Option to Purchase
Units
TITAN PHARMACEUTICALS, INC.
Unit Purchase Option
Dated: August 2, 1996.
THIS CERTIFIES THAT [X.X. Xxxxx Investment Banking Corp. and its designees]
(herein sometimes called the "Holder") is entitled to purchase from Titan
Pharmaceuticals, Inc., a Delaware corporation (hereinafter called the
"Company"), at the prices and during the periods as hereinafter specified, up to
_______________________ Units ("Units"), each Unit consisting of one share of
the Company's Common Stock, $.001 par value, as now constituted ("Common Stock")
and one Class A warrant ("Class A Warrants"). Each Class A Warrant is
exercisable to purchase one share of Common Stock at an exercise price of $6.20
from the date hereof to January 18, 2001. The Class A Warrants are herein
collectively referred to as the "Warrants."
This Option, together with options of like tenor, constituting in the
aggregate options (the "Options") to purchase 307,200 Units, subject to
adjustment in accordance with Section 8 of this Option (the "Option Units"), was
issued pursuant to a placement agent agreement between the Company and X.X.
Xxxxx Investment Banking Corp. as Placement Agent (the "Placement Agent") in
connection with a private offering (the "Offering") of up to 1,536,000 Units
through the Placement Agent, in consideration of $160 received for the Options.
Except as specifically otherwise provided herein, the Common Stock and the
Warrants issued pursuant to the option herein granted (the "Option") shall bear
the same terms and conditions as described under the caption "Description of
Securities" in the Company's Registration Statement on form SB-2 (File No.
33-27436), declared effective by the Securities and Exchange Commission on
January 18, 1996 (the "Registration Statement"), and the Warrants shall be
governed by the terms of the Warrant Agreement dated as of July 31, 1996 (the
"Warrant Agreement"), and except that (i) the holder shall have registration
rights under the Securities Act of 1933, as amended (the "Act"), for the Option,
the Common Stock and the Warrants included in the Option Units, and the shares
of Common Stock underlying the Warrants, as more fully described in Section 6 of
this Option and (ii) the Warrants issuable upon exercise of the Option will not
be subject to redemption by the Company nor will it be callable by the Company.
The Company will list the Common Stock underlying this Option and, at the
Holder's request the Warrants, on the Nasdaq National Market, the Nasdaq Small
Cap Market or such other exchange or market as the Common Stock or Public
Warrants may then be listed or quoted. In the event of any extension of the
expiration date or reduction of the exercise price of the Public Warrants, the
same changes to the Warrants included in the Option Units shall be
simultaneously effected.
1. The rights represented by this Option shall be exercised at $10.42 per
Unit, subject to adjustment in accordance with Section 8 of this Option ("the
"Exercise Price"), from the date hereof until August 2, 2001. In the event that
this Option is exercised after January 18, 2001, the Option will be exercisable
to purchase the Common Stock contained in the Units only.
2. (a) The rights represented by this Option may be exercised at any time
within the period above specified, in whole or in part, by (i) the surrender of
this Option (with the purchase form at the end hereof properly executed) at the
principal executive office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company); and (ii) payment to the
Company of the exercise price then in effect for the number of Option Units
specified in the above-mentioned purchase form together with applicable stock
transfer taxes, if any. This Option shall be deemed to have been exercised, in
whole or in part to the extent specified, immediately prior to the close of
business on the date this Option is surrendered and payment is made in
accordance with the foregoing provisions of this Section 2, and the person or
persons in whose name or names the certificates for shares of Common Stock and
Warrants shall be issuable upon such exercise shall become the holder or holders
of record of such Common Stock and Warrants at that time and date. The
certificates for the Common Stock and Warrants so purchased shall be delivered
to the Holder as soon as practicable but not later than ten (10) days after the
rights represented by this Option shall have been so exercised.
