxxx & Company, Inc., or
registered assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from Atlantic Pharmaceuticals, Inc., a
Delaware corporation ("Company"), _______ shares of Common Stock (as hereinafter
defined and subject to adjustment as provided herein), in whole or in part,
including fractional parts, at a purchase price of $_________ 1per share
(subject to adjustment as provided herein) all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
Capitalized terms used in this Warrant but not defined have
the meaning set forth in the Warrant Agreement (as defined below). The following
terms have the respective meanings set forth below:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.
"Business Day" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.
"Commission" means the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" means (except where the context otherwise
indicates) the Common Stock, par value $.001 per share, of Company as
constituted on the Closing Date, and any capital stock into which such Common
Stock may thereafter be changed, and shall also include (i) capital stock of
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of Company and
which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation (as defined in Section 4.8) received by or
----------------------
1 See Section 7 of the Financial Advisory Agreement.
A-2
distributed to the holders of Common Stock of Company in the circumstances
contemplated by Section 4.8.
"Convertible Securities" means evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"Current Market Price" means, in respect of a share of Common
Stock on any date, either (a) if there shall not then be a public market for the
Common Stock, the Fair Market Value per share of Common Stock as at such date or
(b) if there shall then be a public market for the Common Stock, the average of
the daily market prices for 20 consecutive Business Days commencing 30 days
before such date. The daily market price for each such Business Day shall be (i)
the last sale price on such day on the principal stock exchange or NASDAQ Small
Cap Market ("NASDAQ") on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or NASDAQ,
the average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange or NASDAQ, (iii) if the Common Stock is
not then listed or admitted to trading on any stock exchange or NASDAQ, the
average of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the National Association of Securities
Dealers Automatic Quotation System or the National Quotation Bureau, Inc., (iv)
if neither such corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business, or
(v) if there is no such firm, as furnished by any member of the NASD selected
mutually by the Majority Holders and Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD, one of which shall be
selected by the Majority Holders and one of which shall be selected by Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.
"Expiration Date" means January 4, 200___2.
"Financial Advisory Agreement" means the Financial Advisory
and Consulting Agreement, dated January 4, 2000, by and between the Company and
the Consultant.
"Fully Diluted Outstanding" means, on any date, all shares of
Common Stock Outstanding on such date and all shares of Common Stock issuable in
respect of this Warrant outstanding on such date, and other options or warrants
to purchase, or
------------------------
2 See Section 7 of the Financial Advisory Agreement.
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securities convertible into or exchangeable for, shares of Common Stock
outstanding on such date, regardless of whether such options, warrants or other
securities are then exercisable or convertible.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Holder" means the Person in whose name the Warrant set forth
herein is registered on the books of Company maintained for such purpose.
"Majority Holders" means the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Warrant Stock then
purchasable upon exercise of all Warrants.
"NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Other Property" has the meaning set forth in Section 4.8.
"Outstanding" means, when used with reference to Common Stock,
on any date, all issued shares of Common Stock on such date, except shares then
owned or held by or for the account of Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
"Permitted Issuances" means the issuance of shares of Common
Stock upon the exercise or conversion of Company's presently outstanding
convertible preferred stock, warrants and employee incentive options.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Transfer Notice" has the meaning set forth in Section 9.2.
"Warrant" means this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, this Warrant. All
Warrants shall at all
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times be identical as to terms and conditions and date, except as to the number
of shares of Common Stock for which they may be exercised.
"Warrant Price" means an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) $________, as adjusted from time to time
pursuant to Section 4 of this Warrant.
"Warrant Stock" means the shares of Common Stock issued or
issuable upon the exercise of this Warrant.
