Exhibit 4.1
WARRANT AGREEMENT
THIS AGREEMENT is dated this ____ day of _______________, 2002, by and
among BIODELIVERY SCIENCES INTERNATIONAL, INC., a Delaware corporation, having
its offices at UMDNJ New Jersey Medical School, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), American
Stock Transfer & Trust Company, a ______________ corporation, having its
offices at ______________________, as agent (the "Warrant Agent"), and
Roan/▇▇▇▇▇▇ Associates, L.P., a New York limited partnership as representative
of the several Underwriters listed in the prospectus included in the
Registration Statement (as defined below) under the heading Underwriters,
having its offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, pursuant to a Registration Statement on Form SB-2,
registration no. 333- ______ (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") and pursuant to an
underwriting agreement between the Company and the Underwriter dated
__________, 2001 (the "Underwriting Agreement") relating to the Company's
proposed public offering, the Company proposes to issue up to 2,300,000 units
(the "Units") (inclusive of 300,000 Units subject to the Representative's
overallotment option), each Unit consisting of one (1) share of the Company's
Common Stock, par value $0.01 per share (the "Common Stock"), one (1) Class A
Redeemable Common Stock Purchase Warrant (the "Class A Warrant"), and further
proposes to issue to the Representative or its designees an Option to purchase
200,000 additional Units (the "Representative's Purchase Option"); and
WHEREAS, each Class A Warrant is redeemable by the Company for $0.10
per Warrant, upon 30 days' prior written notice, if the average closing sale
price of the Common Stock, as reported by the principal exchange on which the
Common Stock is traded, Nasdaq Stock Market, the OTC Bulletin Board or the
National Quotation Bureau Incorporated, as the case may be, equals or exceeds
One Hundred Fifty Percent (150%) of the then applicable Class A Warrant
Exercise Price for ten (10) consecutive trading days ending prior to the date
of the notice of redemption as provided herein; and
WHEREAS, the Company desires the Warrant Agent, and the Warrant Agent
agrees, to act on behalf of the Company in connection with the issuance,
registration, exercise, division, transfer, exchange, replacement, redemption
and surrender of the Warrant Certificates for Class A Warrants and the rights
of the holders thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, and for the purpose of defining the terms
and provisions of the Class A Warrants, the Class A Warrant Certificates, and
the respective rights and obligations thereunder of the Company, the
Registered Holders, the Representative on behalf of the Underwriters and the
Warrant Agent, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise require:
(a) "Business Office" shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its
principal business shall be administered, which office is
located on the date hereof at______________________________.
(b) "Change of Shares" shall have the meaning ascribed thereto in
Section 8(a)(i) herein.
(c) "Class A Warrant" shall mean one (1) Class A Redeemable Common
Stock Purchase Warrant of the Company.
(d) "Class A Warrant Certificates" shall mean certificates
representing Class A Warrants.
(e) "Class A Warrant Exercise Price" shall mean the purchase price
to be paid upon exercise of each Class A Warrant in accordance
with the terms hereof, which price shall be $__ per share,
subject to adjustment as provided in Section 8 herein.
(f) "Class A Warrant Redemption Date" shall mean that date, if any,
upon thirty (30) days' prior written notice, provided that the
average closing price or bid price of the Common Stock, as
reported by the principal exchange on which the Common Stock is
traded, Nasdaq Stock Market, the OTC Bulletin Board or the
National Quotation Bureau Incorporated, as the case may be,
equals or exceeds One Hundred Fifty Percent (150%) of the then
applicable Class A Warrant Exercise Price for 10 consecutive
trading days prior to the date of the notice of redemption.
(g) "Commission" shall mean the United States Securities and
Exchange Commission or any other federal agency at the time
administering the Securities Act.
(h) "Common Stock" shall mean stock of the Company of any class or
series, whether now or hereafter authorized, which has the
right to participate in the distribution of earnings and assets
of the Company without limit as to amount or percentage, which
at the date hereof is the __________ authorized shares of
Common Stock, par value $0.01 per share, of the Company.
(i) "Company" shall mean Biodelivery Sciences International, Inc.,
a [Delaware corporation].
2
(j) "Effective Date" shall mean the date a registration statement
relating to the Common Stock underlying the Warrants is
declared effective by the Securities and Exchange Commission.
(k) "Exchange Act" shall mean 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 at the time.
(l) "Exercise Date" shall have the meaning ascribed thereto in
Section 4 herein.
(m) "Exercise Period" with respect to Class A Warrants shall mean
the period commencing on their respective First Exercise Date
and terminating on their respective Expiration Date.
(n) "Expiration Date" shall mean 5:00 p.m. (New York time) on the
date which is the earlier of the fourth anniversary of the
First Exercise Date or the last business day immediately
preceding the Class A Redemption Date as applicable, provided
however, that if any such date shall be in the State of New
York a holiday or a day on which banks are authorized to close,
then 5:00 p.m. (New York time) on the next following day which
in the State of New York is not a holiday or a day on which
banks are authorized to close, after which dates the respective
Class A Warrants, as applicable, may not be exercised.
(o) "First Exercise Date" with respect to the Class A Warrants
shall mean the first anniversary of the Effective Date.
(p) "Redemption Date" shall mean Class A Redemption Date.
(q) "Redemption Price" shall mean the price at which the Company
may, at its option, redeem the Class A Warrants, in accordance
with the terms hereof, which price shall be $0.10 per Warrant.
(r) "Registered Holders" shall mean the persons in whose names any
Class A Warrant Certificates shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6 herein.
(s) "Registration Statement" shall have the meaning ascribed
thereto in the Preamble.
3
(t) "Restricted Stock" shall mean the Warrant Stock, excluding
shares of Warrant Stock which have been (i) registered under
the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with
the registration statement covering them, or (ii) publicly sold
pursuant to Rule 144 under the Securities Act.