(b) At any time during the period above specified, during which this Option
may be exercised, the Holder may, at its option, exchange this Option, in whole
or in part (an "Option Exchange"), into the number of Option Units determined in
accordance with this Section (b), by surrendering this Option at the principal
office of the Company or at the office of its stock transfer agent, accompanied
by a notice stating such Xxxxxx's intent to effect such exchange, the number of
Option Units into which this Option is to be exchanged and the date on which the
Holder requests that such Option Exchange occur (the "Notice of Exchange"). The
Option Exchange shall take place on the date specified in the Notice of Exchange
or, if later, the date the Notice of Exchange is received by the Company (the
"Exchange Date"). Certificates for the shares of Common Stock and Warrants
issuable upon such Option Exchange and, if applicable, a new Option of like
tenor evidencing the balance of the Option Units remaining subject to this
Option, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) days following the Exchange Date. In connection with any Option
Exchange, this Option shall represent the right to subscribe for and acquire the
number of Option Units (rounded to the next highest integer) equal to (x) the
number of Option Units specified by the Holder in its Notice of Exchange up to
the maximum number of Option Units subject to this option (the "Total Number")
less (y) the number of Option Units equal to the quotient obtained by dividing
(A) the product of the Total Number and the existing Exercise Price by (B) the
Fair Market Value. "Fair Market Value" shall mean first, if there is a trading
market as indicated in Subsection (i) below for the Units, such Fair Market
Value of the Units and if there is no such trading market in the Units, then
Fair Market Value shall have the meaning indicated in Subsections (ii) through
(v) below for the aggregate value of all shares of Common Stock and Warrants
which comprise a Unit:
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(i) If the Units are listed on a national securities exchange or
listed or admitted to unlisted trading privileges on such exchange or
listed for trading on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value shall be the average of the last reported
sale prices or the average of the means of the last reported bid and asked
prices, respectively, of the Units on such exchange or market for the
twenty (20) business days ending on the last business day prior to the
Exchange Date; or
(ii) If the Common Stock or Warrants are listed on a national
securities exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value shall be the average of the last
reported sale prices or the average of the means of the last reported bid
and asked prices, respectively, of Common Stock or Warrants, respectively,
on such exchange or market for the twenty (20) business days ending on the
last business day prior to the Exchange Date; or
(iii) If the Common Stock or Warrants are not so listed or admitted to
unlisted trading privileges, the Fair Market Value shall be the average of
the means of the last reported bid and asked prices of the Common Stock or
Warrants, respectively, for the twenty (20) business days ending on the
last business day prior to the Exchange Date; or
(iv) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the Fair
Market Value shall be an amount, not less than book value thereof as at the
end of the most recent fiscal year of the Company ending prior to the
Exchange Date, determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company; or
(v) If the Warrants are not so listed or admitted to unlisted trading
privileges, and bid and asked prices are not so reported for Warrants, then
Fair Market Value for the Warrants shall be an amount equal to the
difference between (i) the Fair Market Value of the shares of Common Stock
and Warrants which may be received upon the exercise of the Warrants, as
determined herein, and (ii) the Warrant Exercise Price.
3. Any assignment shall be effected by the Holder (i) executing the form of
assignment at the end hereof and (ii) surrendering this Option for cancellation
at the office or agency of the Company referred to in Section 2 hereof,
accompanied by a certificate (signed by an authorized officer of the Holder if
the Holder is a corporation), stating that each transferee is a permitted
transferee under this Section 3 hereof; whereupon the Company shall issue, in
the name or names specified by the Holder (including the Holder) a new Option or
Options of like tenor and representing in the aggregate rights to purchase the
same number of Option Units as are purchasable hereunder.
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4. The Company covenants and agrees that all shares of Common Stock which
may be issued as part of the Option Units purchased hereunder and the Common
Stock which may be issued upon exercise of the Warrants will, upon issuance in
accordance with the terms of this Option and the Warrant Agreement, be duly and
validly issued, fully paid and nonassessable and no personal liability will
attach to the holder thereof. The Company further covenants and agrees that
during the periods within which this Option may be exercised, the Company will
at all times have authorized and reserved a sufficient number of shares of its
Common Stock to provide for the exercise of this Option and that it will have
authorized and reserved a sufficient number of shares of Common Stock for
issuance upon exercise of the Warrants included in the Option Units.
5. This Option shall not entitle the Holder to any voting rights or any
other rights, or subject to the Holder to any liabilities, as a stockholder of
the Company.
6. (a) The Company shall advise the Holder or its transferee, whether the
Holder holds the Option or has exercised the Option and holds Option Units or
any of the securities underlying the Option Units, by written notice at least
three weeks prior to the filing of any new registration statement or
post-effective amendment thereto under the Act covering any securities of the
Company, for its own account or for the account of others, and will for a period
of seven years from August 2, 1996, upon the request of the Holder, include in
any such registration statement, such information as may be required to permit a
public offering of all or any of the Option Units, the Common Stock or Warrants
included in the Option Units or the Common Stock issuable upon the exercise of
the Warrants (the "Registrable Securities").
