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EXHIBIT 4.1
[LETTERHEAD OF LADENBURG XXXXXXXX]
January 9, 2001
X. Xxxxx Xxxxxxxxxxxxxx
Chairman
InSite Vision Incorporated
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxxxxxxxxx:
The purpose of this letter agreement (the "Agreement") is to set forth the terms
and conditions pursuant to which Ladenburg Xxxxxxxx & Co. Inc. ("LTCO") shall
serve as exclusive placement agent in connection with the proposed offering (the
"Offering") of equity securities (the "Securities") of InSite Vision
Incorporated (the "Company") pursuant to the registration statement on Form S-3
referenced in Section 6 hereof (the "Registration Statement"). The gross
proceeds from the Offering will be up to $40,000,000. All references to dollars
shall be to U.S. dollars. The terms of such Offering and the Securities shall be
as agreed to between the Company and the purchasers thereof from time to time.
Upon the terms and subject to the conditions of this Agreement, the
parties hereto agree as follows:
1. APPOINTMENT. (a) Subject to the terms and conditions of this
Agreement hereinafter set forth, the Company hereby retains LTCO, and LTCO
hereby agrees to act as the Company's exclusive placement agent and financial
advisor in connection with the Offering, effective as of the date hereof. The
Company expressly acknowledges and agrees that LTCO's obligations hereunder are
on a reasonable best efforts basis only and that the execution of this Agreement
does not constitute a commitment by LTCO to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of LTCO with respect to securing any other
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financing on behalf of the Company. LTCO shall not commence any selling efforts
until the Registration Statement has been declared effective by the SEC.
(b) The Company shall not provide or release any information with
respect to this Agreement or the Offering, including any press release, except
(i) as required by law, (ii) to a third party with which the Company is
considering a joint venture, merger, acquisition or other corporate transaction
if the Company has an executed non-disclosure agreement or confidentiality
agreement with such party, or (iii) with the prior written consent of LTCO,
which may be withheld in LTCO's sole discretion.
2. FEES AND COMPENSATION. In consideration of the services rendered by
LTCO in connection with the Offering, the Company agrees to pay LTCO the
following fees and other compensation:
(a) 1) 2% warrant coverage, payable pro-rata with respect to each
closing of the Offering, which warrants shall have a strike
price of 120% of the price at which the Securities are sold, and
shall otherwise be in the form of Exhibit D; and
2) a cash fee payable upon the initial and each subsequent
closing equal to 4% of the amount drawn down by the Company at
each such closing; and
(b) $30,000 non-accountable expense allowance payable upon the
engagement of LTCO by the Company hereunder. The Company shall
not be charged by LTCO for any additional expenses of LTCO.
(c) All fees payable hereunder shall be paid to LTCO out of an
attorney escrow account at the closing or by such other means
reasonably acceptable to LTCO.
3. TERMS OF RETENTION. (a) The engagement of LTCO pursuant to the terms
of this Agreement shall be effective as of the date of this Agreement. LTCO's
engagement hereunder will be for the period ending at the earliest of (i) the
placement of all of the Securities; (ii) written notice of termination by either
the Company or LTCO for any reason, effective after written notice of such
termination is received by the other party; or (iii) December 31, 2001 (the
earliest of (i), (ii) or (iii), the "Termination Date").
(b) Notwithstanding anything herein to the contrary (but subject to the
limitations set forth in this Section 3(b)), the obligation to pay the Fees and
Compensation and Expenses described in Section 2 (to the extent accrued in
accordance with the provisions hereof and remaining outstanding), if any, and
the provisions of paragraphs 2, 5, and 8 of Exhibit A and all of Exhibit B and
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Exhibit C attached hereto, each of which exhibits is incorporated herein by
reference, shall survive any termination or expiration of the Agreement. It is
expressly understood and agreed by the parties hereto that any private financing
of equity or securities convertible into equity of the Company within 18 months
of the termination or expiration of this Agreement, with any investors to whom
the Company was introduced by LTCO or who was contacted by LTCO while this
Agreement was in effect, and disclosed to the Company in writing, shall result
in such fees and compensation being due and payable by the Company to LTCO under
the same terms of Section 2 above. LTCO shall not contact any potential
investors (and therefore will not be entitled to any fees with respect thereto),
without the prior written approval of the Company.
4. [INTENTIONALLY OMITTED].
