THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
NO. W - A -___ Warrant for _____________ Common Stock
(subject to adjustment)
ALPHARX, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, __________________________, a
___________ organized and existing under the laws of the State of _____________,
and having an address of __________________________, or its registered assigns
(the holder or any registered assign thereof being a "Holder") is entitled,
subject to the terms set forth below, to purchase from ALPHARX, INC. a Delaware
corporation having an address of 000-000 Xxxxxx Xxxxxxxx, Xxxxxxx, Xxxxxxx,
Xxxxxx X0X0X0 (the "Company"), the number of shares of Common Stock, as defined
below, appearing above, upon surrender hereof, at the principal office of the
Company referred to below, with the subscription form attached hereto duly
executed, and simultaneous payment therefor in lawful money of the United States
or otherwise as hereinafter provided, at the Exercise Price as set forth in
Section 3 below. The term "Warrant" as used herein shall include this Warrant,
and any warrants delivered in substitution or exchange herefor or therefor as
provided herein. As more particularly set forth in that certain Subscription
Agreement, dated June __, 2004, (the "Subscription Agreement") by and between
the Company and the undersigned Holder, this Warrant was issued to the Holder
for the consideration set forth in the Subscription Agreement.
On or about the date hereof the Company has or may enter into other
agreements similar to the Subscription Agreement and pursuant thereto issue to
other persons warrants that are similar to this Warrant (this Warrant and such
other warrants are hereinafter collectively, the "Warrants").
1. TERM OF WARRANT. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, at any time
after its issuance on this the ______ day of June, 2004 (the "Warrant Issue
Date") and before its expiration at 5:00 p.m. New York, New York time, on the
third year anniversary of the Warrant Issue Date.
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WARRANT TO PURCHASE COMMON STOCK
2. NUMBER OF SHARES FOR WHICH EXERCISABLE. This Warrant shall be
exercisable at any time for the number of shares Common Stock appearing above at
the Exercise Price in effect at such time; provided that the number of Common
Stock shall be appropriately adjusted from time to time to reflect any exercises
of this Warrant and such further adjustments as are required pursuant to other
provisions of this Warrant. For purposes hereof, "Common Stock" means any common
stock or equivalent units authorized under the Certificate of Incorporation or
other governing instruments of the Company including any securities subsequently
issued in any merger, recapitalization or other transaction in exchange for such
securities.
3. EXERCISE PRICE. The price per share of Common Stock at which this
Warrant may be exercised (the "Exercise Price") shall be equal to U.S. $0.30 and
shall be payable in cash or other immediately available funds.
4. EXERCISE OF WARRANT.
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, at any time, or from time to
time, during the term hereof as described in Section 1 above, by the surrender
of this Warrant and the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, at the 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), upon
payment (i) in cash or wire transfer of immediately available funds to the
Company of the Exercise Price, (ii) by cancellation by the Holder of
indebtedness or other obligations of the Company to the Holder, or (iii) by a
combination of (i) and (ii), of the purchase price of the shares to be
purchased.
(b) This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the Common Stock
issuable upon such exercise shall be treated for all purposes as the holder of
record of such Common Stock as of the close of business on such date. As
promptly as practicable on or after such date and in any event within ten (10)
days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares of Common Stock issuable upon such exercise. In the event
that this Warrant is exercised in part, the Company at its expense will execute
and deliver a new Warrant of like tenor exercisable for the number of Common
Shares for which this Warrant may then be exercised.
5. OWNERSHIP CAP AND EXERCISE RESTRICTIONS.
(a) Notwithstanding any provision of this Warrant to the
contrary, at no time may the Holder, or any subsequent holder, of this Warrant
exercise this Warrant if the number of shares of Common Stock to be issued upon
such exercise would result, when aggregated with all other shares of Common
Stock owned by the Holder at such time, in the Holder owning more than 4.99% of
the outstanding Common Stock at the time of the exercise, provided, however,
that upon the Holder providing the Company with sixty-one (61) days notice (the
"Waiver Notice") that the Holder intends to waive the requirements of this
Section 5(a) in regard to any or all of the Common Stock to be issued upon the
exercise of the Warrant, then this Section 5(a) shall have no force or effect
with regard to any Common Stock referenced in Waiver Notice. This provision
shall expire sixty-one (61) days prior to the expiration of this Warrant under
Section 1.
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WARRANT TO PURCHASE COMMON STOCK
2
(b) The Holder may not exercise this Warrant in whole or in
part to the extent such exercise would result in the Holder beneficially owning
(as determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934 and the rules promulgated thereunder) more than 9.99% of the then issued
and outstanding Common Stock, including any Common Stock, issuable upon the
exercise of this Warrant after the application of this Section 5(b).
6. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the fair market value
of such fractional share.
7. REPLACEMENT OF WARRANT. On 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, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
8. RIGHTS OF STOCKHOLDERS. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of
securities, reclassification of securities, change of par value, or change of
securities to no par value, consolidation, merger, conveyance, or otherwise) or
to receive notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised as provided herein.
9. TRANSFER OF WARRANT.
(a) WARRANT REGISTER. The Company will maintain a register
(the "Warrant Register") containing the names and addresses of the Holder or
Holders. Any Holder of this Warrant or any portion thereof may change his or her
address as shown on the Warrant Register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to such
Holder as shown on the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.
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WARRANT TO PURCHASE COMMON STOCK
3
(b) WARRANT AGENT. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining the Warrant Register
referred to in Section 9(a) above, issuing the Common Stock or other securities
then issuable upon the exercise of this Warrant, exchanging this Warrant,
replacing this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or replacement, as the case may be, shall be
made at the office of such agent.
(c) TRANSFERABILITY AND NONNEGOTIABILITY OF WARRANT. This
Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and the transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, if such are requested by the Company). Subject to the provisions of
this Warrant with respect to compliance with the Securities Act of 1933, as
amended (the "Act"), title to this Warrant may be transferred by endorsement (by
the Holder executing the Assignment Form annexed hereto) and delivery in the
same manner as a negotiable instrument transferable by endorsement and delivery.
(d) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this
Warrant for exchange, properly endorsed on the Assignment Form and subject to
the provisions of this Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained in this Section 8, the
Company at its expense shall issue to or on the order of the Holder a new
warrant or warrants of like tenor, in the name of the Holder or as the Holder
(on payment by the Holder of any applicable transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.
(e) COMPLIANCE WITH SECURITIES LAWS.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Common Stock to be issued upon exercise
hereof are being acquired solely for the Holder's own account and not as a
nominee for any other party; and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any Common Stock to be
issued upon exercise hereof except under circumstances that will not result in a
violation of the Act or any state securities laws. Upon exercise of this
Warrant, the Holder shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the Common Stock so purchased are being
acquired solely for the Holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale.
(ii) This Warrant and all Common Stock issued upon
exercise hereof unless registered under the Act shall be stamped or imprinted
with a legend in substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES AND ANY
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WARRANT TO PURCHASE COMMON STOCK
4
SECURITIES ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND APPLICABLE LAWS.
10. RESERVATION OF STOCK. The Company covenants that during the term
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares of Common Stock to provide
for the issuance of all shares of Common Stock issuable upon the exercise in
full of this Warrant and, from time to time, will take all steps necessary to
amend its operating agreement (or any other governing documents of the Company
that may be in effect from time to time) to provide for sufficient reserves of
shares of Common Stock then issuable upon exercise in full of the Warrant. The
Company further covenants that all Common Stock issued upon the exercise of
rights represented by this Warrant in accordance with its terms will be duly and
validly issued, fully paid, non-assessable, and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein). The Company
agrees that its issuance of this Warrant shall constitute full authority to its
officers and agents who are charged with the duty of executing stock
certificates or other evidence of equity interests of the Company to execute and
issue the necessary certificates or other instruments for Common Stock upon any
exercise of this Warrant.
11. NOTICES.
(a) Whenever the Exercise Price or number of shares of Common
Stock purchasable hereunder shall be adjusted pursuant to Section 13 hereof, the
Company shall issue a certificate signed by its Chief Financial Officer (or the
equivalent officer of the Company) setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Exercise Price and the number of
shares of Common Stock issuable or issued thereunder after giving effect to such
adjustment, and shall cause a copy of such certificate to be mailed (by
first-class mail, postage prepaid) to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of
its Common Stock (or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any Common Stock or any
other securities, or to receive any other right, or
(ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation, or
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WARRANT TO PURCHASE COMMON STOCK
5
(iii) of any voluntary 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 Holder or Holders a notice specifying, as the case may
be, (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (B) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, 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 securities at the time receivable
upon the exercise of this Warrant) shall be entitled to exchange their Common
Stock (or such other securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 15
days prior to the date therein specified.
(c) All such notices, advices and communications shall be
deemed to have been received when provided in accordance with the notice
requirements set forth in Section 13(a).
12. AMENDMENTS.
(a) This Warrant may be amended in writing by the Company and
the Holder. This Warrant may also be amended in writing by the Company and
holders of a majority of all outstanding Warrants, so long as all such Warrants
are identically amended. Any amendment effected in accordance with this Section
12 shall be binding upon the Holder, each future holder of the Warrant, and the
Company.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.