2. EXERCISE OF WARRANT
2.1 EXERCISE PERIOD. (a) From and after January 4, 200 __3 and until 5:00
P.M., New York time, on the Expiration Date (the "Exercise Period"), Holder may
exercise this Warrant, on any Business Day on which the condition set forth in
Section 2.1(b) hereof is met, for all or any part of the Warrant Stock [which is
then purchasable in accordance with the vesting schedule set forth below:
Shares purchasable
Date upon exercise
---- -----------------
January 4, 2000 12,500
February 4, 2000 25,000
March 4, 2000 37,500
April 4, 2000 50,000
May 4, 2000 62,500
June 4, 2000 75,000
July 4, 2000 87,500
August 4, 2000 100,000
September 4, 2000 112,500
October 4, 2000 125,000
November 4, 2000 137,500
December 4, 2000 150,000
Upon any termination of the Financial Advisory Agreement
pursuant to Section 14 thereof, the Warrant shall cease to vest and shall
continue to be exercisable, in accordance with the terms set forth herein, for
the number of shares of Warrant Stock which were purchasable on such date of
termination.]4
(b) The Warrant may be exercised on any Business Day, except
that it may only be exercised if the last sale price of a share of Common Stock
on NASDAQ (or the principal stock exchange on which the Common Stock is then
listed or admitted to
-----------------------
3 See Section 7 of the Financial Advisory Agreement.
4 This vesting schedule will only apply to the $3.50 and $4.50 exercise price
warrants.
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trading) on the immediately preceding Business Day was equal to or greater than
$1.00 plus the Exercise Price then in effect.
2.2 EXERCISE NOTICE; DELIVERY OF CERTIFICATES. In order to exercise this
Warrant, Holder shall deliver to Company at its principal office at 000
Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, or at the office or agency
designated by Company pursuant to Section 13.2, (i) a written notice of Holder's
election to exercise this Warrant, specifying the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt thereof, Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter, deliver
to Holder a duly executed certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share, as hereinafter provided. Such stock
certificate or certificates shall be in such denominations and registered in the
name designated in the subscription form, subject to Section 9. Holder or any
other Person so designated to be named therein shall be deemed to have become a
holder of record of such shares of Warrant Stock for all purposes, as of the
date on which all items in clauses (i)-(iii) above have been received by Company
and all taxes required to be paid by Holder, if any, pursuant to Section 2.4
have been paid. If this Warrant shall have been exercised in part, Company shall
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
remaining shares of Common Stock issuable upon exercise of this Warrant, which
new Warrant shall in all other respects be identical with this Warrant, or
appropriate notation may be made on this Warrant and the same returned to
Holder.
2.3 PAYMENT OF WARRANT PRICE. Payment of the Warrant Price shall be made
at the option of the Holder by:
(i) certified or official bank check;
(ii) The surrender to Company of that number of shares of
Warrant Stock (or the right to receive such number of shares) or shares of
Common Stock having an aggregate Current Market Price equal to or greater than
the Current Warrant Price for all shares then being purchased (including those
being surrendered); or
(iii) any combination thereof, duly endorsed by or
accompanied by appropriate duly executed instruments of transfer.
2.4 PAYMENT OF TAXES. All shares of Warrant Stock shall be validly
issued, fully paid and nonassessable and without any preemptive rights. Company
shall pay all expenses, taxes and other governmental charges with respect to the
issue or delivery thereof, unless such tax or charge is imposed by law upon
Holder. Company shall not be required, however, to pay any transfer tax or other
similar charge imposed in connection with any transfer involved in the issue of
any certificate for shares of Common Stock issuable upon exercise of this
Warrant in any name other than that of Holder, and in such case Company shall
not be required to issue or deliver any stock
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certificate until such tax or other charge has been paid or it has been
established to the satisfaction of Company that no such tax or other charge is
due.
2.5 FRACTIONAL SHARES. Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants would otherwise be
entitled to purchase upon such exercise, except as otherwise provided in Section
2.1, Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1 TRANSFER. Subject to compliance with Section 9 hereof, transfer of
this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of Company referred to in Section 2.1 or
the office or agency designated by Company pursuant to Section 13.2, together
with a duly executed written assignment of this Warrant substantially in the
form of Exhibit B hereto and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, Company shall, subject to Section 9, execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2 DIVISION AND COMBINATION. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of Company, together with a duly executed written
notice specifying the names and denominations in which new Warrants are to be
issued. Subject to compliance with Section 3.1 and with Section 9, as to any
transfer which may be involved in such division or combination, Company shall
execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3 EXPENSES. Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 3.