5. INFORMATION. The Company recognizes and confirms that in completing
its engagement hereunder, LTCO will be using and relying solely on publicly
available information and on data, material and other information furnished to
LTCO by the Company or the Company's affiliates and agents. It is understood and
agreed that in performing under this engagement, LTCO will rely upon the
accuracy and completeness of, and is not assuming any responsibility for
independent verification of, such publicly available information and the other
information so furnished. Notwithstanding the foregoing, it is understood that
LTCO will conduct a due diligence investigation of the Company and the Company
will cooperate in all respects with such investigation as a condition of LTCO's
obligations hereunder.
6. REGISTRATION. Promptly following execution of this Agreement, the
Company shall prepare and, following review and approval by LTCO's counsel, file
with the SEC the Registration Statement. From time to time in connection with
any particular sale of Securities, the Company will, at its own expense, obtain
any registration or qualification required to sell any Securities under the Blue
Sky laws of any applicable jurisdictions, as reasonably requested by LTCO, and
shall pay any filing fees required by NASD Regulation, Inc. in connection with
their review of the terms of this Agreement, if so required.
7. NO GENERAL SOLICITATION. The Securities will be offered only by
approaching prospective purchasers on an individual basis. No general
solicitation or general advertising in any form will be used in connection with
the offering of the Securities. From and after the execution of this Agreement
until the completion of the Offering, and except as required by law, the Company
shall obtain the consent of LTCO, which consent shall not be unreasonably
withheld, to issue any proposed press release which mentions this Agreement or
the Offering with LTCO.
8. CLOSING. The closing of the sale of the Securities shall be subject
to customary closing conditions, including the provision by the Company to
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LTCO of officers' certificates, opinions of counsel and "cold comfort" letters
from the Company's auditors.
9. MISCELLANEOUS. This Agreement together with the attached Exhibits A
through D constitutes the entire understanding and agreement between the parties
with respect to its subject matter and there are no agreements or understandings
with respect to the subject matter hereof which are not contained in this
Agreement. This Agreement may be modified only in writing signed by the party to
be charged hereunder.
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If the foregoing correctly sets forth our agreement, please confirm this
by signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and are looking forward
to working with you on this matter.
Very truly yours,
LADENBURG XXXXXXXX & CO. INC.
By: /s/ XXXXXX XXXXX
--------------------------------------
Xxxxxx Xxxxx
Agreed to and accepted
as of the date first written above:
INSITE VISION INCORPORATED
By: /s/ X. XXXXX XXXXXXXXXXXXXX
------------------------------
X. Xxxxx Xxxxxxxxxxxxxx
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EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide LTCO with all relevant information
about the Company (to the extent available to the Company in the case of
parties other than the Company) that shall be reasonably requested or
required by LTCO, which information shall be complete and accurate in
all material respects at the time furnished.
2. LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly
available, or previously known to, or obtained by LTCO independently of
the Company and without breach of LTCO's agreement with the Company; (b)
LTCO may disclose such information to its employees and attorneys, and
to its other advisors and financial sources on a need to know basis only
and shall use best efforts to ensure that all such employees, attorneys,
advisors and financial sources will keep such information strictly
confidential and shall be responsible for any breach by such persons;
and (c) pursuant to any order of a court of competent jurisdiction or
other governmental body (including any subpoena) or as may otherwise be
required by law. LTCO shall give the Company as much prior notice as
practicable of any such order or subpoena to permit the Company
opportunity to contest such order or subpoena.
3. The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be
informed of and, to the extent practicable, be allowed to participate in
meetings and discussions between the Company and any prospective
purchaser of the Securities, relating to the matters covered by the
terms of LTCO's engagement.
4. The Company agrees that any report or opinion, oral or written,
delivered to it by LTCO is prepared solely for its confidential use and
shall not be reproduced, summarized, or referred to in any public
document or given or otherwise divulged to any other person outside the
Company and its agents without LTCO's prior written consent, except as
may be required by applicable law or regulation.
5. No fee payable to LTCO pursuant to any other agreement with the Company
or payable by the Company to any agent, lender or investor shall reduce
or otherwise affect any fee payable by the Company to LTCO hereunder. If
LTCO engages any other broker-dealer or other finder to assist LTCO in
the placement of the Offering, then the fees of such other broker-dealer
or finder shall be paid by LTCO.