(b) If X.X. Xxxxx Investment Banking Corp., X.X. Xxxxx & Co., Inc. or
X. Xxxxxx Xxxxx (the "Requesting Holder") shall give notice to the Company at
any time to the effect that such holder desires to register under the Act this
Option, the Option Units or any of the underlying securities contained in the
Option Units under such circumstances that a public distribution (within the
meaning of the Act) of any such securities will be involved then the Company
will promptly, but no later than twenty (20) business days after receipt of such
notice, file a new registration statement on Form S-1 or such other form as may
be permissable pursuant to the Act, to the end that the Registrable Securities
may be publicly sold under the Act as promptly as practicable thereafter and the
Company will use its best efforts to cause such registration to become and
remain effective (including the taking of such steps as are necessary to obtain
the removal of any stop order); provided, that such holder shall furnish the
Company with appropriate information in connection therewith as the Company may
reasonably request in writing. The Requesting Holder may, at its option, request
the filing of a new registration statement under the Act on two occasions during
the seven year period beginning one year from the final closing date of the
Offering. The Holder may, at its option request the registration of the Option
and/or any of the securities underlying the Option in a registration statement
made by the Company as contemplated by Section 6(a) or in connection with a
request made pursuant to this Section 6(b) prior to acquisition of the Option
Units issuable upon exercise of the Option and even though the Holder has not
given notice of exercise of the Option. The Requesting Holder may, at its
option, request such new registration statement during the described period with
respect to the Option Units as a unit, or separately as to the Common Stock
and/or Warrants included in the Option Units and/or the
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Common Stock issuable upon the exercise of the Warrants, and such registration
rights may be exercised by the Requesting Holder prior to or subsequent to the
exercise of the Option.
Within ten days after receiving any such notice pursuant to this Section
6(b), the Company shall give notice to the other holders of the Options,
advising that the Company is proceeding with such registration statement and
offering to include therein the Registrable Securities of the other holders,
provided that they shall furnish the Company with such appropriate information
(relating to the intentions of such holders) in connection therewith as the
Company shall reasonably request in writing. In the event the registration
statement is not filed within the period specified herein, the expiration date
of this Option and the underlying Warrants shall be extended by an amount of
time equal to the delay in filing. All costs and expenses of the first such new
registration statement under this paragraph 6(b) shall be borne by the Company,
except that the holders shall bear the fees of their own counsel and any
underwriting discounts or commissions applicable to any of the securities sold
by them. If the Company determines to include securities to be sold by it in any
registration statement originally requested pursuant to this Section 6(b), such
registration shall instead be deemed to have been a registration under Section
6(a) and not under this Section 6(b).
The Company will maintain such registration statement current under the Act
for a period of at least six months (and for up to an additional three months if
requested by the Holder) from the effective date thereof.
(c) Whenever pursuant to Section 6 a registration statement relating
to any Registrable Securities is filed under the Act, amended or supplemented,
the Company shall (i) supply prospectuses and such other documents as the Holder
may request in order to facilitate the public sale or other disposition of the
Registrable Securities, (ii) use its best efforts to register and qualify any of
the Registrable Securities for sale in such states as such Holder designates,
(iii) furnish indemnification in the manner provided in Section 7 hereof, (iv)
notify each Holder of Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and, at the request of
any such Holder, prepare and furnish to such Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not included an untrue statement of a material
fact or omit to state material fact required to be stated therein or necessary
to make the statements therein not misleading and (v) do any and all other acts
and things which may be necessary or desirable to enable such Holders to
consummate the public sale or other disposition of the Registrable Securities,
The Holder shall furnish appropriate information in connection therewith and
indemnification as set forth in Section 7.
7. (a) Whenever pursuant to Section 6 a registration statement relating to
the Registrable Securities is filed under the Act, amended or supplemented, the
Company will indemnify and hold harmless each holder of the Registrable
Securities covered by such registration
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statement, amendment or supplement (such holder being hereinafter called the
"Distributing Holder"), and each person, if any, who controls (within the
meaning of the Act) the Distributing Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter, against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any such controlling person or any such underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and will reimburse the Distributing Holder and each such controlling
person and underwriter for any legal or other expenses reasonably incurred by
the Distributing Holder or such controlling person or underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Distributing
Holder specifically for use in the preparation thereof.