3.4 MAINTENANCE OF BOOKS. Company agrees to maintain, at its aforesaid
office or agency, books for the registration and the registration of transfer of
the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this
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Warrant, shall be subject to adjustment from time to time as set forth in this
Section 4. Company shall give each Holder notice of any event described below
which requires an adjustment pursuant to this Section 4 at the time of such
event.
4.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Warrant Price shall be
adjusted to equal (A) the Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment.
4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS.
(a) If at any time Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any dividend or
other distribution of:
(i) cash in excess of earned surplus,
(ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash, Convertible
Securities or Additional Shares of Common Stock),
then the Exercise Price shall be reduced, without any further action by the
parties hereto, by the Per Share Value (as hereinafter defined) of the dividend.
For purposes of this Section 4.2 the "Per Share Value" of cash dividend or other
distribution shall be the dollar amount of the distribution on each share of
Common Stock and the "Per Share Value" of any dividend or distribution other
than cash shall be equal to the fair market
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value of such non-cash distribution on each share of Common Stock, as determined
in good faith by the Board of Directors of the Company.
(b) A reclassification of the Common Stock (other than a
change in par value) into shares of Common Stock and shares of any other class
of stock shall be deemed a distribution by Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of
paragraph (a) above, and if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the meaning
of Section 4.1.
4.3 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(a) If at any time Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price, then
(i) the Warrant Price as to the number of shares for
which this Warrant is exercisable prior to such adjustment shall be reduced to a
price determined by dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock Outstanding immediately prior to such issue or sale
multiplied by the Current Market Price plus (y) the consideration, if any,
received by Company upon such issue or sale as determined pursuant to Section
4.7(a), by (B) the total number of shares of Common Stock Outstanding
immediately after such issue or sale; and (ii) the number of shares of Common
Stock for which this Warrant is exercisable shall be adjusted to equal the
product obtained by multiplying the Warrant Price in effect immediately prior to
such issue or sale by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such issue or sale and dividing the
product thereof by the Warrant Price resulting from the adjustment made pursuant
to clause (i) above.
(b) The provision of paragraph (a) shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of shares of
Common Stock for which this Warrant shall be exercisable shall be made under
paragraph (a) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange rights
in any Convertible Securities, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Sections 4.4 or 4.5 hereof.
4.4 ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporation) issue
or sell, any warrants or
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other rights to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such warrants or other rights or upon
conversion or exchange of such Convertible Securities shall be less than the
Current Market Price in effect immediately prior to the time of such issue or
sale, then the number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock issuable pursuant
to all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the issuance of such
warrants or other rights.
4.5 ISSUANCE OF CONVERTIBLE SECURITIES. If at any time Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether directly or by
assumption in a merger in which Company is the surviving corporation) issue or
sell, any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the Current Market Price in effect immediately prior to the time of such
issue or sale, then the number of Shares for which this Warrant is exercisable
and the Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock necessary to effect
the conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and outstanding and Company shall have received all of the
consideration payable therefor, if any, as of the date of issuance of such
Convertible Securities. No adjustment of the number of Shares for which this
Warrant is exercisable and the Warrant Price shall be made under this Section
4.5 upon the issuance of any Convertible Securities which are issued pursuant to
the exercise of any warrants or other subscription or purchase rights therefor,
if any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. If any issue or sale of
Convertible Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of Shares for which this Warrant is exercisable and
the Warrant Price have been or are to be made pursuant to Section 4.4, no
further adjustments of the number of Shares for which this Warrant is
exercisable and the Warrant Price shall be made by reason of such issue or sale.
4.6 SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5 as the
result of any issuance of warrants, rights or Convertible Securities,
(a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or a
portion of such warrants or rights,
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or the right of conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have been exercised,
or
(b) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share upon
the occurrence of a specified date or event,
then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of the
effect of such rights or options or other Convertible Securities on the basis of
(c) treating the number of Additional Shares of Common Stock
or other property, if any, theretofore actually issued or issuable pursuant to
the previous exercise of any such warrants or rights or any such right of
conversion or exchange, as having been issued on the date or dates of any such
exercise and for the consideration actually received and receivable therefor,
and
(d) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock or other property are issuable under such
warrants or rights or other Convertible Securities; whereupon a new adjustment
of the number of shares of Common Stock for which this Warrant is exercisable
and the Warrant Price shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.