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6. The Company represents and warrants that: (a) it has full right, power
and authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) this Agreement has been duly authorized and
executed by
EXHIBIT A (CONTINUED)
and constitutes a valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency and the laws governing the rights of debtors and creditors
generally; and (c) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not conflict
with or result in a breach of (i) the Company's certificate of
incorporation or by-laws or (ii) any material agreement to which the
Company is a party or by which any of its property or assets is bound.
7. Nothing contained in this Agreement shall be construed to place LTCO and
the Company in the relationship of partners or joint venturers. Neither
LTCO nor the Company shall represent itself as the agent or legal
representative of the other for any purpose whatsoever nor shall either
have the power to obligate or bind the other in any manner whatsoever.
LTCO, in performing its services hereunder, shall at all times be an
independent contractor.
8. This Agreement has been and is made solely for the benefit of LTCO and
the Company and each of the persons, agents, employees, officers,
directors and controlling persons referred to in Exhibit B and their
respective heirs, executors, personal representatives, successors and
assigns, and nothing contained in this Agreement shall confer any rights
upon, nor shall this Agreement be construed to create any rights in, any
person who is not party to such Agreement, other than as set forth in
this paragraph.
9. The rights and obligations of either party under this Agreement may not
be assigned without the prior written consent of the other party hereto
and any other purported assignment shall be null and void.
10. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand
delivered, or sent by a recognized overnight courier service such as
Federal Express, via facsimile and confirmed by letter, to the party to
whom it is addressed at the following addresses or such other address as
such party may advise the other in writing:
To the Company:
InSite Vision Incorporated
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: X. Xxxxx Xxxxxxxxxxxxxx
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Telephone: 000-000-0000
Facsimile: 000-000-0000
To LTCO:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
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EXHIBIT B
INDEMNIFICATION
The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and controlling
persons within the meaning of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933, each as amended (any and all of
whom are referred to as an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities, or expenses, and all actions in respect
thereof (including, but not limited to, all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the investigation,
preparation, defense or settlement of any claim, action or proceeding, whether
or not resulting in any liability), incurred by an Indemnified Party: (a)
arising out of, or in connection with, any untrue statement or alleged untrue
statement of a material fact contained in any of the financial or other
information contained in the registration statement and/or final prospectus
furnished to LTCO by or on behalf of the Company or the omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; or (b) with respect to, caused by, or otherwise arising
out of any transaction contemplated by the Agreement or LTCO's performing the
services contemplated hereunder; provided, however, the Company will not be
liable under this paragraph to the extent, and only to the extent, that any
loss, claim, damage, liability or expense is finally judicially determined to
have resulted primarily from (i) LTCO's gross negligence, willful misconduct or
bad faith in performing such services or (ii) arises from information provided
by LTCO for use in the registration statement and/or final prospectus. It is
agreed that the indemnity contained in this paragraph shall not apply to any
amounts paid in settlement of any loss, claim, damage or expense if such
settlement is effected without the consent of the Company, so long as the
Company is then meeting its obligations to undertake the defense of a claim on a
timely basis.
LTCO agrees that it shall indemnify and hold harmless, the Company, its
directors, officers, employees, agents, affiliates and controlling persons
within the meaning of Section 20 of the Securities Exchange Act of 1934 and
Section 15 of the Securities Act of 1933, each as amended (any and all of whom
are referred to as an "Indemnified Party"), from and against any and all losses,
claims, damages, liabilities, or expenses, and all actions in respect thereof
(including, but not limited to, all legal or other expenses reasonably incurred
by an Indemnified Party in connection with the investigation, preparation,
defense or settlement of any claim, action or proceeding, whether or not
resulting in any liability), incurred by an Indemnified Party: (a) arising out
of, or in connection with, the gross negligence, willful misconduct or bad faith
of LTCO in performing the services contemplated hereunder, or (b), arising out
of, or in connection with, any information provided by LTCO for use in the
registration statement and/or final prospectus.
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If the indemnification provided for herein is conclusively determined
(by an entry of final judgment by a court of competent jurisdiction and the
expiration of the time or denial of the right to appeal) to be unavailable or
insufficient to hold any Indemnified Party harmless in respect to any losses,
claims, damages, liabilities or expenses referred to herein, then the
indemnifying party shall contribute to the amounts paid or payable by such
Indemnified Party in such proportion as is appropriate and equitable under all
circumstances taking into account the relative benefits received by the Company
on the one hand and LTCO on the other, from the transaction or proposed
transaction under the Agreement or, if allocation on that basis is not permitted
under applicable law, in such proportion as is appropriate to reflect not only
the relative benefits received by the Company on the one hand and LTCO on the
other, but also the relative fault of the Company and LTCO; provided, however,
in no event shall the aggregate contribution of LTCO and/or any LTCO Indemnified
Party be in excess of the net compensation actually received by LTCO pursuant to
this Agreement.