(u) "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.
(v) "Representative" shall mean Roan/▇▇▇▇▇▇ Associates, L.P., a New
York limited partnership.
(aa) "Underwriter's Purchase Option" shall have the meaning ascribed
thereto in the Preamble.
(bb) "Underwriting Agreement" shall have the meaning ascribed
thereto in the Preamble.
(cc) "Underwriters" shall be the underwriters listed in the
Registration Statement in the Underwriter's section.
(dd) "Units" shall have the meaning ascribed thereto in the
Preamble.
(ee) "Warrant Agent" shall mean American Stock Transfer and Trust
Company (or its successor), as agent for the issuance,
registration, transfer, and exchange of the Class A Warrant
Certificates, exercise of the Class A Warrants and, thereupon,
the issuance of the Warrant Stock.
(ff) "Warrant Certificates" shall mean, collectively, Class A
Warrant Certificates.
(gg) "Warrant Stock" shall mean and include (i) up to 5,000,862
shares of authorized and unissued Common Stock initially
reserved for issuance upon exercise of the Class A Warrants;
and (ii) any additional shares of Common Stock or other
property which may hereafter become issuable or deliverable
upon exercise of the Warrants pursuant to Section 8 herein.
(hh) "Warrants" shall mean, the Class A Warrants.
SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
4
2.1 Each Class A Warrant, when signed by the Chairman or President or
any Vice President and by the Secretary, Treasurer or Assistant Secretary of
the Company and counter-signed by the Warrant Agent, shall initially entitle
the Registered Holder of the Class A Warrant Certificate representing such
Class A Warrant to purchase one (1) share of Common Stock upon the exercise
thereof and payment of the Class A Warrant Exercise Price therefor, subject to
modification and adjustment as provided in Section 8 herein and redemption as
provided in Section 9 herein.
2.2 Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold pursuant to the Underwriting
Agreement shall be executed by the Company and delivered to the Warrant Agent.
Upon written order of the Company signed by its President or Chairman or a
Vice President and by its Secretary or an Assistant Secretary, the Warrant
Certificates shall be countersigned, issued and delivered by the Warrant Agent
as part of the Units.
2.3 From time to time up to the Expiration Date, the Warrant Agent
shall countersign and deliver stock certificates in required whole number
denominations representing up to an aggregate of ___________ shares of Common
Stock, subject to adjustment as described herein, upon the exercise of
Warrants in accordance with this Agreement.
2.4 From time to time, up to the Expiration Date of the Warrants, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the First Exercise Date upon the
exercise of fewer than all Warrants represented by any Warrant Certificate to
evidence any unexercised Warrants held by the exercising Registered Holder,
(iii) those issued upon any transfer or exchange pursuant to Section 6 herein;
(iv) those issued in replacement of lost, stolen, destroyed or mutilated
Warrant Certificates pursuant to Section 7 herein; (v) those issued pursuant
to the Representative's Purchase Option; and (vi) at the option of the
Company, in such form as may be approved by its Board of Directors, to reflect
any adjustment or change in the Class A Warrant Exercise Price, the number of
shares of Common Stock purchasable upon exercise of the Warrants or the
Redemption Price therefor pursuant to Section 8 herein.
2.5 Pursuant to the terms of the Representative's Purchase Option, the
Representative may purchase up to 200,000 Units, which include up to 200,000
shares of Common Stock and 200,000 Class A Warrants. The Representative's
Purchase Option (i) shall be exercisable for a four-year period commencing on
the First Exercisable Date, (ii) shall not expire until the fourth anniversary
of the First Exercisable Date, (iii) shall be exercisable at exercise prices
equal to One Hundred Twenty Percent (120%) of the initial offering price of
the Units, as applicable, and (iv) shall not be subject to redemption by the
Company. Notwithstanding anything herein to the contrary, the
5
Representative's Purchase Option shall not be transferable or assignable
without the prior written consent of the Company for a period of one (1) year
commencing the date hereof and then only to officers, directors and employees
of the Representative.
SECTION 3. FORM AND EXECUTION OF THE WARRANT CERTIFICATES.
3.1 The Class A Warrant Certificates shall be substantially in the
form annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers, or other marks of
identification or designation and such legends, summaries, or endorsements
printed, lithographed, or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any law, or with any rule or regulation made
pursuant thereto, or with any rule or regulation of any stock exchange on
which the Warrants may be listed, or to conform to custom or usage. The
Warrant Certificates shall bear the dates of issuance thereof, whether upon
initial issuance, transfer, or exchange or in lieu of mutilated, lost, stolen,
or destroyed Warrant Certificates. The Warrant Certificates initially shall be
issued only in a number equal to the number of certificates for shares of
Common Stock issuable upon exercise thereof. Such Class A Warrant Certificates
shall, be numbered serially with the letters "W-A" on Class A Warrants of all
denominations.
3.2 The Warrant Certificates shall be executed on behalf of the
Company by its Chairman, President or any Vice President and by its Secretary
or an Assistant Secretary or Treasurer, by manual or facsimile signatures
printed thereon, and shall have imprinted thereon a facsimile of the Company's
seal. The Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. If any
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be such officer of the Company before the date of issuance of
the Warrant Certificates or before countersignature by the Warrant Agent and
issue and delivery thereof, such Warrant Certificates nevertheless may be
countersigned by the Warrant Agent, issued, and delivered with the same force
and effect as though the person who signed such Warrant Certificates had not
ceased to be such officer of the Company.
SECTION 4. EXERCISE OF WARRANTS.