4.7 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration, the
consideration received by Company therefor shall be the amount of the cash
received by Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities are offered by Company for subscription, the subscription
price, or, if such Additional Shares of Common Stock or Convertible Securities
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
Company for and in the underwriting of, or otherwise in connection with, the
issuance thereof). To the
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extent that such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the amount of such consideration
shall be deemed to be the fair market value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of Company.
In case any Additional Shares of Common Stock or any Convertible Securities or
any warrants or other rights to subscribe for or purchase such Additional Shares
of Common Stock or Convertible Securities shall be issued in connection with any
merger in which Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of Company, of such portion of the assets and business of
the nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or other
rights to subscribe for or purchase the same shall be the consideration received
by Company for issuing such warrants or other rights plus the additional
consideration payable to Company upon exercise of such warrants or other rights.
The consideration for any Additional Shares of Common Stock issuable pursuant to
the terms of any Convertible Securities shall be the consideration received by
Company for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to Company in
respect of the subscription for or purchase of such Convertible Securities, plus
the additional consideration, if any, payable to Company upon the exercise of
the right of conversion or exchange in such Convertible Securities. In case of
the issuance at any time of any Additional Shares of Common Stock or Convertible
Securities in payment or satisfaction of any dividends upon any class of stock
other than Common Stock, Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a consideration
equal to the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section 4.1) up to,
but not beyond the date of exercise if such adjustment either by itself or with
other adjustments not previously made adds or subtracts less than 1% of the
shares of Common Stock for which this Warrant is exercisable immediately prior
to the making of such adjustment. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.
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(d) When Adjustment Not Required. If Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Stock, but prior to the occurrence of the event for
which such record is taken, and Holder exercises this Warrant, any Additional
Shares of Common Stock issuable upon exercise by reason of such adjustment shall
be deemed the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by Company to be issued to
Holder upon and to the extent that the event actually takes place, upon payment
of the Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by Company and escrowed
property returned to Company.
(f) Challenge to Good Faith Determination. Whenever the Board
of Directors of Company shall be required to make a determination in good faith
of the fair market value of any item under this Section 4, such determination
may be challenged in good faith by the Majority Holders, and any dispute shall
be resolved by an investment banking or valuation firm of recognized national
standing selected by Company and acceptable to the Majority Holders.
4.8 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of Company, then
each Holder shall have the right thereafter to receive, upon exercise of such
Warrant, the number of shares of common stock of the successor or acquiring
corporation or of Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than Company) shall expressly assume the due
and punctual observance and
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performance of each and every covenant and condition of this Warrant to be
performed and observed by Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of Company) in order to
provide for adjustments of shares of Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9 OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time
to time Company shall take any action in respect of its Common Stock, other than
any action described in this Section 4, then, unless such action will not have a
materially adverse effect upon the rights of the Holders, the number of shares
of Common Stock or other stock for which this Warrant is exercisable and/or the
purchase price thereof shall be adjusted in such manner as may be equitable in
the circumstances.
5. NOTICES TO WARRANT HOLDERS
5.1 NOTICE OF ADJUSTMENTS. Whenever an adjustment to this Warrant is made
pursuant to Section 4, Company shall prepare a certificate to be executed by the
chief financial officer of Company setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated, specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section 4.8
or 4.9) describing the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in the purchase
price or prices thereof, after giving effect to such adjustment or change.
Company shall promptly cause a signed copy of such certificate to be delivered
to each Holder. Company shall keep at its office or agency designated pursuant
to Section 15 copies of all such certificates and cause the same to be available
for inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.
5.2 NOTICE OF CORPORATE ACTION. If at any time
(a) Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
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(b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or any
consolidation or merger of Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of
Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;
then, in any one or more of such cases, Company shall give to Holder (i) at
least 30 days' prior written notice of the date on which a record date shall be
selected in respect of such event and (ii) in the case of any such event, at
least 30 days' prior written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause also shall specify (i) the
date on which the holders of Common Stock shall be entitled to any such
dividend, distribution or right, and the amount and character thereof and (ii)
the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up.