The Indemnifying Party shall not settle or compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in which any Indemnified Party is
or could be a party and as to which indemnification or contribution could have
been sought by such Indemnified Party hereunder (whether or not such Indemnified
Party is a party thereto), unless such consent or termination includes an
express unconditional release of such Indemnified Party, reasonably satisfactory
in form and substance to such Indemnified Party, from all losses, claims,
damages, liabilities or expenses arising out of such action, claim, suit or
proceeding.
In the event any Indemnified Party shall incur any expenses covered by
this Exhibit B, the Indemnifying Party shall reimburse the Indemnified Party for
such covered expenses within thirty (30) days of the Indemnified Party's
delivery to the Indemnifying Party of an invoice therefor, with receipts
attached. Such obligation of the Indemnifying Party to so advance funds may be
conditioned upon the Indemnifying Party's receipt of a written undertaking from
the Indemnified Party to repay such amounts within thirty (30) days after a
final, non-appealable judicial determination that such Indemnified Party was not
entitled to indemnification hereunder.
The foregoing indemnification and contribution provisions are not in
lieu of, but in addition to, any rights which any Indemnified Party may have at
common law hereunder or otherwise, and shall remain in full force and effect
following the expiration or termination of LTCO's engagement and shall be
binding on any successors or assigns of the parties and successors or assigns to
all or substantially all of each party's business or assets.
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EXHIBIT C
JURISDICTION
The Company and LTCO each hereby irrevocably: (a) submits to the
jurisdiction of any court of the State of New York or any federal court sitting
in the State of New York for the purposes of any suit, action or other
proceeding arising out of the Agreement between the Company and LTCO which is
brought by or against the Company or LTCO; (b) agrees that all claims in respect
of any suit, action or proceeding may be heard and determined in any such court;
and (c) to the extent that the Company or LTCO has acquired, or hereafter may
acquire, any immunity from jurisdiction of any such court or from any legal
process therein, the Company and LTCO each hereby waives, to the fullest extent
permitted by law, such immunity. The prevailing party in any litigation
respecting this Agreement shall be entitled to an award of its costs, including
reasonable attorneys' fees, in connection therewith.
The Company and LTCO each waives, and agrees not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that: (a) it is not personally subject to the
jurisdiction of any such court; (b) it is immune from any legal process (whether
through service or notice, attachment prior to judgment, attachment in the aid
of execution, execution or otherwise) with respect to it or its property; (c)
any such suit, action or proceeding is brought in an inconvenient forum; (d) the
venue of any such suit, action or proceeding is improper; or (e) this Agreement
may not be enforced in or by any such court.
Any process against the Company or LTCO in, or in connection with, any
suit, action or proceeding filed in the United States District Court for the
Southern District of New York or any other court of the State of New York,
arising out of or relating to this Agreement or any transaction or agreement
contemplated hereby, may be served personally, or by first class mail or
overnight courier (with the same effect as though served personally) addressed
to the party being served at the address set forth in the Agreement between the
Company and LTCO.
Nothing in these provisions shall affect any party's right to serve
process in any manner permitted by law or limit its rights to bring a proceeding
in the competent courts of any jurisdiction or jurisdictions or to enforce in
any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.
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EXHIBIT D
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
OR EXERCISED UNLESS AND UNTIL SUCH WARRANT AND/OR SHARES OF COMMON STOCK ARE
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTIONS 4 AND 10 OF THIS
WARRANT.
Warrant No. 1 Number of Shares: _______
(subject to adjustment)
Date of Issuance: ______________, 2001
[ISSUER]
Common Stock Purchase Warrant
(Void after [four years])
[Issuer], a ________________ corporation (the "Company"), for value received,
hereby certifies that Ladenburg Xxxxxxxx & Co. Inc., or its registered assigns
(the "Registered Holder"), is entitled, subject to the terms and conditions set
forth below, to purchase from the Company, at any time or from time to time on
or after the date of issuance and on or before 5:00 p.m. (Eastern time)
on________, 200_, _____________________ shares of Common Stock, of the Company,
at a purchase price of $__________ per share. The shares purchasable upon
exercise of this Warrant, and the purchase price per share, each as adjusted
from time to time pursuant to the provisions of this Warrant, are hereinafter
referred to as the "Warrant Shares" and the "Purchase Price," respectively.