(b) If requested by the Company prior to the filing of any
registration statement covering the Registrable Securities, each Distributing
Holder will agree, severally but not jointly, to indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in said registration statement,
said preliminary prospectus, said final prospectus, or said amendment or
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said registration
statement, said preliminary prospectus, said final prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder specifically for use in the preparation
thereof; except that the maximum amount which may be recovered from the
Distributing Holder pursuant to this Section 7 or otherwise shall be limited to
the amount of net proceeds received by the Distributing Holder from the sale of
the Registrable Securities.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, give the
indemnifying party notice of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 7.
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(d) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(8) In addition to the provisions of Section 1(a) of this Option, the
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of the Options shall be subject to adjustment from
time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution of its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective date
of such subdivision, combination or reclassification shall be adjusted
so that it shall equal the price determined by multiplying the
Exercise Price by a fraction, the denominator of which shall be the
number of shares of Common Stock outstanding after giving effect to
such action, and the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above
shall occur.
(b) In case the Company shall fix a record date for the issuance
of rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price (the
"Subscription Price") (or having a conversion price per share) less
than (i) the current market price of the Common Stock (as defined in
Subsection (h) below) on the record date mentioned below, or (ii) the
Exercise Price on a per share basis giving no value to the Warrants
included in the Option Units (the "Per Share Exercise Price") on such
record date, the Exercise Price shall be adjusted so that the same
shall equal the lower of (i) the price determined by multiplying the
number of shares then comprising an Option Unit by the product of the
Per Share Exercise Price in effect immediately prior to the date of
such issuance multiplied by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding on the
record date mentioned below and the number of additional shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price
of the convertible securities so offered) would purchase at such
current market price per share of the
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Common Stock, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on such record date
and the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible securities so
offered are convertible) or (ii) in the event the Subscription Price
is equal to or higher than the current market price but is less than
the Per Share Exercise Price, the price determined by multiplying the
number of shares then comprising an Option Unit by the product of the
Per Share Exercise Price in effect immediately prior to the date of
issuance multiplied by a fraction, the numerator of which shall be the
sum of the number of shares outstanding on the record date mentioned
below and the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible
securities so offered) would purchase at the Per Share Exercise Price
in effect immediately prior to the date of such issuance, and the
denominator of which shall be the sum of the number of shares of
Common Stock outstanding on the record date mentioned below and the
number of additional shares of Common Stock offered for subscription
or purchase (or into which the convertible securities so offered are
convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately
after the record date for the determination of shareholders entitled
to receive such rights or warrants; and to the extent that shares of
Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or
warrants the Exercise Price shall be readjusted to the Exercise Price
which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to the holders
of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions and dividends or distributions
referred to in Subsection (a) above) or subscription rights or
warrants (excluding those referred to in Subsection (b) above), then
in each such case the Exercise Price in effect thereafter shall be
determined by multiplying the number of shares then comprising an
Option Unit by the product of the Per Share Exercise Price in effect
immediately prior thereto multiplied by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
multiplied by the current market price per share of Common Stock (as
defined in Subsection (h) below), less the fair market value (as
determined by the Company's Board of Directors) of said assets or
evidences of indebtedness so distributed or of such rights or
warrants, and the denominator of which shall be the total number of
shares of Common Stock outstanding multiplied by such current market
price per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such adjustment
shall be made whenever any such distribution is made and shall become
effective immediately after
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the record date for the determination of shareholders entitled to
receive such distribution.