13. MANDATORY REDEMPTION. At the election of the Company, this Warrant
is subject to mandatory redemption at a price of U.S. $0.01 per underlying share
of Common Stock if the Common Stock trades for 10 consecutive trading days at a
price at or above U.S. $0.90 per share on any eligible market (including,
without limitation, the over-the-counter market; NASDAQ Small Cap Market and
NASDAQ National Market), provided that (i) the Holder will be given at least 15
days prior written notice of such redemption in order that the Holder may
exercise this Warrant, and (ii) immediately prior to giving such notice of
redemption, the Common Stock underlying this Warrant is subject to an effective
registration statement covering its resale under the Act.
14. MISCELLANEOUS. The following additional provisions shall apply
during the term of this Agreement:
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WARRANT TO PURCHASE COMMON STOCK
6
(a) NOTICES. Any notice required or permitted under the terms
of this Warrant shall be in writing and shall be deemed effectively given: (i)
upon actual delivery, when delivered personally; (ii) upon receipt when sent by
confirmed telegram or fax if sent during normal business hours, and if not, then
on the next business day; (iii) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery; or (iv) 5 business
days after being deposited in the U.S. mail, as certified or registered mail,
return receipt requested, postage prepaid. All communications shall be sent to
the Company at its principal address as set forth in the first paragraph of this
Warrant, and to the Holder at its registered address as set forth in the first
paragraph of this Agreement, or at such other address as the Company or any
Holder may subsequently designate by ten days' advance written notice to the
other.
(b) GOVERNING LAW. This Warrant and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto are to be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without giving effect to any choice of law rule that would cause
the application of the laws of any jurisdiction other than the State of Delaware
to the rights and duties of the parties hereto.
(c) ATTORNEY'S FEES. If any action at law or in equity
(including arbitration) is instituted to enforce or interpret the terms of this
Warrant, the Holder shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which the Holder may
be entitled.
(d) ASSUMPTION ON MERGER OR CONSOLIDATION OF THE COMPANY. The
Company will not merge or consolidate with or into, or enter into an agreement
of share exchange with, any other corporation unless the corporation resulting
from such merger, consolidation, or share exchange (if not the Company) shall
expressly assume, by supplemental agreement reasonably satisfactory in form to
the Holder, and duly executed and delivered to the Holder, the due and punctual
performance and observance of each and every covenant and condition of this
Warrant to be performed and observed by the Company.
(e) CONSTRUCTION AND TITLES. The titles and subtitles used in
this Warrant are used for convenience only and are not to be considered in
construing or interpreting this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
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WARRANT TO PURCHASE COMMON STOCK
7
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officer or agent under its corporate
seal and to be dated the date hereof.
ALPHARX, INC.
By:_______________________________
Name:
Title:
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WARRANT TO PURCHASE COMMON STOCK
8
NOTICE OF EXERCISE
To: ALPHARX, INC.
(1) The undersigned hereby elects to purchase _______ shares of Common
Stock (as such term is defined in the attached Warrant) of ALPHARX, INC.
pursuant to the provisions of Section 4(a) of the attached Warrant, and tenders
herewith payment of the purchase price for all such shares of Common Stock.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the Common Stock to be issued upon exercise hereof is being
acquired solely for the account of the undersigned and not as a nominee for any
other party, and for investment, and that the undersigned will not offer, sell
or otherwise dispose of any such Common Stock except under circumstances that
will not result in a violation of the Act, or any applicable state securities
laws.
(3) Please issue a certificate or certificates or other appropriate
instrument or instruments representing said Common Shares in the name of the
undersigned or in such other name as is specified below:
---------------------------------
(Name)
---------------------------------
(Name)
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
-------------------------- ---------------------------------
(Date) (Signature)
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WARRANT TO PURCHASE COMMON STOCK
9
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
NAME OF XXXXXXXX ADDRESS NO. OF SHARES
and does hereby irrevocably constitute and appoint ___________________ Attorney
to make such transfer on the books of ALPHARX, INC., maintained for the purpose,
with full power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the Common Stock to be issued upon
exercise hereof or conversion thereof are being acquired for investment and that
the Assignee will not offer, sell or otherwise dispose of this Warrant or any
Common Stock to be issued upon exercise hereof or conversion thereof except
under circumstances which will not result in a violation of the Act, or any
state securities laws. Further, the Assignee has acknowledged that upon exercise
of this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the Common Stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated:___________________ _______________________________
Signature of Holder
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WARRANT TO PURCHASE COMMON STOCK
10