4.1 Each Warrant may be exercised at any time during its Exercise
Period, but not after its Expiration Date, upon the terms and subject to the
conditions set forth herein and in the Warrant Certificate representing such
Warrant. A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date of the surrender for exercise (the "Exercise
Date") of the Warrant Certificate representing such Warrant, with the exercise
form thereon duly executed by the Registered Holder thereof or his attorney
duly authorized in writing, with signatures guaranteed by a member firm of a
national securities exchange, a commercial bank (not a savings
6
bank or a savings and loan association) or trust company located in the United
States or a member firm of the National Association of Securities Dealers,
Inc., together with payment made payable and sent to the Warrant Agent for the
account of the Company, in cash or by official bank, certified, or cashier's
check, or by money order or wire transfer of good funds, of an amount in
lawful money of the United States of America equal to the Class A Warrant
Exercise Price, as applicable, plus all applicable transfer fees or taxes, and
the person entitled to receive the Warrant Stock deliverable upon such
exercise shall be treated for all purposes as the holder thereof as of the
close of business on the Exercise Date, irrespective of the date of issuance
or delivery of such certificate for Warrant Stock; provided, however, that if,
at the date of the surrender of such Warrants and the payment of the Class A
Warrant Exercise Price, the transfer books for the Warrant Stock or other
class of stock purchasable upon the exercise of such Warrants shall be closed,
the certificates for the Warrant Stock or for shares of such other class of
stock in respect of which such Warrants are then exercised shall be issuable
as of the date on which such books shall next be opened (whether before or
after the Expiration Date) and until such date the Company shall be under no
duty to deliver any certificate for such Warrant Stock or for shares of such
other class of stock; provided further, that the transfer books of record,
unless otherwise required by law, shall not be closed at any time for a period
longer than 20 days. Except as otherwise provided herein, no Warrants
presented for exercise after their Expiration Date will be accepted for
exercise and all unexercised Warrants shall be void at their Expiration Date
and the rights of the holders thereof shall cease at such time. No
alternative, conditional, or contingent exercises or over-subscriptions shall
be accepted.
4.2 Any transfer fees and taxes with respect to such exercises shall
be paid by the Company. Other expenses incurred by the Warrant Agent,
including expenses incurred to establish new accounts, to deliver share
certificates, and to reconcile accounts, shall be paid by the Company.
4.3 If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 8 herein, the Company
shall nevertheless not be required to issue fractions of shares upon exercise
of the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Registered Holder an amount in
cash equal to such fraction multiplied by the current market value of such
fractional share, determined as follows: (1) if the Common Stock is listed on
a National Securities Exchange or admitted to unlisted trading privileges on
such exchange or listed for trading on the Nasdaq Stock Market Quotation
System or the OTC Bulletin Board, the current value shall be the last reported
sale price of the Common Stock on such exchange on the last business day prior
to the date of exercise of the Warrant or if no such sale is made on such day,
the average of the closing bid and asked prices for such day on such exchange;
or (2) if the Common Stock is not listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Quotation Bureau, Inc. reported on the
last business day prior to the date of the exercise of the Warrant; or (3)
7
if the Common Stock is not so listed or admitted to unlisted trading
privileges and bid and asked prices are not so reported, the current value
shall be an amount determined in such reasonable manner and sold in good faith
as may be prescribed by the Board of Directors of the Company.
4.4 As soon as practicable on or after the Exercise Date and in no
event more than three business days thereafter, the Warrant Agent, on behalf
of the Company, shall cause to be issued to the person or persons entitled to
receive the same, a certificate or certificates for the Warrant Stock, and the
Warrant Agent shall deliver the same to the person or persons entitled
thereto. No adjustment shall be made in respect of dividends on Warrant Stock
delivered upon exercise of any Warrant.
4.5 If on or before the Exercise Date of the Warrants, and in no event
more than three business days thereafter the Warrant Agent receives the full
exercise price for any Warrants together with a letter, telegraphic, or
facsimile guaranty from a commercial bank or trust company located in the
United States, a member firm of a national securities exchange, or a
registered broker-dealer, setting forth the Registered Holder's name, the
number of Warrants held by him, and the number of shares of Common Stock he
wishes to purchase pursuant to exercise of the Warrants, and stating that the
Warrant Certificate representing such Warrants will be delivered to the
Warrant Agent within eight (8) trading days after the date of such letter,
telegraphic, or facsimile guaranty, the Warrants will be accepted for exercise
subject to receipt of the duly executed Warrant Certificate within eight (8)
trading days.
4.6 The Company reserves the absolute right to waive any defect or
irregularity, permit a defect or irregularity to be cured or corrected within
such time as it may determine, or reject any exercise of a Warrant which it
determines to have been made improperly or the acceptance of which would, in
the opinion of the Company's counsel, be unlawful. Any irregularities in
connection with presentments for exercise must be cured within such time as
the Company shall determine in its sole and absolute discretion unless waived.
The Company shall notify the Warrant Agent in writing of its waiver of any
defect or irregularity in presentment, its permission to cure or correct such
defect or irregularity and any subsequent cure or correction thereof. Neither
the Company nor the Warrant Agent shall be under any duty to give notification
of defects in presentments for exercise or incur any liability for failure to
give such notification. Any presentments for exercise as to which defects or
irregularities have not been cured or waived and as to which notice of cure or
waiver has not been given to the Warrant Agent as provided herein will be
returned to the Registered Holder by the Warrant Agent, as soon as
practicable, together with all funds held for the Registered Holder's account.
No interest shall be paid on any such funds so returned.
4.7 Subject to the foregoing, once a Registered Holder has presented
his Warrant Certificate and payment for exercise, the exercise is irrevocable.
8
4.8 If less than all of the Warrants represented by a Warrant
Certificate are exercised, the Warrant Agent shall execute and mail, by
first-class mail, within three (3) business days of the date of exercise, to
the Holder of such Warrant Certificate, or such other person as shall be
designated in the election to purchase, a new Warrant Certificate representing
the number of full Warrants not exercised.