(d) In case the Company shall issue shares of its Common Stock
(excluding shares issued (i) in any of the transactions described in
Subsections (a), (b), (c) or (e) of this Section 8; (ii) upon exercise
of options granted to the Company's employees under a plan or plans
adopted by the Company's Board of Directors and approved by its
shareholders, if such shares would otherwise be included in this
Subsection (d), (but only to the extent that the aggregate number of
shares excluded hereby and issued after the date hereof, shall not
exceed 15% of the Company's Common Stock outstanding at the time of
any issuance); (iii) upon exercise of options and warrants or upon
conversion of convertible securities outstanding at July 31, 1996, and
this Option; (iv) to shareholders of any corporation which merges into
the Company in proportion to their stock holdings of such corporation
immediately prior to such merger, upon such merger; (v) in a bona fide
public offering pursuant to a firm commitment underwriting; or (vi) in
a private placement offering through either X.X. Xxxxx Investment
Banking Corp. or X.X. Xxxxx & Co., Inc., as placement agent; but only
if no adjustment is required pursuant to any other specific subsection
of this Section (8) (without regard to Subsection (i) below) with
respect to the transaction giving rise to such rights for a
consideration per share (the "Offering Price") less than (i) the
current market price per share (as defined in Subsection (h) below) on
the date the Company fixes the offering price of such additional
shares, or (ii) the Per Share Exercise Price, then the Exercise Price
shall be adjusted immediately thereafter so that it shall equal the
lower of (i) the price determined by multiplying the number of shares
then comprising an Option Unit by the product of the Per Share
Exercise Price in effect immediately prior thereto multiplied by a
fraction, the numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to the issuance
of such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in
Subsection (g) 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 number of shares of Common Stock
outstanding immediately after the issuance of such additional shares
or (ii) in the event the Offering Price is equal to or higher than the
current market price per share but less than the Per Share Exercise
Price, the price determined by multiplying the number of shares then
comprising an Option Unit by the product of the Per Share Exercise
Price in effect immediately prior to the date of issuance multiplied
by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common Stock which the
aggregate consideration received (determined as provided in Subsection
(g) below) for the issuance of such additional shares would purchase
at the Per Share Exercise Price in effect immediately prior to the
date of such issuance, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after the
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issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
(e) In case the Company shall issue any securities convertible
into or exchangeable for its Common Stock (excluding securities issued
in transactions described in Subsections (b) and (c) above) for a
consideration per share of Common Stock (the "Conversion Price")
initially deliverable upon conversion or exchange of such securities
(determined as provided in Subsection (g) below) less than (i) the
current market price per share (as defined in Subsection (h) below) in
effect immediately prior to the issuance of such securities, or (ii)
the Per Share Exercise Price, then the Exercise Price shall be
adjusted immediately thereafter so that it shall equal the lower of
(i) the price determined by multiplying the number of shares then
comprising an Option Unit by the product of the Per Share Exercise
Price in effect immediately prior thereto multiplied by a fraction,
the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such
securities and the number of shares of Common Stock which the
aggregate consideration received (determined as provided in Subsection
(g) below) for such securities 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 prior to such issuance and the maximum number of shares of
Common Stock of the Company deliverable upon conversion of or in
exchange for such securities at the initial conversion or exchange
price or rate, or (ii) in the event the Conversion Price is equal to
or higher than the current market price per share but less than the
Per Share Exercise Price, the price determined by multiplying the
number of shares then comprising an Option Unit by the product of the
Per Share Exercise Price in effect immediately prior to the date of
issuance multiplied by a fraction, the numerator of which shall be the
sum of the number of shares outstanding immediately prior to the
issuance of such securities and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in
Subsection (g) below) for such securities would purchase at the Per
Share Exercise Price in effect immediately prior to the date of such
issuance, and the denominator of which shall be the sum of the number
of shares of Common Stock outstanding immediately prior to the
issuance of such securities and the maximum number of shares of Common
Stock of the Company deliverable upon conversion of or in exchange for
such securities at the initial conversion or exchange price or rate.
Such adjustment shall be made successively whenever such an issuance
is made.
(f) Whenever the Exercise Price payable upon exercise of each
Option is adjusted pursuant to Subsections (a), (b), (c), (d) or (e)
above, (i) the number of shares of Common Stock included in an Option
Unit shall simultaneously be adjusted by multiplying the number of
shares of Common Stock included in Option Unit immediately prior to
such adjustment by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the
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Exercise Price, as adjusted and (ii) the number of shares of
Common Stock or other securities issuable upon exercise of the
Warrants included in the Option Units and the exercise price of such
Warrants shall be adjusted in accordance with the applicable terms of
the Warrant Agreement.
(g) For purposes of any computation respecting consideration
received pursuant to Subsections (d) and (e) above, the following
shall apply:
(A) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by the Company
for any underwriting of the issue or otherwise in connection
therewith;
(B) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Company (irrespective of the accounting
treatment thereof), whose determination shall be conclusive; and
(C) in the case of the issuance of securities convertible
into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to
be received by the Company upon the conversion or exchange
thereof (the consideration in each case to be determined in the
same manner as provided in clauses (A) and (B) of this Subsection
(g)).