6. NO IMPAIRMENT
Company shall not by any action, including, without
limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, 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 actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, Company will take all such action as may be necessary or appropriate
in order that Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, including taking such
action as is necessary for the Warrant Price to be not less than the par value
of the shares of Common Stock issuable upon exercise of this Warrant. The
Company will use its best efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable Company to perform its obligations under this Warrant.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
From and after the Closing Date, Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any Warrant and
payment therefor in accordance with the terms
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of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by Company
to the holders of its Common Stock with respect to which any provision of
Section 4 refers to the taking of a record of such holders, Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. Company will not at any time, except upon
dissolution, liquidation or winding up of Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1 RESTRICTIVE LEGEND. 1. Except as otherwise provided in this Section
9, each certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act or the
rules and regulations thereunder."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby
have not been registered under the Securities Act of 1933, as
amended, and may not be transferred in violation of such Act,
the rules and regulations thereunder or the provisions of this
Warrant."
9.2 NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to or
promptly following any Transfer of any Warrants or any shares of Restricted
Common Stock, the holder of such Warrants or Restricted Common Stock shall give
written notice (a "Transfer Notice") to Company of such Transfer. Each
certificate, if any, evidencing such shares of Restricted Common Stock issued
upon such Transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such Transfer
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shall bear the restrictive legend set forth in Section 9.1(b), unless in the
opinion of counsel to such holder which is reasonably acceptable to Company such
legend is not required in order to ensure compliance with the Securities Act.
9.3 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions
of Section 9, the restrictions imposed by this Section upon the transferability
of the Warrants and the Warrant Stock, and the legend requirements of Section
9.1, shall terminate as to any particular Warrant or share of Warrant Stock (i)
when and so long as such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto or (ii) when Company shall
have received an opinion of counsel reasonably satisfactory to it that such
security may be transferred without registration thereof under the Securities
Act. Whenever the restrictions imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive
from Company, at the expense of Company, a new Warrant without the restrictive
legend set forth in Section 9.1(b). Whenever the restrictions imposed by this
Section shall terminate as to any share of Warrant Stock, as hereinabove
provided, the holder thereof shall be entitled to receive from Company, at
Company's expense, a new certificate representing such Warrant Stock not bearing
the restrictive legend set forth in Section 9.1(a).
10. SUPPLYING INFORMATION
Company shall cooperate with each Holder of a Warrant or
Warrant Stock in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Warrant Stock.
11. LOSS OR MUTILATION
Upon receipt by Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of Holder shall be sufficient indemnity),
and in case of mutilation upon surrender and cancellation hereof, Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to Company for cancellation.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of such
Holder for the purchase price of any Common Stock or as a stockholder of
Company, whether such liability is asserted by Company or by creditors of
Company.
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13. MISCELLANEOUS
13.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies. If
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.
13.2 NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained for such purpose.
(b) If to Company at:
Atlantic Pharmaceuticals, Inc.
000 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: A. Xxxxxx Xxxxxx
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
13.3 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of Company and the successors and assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and shall be enforceable by any
such Holder.
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13.4 AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of Company and
the Majority Holders, provided that no such Warrant may be modified or amended
to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
13.5 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
13.6 HEADINGS. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
13.7 GOVERNING LAW. This Warrant shall be governed by the laws of the
State of Delaware, without regard to the provisions thereof relating to conflict
of laws.
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IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed and attested by its Secretary or an Assistant Secretary.
Dated:
ATLANTIC PHARMACEUTICALS, INC.
By:_____________________________
Name:
Title:
Attest:
By:___________________________
Name:
Title:
A-20
EXHIBIT A TO WARRANT
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Shares of Common Stock of
Atlantic Pharmaceuticals, Inc. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _____________ whose address is _________________ and, if
such shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.
-------------------------------
(Name of Registered Owner)
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
A-21
EXHIBIT B TO WARRANT
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint ___________________________
attorney-in-fact to register such transfer on the books of Atlantic
Pharmaceuticals, Inc. maintained for the purpose, with full power of
substitution in the premises.
Dated:__________________ Print Name:___________________
Signature:____________________
Witness:______________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
A-22
EXHIBIT B
FORM OF LETTER AGREEMENT
Atlantic Pharmaceuticals, Inc.
0000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxx & Company, Inc.
00 Xxxxxx Xxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Amendment to Underwriters Warrant Agreement
-------------------------------------------
Ladies and Gentlemen:
With reference to that certain Underwriter's Warrant
Agreement, dated as of _______, 1995, between Atlantic Pharmaceuticals, Inc.
("Company") and Xxxxxx Xxxxxxx & Company, L.P. (the "Original Warrant
Agreement"), we wish to provide that the shares of common stock, par value $.001
per share, of the Company ("Common Stock") issuable upon exercise of the
warrants to be issued to you ("Warrants") pursuant to that certain Financial
Advisory and Consulting Agreement, dated as of the date hereof, shall be subject
to Sections 7.2 through 7.5 of the Original Warrant Agreement. Notwithstanding
anything to the contrary in the Original Warrant Agreement, (i) the piggyback
registration rights granted pursuant to Section 7.2 shall be effective for seven
years from the date hereof and (ii) the demand registration rights granted
pursuant to section 7.3 shall be effective for five years from the date hereof,
in each case with respect to all shares of Common Stock issuable upon the
exercise of Warrants held by Xxxxxx Xxxxxxx & Company, Inc. and its affiliates,
and all shares of Common Stock issuable upon the exercise of warrants issued
pursuant to the Original Warrant Agreement.
Very truly yours,
ATLANTIC PHARMACEUTICALS INC.
By: _________________________
Name:
Title:
Agreed and Acknowledged
XXXXXX XXXXXXX & COMPANY, INC.
By: ________________________________
Name:
Title:
B-1
EXHIBIT C
FORM OF INDEMNIFICATION AGREEMENT
Atlantic Pharmaceuticals, Inc.
0000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
January 4, 2000
XXXXXX XXXXXXX & COMPANY, INC.
00 Xxxxxx Xxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the engagement by Atlantic Pharmaceuticals,
Inc. (the "Company") of XXXXXX XXXXXXX & COMPANY, INC. (the "Consultant") as the
Company's financial advisor and investment banker, the Company hereby agrees to
indemnify and hold the Consultant and its affiliates, and the directors,
officers, partners, shareholders, agents and employees of the Consultant
(collectively the "Indemnified Persons"), harmless from and against any and all
claims, actions, suits, proceedings (including those of shareholders), damages,
liabilities and expenses incurred by any of them (including, but not limited to,
fees and expenses of counsel) which are (A) related to or arise out of (i) any
actions taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by the Company, or (ii) any actions taken or
omitted to be taken by any Indemnified Person in connection with our engagement
of the Consultant pursuant to the Financial Advisory and Consulting Agreement,
of even date herewith, between the Consultant and the Company (the "Consulting
Agreement"), or (B) otherwise related to or arising out of the Consultant's
activities on the Company's behalf pursuant to the Consultant's engagement under
the Consulting Agreement, and the Company shall reimburse any Indemnified Person
for all expenses (including, but not limited to, fees and expenses of counsel)
incurred by such Indemnified Person in connection with investigating, preparing
or defending any such claim, action, suit or proceeding (collectively a
"Claim"), whether or not in connection with pending or threatened litigation in
which any Indemnified Person is a party. The Company will not, however, be
responsible for any Claim which is finally judicially determined to have
resulted exclusively from the gross negligence or willful misconduct of any
person seeking indemnification hereunder. The Company further agrees that no
Indemnified Person shall have any liability to the Company for or in connection
with the Consultant's engagement under the Consulting Agreement except for any
Claim incurred by the Company solely as a direct result of any Indemnified
Person's gross negligence or willful misconduct.
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The Company further agrees that the Company will not, without
the prior written consent of the Consultant, settle, compromise or consent to
the entry of any judgment in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person
is an actual or potential party to such Claim), unless such settlement,
compromise or consent includes a legally binding, unconditional, and irrevocable
release of each Indemnified Person hereunder from any and all liability arising
out of such Claim.