4.9 Upon the exercise, or conversion as provided for in Section 8
herein, of any Warrant, the Warrant Agent shall promptly deposit the payment
therefor into an interest bearing escrow account established by mutual
agreement of the Company and the Warrant Agent at a federally insured
commercial bank. All funds from the exercise deposited in the escrow account
together with interest thereon, less expenses to be paid by the Company, will
be disbursed to the Company on a weekly basis once determined by the Warrant
Agent to be collected funds. An accounting relating to the number of Warrants
exercised and the net amount of exercise funds remitted will be made by the
Warrant Agent to the Company with each payment to the Company of exercise
funds, which will serve as an interim accounting during the period during
which the Warrants may be exercised. A complete accounting concerning all
exercises of Warrants will be made to the Company at the completion of the
period during which the Warrants may be exercised.
SECTION 5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
5.1 The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of the Warrants as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of Warrant Stock
which shall be so issuable shall be duly authorized and validly issued and
upon full payment therefor be fully paid and non-assessable and free from all
pre-emptive rights, taxes, claims, liens, encumbrances and charges.
5.2 No Warrants shall be issued to any Registered Holder in any state
in which such exercise would be unlawful.
5.3 The Company shall pay all documentary, stamp, or similar taxes and
other governmental charges that may be imposed with respect of the issuance of
the Warrants, or the issuance, transfer, or delivery of any Warrant Stock upon
exercise of the Warrants; provided, however, that if a certificate for Warrant
Stock is to be delivered in a name other than the name of the Registered
Holder of the Warrant Certificate representing any Warrant being exercised,
then no such delivery shall be made unless the person requesting the same has
paid to the Warrant Agent the amount of any such taxes or charges incident
thereto, if any. Any transfer fees payable to the Warrant Agent
9
for the transfer, exchange, or exercise of any certificate issued pursuant to
this Agreement shall be paid by the presenter of such certificate.
5.4 The Warrant Agent is hereby irrevocably authorized to requisition
the Company's Transfer Agent from time to time for certificates representing
shares of Common Stock required upon exercise of the Warrants, and the Company
will authorize the Transfer Agent to comply with all such proper requisitions.
The Company will file with the Warrant Agent a statement setting forth the
name and address of the Transfer Agent of the Company for shares of Common
Stock issuable upon exercise of the Warrants.
SECTION 6. EXCHANGE AND REGISTRATION OR TRANSFER OF WARRANTS.
6.1 The Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of the same series of
Warrants or may be transferred in whole or in part. Warrant Certificates to be
so exchanged shall be surrendered to the Warrant Agent at its Business Office,
and the Company shall execute and the Warrant Agent shall countersign, issue,
and deliver in exchange therefor the Warrant Certificates which the Registered
Holder making the exchange shall be entitled to receive.
6.2 The Warrant Agent shall keep, at its business office, books in
which, subject to such reasonable regulations as it may prescribe, the Warrant
Agent shall register the Warrants and the transfer thereof. Upon due
presentment for registration or transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and
deliver to the transferee a new Warrant Certificate representing an equal
aggregate number of Warrants.
6.3 All Warrant Certificates presented for registration or transfer or
for exchange or exercise, and the subscription form on the reverse thereof,
shall be duly endorsed or be accompanied by a written instrument of transfer
and subscription in form satisfactory to the Company and the Warrant Agent
duly executed by the Registered Holder thereof or his attorney duly authorized
in writing.
6.4 A transfer fee shall be charged to the transferee for any exchange
or registration or transfer of a Warrant Certificate. In addition, the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
6.5 All Warrant Certificates surrendered for transfer or exercise, or
for exchange in the case of mutilated Warrant Certificates, shall be promptly
canceled by the Warrant Agent and thereafter retained by the Warrant Agent for
the duration of the agency. From time to time at such times as the Company may
reasonably request, the Warrant Agent shall provide the Company with a list of
the Registered Holders of the Warrants.
10
6.6 Prior to due presentment for registration or transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof and of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company or the Warrant Agent) for all
purposes, and shall not be affected by any notice to the contrary.
SECTION 7. LOSS OR MUTILATION.
7.1 Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them of the ownership of and the loss, theft, destruction, or
mutilation of any Warrant Certificate and, in the case of loss, theft, or
destruction, an indemnity satisfactory to them, or, in the case of mutilation,
upon surrender and cancellation thereof, the Company shall execute and the
Warrant Agent shall countersign and deliver in lieu thereof a new Warrant
Certificate representing an equal aggregate number of Warrants. Applicants for
a substitute Warrant Certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Warrant Agent may
prescribe.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF
COMMON STOCK OR WARRANTS.
8.1 Subject to the exceptions referred to in Section 8(g) below, in
the event the Company shall, at any time or from time to time after the date
hereof, sell any shares of Common Stock for a consideration per share less
than the current exercise price of the Common Stock on the date of the sale or
issue any shares of Common Stock as a stock dividend to the holders of Common
Stock, or subdivide or combine the outstanding shares of Common Stock into a
greater or lesser number of shares (any such sale, issuance, subdivision or
combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Exercise Price in effect immediately
prior to such Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of which shall
be the sum of (x) the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares plus (y) the number of shares
of Common Stock which the aggregate consideration received (determined as
provided in subsection 8(f)(F) below) for the issuance of such additional
shares would purchase at such current market price per share of Common Stock,
and the denominator of which shall be the sum of the number of shares of
Common Stock outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such an issuance
is made.
11
8.2 Upon each adjustment of the Exercise Price pursuant to this
Section 8, the total number of shares of Common Stock purchasable upon the
exercise of each Warrant shall (subject to the provisions contained in Section
8(b) hereof) be such number of shares (calculated to the nearest tenth)
purchasable at the Exercise Price immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to such adjustment and the denominator of which
shall be the Exercise Price in effect immediately after such adjustment.
8.3 The Company may elect, upon any adjustment of the Exercise Price
hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the
exercise of each Warrant as hereinabove provided, so that each Warrant
outstanding after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to such adjustment of
the number of Warrants shall become that number of Warrants (calculated to the
nearest tenth) determined by multiplying the number one by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
such adjustment and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment. Upon each adjustment of the number
of Warrants pursuant to this Section 8, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant Certificates evidencing,
subject to not issuing fractional shares, the number of additional Warrants to
which such Registered Holder shall be entitled as a result of such adjustment
or, at the option of the Company, cause to be distributed to such Registered
Holder in substitution and replacement for the Warrant Certificates held by
him prior to the date of adjustment (and upon surrender thereof, if required
by the Company) new Warrant Certificates evidencing the number of Warrants to
which such Registered Holder shall be entitled after such adjustment.
8.4 In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as, or
substantially as, an entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective provision to be made
so that each holder of a Warrant then outstanding shall have the right
thereafter, by exercising such Warrant, to purchase the kind and number of
shares of stock or other securities or property (including cash) receivable
upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock that might have been purchased upon exercise of such Warrant
immediately prior to such reclassification, capital
12
reorganization or other change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 8. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
8.5 Irrespective of any adjustments or changes in the Exercise Price
or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant
Certificates, continue to express the Exercise Price per share, the number of
shares purchasable thereunder and the Redemption Price therefor as the
Exercise Price per share, and the number of shares purchasable and the
Redemption Price therefore were expressed in the Warrant Certificates when the
same were originally issued.
8.6 After each adjustment of the Exercise Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Exercise Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and, if the
Company shall have elected to adjust the number of Warrants, the number of
Warrants to which the Registered Holder of each Warrant shall then be
entitled, and the adjustment in Redemption Price resulting therefrom, and
(iii) a brief statement of the facts accounting for such adjustment. The
Company will promptly file such certificate with the Warrant Agent and cause a
brief summary thereof to be sent by ordinary first class mail to the
Representative and to each Registered Holder of Warrants at his last address
as it shall appear on the registry books of the Warrant Agent. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity thereof except as to the holder to whom the Company failed to
mail such notice, or except as to the holder whose notice was defective. The
affidavit of an officer of the Warrant Agent or the Secretary or an Assistant
Secretary of the Company that such notice has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
8.7 For purposes of Section 8(a) and 8(b) hereof, the following
provisions (A) to (F) shall also be applicable:
(A) The number of shares of Common Stock outstanding at any
given time shall include shares of Common Stock owned or held by or for the
account of the Company and the sale or issuance of such treasury shares or the
distribution of any such treasury shares shall not be considered a Change of
Shares for purposes of said sections.
13
(B) No adjustment of the Exercise Price shall be made unless
such adjustment would require an increase or decrease of at least $.10 in such
price; provided that any adjustments which by reason of this clause (B) are
not required to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an increase or decrease of at
least $.10 in the Exercise Price then in effect hereunder.
(C) In case of (1) the sale by the Company for cash of any
rights or warrants to subscribe for or purchase, or any options for the
purchase of, Common Stock or any securities convertible into or exchangeable
for Common Stock without the payment of any further consideration other than
cash, if any (such convertible or exchangeable securities being herein called
"Convertible Securities"), or (2) the issuance by the Company, without the
receipt by the Company of any consideration therefor, of any rights or
warrants to subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, in each case, if (and only if) the
consideration payable to the Company upon the exercise of such rights,
warrants or options shall consist of cash, whether or not such rights,
warrants or options, or the right to convert or exchange such Convertible
Securities, are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such rights, warrants or options
or upon the conversion or exchange of such Convertible Securities (determined
by dividing (x) the minimum aggregate consideration payable to the Company
upon the exercise of such rights, warrants or options, plus the consideration
received by the Company for the issuance or sale of such rights, warrants or
options, plus, in the case of such Convertible Securities, the minimum
aggregate amount of additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of such
rights, warrants or options) is less than the closing price ("Fair Market
Value")of the Common Stock on the date prior to the date of the issuance or
sale of such rights, warrants or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities (as
of the date of the issuance or sale of such rights, warrants or options) shall
be deemed to be outstanding shares of Common Stock for purposes of Sections
8(a) and 8(b) hereof and shall be deemed to have been sold for cash in an
amount equal to such price per share.
(D) In case of the sale by the Company for cash of any
Convertible Securities, whether or not the right of conversion or exchange
thereunder is immediately exercisable, and the price per share for which
Common Stock is issuable upon the conversion or exchange of such Convertible
Securities (determined by dividing (x) the total amount of consideration
received by the
14
Company for the sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of such Convertible Securities) is less than the Fair
Market Value or the Common Stock on the date of the sale of such Convertible
Securities, then the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities (as of the date
of the sale of such Convertible Securities) shall be deemed to be outstanding
shares of Common Stock for purposes of Sections 8(a) and 8(b) hereof and shall
be deemed to have been sold for cash in an amount equal to such price per
share.
(E) If the exercise or Exercise Price provided for in any
right, warrant or option referred to in (C) above, or the rate at which any
Convertible Securities referred to in (C) or (D) above are convertible into or
exchangeable for Common Stock, shall change at any time (other than under or
by reason of provisions designed to protect against dilution), the Exercise
Price then in effect hereunder shall forthwith be readjusted to such Exercise
Price as would have obtained (1) had the adjustments made upon the issuance or
sale of such rights, warrants, options or Convertible Securities been made
upon the basis of the issuance of only the number of shares of Common Stock
theretofore actually delivered (and the total consideration received therefor)
upon the exercise of such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities, (2) had adjustments been made on
the basis of the Exercise Price as adjusted under clause (1) for all
transactions (which would have affected such adjusted Exercise Price) made
after the issuance or sale of such rights, warrants, options or Convertible
Securities, and (3) had any such rights, warrants, options or Convertible
Securities then still outstanding been originally issued or sold at the time
of such change. On the expiration of any such right, warrant or option or the
termination of any such right to convert or exchange any such Convertible
Securities, the Exercise Price then in effect hereunder shall forthwith be
readjusted to such Exercise Price as would have obtained (a) had the
adjustments made upon the issuance or sale of such rights, warrants, options
or Convertible Securities been made upon the basis of the issuance of only the
number of shares of Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities and
(b) had adjustments been made on the basis of the Exercise Price as adjusted
under clause (a) for all transactions (which would have affected such adjusted
Exercise Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities.