(h) For the purpose of any computation under Subsections (b),
(c), (d) and (e) above, the current market price per share of Common
Stock at any date shall be deemed to be the average of the daily
closing prices for 30 consecutive business days before such date. The
closing price for each day shall be the last sale price regular way
or, in case no such reported sale takes place on such day, the average
of the last reported bid and asked prices regular way, in either case
on the principal national securities exchange, including the Nasdaq
National Market, on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on such exchange or
market, the average of the highest reported bid and lowest reported
asked prices as reported by Nasdaq, or other similar organization if
Nasdaq is no longer reporting such information, or if not so
available, the fair market price as determined by the Board of
Directors acting in good faith.
(i) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least five
cents ($0.05) in such price; provided, however, that any adjustments
which by reason of this
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Subsection (c)(i) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section 8 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may
be. Anything in this Section 8 to the contrary notwithstanding, the Company
shall be entitled, but shall not be required, to make such changes in the
Exercise Price, in addition to those required by this Section 8, as it
shall determine, in its sole discretion, to be advisable in order that any
dividend or distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter made by the
Company shall not result in any Federal Income tax liability to the holders
of Common Stock or securities convertible into Common Stock (including
Warrants issuable upon exercise of this Option).
(j) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly but no later than 10 days after any request for such
an adjustment by the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Option Units issuable upon exercise
of each Option and, if requested, information describing the transactions
giving rise to such adjustments, to be mailed to the Holders, at the
address set forth herein, and shall cause a certified copy thereof to be
mailed to its transfer agent, if any. The Company may retain a firm of
independent certified public accountants selected by the Board of Directors
(who may be the regular accountants employed by the Company) to make any
computation required by this Section 8, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment.
(k) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (a) above, the Holder of this Option thereafter
shall become entitled to receive any shares of the Company, other than
Common Stock, thereafter the number of such other shares so receivable upon
exercise of this Option shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in Subsections (a) through (j)
inclusive above.
(l) In case any event shall occur as to which the other provisions of
this Section 8 or Section 1(a) hereof are not strictly applicable but as to
which the failure to make any adjustment would not fairly protect the
purchase rights represented by this Option in accordance with the essential
intent and principles hereof then, in each such case, the Holders of
Options representing the right to purchase a majority of the Option Units
may appoint a firm of independent public accountants reasonably acceptable
to the Company, which shall give their opinion as to the adjustment, if
any,
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on a basis consistent with the essential intent and principles
established herein, necessary to preserve the purchase rights represented
by the Options. Upon receipt of such opinion, the Company will promptly
mail a copy thereof to the Holder of this Option and shall make the
adjustments described therein. The fees and expenses of such independent
public accountants shall be borne by the Company.
9. This Agreement shall be governed by and in accordance with the laws of
the State of New York, without giving effect to the principles of conflicts of
law thereof.
IN WITNESS WHEREOF, Titan Pharmaceuticals, Inc. has caused this Option to
be signed by its duly authorized officers under its corporate seal, and this
Option to be dated August 2nd, 1996.
TITAN PHARMACEUTICALS, INC.
By: ____________________________
Xxxxx X. Xxxxxx, President
(Corporate Seal)
Attest:
--------------------------
Xxxxx Xxxxxxx, Secretary
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PURCHASE FORM
(To be signed only upon exercise of option)
The undersigned, the holder of the foregoing Option, hereby irrevocably
elects to exercise the purchase rights represented by such Option for, and to
purchase thereunder, _______Units of Titan Pharmaceuticals, Inc., each Unit
consisting of _________ shares of Common Stock and _________ Class A Warrant(s)
to purchase _________ share(s) _________ of Common Stock, and herewith makes
payment of $_________ therefor.
Dated: _________, 19__. Instructions for Registration of Stock and Warrants
----------------------------------------
Print Name
----------------------------------------
Address
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Signature
OPTION EXCHANGE
The undersigned, pursuant to the provisions of the foregoing Option, hereby
elects to exchange its Option for _________ Units of Titan Pharmaceuticals,
Inc., each Unit consisting of __________shares of $.001 Par Value Common Stock
and __________ Class A Warrant(s) to purchase _________ share(s) of Common
Stock, pursuant to the Option Exchange provisions of the Option.
Dated: _____________, 19__.
----------------------------------------
Print Name
----------------------------------------
Address
----------------------------------------
Signature
TRANSFER FORM
(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells, assigns, and transfers
unto ______________the right to purchase Units represented by the foregoing
Option to the extent of __________ Units , and appoints ____________________
attorney to transfer such rights on the books of Titan Pharmaceuticals, Inc.
with full power of substitution in the premises.
Dated: _______________, 19__
By:
-----------------------------------
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Address
In the presence of:
