Contract
Exhibit
10.3
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, OR
HYPOTHECATED UNLESS AND UNTIL (I) REGISTERED UNDER THE ACT OR, (II) THE
TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE ACT AND AN OPINION OF COUNSEL
IN A FORM REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES HAS BEEN
RENDERED.
WARRANT
TO
PURCHASE COMMON STOCK
OF
NEUROLOGIX,
INC.
(void
after November 19, 2014)
No.
W-____
THIS
CERTIFIES THAT, for value received, ____________________ or its registered
assigns (the “Holder”), from and after the date hereof, and
subject to the terms and conditions herein set forth, is entitled to purchase
from Neurologix, Inc., a Delaware corporation (the “Company”),
at any time before 5:00 p.m. New York City time on November 19, 2014 (the
“Termination Date”), _____________ shares (the “Warrant
Shares”) of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), at a price per share equal to the Warrant
Price (as defined below) upon exercise of this Warrant pursuant to Section
5
hereof. The number of Warrant Shares is subject to adjustment under
Section 2.
1. Definitions. As
used in this Warrant, the following terms have the definitions ascribed to
them
below:
(a)
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“Cash
Shares” shall have the meaning ascribed to them in Section
5(a).
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(b)
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“Issuance
Date” means November 19,
2007.
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(c)
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“Offering
Warrants” shall have the meaning ascribed to the term in Section
8.
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(d)
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“Person”
means any individual, corporation, partnership, limited liability
company,
trust, incorporated or unincorporated association, joint venture,
joint
stock company, governmental authority or other entity of any kind,
and
shall include any successor (by merger or otherwise) of such
entity.
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(e)
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“Registration
Rights Agreement” means that certain Registration Rights
Agreement dated as of November 19, 2007, by and among the Company,
the
initial Holder of this Warrant, Corriente Master Fund, L.P.,
DaimlerChrysler Corporation Master Retirement Trust and certain funds
managed by ProMed Asset Management
LLC.
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(f)
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“Subscription
Agreement” means that certain Stock and Warrant Subscription
Agreement dated as of November 19, 2007 between the Company and the
initial Holder of this Warrant.
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(g)
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“Warrant
Price” means $1.39 per share subject to adjustment under Section
2.
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2. Adjustments
and Notices. The Warrant Price and/or the Warrant Shares shall be
subject to adjustment from time to time in accordance with this Section
2. The Warrant Price and/or the Warrant Shares shall be adjusted to
reflect all of the following events that occur on or after the Issuance
Date.
(a) Subdivision,
Stock Dividends or Combinations. In case the Company shall at any
time subdivide the outstanding shares of the Common Stock or shall issue a
stock
dividend with respect to the Common Stock, the Warrant Price in effect
immediately prior to such subdivision or the issuance of such dividend shall
be
proportionately decreased, and the number of Warrant Shares for which this
Warrant may be exercised immediately prior to such subdivision or the issuance
of such dividend shall be proportionately increased. In case
the Company shall at any time combine the outstanding shares of the Common
Stock, the Warrant Price in effect immediately prior to such combination shall
be proportionately increased, and the number of Warrant Shares for which this
Warrant may be exercised immediately prior to such combination shall be
proportionately decreased. In each of the foregoing cases, the
adjustment shall be effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassification,
Exchange, Substitution, In-Kind Distribution. Upon any
reclassification (other than a change in par value or from par value to no
par
value or from no par value to par value or as a result of a stock dividend
or
subdivision, split-up or combination of shares covered in clause (a) above),
exchange, substitution or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant or upon the payment of a dividend in securities or property other than
shares of the Common Stock, the Holder shall be entitled to receive, upon
exercise of this Warrant, the number and kind of securities and property that
the Holder would have received if this Warrant had been exercised immediately
before the record date for such reclassification, exchange, substitution, or
other event or immediately prior to the record date for such
dividend. The Company or its successor shall promptly issue to the
Holder a new warrant for such new securities or other property. The
new warrant shall provide for adjustments which shall be as nearly equivalent
as
may be practicable to the adjustments provided for in this Section 2 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 2(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization,
Merger etc. In case of any merger or consolidation of the Company (where the
Company is not the surviving Person or where there is a change in or
distribution with respect to the Common Stock), or sale, transfer or lease
(but
not including a transfer or lease by pledge or mortgage to a bona fide lender)
of all or substantially all of the assets of the Company, the Company, or such
successor or purchasing corporation, as the case may be, shall, as a condition
to closing any such reorganization, merger or sale, duly execute and deliver
to
the Holder hereof a new warrant so that the Holder shall have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
or conversion of the unexercised portion of this Warrant, and in lieu of the
Warrant Shares theretofore issuable upon exercise or conversion of this Warrant,
the kind and amount of shares of stock,
-2-
other
securities, money and property that would have been receivable upon such
reorganization, merger or sale by the Holder with respect to the Warrant Shares
if this Warrant had been exercised immediately before the consummation of such
transaction. Such new warrant shall provide for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 2. The provisions of this subparagraph (c) shall
similarly apply to successive transactions of the type described in this
subparagraph (c).
(d) Adjustment
for Issuance of Shares of Common Stock Below Warrant Price. If
the Company shall issue, or be deemed to issue (as provided below), any
additional shares of Common Stock other than Excluded Stock, as defined below
(“Additional Shares of Common Stock”), for a consideration per share less than
$1.16 (excluding
subdivisions, stock dividends, combinations, reclassifications and
reorganizations which are covered in Sections 2(a), 2(b) and 2(c) above), the
Warrant Price shall be reduced concurrent with each such issuance to a price
calculated as follows:
Adjusted
Warrant Price = (Outstanding Stock x Warrant
Price) + Additional Stock Consideration
Outstanding
Stock + No. of Additional Shares of Common Stock
As
used
herein:
“Additional
Stock Consideration” means the consideration received by the Company upon the
issuance of the Additional Shares of Common Stock.
“Convertible
Securities” means any evidence of indebtedness, shares or securities, in each
case convertible into or exchange for Additional Shares of Common
Stock.
“Excluded
Stock” means (a) securities issued, or deemed issued (as provided below), to
directors, officers, employees or consultants of the Company or a subsidiary
of
the Company in connection with their service as directors of the Company or
a
subsidiary of the Company, their employment by the Company or a subsidiary
of
the Company or their retention as consultants by the Company or a subsidiary
of
the Company under stock option plans of the Company; (b) shares of Common Stock
issuable upon exercise of warrants outstanding as of the Issuance Date; (c)
shares of Common Stock issued, or deemed issued (as provided below), pursuant
to
a merger, consolidation or stock or asset acquisition approved by the Company’s
Board of Directors; (d) the issuance, or deemed issuance, of securities of
the
Company for any purpose and in any amount as approved by the holders of Offering
Warrants exercisable for seventy (70%) percent of the Warrant Shares issuable
upon exercise of the then outstanding Offering Warrants; (e) shares issued,
or
deemed issued, to persons or entities in connection with a strategic
partnership, joint venture or other similar agreement with the Company, provided
such issuances are primarily for other than equity financing purposes and are
approved by a two-thirds majority of the members of the Board of Directors;
(f)
shares issued, or deemed issued, pursuant to any equipment leasing arrangement
or debt financing from a bank or similar institution approved by a two-thirds
majority of the members of the Board of Directors; provided such financing
is
primarily for non-equity financing purposes; (g) shares of Common Stock issued
or issuable upon exercise of the Offering Warrants; and (h) shares of Common
Stock issued or issuable upon conversion of the Series C Convertible Preferred
Stock or the Series D Convertible Preferred Stock.
“No.
of
Additional Shares of Common Stock” means the number of units of Additional
Shares of Common Stock issued in connection with the issuance of the
same.
“Options”
means rights, options or warrants to subscribe for, purchase or otherwise
acquire shares of Common Stock or Convertible Securities.
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“Outstanding
Stock” means the total number of shares of Common Stock outstanding plus the
total number of shares of Common Stock issuable upon conversion or exercise
of
outstanding Convertible Securities (including this Warrant, all other warrants
and any Options) immediately prior to the issuance of the Additional Shares
of
Common Stock; provided that the number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for
the account of the Company.
No
adjustment in the Warrant Price need be made if such adjustment would result
in
a change in the Warrant Price of less than $0.001. Any such
adjustment which is not made shall be carried forward and shall be made at
the
time of and together with any subsequent adjustment which, on a cumulative
basis, amounts to an adjustment of $0.001 or more in the Warrant
Price. No adjustment in the Warrant Price of this Warrant shall be
made in respect of the issuance of Additional Shares of Common Stock unless
the
consideration per share for such Additional Shares of Common Stock issued or
deemed to be issued (as provided below) by the Company is less than the Warrant
Price then in effect on the date of, and immediately prior to, such issue,
for
this Warrant.
For
purposes of making any adjustment required under this Section 2(d), the
consideration received by the Company for any issue or sale of securities shall
(a) to the extent that it consists of cash be computed as the amount of cash
received by the Company without deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale, (b) to the extent that it consists of
property other than cash, be computed at the fair market value of that property
as determined in good faith by the Board of Directors, and (c) if Additional
Shares of Common Stock, Convertible Securities or rights or Options are issued
or sold together with other securities or other assets of the Company for a
consideration which covers both, be computed (as provided in clauses (a) and
(b)
above) as the portion of the consideration so received that may be reasonably
determined in good faith by the Board of Directors to be allocable to such
Additional Shares of Common Stock, Convertible Securities or rights or
Options.
If
the
holders of seventy percent (70%) in interest of the Offering Warrants shall,
in
good faith, disagree with any determination made by the Board of Directors
of
the Company of the fair market value of any property (including without
limitation any securities other than shares of Common Stock) pursuant to the
Offering Warrants (such holders hereinafter referred to as the “Requesting
Holders”), and such disagreement is in respect of property valued by the Board
of Directors of the Company at more than $500,000, then the Requesting Holders
may by written notice to the Company (an “Appraisal Notice”), given within 15
days after notice to the holders of the Offering Warrants following such
determination, elect to contest such determination; provided, however, that
the
holders of the Offering Warrants may not seek appraisal or any determination
of
fair market value to the extent that the Company has received a fairness opinion
or other appraisal from an independent appraiser selected by the Board of
Directors of the Company in connection with the transaction giving rise to
such
determination. Within 15 days after an Appraisal Notice, the Company
shall engage an Appraiser (as defined below) to make an independent
determination of such fair market value (the “Appraiser’s Determination”), and
to deliver to the Company and the holder of this Warrant a report describing
its
methodology and results in reasonable detail within 15 days of such
engagement. The Company and the holder of this Warrant shall be
afforded reasonable opportunities to discuss the appraisal with the
Appraiser. The Appraiser’s Determination shall be final and binding
on the Company and the holder of this Warrant, absent manifest
error. The costs of conducting an appraisal, including all fees and
expenses of the Appraiser, shall be borne one half by the Requesting Holders
(among the Requesting Holders, pro rata according to the number of shares
issuable upon exercise of outstanding Offering Warrants that are held by the
Requesting Holders) and one half by the Company. “Appraiser” means an
independent appraiser chosen by the Board of Directors of the Company with
the
consent of the Requesting Holder with the greatest number of Shares issuable
upon exercise of the Offering Warrants, which consent shall not be unreasonably
withheld or delayed.
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For
purposes of the adjustment required under this Section 2(d), if at any time
or
from time to time after the Issuance Date, the Company issues or sells any
Options or Convertible Securities, then in each case the Company shall be deemed
to have issued at the time of the issuance of such Options or Convertible
Securities the maximum number of Additional Shares of Common Stock (as set
forth
in the instruments relating thereto, giving effect to any provision contained
therein for a subsequent upward adjustment of such number other than any
provision requiring anti-dilution adjustments (based on price,
recapitalizations, mergers, reorganizations or otherwise), which such
anti-dilution provisions shall only result in upward adjustments upon the
triggering of such anti-dilution adjustment) issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares of Common Stock an amount equal to the total amount of
consideration, if any, received by the Company for the issuance of such Options
or Convertible Securities plus, in the case of such Options, the minimum amounts
of consideration, if any (as set forth in the instruments relating thereto,
giving effect to any provision contained therein for a subsequent downward
adjustment of such consideration), payable to the Company upon the exercise
of
such Options and, in the case of Convertible Securities, the minimum
amounts of consideration, if any, payable to the Company upon the subsequent
conversion of any such Convertible Security (other than by cancellation of
liabilities or obligations evidenced by such Convertible
Securities). No further adjustment of the Warrant Price, adjusted
upon the issuance of such Options or Convertible Securities, shall be made
as a
result of the actual issuance of Additional Shares of Common Stock on the
exercise of any such Options or the conversion of any such Convertible
Securities. If any such Options or the conversion privilege
represented by any such Convertible Securities shall expire without having
been
exercised, the Warrant Price adjusted upon the issuance of such Options or
Convertible Securities or upon the triggering of any anti-dilution adjustments
(based on price, recapitalization, mergers reorganizations or otherwise)
thereunder shall be readjusted to the Warrant Price which would have been in
effect had an adjustment been made on the basis that the only Additional Shares
of Common Stock so issued were the Additional Shares of Common Stock, if any,
actually issued or sold for the consideration received by the Company for the
granting of all such Options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted
plus the consideration, if any, actually received by the Company (other than
by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion of such Convertible Securities. Upon
the happening of any of the following events, namely, if the purchase price
provided for in any Option, the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities, or the rate at which
Convertible Securities are convertible into or exchangeable for Common Stock
shall change at any time (including, but not limited to, changes under or by
reason of provisions designed to protect against dilution), the Warrant Price
in
effect at the time of such event shall forthwith be readjusted to the Warrant
Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at
the
time initially granted, issued or sold, but only if as a result of such
adjustment the Warrant Price then in effect after any adjustment hereunder
is
thereby reduced; and on the termination of any such Option or any such right
to
convert or exchange such Convertible Securities, the Warrant Price then in
effect hereunder shall forthwith be increased to the Warrant Price which would
have been in effect at the time of such termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
termination, never been issued.
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(e) Certificate
of Adjustment. In each case of an adjustment or readjustment of
the Warrant Price, the Company, at its own expense, shall cause its Chief
Financial Officer (or equivalent officer of the Company) to compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to the Holder. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based. No
adjustment of the Warrant Price shall be required to be made unless it would
result in an increase or decrease of at least one cent, but any adjustments
not
made because of this sentence shall be carried forward and taken into account
in
any subsequent adjustment otherwise required hereunder.
(f) No
Impairment. The Company shall not, by amendment of its
certificate of incorporation, by-laws or other organizational documents, or
through a 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 to be
observed or performed under this Warrant by the Company, but shall subject
to
Section 8 at all times in good faith assist in carrying out all of the
provisions of this Section 2 and in taking all such action as may be necessary
or appropriate to protect the Holder’s rights under this Section 2 against
impairment.
(g) Fractional
Shares. No fractional shares shall be issuable upon exercise or
conversion of the Warrant and the number of shares to be issued shall be rounded
down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full
share.
3. No
Shareholder Rights. This Warrant, by itself, as distinguished
from any shares purchased hereunder, shall not entitle the Holder to any of
the
rights of a shareholder of the Company.
4. Reservation
of Stock. The Company will reserve from its authorized and
unissued stock a sufficient number of shares to provide for the issuance of
the
Warrant Shares upon the exercise of this Warrant. Issuance of this
Warrant shall constitute full authority to the Company’s officers who are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares issuable upon the exercise of
this
Warrant.
5. Exercise
of Warrant.
(a) This
Warrant may be exercised by the Holder hereof, in whole or in part, at any
time
prior to the Termination Date, at the election of the Holder hereof (with the
notice of exercise substantially in the form attached hereto as Attachment
1 duly completed and executed for an exercise under this Section 5(a)) (the
“Notice”), by the surrender of this Warrant at the principal
office of the Company or transfer agent and the payment to the Company, by
certified or bank check, or by wire transfer to an account designated by the
Company, of an amount equal to the then applicable Warrant Price multiplied
by
the number of Warrant Shares then being purchased (Warrant Shares issued upon
such an exercise described in this Section 5(a), “Cash
Shares”). This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive
the
Warrant Shares issuable upon such exercise shall be treated for all purposes
as
the holder of such shares of record as of the close of business on such
date. As promptly as practicable after such date, the Company shall
issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of full Warrant Shares issuable
upon
such exercise.
-6-
(b) At
any time prior to the Termination Date, in lieu of exercising this Warrant
for
cash, the Holder may elect to receive shares equal to the value of this Warrant
(or the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with notice of such election
substantially in the form attached hereto as Attachment 1 duly completed
and executed for an exercise
under this Section 5(b) (a “Net
Exercise”). The Company shall issue to a Holder who Net
Exercises a number of Warrant Shares computed using the following
formula:
Y
(A -
B)
X
= A
Where
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X
=
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The
number of Warrant Shares to be issued to the
Holder.
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Y
=
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The
number of Warrant Shares set forth in the
Notice.
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A
=
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The
fair market value of one (1) Warrant Share (at the date of such
calculation).
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B =
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The
Warrant Price (as adjusted to the date of such
calculation).
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For
purposes of this Section 5, the fair market value of a Warrant Share shall
mean:
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(i)
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If
traded on a securities exchange, the Nasdaq National Market,
Nasdaq
SmallCap Market or other market or over-the-counter system, the
fair
market value of the Common Stock shall be deemed to be the average
of the
closing prices of the Common Stock on the principal such U.S.
exchange or
market by trading volume (or if not traded on a U.S. exchange
or market,
the principal exchange or market by trading volume) over the
thirty
trading days immediately prior to the determination date;
or
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(ii)
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If
there is no public market for the Common Stock, the fair market value
shall be the price per Warrant Share that the Company could obtain
from a
willing buyer for Warrant Shares sold by the Company from authorized
but
unissued Warrant Shares, as such prices shall be determined in good
faith
by the Company’s Board of
Directors.
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(c) Notwithstanding
anything to the contrary contained herein, to the extent this Warrant is not
previously exercised, and if the fair market value of one Warrant Share is
greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 5(b) above (even if not surrendered)
immediately before the Termination Date. To the extent this Warrant
or any portion thereof is deemed automatically exercised pursuant to this
Section 5(c), the Company agrees to promptly notify the Holder of the
number of Warrant Shares, if any, the Holder is to receive by reason of such
automatic exercise, which number shall be determined in accordance with Section
5(b).
6. Transfer
of Warrant. This Warrant may be transferred or assigned by the
Holder hereof as a whole or in part, provided that prior to such transfer the
transferor provides to the Company, at the Company’s request, an opinion of
counsel satisfactory to the Company that such transfer does not require
registration under the Securities Act.
-7-
7. Legends. Upon
issuance, the certificate or certificates evidencing any Warrant Shares shall
bear legends as set forth in the Subscription Agreement.
8. Subscription
Agreement. This Warrant is one of a number of warrants (the
“Offering Warrants”) issued pursuant to the Subscription
Agreement, and the Warrant Shares shall be entitled to the rights conferred
thereon under the Subscription Agreement and under the Registration Rights
Agreement. Any term of the Warrant and each other Offering Warrant
may be amended and the observance of any term may be waived by the Company
and
the holders in-interest of at least seventy percent (70%) of the then
outstanding Offering Warrants, and any such amendment or waiver shall be binding
upon all holders of Offering Warrants.
9. Termination. This
Warrant shall terminate at 5:00 p.m. New York City time on the Termination
Date.
10. Miscellaneous. This
Warrant shall be governed by the laws of the State of New York, as such laws
are
applied to contracts to be entered into and performed entirely in New York
by
New York residents. The headings in this Warrant are for purposes of convenience
and reference only, and shall not be deemed to constitute a part
hereof. Subject to the provisions of Section 8 hereof, neither this
Warrant nor any term hereof may be changed or waived orally, but only by an
instrument in writing signed by the Company and the
Holder. All notices and other communications from the Company to the
Holder of this Warrant shall be delivered personally or by facsimile
transmission or mailed by first class mail, postage prepaid, to the address
or
facsimile number furnished to the Company in writing by the last Holder of
this
Warrant who shall have furnished an address or facsimile number to the Company
in writing, and if mailed shall be deemed given three days after deposit in
the
United States mail. Upon receipt of evidence satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation
of
any Warrant and, in the case of any such loss, theft or destruction, upon
receipt of indemnity or security satisfactory to the Company or, in the case
of
any such mutilation, upon surrender and cancellation of such Warrant, the
Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
-8-
ISSUED:
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November
19, 2007
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NEUROLOGIX,
INC.
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By:__________________________________
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Name:________________________________
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Title:_________________________________
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Attachment
1
NOTICE
OF
EXERCISE
TO: NEUROLOGIX,
INC.
1.
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The
undersigned hereby:
|
q
|
elects
to purchase shares of Common Stock of the
Company pursuant to Section 5(a) of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full,
or
|
q
|
elects
to exercise its net issuance rights pursuant to Section 5(b) of the
attached Warrant with respect to shares of
Common Stock (such number being “Y” in the formula in such
Section).
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2.
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Please
issue a certificate or certificates representing said Warrant Shares
in
the name of the undersigned or in such other name as is specified
below:
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______________________________
(Name
in
which certificate(s) are to be issued)
_______________________________
(Address)
________________________________
(Name
of Warrant Holder)
By:_____________________________
Title:____________________________
Date
signed: ______________________
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