Promptly upon receipt by an Indemnified Person of notice of
any complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
the Company in writing of such complaint or of such assertion or institution,
but failure to so notify the Company shall not relieve the Company from any
obligation the Company may have hereunder, unless, and only to the extent that,
such failure results in the forfeiture by the Company of substantial rights and
defenses, and such failure to so notify the Company will not in any event
relieve the Company from any other obligation or liability the Company may have
to any Indemnified Person otherwise than under this Agreement. If the Company so
elects or is requested by such Indemnified Person, the Company will assume the
defense of such Claim, including the employment of counsel reasonably
satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event, however, that such Indemnified Person reasonably
determines in its sole judgment that having common counsel would present such
counsel with a conflict of interest or such Indemnified Person concludes that
there may be legal defenses available to it or other Indemnified Persons that
are different from or in addition to those available to the Company, then such
Indemnified Person may employ its own separate counsel to represent or defend it
in any such Claim and the Company shall pay the reasonable fees and expenses of
such counsel. Notwithstanding anything herein to the contrary, if the Company
fails timely or diligently to defend, contest, or otherwise protect against any
Claim, the relevant Indemnified Party shall have the right, but not the
obligation, to defend, contest, compromise, settle, assert crossclaims or
counterclaims, or otherwise protect against the same, and shall be fully
indemnified by the Company therefor, including, but not limited to, for the fees
and expenses of its counsel and all amounts paid as a result of such Claim or
the compromise or settlement thereof. In any Claim in which the Company assumes
the defense, the Indemnified Person shall have the right to participate in such
defense and to retain its own counsel therefor at its own expense.
The Company agrees that if any indemnity sought by an
Indemnified Person hereunder is held by a court to be unavailable for any
reason, then (whether or not the Consultant is the Indemnified Person) the
Company and the Consultant shall contribute to the Claim for which such
indemnity is held unavailable in such proportion as is appropriate to reflect
the relative benefits to the Company, on the one hand, and the Consultant, on
the other, in connection with the Consultant's engagement by the Company under
the Consulting Agreement, subject to the limitation that in no event shall the
amount of the Consultant's contribution to such Claim exceed the amount of fees
actually received by the Consultant from the Company pursuant to the
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Consultant's engagement under the Consulting Agreement. The Company hereby
agrees that the relative benefits to the Company, on the one hand, and the
Consultant, on the other, with respect to the Consultant's engagement under the
Consulting Agreement shall be deemed to be in the same proportion as (a) the
total value paid or proposed to be paid or received by the Company or the
Company's shareholders as the case may be, pursuant to the transaction (whether
or not consummated) for which the Consultant is engaged to render services bears
to (b) the fee paid or proposed to be paid to the Consultant in connection with
such engagement.
Our indemnity, reimbursement and contribution obligations
under this Agreement shall be in addition to, and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party may have at law
or at equity.
Should the Consultant, or any of its directors, officers,
partners, shareholders, agents or employees, be required or be requested by us
to provide documentary evidence or testimony in connection with any proceeding
arising from or relating to the Consultant's engagement under the Consulting
Agreement, the Company agrees to pay all reasonable expenses (including, but not
limited to, fees and expenses of counsel) in complying therewith and one
thousand dollars ($1,000) per day for any sworn testimony or preparation
therefor, payable in advance.
The Company hereby consents to personal jurisdiction and
service of process and venue in any court in which any claim for indemnity is
brought by any Indemnified Person.
It is understood that, in connection with the Consultant's
engagement under the Consulting Agreement, the Consultant may be engaged to act
in one or more additional capacities and that the terms of the original
engagement or any such additional engagement may be embodied in one or more
separate written agreements. The provisions of this Agreement shall apply to the
original engagement and any such additional engagement and shall remain in full
force and effect following the completion or termination of the Consultant's
engagement(s).
Very truly yours,
ATLANTIC PHARMACEUTICALS, INC.
By:___________________________________
Name:
Title:
CONFIRMED AND AGREED TO:
XXXXXX XXXXXXX & COMPANY, INC.
By: ________________________________
Name:
Title:
C-3