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder, in whole or
in part, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by the Registered Holder or by the Registered Holder's
duly authorized attorney, at the principal office of the Company, or at such
other office or agency as the Company may designate, accompanied by payment in
full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
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(b) The Registered Holder may, at its option, elect to pay some or all
of the Purchase Price payable upon an exercise of this Warrant by canceling all
or a portion of this Warrant. If the Registered Holder wishes to exercise this
Warrant by this method, the number of Warrant Shares purchasable (which shall in
no event exceed the total number of Warrant Shares purchasable under this
Warrant as set forth above), subject to adjustment under Section 2 of this
Warrant) shall be determined as follows:
X=Y[(A-B)/A]; where
X= the number of Warrant Shares to be issued to the Holder.
Y= the number of Warrant Shares with respect to which this Warrant is being
exercised.
A= the Fair Market Value of one share of Common Stock.
B= the Purchase Price of one share of Common Stock.
The Fair Market Value per share of Common Stock as of a date specified
shall be determined as follows:
(i) If the Common Stock is listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system (including, without limitation, the OTC Bulletin Board
and, if the average daily trading volume for the preceding 10 days has
been at least 100,000 shares, the Pink Sheets) as of the Exercise Date,
the Fair Market Value per share of Common Stock shall be deemed to be
the arithmetic average of the high and low reported sale prices per
share of Common Stock thereon on the trading day immediately preceding
the Exercise Date (provided that if no such price is reported on such
day, the Fair Market Value per share of Common Stock shall be determined
pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per share
of Common Stock shall be deemed to be the amount most recently
determined by the Board of Directors to represent the fair market value
per share of the Common Stock (including without limitation a
determination for purposes of granting Common Stock options or issuing
Common Stock under an employee benefit plan of the Company); and, upon
request of the Registered Holder, the Board of Directors (or a
representative thereof) shall promptly notify the Registered Holder of
the Fair Market Value per share of Common Stock. Notwithstanding the
foregoing, if the Board of Directors has not made such a determination
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within the three-month period prior to the Exercise Date, then (A) the
Board of Directors shall make a determination of the Fair Market Value
per share of the Common Stock within 15 days of a request by the
Registered Holder that it do so, and (B) the exercise of this Warrant
pursuant to this subsection 1(b) shall be delayed until such
determination is made. If prior to such date of determination, the
Company has become subject to a merger, acquisition or consolidation
pursuant to which the Company is not or will not be the surviving party,
the current fair market value shall be deemed to be the value received
or to be received by the holders of the shares of such Common Stock
pursuant to such merger, acquisition or consolidation.
(c) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection 1(a) above
accompanied by payment in full of the Purchase Price (the "Exercise Date"). At
such time, the person or persons in whose name or names any certificates for
Warrant Shares shall be issuable upon such exercise as provided in subsection
1(d) below shall be deemed to have become the holder or holders of record of the
Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within 5 business days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which the Registered
Holder would otherwise be entitled, cash in an amount determined
pursuant to Section 3 hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate
on the face or faces thereof for the number of remaining Warrant Shares.
2. ADJUSTMENTS.
(a) Adjustment for Stock Splits and Combinations. If the Company shall
at any time or from time to time after the date on which this Warrant was first
issued (the "Original Issue Date") effect a subdivision of the outstanding
Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased. If the Company shall at any time
or from time to time after the Original Issue Date combine the outstanding
shares of Common Stock, the Purchase Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall
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become effective at the close of business on the date the subdivision or
combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the event the
Company at any time, or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date, and
(2) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in
payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Purchase Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Purchase Price shall be adjusted
pursuant to this paragraph as of the time of actual payment of such dividends or
distributions.
(c) Adjustment in Number of Warrant Shares. When any adjustment is
required to be made in the Purchase Price pursuant to subsections 2(a) or 2(b),
the number of Warrant Shares purchasable upon the exercise of this Warrant shall
be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than cash out of earnings or earned surplus, determined in
accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the Registered Holder shall receive upon
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exercise hereof, in addition to the number of shares of Common Stock issuable
hereunder, the kind and amount of securities of the Company and/or cash and
other property which the Registered Holder would have been entitled to receive
had this Warrant been exercised into Common Stock on the date of such event and
had the Registered Holder thereafter, during the period from the date of such
event to and including the Exercise Date, retained any such securities
receivable, giving application to all adjustments called for during such period
under this Section 2 with respect to the rights of the Registered Holder.