(F) In case of the sale for cash of any shares of Common
Stock, any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefore shall be
deemed to be the gross sales price therefor without deducting therefrom any
expense paid or
15
incurred by the Company or any underwriting discounts or commissions or
concessions paid or allowed by the Company in connection therewith.
(G) No adjustment to the Exercise Price of the Warrants or
to the number of shares of Common Stock purchasable upon the exercise of each
Warrant will be made, however,
(i) upon the exercise of any of the options presently
outstanding under the Company's Stock Option Plan (the
"Plan"); or
(ii) upon the grant or exercise or any other options
which may hereafter be granted or exercised under the
Plan or under any other employee benefit plan of the
Company; or
(iii) upon the sale or exercise of the Warrants,
including without limitation the sale or exercise of any
of the Warrants comprising the Representative's Purchase
Option; or
(iv) upon the sale of any shares of Common Stock in
the public offering represented by the Registration
Statement, including, without limitation, shares sold
upon the exercise of any overallotment option granted to
the Underwriters in connection with such offering; or
(v) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities,
whether or not any adjustment in the Exercise Price was
made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of
the original sale of the Warrants or were thereafter
issued or sold; or
(vi) upon any amendment to or change in the terms of
any rights or warrants to subscribe for or purchase, or
options for the purchase of, Common Stock or convertible
securities or in the terms of any convertible
securities, including, but not limited to, any extension
of any expiration date of any such right, warrant or
option, any change in any exercise or Exercise Price
provided for in any such right, warrant or option, any
extension of any date through which any Convertible
Securities are convertible into or exchangeable for
Common Stock or any change in the rate at which any
Convertible Securities are convertible into or
exchangeable for Common
16
Stock (other than rights, warrants, options or
Convertible Securities issued or sold after the close of
business on the date of the original issuance of the
Units (i) for which an adjustment in the Exercise Price
then in effect was theretofore made or required to be
made, upon the issuance or sale thereof, or (ii) for
which such an adjustment would have been required had
the exercise or Exercise Price of such rights, warrants
or options at the time of the issuance or sale thereof
or the rate of conversion or exchange of such
Convertible Securities, at the time of the sale of such
Convertible Securities, or the issuance or sale of
rights or warrants to subscribe for or purchase, or
options for the purchase of, such Convertible
Securities, been the price or rate as changed, in which
case the provisions of Section 8(f)(E) hereof shall be
applicable if, but only if, the exercise or Exercise
Price thereof, as changed, or the rate of conversion or
exchange thereof, as changed, consists of cash or
requires the payment of additional consideration, if
any, consisting of cash and the Company did not receive
any consideration other than cash, if any, in connection
with such change).
(H)As used in this Section 8, the term "Common Stock" shall
mean and include the Company's Common Stock authorized on the date of the
original issue of the Units and shall also include any capital stock of any
class of the Company thereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
liquidation, dissolution or winding up of the Company; provided, however, that
the shares issuable upon exercise of the Warrants shall include only shares of
such class designated in the Company's Certificate of Incorporation as Common
Stock on the date of the original issue of the Units or (i), in the case of
any reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 8(c) hereof, the stock, securities or
property provided for in such section or (ii), in the case of any
reclassification or change in the outstanding shares of Common Stock issuable
upon exercise of the Warrants as a result of a subdivision or combination or
consisting or a change in par value, or from par value to no par value, or
from no par value to par value, such shares of Common Stock as so reclassified
or changed.
(I) Any determination as to whether an adjustment in the
Exercise Price in effect hereunder is required pursuant to Section 8, or as to
the amount of any such adjustment, if required, shall be binding upon the
holders of the Warrants and the Company if made in good faith by the Board of
Directors of the Company.
17
(J) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into
or exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company shall concurrently therewith grant to each of the then
Registered Holders of the Warrants all of such rights, warrants or options to
which each such holder would have been entitled if, on the date of
determination of stockholders entitled to the rights, warrants or options
being granted by the Company, such holder were the holder of record of the
number of whole shares of Common Stock then issuable upon exercise (assuming,
for purposes of this section 8(j), that exercise of Warrants is permissable
during periods prior to the First Exercise Date) of his Warrants. Such grant
by the Company to the holders of the Warrants shall be in lieu of any
adjustment which otherwise might be called for pursuant to this Section 8.
SECTION 9. REDEMPTION.
9.1 Provided that adequate provision has been made therefor and except
with respect to the Warrants forming a part of the Representative's Purchase
Option, upon the resolution of its Board of Directors, the Company may, but
shall not be required to, call for redemption all or less than all of the
Class A Warrants at any time, provided: (i) it provides to each Registered
Holder of Warrants to be redeemed thirty (30) days' prior written notice, (ii)
if the average closing price or bid price of the Common Stock, as reported by
the principal exchange on which the Common Stock is traded, Nasdaq Stock
Market, the OTC Bulletin Board or the National Quotation Bureau Incorporated,
as the case may be, equals or exceeds One Hundred Fifty Percent (150%) of the
then applicable Class A Warrant Exercise Price for 10 consecutive trading days
prior to the date of delivery of the notice of redemption and (iii) there is
then a current registration statement and prospectus allowing the resale of
the Warrant shares for not less than 180 days. In such an event, the Company
shall cause to be filed with the Warrant Agent a certified copy of such
resolution and a form of notice of redemption and the Warrant Agent shall mail
to each of the Registered Holders of the Warrant Certificates to be redeemed,
by first class mail, postage prepaid, to his last address appearing on the
records of the Warrant Agent, such written notice of such redemption. Such
notice shall identify the Warrants to be redeemed, state the Redemption Date,
the Redemption Price, and the date upon which the Registered Holder's right to
exercise the Warrants will terminate, and describe the manner in which Warrant
Certificates are to be surrendered. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given whether or not
the Registered Holder receives such notice. Failure to mail notice to any
Registered Holder, shall not affect the validity of any other redemptions for
which notice had been duly provided, only redemptions of persons lacking
notice.