(e) Adjustment for Mergers or Reorganizations, etc. If there shall occur
any reorganization, recapitalization, consolidation or merger involving the
Company in which the Common Stock is converted into or exchanged for securities,
cash or other property (other than a transaction covered by subsections 2(a),
2(b) or 2(d)), then, following any such reorganization, recapitalization,
consolidation or merger, the Registered Holder shall receive upon exercise
hereof the kind and amount of securities, cash or other property which the
Registered Holder would have been entitled to receive if, immediately prior to
such reorganization, recapitalization, consolidation or merger, the Registered
Holder had held the number of shares of Common Stock subject to this Warrant.
Notwithstanding the foregoing sentence, if (x) there shall occur any
reorganization, recapitalization, consolidation or merger involving the Company
in which the Common Stock is converted into or exchanged for anything other than
solely equity securities, and (y) the common stock of the acquiring or surviving
company is publicly traded, then, as part of any such reorganization,
recapitalization, consolidation or merger, (i) the Registered Holder shall have
the right thereafter to receive upon the exercise hereof such number of shares
of common stock of the acquiring or surviving company as is determined by
multiplying (A) the number of shares of Common Stock then subject to this
Warrant by (B) a fraction, the numerator of which is the Fair Market Value per
share of Common Stock as of the effective date of such transaction, as
determined pursuant to subsection 1(b), and the denominator of which is the fair
market value per share of common stock of the acquiring or surviving company as
of the effective date of such transaction, as determined in good faith by the
Board of Directors of the Company (using the principles set forth in subsection
1(b) to the extent applicable), and (ii) the exercise price per share of common
stock of the acquiring or surviving company shall be the Purchase Price divided
by the fraction referred to in clause (B) above. In any such case, appropriate
adjustment (as determined in good faith by the Board of Directors of the
Company) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder, to
the end that the provisions set forth in this Section 2 (including provisions
with respect to changes in and other adjustments of the Purchase Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
securities, cash or other property thereafter deliverable upon the exercise of
this Warrant.
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(e) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable and the Purchase Price) and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon the written
request at any time of the Registered Holder, furnish or cause to be furnished
to the Registered Holder a certificate setting forth (i) the Purchase Price then
in effect and (ii) the number of shares of Common Stock and the amount, if any,
of other securities, cash or property which then would be received upon the
exercise of this Warrant.
3. FRACTIONAL SHARES. The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the Fair Market Value per share of Common
Stock, as determined pursuant to subsection 1(b) above.
4. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or transferred
unless either (i) they first shall have been registered under the Securities Act
of 1933, as amended (the "Act"), or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a Registered Holder which is a
corporation to a wholly owned subsidiary of such corporation, a transfer by a
Registered Holder which is a partnership to a partner of such partnership or a
retired partner of such partnership or to the estate of any such partner or
retired partner, a transfer by a Registered Holder which is a limited liability
company to a member of such limited liability company or a retired member or to
the estate of any such member or retired member, or a transfer by a Registered
Holder which is a member of the National Association of Securities Dealers (the
"NASD") to an officer or employee of the Registered Holder as permitted by NASD
rules, provided that the transferee in each case agrees in writing to be subject
to the terms of this Section 4, or (ii) a transfer made in accordance with Rule
144 under the Act.
(c) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold or otherwise transferred, pledged or hypothecated unless and until
such securities
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are registered under such Act or an opinion of counsel satisfactory to
the Company is obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act or if an
effective registration statement is then in effect permitting the resale of the
Warrant Shares.
(d) The Registered Holder shall have "piggyback" registration rights to
have the Warrant Shares (but not the Warrants) registered for resale on any
registration statement which the Company files for any purpose on a form
available for such registration, after the Original Issue Date. Such
registration shall be subject to customary obligations by the Registered Holder
to provide information to the Company and by the Company to indemnify the
Registered Holder against Securities Act liabilities.
5. NO IMPAIRMENT. The Company will not, by amendment of its charter or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.
6. NOTICES OF RECORD DATE, ETC. In the event:
(a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right; or of any capital reorganization of the Company, any reclassification of
the Common Stock of the Company, any consolidation or merger of the Company with
or into another corporation (other than a consolidation or merger in which the
Company is the surviving entity and its Common Stock is not converted into or
exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or
(b) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
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liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten days prior
to the record date or effective date for the event specified in such notice.
7. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time shall be issuable upon the exercise of this Warrant.
8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder, properly
endorsed, to the Company at the principal office of the Company, the Company
will, subject to the provisions of Section 4 hereof, issue and deliver to or
upon the order of such Holder, at the Company's expense, a new Warrant or
Warrants of like tenor, in the name of the Registered Holder or as the
Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock (or other securities, cash
and/or property) then issuable upon exercise of this Warrant.
9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. TRANSFERS, ETC.
(a) The Company will maintain a register containing the name and address
of the Registered Holder of this Warrant. The Registered Holder may change its
or his address as shown on the warrant register by written notice to the Company
requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of Exhibit II hereto)
at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant register,
the Company may treat the Registered Holder as the absolute owner hereof for all
purposes; provided, however, that if and when this Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the bearer
hereof
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as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
11. REPRESENTATIONS OF THE REGISTERED HOLDER. The Registered Holder of this
Warrant represents and warrants to the Company as follows:
(a) Investment. The Registered Holder is acquiring this Warrant and the
Warrant Shares issuable upon the exercise of this Warrant, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same, except as otherwise may be permitted under applicable securities laws.
(b) Authority. The Registered Holder has full power and authority to
enter into and to perform this Warrant in accordance with its terms. The
Registered Holder has not been organized specifically for the purpose of
investing in the Company.
(c) Accredited Investor. The Registered Holder is an Accredited Investor
within the definition set forth in Rule 501(a) promulgated under the Securities
Act.
12. MAILING OF NOTICES, ETC. All notices and other communications from the
Company to the Registered Holder shall be mailed by first-class certified or
registered mail, postage prepaid, to the address last furnished to the Company
in writing by the Registered Holder. All notices and other communications from
the Registered Holder or in connection herewith to the Company shall be mailed
by first-class certified or registered mail, postage prepaid, to the Company at
its principal office set forth below. If the Company should at any time change
the location of its principal office to a place other than as set forth below,
it shall give prompt written notice to the Registered Holder and thereafter all
references in this Warrant to the location of its principal office at the
particular time shall be as so specified in such notice.
13. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the Registered
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company. Notwithstanding the foregoing, in the event (i) the Company
effects a split of the Common Stock by means of a stock dividend and the
Purchase Price of and the number of Warrant Shares are adjusted as of the date
of the distribution of the dividend (rather than as of the record date for such
dividend), and (ii) the Registered Holder exercises this Warrant between the
record date and the distribution date for such stock dividend, the Registered
Holder shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon such exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.
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14. CHANGE OR WAIVER. Any term of this Warrant may be changed or waived only by
an instrument in writing signed by the party against which enforcement of the
change or waiver is sought.
15. SECTION HEADINGS. The section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
16. GOVERNING LAW. This Warrant will be governed by and construed in accordance
with the internal laws of the State of New York (without reference to the
conflicts of law provisions thereof).
EXECUTED as of the Date of Issuance indicated above.
[ISSUER]
By:
----------------------------------
Title:
-------------------------------
ATTEST:
-------------------------
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EXHIBIT I
PURCHASE FORM
To: Dated:
----------------------- -----------------------
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably elects to purchase (check applicable box):
- _____ shares of the Common Stock covered by such Warrant; or
- the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in
Section 1(b).
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is $________.
Such payment takes the form of (check applicable box or boxes):
- $______ in lawful money of the United States; and/or
- the cancellation of such portion of the attached Warrant as is
exercisable for a total of _____ Warrant Shares (using a Fair
Market Value of $_____ per share for purposes of this
calculation); and/or
- the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section
1(b), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in Section 1(b).
Signature:
------------------------------
Address:
--------------------------------
--------------------------------
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EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
Name of Assignee Address No. of Shares
Dated:
------------------------------------
Signature:
---------------------------------
Signature Guaranteed:
By:
----------------------------------------
The signature should be guaranteed by an
eligible guarantor institution (banks,
stockbrokers, savings and loan associations and
credit unions with membership in an approved
signature guarantee medallion program) pursuant
to Rule 17Ad-15 under the Securities Exchange
Act of 1934.
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