18
9.2 On or before the Redemption Date, each Registered Holder of
Warrants to be redeemed, unless he has previously exercised or will exercise
such Warrants on or before the Redemption Date, shall surrender the Warrant
Certificate or Certificates representing such Warrants to the Warrant Agent.
The Warrants to be redeemed shall be exercisable up to and including the date
immediately preceding the Redemption Date. Upon receipt of such Warrant
Certificates, the Warrant Agent, as paying agent, shall pay the Redemption
Price for such Warrants to the order of the Registered Holders thereof. Any
Warrants so redeemed will be canceled by the Warrant Agent upon receipt. After
the Redemption Date, all rights with respect to such Warrants shall cease,
except for the right to receive the Redemption Price of the Warrants. If less
than all of the Warrants are to be redeemed, the Warrants to be redeemed shall
be chosen, pro rata, from among all Registered Holders in a proportion to the
amount owned by each.
9.3 Upon or prior to the Redemption Date, the Company shall deposit in
trust with the Warrant Agent a sum equal to the Redemption Price of all
Warrants called for redemption, with irrevocable instructions and authority to
the Warrant Agent to pay, on and after the Redemption Date, the Redemption
Price to the Registered Holders upon the surrender of the Warrant
Certificates. The deposit shall constitute full payment of the Warrants to the
Registered Holders, and from and after the date of the deposit, the Warrants
shall be deemed to be no longer outstanding. The balance of the deposit
remaining unclaimed at the end of one year from the Redemption Date shall be
released to the Company, after which the holders of Warrants called for
redemption shall be entitled to receive payment of the redemption price only
from the Company.
SECTION 10. CONCERNING THE WARRANT AGENT.
10.1 The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any stock or other
property delivered upon exercise of the Warrants or whether any such stock is
fully paid and non-assessable. The Warrant Agent shall not at any time be
under any duty or responsibility to the holders of the Warrant Certificates to
make or cause to be made any adjustment of the Class A Warrant Exercise Price
provided in this Agreement, or to determine whether any fact exists which may
require any such adjustments, or with respect to the nature or extent of any
such adjustment, when made, or with respect to the method employed in making
the same. It shall not (i) be liable for any recital or statement of fact
contained herein or for any action taken, suffered, or omitted by it in
reliance on any Warrant Certificate or other document or instrument believed
by it in good faith to be genuine and to have been signed or presented by the
proper party or parties, (ii) be responsible for any failure on the part of
the Company to comply with
19
any of its covenants and obligations contained in this Agreement or the
Warrant Certificates, or (iii) be liable for any act or omission in connection
with this Agreement except for its own negligence or willful misconduct.
10.2 The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered, or omitted by it
in good faith in accordance with the opinion or advice of such counsel, other
than as specified in clause (iii) of the preceding paragraph.
10.3 Any notice, statement, instruction, request, direction, order, or
demand of the Company to the Warrant Agent hereunder shall be sufficiently
evidenced by an instrument signed by the President, a Vice President, the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer
(unless other evidence in respect thereof is herein specifically prescribed).
The Warrant Agent shall not be liable for any action taken, suffered, or
omitted by it in accordance with such notice, statement, instruction, request,
direction, order or demand reasonably believed by the Warrant Agent to be
genuine and to have been signed, sent or presented by the proper parties or
party.
10.4 The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder. The Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses, and liabilities,
including judgments, costs, and reasonable counsel fees, for anything done or
omitted by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses, and liabilities arising as a result of the
Warrant Agent's own negligence or willful misconduct.
10.5 The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall
cause a copy of such notice of resignation to be mailed, at the Company's
expense, to the Registered Holder of each Warrant Certificate then
outstanding. Upon comparable notice to the Warrant Agent, the Company may
remove the Warrant Agent; provided, however, that in such event the Company
shall appoint a new warrant agent (the "New Warrant Agent"), as hereinafter
provided, the removal of the Warrant Agent shall not be effective until a New
Warrant Agent has been appointed and has accepted such appointment. If the
office of Warrant Agent becomes vacant by resignation or incapacity to act or
otherwise, the Company shall appoint in writing a New Warrant Agent. If the
Company shall fail to make an appointment within a period of 30 days after it
has been notified in writing of such resignation or after such removal by the
resigning Warrant Agent, then the Registered Holder of any Warrant Certificate
may apply to any court of competent jurisdiction for the appointment of a new
warrant agent. Any New Warrant Agent, whether appointed by the Company or by
such a court, shall be a bank or trust company having a capital and surplus,
as shown by its last published report
20
to its stockholders, of not less that $10,000,000, or shall be a stock
transfer company. Any New Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to the former Warrant Agent last in office, and to the
Company, an instrument accepting such appointment under substantially the same
terms and conditions as are contained herein. After acceptance in writing of
such appointment by the New Warrant Agent is received by the Company, such New
Warrant Agent shall be vested with the same powers, rights, duties, and
responsibilities as if it originally had been named herein as the Warrant
Agent, without any further assurance, conveyance, act, or deed; but if for any
reason it shall be necessary or expedient for the former Warrant Agent to
execute and deliver any further assurance, conveyance, act, or deed the same
shall be done at the expense of the Company and shall be legally and validly
executed and delivered by the resigning Warrant Agent. Not later than the
effective date of any such appointment, the Company shall file notice thereof
with the resigning Warrant Agent and shall forthwith cause a copy of such
notice to be mailed to the Registered Holder of each Warrant Certificate then
outstanding. Failure to mail such notice, or any defect contained therein,
shall not affect the legality or validity of the appointment of the New
Warrant Agent.
10.6 Any corporation into which the Warrant Agent or any New Warrant
Agent may be converted or merged, or any corporation resulting from any
consolidation to which the Warrant Agent or any New Warrant Agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent shall be a successor warrant agent under this Agreement without
any further act, provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the preceding
paragraph. Any such successor Warrant Agent promptly shall cause notice of its
succession as Warrant Agent to be mailed to the Company and to the Registered
Holder of each Warrant Certificate then outstanding.
10.7 The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell the Warrants or
other securities of the Company and otherwise deal with the Company in the
same manner and to the same extent and with like effect as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
10.8 The Company shall have the right, except as limited by law,
other agreement or herein, to purchase or otherwise acquire Warrants at such
times, in such manner and for such consideration as it may deem appropriate.
SECTION 11. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS.
11.1 No holder of Warrants shall, as such, be entitled to vote or to
receive dividends or be deemed the holder of Common Stock that may at any time
be issuable upon exercise of such
21
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
SECTION 12. RIGHTS OF ACTION.
All rights of action with respect to this Agreement are vested in the
respective Registered Holders of the Warrants, and any Registered Holder of a
Warrant, without consent of the Warrant Agent or of the holder of any other
Warrant, may, in his own behalf and for his own benefit, enforce against the
Company his right to exercise his Warrants for the purchase of shares of
Common Stock in the manner provided in the Warrant Certificate and this
Agreement.
SECTION 13. AGREEMENT OF WARRANT HOLDERS.
13.1 Every holder of a Warrant, by his acceptance thereof, consents
and agrees with the Company, the Warrant Agent and every other holder of a
Warrant that:
13.2 The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his attorney
duly authorized in writing and only if the Warrant Certificates representing
such Warrants are surrendered at the office of the Warrant Agent, duly
endorsed or accompanied by a proper instrument of transfer satisfactory to the
Warrant Agent and the Company in their sole discretion, together with payment
of any applicable transfer taxes; and
13.3 The Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the Registered Holder
and as the absolute, true and lawful owner of the Warrants represented thereby
for all purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice or knowledge to the contrary, except as otherwise
expressly provided in Section 7 herein.
SECTION 14. MODIFICATION OF AGREEMENT.
The Warrant Agent, the Underwriter and the Company by supplemental
agreement may make any changes or corrections in this Agreement, without the
consent of any Registered Holder, (i) that they shall deem appropriate to cure
any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; or (ii) that they may deem
necessary or desirable and which shall not adversely affect the interest of
the Registered Holders of Warrant Certificates; provided, however, that this
Agreement shall not otherwise be modified, supplemented,
22
or altered in any respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than a majority of the
Warrants then outstanding.
SECTION 15. NOTICES.
15.1 All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class, postage prepaid, or delivered to a telegraph
office for transmission:
(i) if to the Registered Holder of a Warrant Certificate, at
the address of such Registered Holder as shown on the registry books
maintained by the Warrant Agent; or
(ii) if to the Company, at UMDNJ New Jersey Medical School,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ to the
attention of the President, or at such other address as may have been
furnished to the other parties hereto in writing by the Company, with a copy
to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Ellenoff ▇▇▇▇▇▇▇▇ Schole & Cyruli, LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; or
(iii) if to the Warrant Agent, at its Business Office; or
(iv) if to the Representative, at ▇▇▇▇ ▇▇▇▇▇▇ Associates,
L.P., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other address as
may have been furnished to the other parties hereto in writing by the
Underwriter, with a copy to ___________________________.
15.2 All written notices required or desired to be given to the
Registered Holders by the Company pursuant to this Agreement shall be effected
by the Company providing to the Warrant Agent a copy of the written notice
which the Company is desirous of giving to the Registered Holders and the
Warrant Agent shall cause same to be delivered to such Registered Holders. The
Company hereby agrees that the Warrant Agent shall not have any liability for,
and agrees to indemnify the Warrant Agent with respect to, any written notice
provided by the Company to the Warrant Agent for delivery to Registered
Holders, except with respect to the Warrant Agent's negligence for failing to
deliver said notices.
SECTION 16. GOVERNING LAW.
This Agreement shall be construed in accordance with and governed
by the laws of the State of Delaware.
SECTION 17. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of
the Company, the Warrant Agent, the Underwriter, and their respective
successors, and the Registered Holders from time to time of the Warrant
Certificates, or any of them. Nothing in this Agreement is intended or shall
be
23
construed to confer upon any other person any right, remedy, or claim or to
impose upon any other person any duty, liability, or obligation.
SECTION 18. TERMINATION.
This Agreement shall terminate at the close of business on the
Expiration Date of all the Warrants or such earlier date upon which all
Warrants have been exercised, except that the Warrant Agent shall account to
the Company for cash held by it and the indemnity provisions of Section 10(e)
and Section 10 herein shall survive such termination.
SECTION 19. EXECUTION.
This Agreement may be executed in several counterparts which taken
together shall constitute a single document.
SECTION 20. AVAILABILITY OF THE AGREEMENT.
The Warrant Agent shall keep copies of this Agreement available for
inspection by Registered Holders during normal business hours at its Stock
Transfer Department. Copies of this Agreement may be obtained upon written
request addressed to the Company at UMDNJ New Jersey Medical School, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
BIODELIVERY SCIENCES INTERNATIONAL, INC.
By:_____________________________________
American Stock Transfer & Trust Co.
By:______________________________________
ROAN/▇▇▇▇▇▇ ASSOCIATES, L.P.
By:______________________________________
24
