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EXHIBIT 4.7
WARRANT AGREEMENT
AGREEMENT, dated as of this 23rd day of June, 1997, between RIBOGENE,
INC., a California corporation ("Company") and PARAMOUNT CAPITAL, INC., a New
York corporation ("Paramount").
W I T N E S S E T H
WHEREAS, the Company has commenced a private placement (the "Private
Placement") of a minimum (the "Minimum Offering") of 1,333,333 units (the
"Units") and a maximum (the "Maximum Offering") of 2,666,666 Units, with an
option in favor of Paramount, subject to the Company's prior consent, to offer
up to an additional 1,777,777 Units to cover over-allotments, each Unit
consisting of (a) one share of Series F Convertible Preferred Stock of the
Company (the "Preferred Stock"), initially convertible into shares of common
stock, no par value, of the Company, (the "Common Stock"), and (b) one
redeemable Class A Warrant to purchase one share of Common Stock (the "Class A
Warrants" or the "Warrants"), pursuant to a Placement Agency Agreement dated as
of August 1, 1996, as amended (the "Placement Agency Agreement"), between the
Company and Paramount and the issuance to the Placement Agent or its designees
of Placement and Advisory Options to purchase up to an aggregate of 1,111,111
additional Units, to be dated June 23, 1997 (the "Unit Purchase Options"), the
Company may issue up to 5,555,554 Class A Warrants;
WHEREAS, each Class A Warrant entitles the Registered Holder thereof to
purchase one (1) share of Common Stock; and
WHEREAS, the Company will act as warrant agent ("Warrant Agent") in
connection with the issuance, registration, transfer, exchange and redemption
of the Warrants, the issuance of certificates representing the Warrants, the
exercise of the Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company and, the
holders of certificates representing the Warrants, the parties hereto agree as
follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
distribution of earnings and assets of the Company without limit as to amount
or percentage, which at the Initial Closing Date will consist of 50,000,000
shares of Common Stock, no par value.
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(b) "Closing Bid Price" for each trading day shall be the reported
closing bid price of the Common Stock on the American Stock Exchange ("AMEX"),
or if the Common Stock is not traded on the AMEX, shall mean the reported
closing bid price on the Nasdaq SmallCap Market or the Nasdaq National Market
System (collectively referred to as, "Nasdaq") or, if the Common Stock is not
traded on Nasdaq, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading (based on the aggregate dollar
value of all securities listed or admitted to trading) or, if not listed or
admitted to trading on any national securities exchange or quoted on Nasdaq, the
closing bid price in the over-the-counter market as furnished by any NASD member
firm selected from time to time by the Corporation for that purpose.
(c) "Corporate Office" shall mean the office of the Company (or its
successor as Warrant Agent) at which at any particular time its principal
business shall be administered, which office is located at the date hereof at
00000 Xxxxx Xxxx, Xxxxxxx, XX 00000.
(d) "Exercise Date" shall mean, as to any Warrant, the date on which
the Company shall have received both (a) the Warrant Certificate representing
such Warrant, with the subscription form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, and (b)
payment in cash, or by official bank or certified check made payable to the
Company, of an amount in lawful money of the United States of America equal to
the applicable Purchase Price.
(e) "Final Closing Date" shall mean the final closing date of the
Private Placement.
(f) "Initial Closing Date" shall mean as to each Warrant the date of
the initial closing of the Offering.
(g) "Initial Warrant Exercise Date" shall man as to each Warrant the
Final Closing Date.
(h) "Market Price" of the Common Stock shall mean the average Closing
Bid Price, for twenty (20) consecutive trading days (or such other period as
Paramount may consent to), ending with the date as of which the Market Price is
being determined, provided that if the prices referenced in the definition of
Closing Bid Price cannot be determined for such period, "Market Price" shall
mean the fair market value of the Common Stock set by, or in a manner
established by, the Board of Directors of the Company in good faith.
(i) "Preferred Stock" shall mean the Series F Convertible Preferred
Stock of the Company, stated value $2.25 per share, which at the Initial
Closing Date will consist of 5,555,554 authorized shares.
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(j) "Purchase Price" shall mean the purchase price to be paid upon
exercise of each Warrant in accordance with the terms hereof, which price shall
be the lesser of (i) $2.25 and (ii) the effective per share price of the Common
Stock sold in the Qualified IPO (taking into account all stock splits and
similar events), subject to adjustment from time to time pursuant to the
provisions of Section 9 hereof, and subject to the Company's right to reduce
the Purchase Price upon notice to all warrantholders (which may be given,
without limitation, prior to the Final Closing Date).
(k) "Qualified IPO" shall mean the initial underwritten public
offering of securities of the Company pursuant to an effective registration
statement under the Securities Act in which gross proceeds to the Company
exceed $7,500,000.
(l) "Redemption Price" shall mean the price at which the Company
may, at its option in accordance with the terms hereof, redeem the Warrants,
which price shall be $0.10 per Warrant.
(m) "Registered Holder" shall mean as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the Company
pursuant to Section 6.
(n) "Transfer Agent" shall mean the Company, or its authorized
successor, as such.
(o) "Warrant Expiration Date" shall mean 5:00 P.M. (New York time)
on the day prior to the sixth anniversary of the Final Closing Date or the
Redemption Date as defined in Section 8, whichever is earlier; provided that if
such date shall in the State of New York be a holiday or a day on which banks
are authorized or required to close, then 5:00 P.M. (New York time) on the next
following day which in the State of New York is not a holiday or a day on which
banks are authorized or required to close. Upon notice to all warrantholders the
Company shall have the right to extend the Warrant Expiration Date.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) A Class A Warrant initially shall entitle the Registered Holder
of the Warrant Certificate representing such Warrant to purchase one share of
Common Stock upon the exercise thereof, in accordance with the terms hereof,
subject to modification and adjustment as provided in Section 9.
(b) The Class A Warrants included in the offering of Units will be
detachable and separately transferable immediately from the shares of Preferred
Stock constituting part of such Units.
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(c) Upon execution of this Agreement, Warrant Certificates
representing the number of Class A Warrants sold pursuant to the Private
Placement shall be executed, issued and delivered by the Company.
(d) From time to time, up to the Warrant Expiration Date, the
Company, or its successor as Transfer Agent, shall execute and deliver stock
certificates in required whole number denominations representing up to an
aggregate of 5,555,554 shares of Common Stock, subject to adjustment as
described herein, upon the exercise of Warrants in accordance with this
Agreement.
(e) From time to time, up to the Warrant Expiration Date, the
Company shall execute and deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any transfer
or exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued hereunder, (ii)
those issued on or after the Initial Warrant Exercise Date, upon the exercise
of fewer than all Warrants represented by any Warrant Certificate, to evidence
any unexercised Warrants held by the exercising Registered Holder, (iii) those
issued upon any transfer or exchange pursuant to Section 6; (iv) those issued
in replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7 and (v) at the option of the Company, in such form as may
be approved by its Board of Directors, to reflect any adjustment or change in
the Purchase Price, the number of shares of Common Stock purchasable upon
exercise of the Warrants or the Redemption Price therefor made pursuant to
Section 9 hereof or of the Warrant Expiration Date.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed
or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Class A Warrants
may be listed, or to conform to usage or to the requirements of Section 2. The
Warrant Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen, or
destroyed Warrant Certificates) and issued in registered form. Warrant
Certificates shall be numbered serially with the letter AW on Class A Warrants
of all denominations.
(b) Warrant Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be an officer of the
Company or to hold the particular office referenced in the Warrant Certificate
before the date of issuance of the Warrant Certificates or before delivery
thereof, such Warrant Certificates may nevertheless be issued and delivered
with the same force and effect as though the person
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who signed such Warrant Certificates had not ceased to be an officer of the
Company or to hold such office.
SECTION 4. Exercise.
(a) Each Warrant may be exercised by the Registered Holder thereof
at any time on or after the Initial Exercise Date, but not after the Warrant
Expiration Date, upon the terms and subject to the conditions set forth herein
and in the applicable Warrant Certificate. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the Exercise Date
and the person entitled to receive the securities deliverable upon such exercise
shall be treated for all purposes as the holder of those securities upon the
exercise of the Warrant as of the close of business on the Exercise Date.
Promptly following the exercise of any Warrant and receipt of proceeds in the
form of cleared funds (the "Cleared Funds") representing the Purchase Price
from the exercise of a Warrant (the "Warrant Proceeds"), the Company shall
cause to be issued and delivered to the person or persons entitled to receive
the same, a certificate or certificates for the securities deliverable upon
such exercise (plus a certificate for any remaining unexercised Warrants of the
Registered Holder). In the case of payment made in the form of a check drawn on
an account of Paramount or such other investment banks and brokerage houses as
the Company shall approve, certificates shall immediately be issued upon the
exercise of any Warrant and receipt of Cleared Funds received from the Warrant
Proceeds.
(b) On the Exercise Date in respect of the exercise of any Warrant,
the Company shall pay from Cleared Funds received from the Warrant Proceeds, a
fee of 5% (the "Paramount Fee") of the Purchase Price to Paramount for Warrant
exercises solicited by Paramount or its representatives (of which a portion may
be reallowed by Paramount to the dealer who solicited the exercise, which may
also be Paramount). In the event the Paramount Fee is not received within seven
days of the date on which the Company receives Cleared Funds received from
Warrant Proceeds, then the Paramount Fee shall begin accruing interest at an
annual rate of prime plus three (3)%, payable by the Company to Paramount at
the time Paramount receives the Paramount Fee. Within five days after exercise
the Company, at the request of Paramount, shall send Paramount a copy of the
reverse side of each Warrant exercised. In addition, Paramount may at any time
during business hours, examine the records of the Company, including its ledger
of original Warrant Certificates returned to the Company upon exercise of
Warrants. The provisions of this paragraph may not be modified, amended or
deleted without the prior written consent of Paramount. In addition to the
foregoing, any costs incurred by Paramount shall be promptly reimbursed by the
Company.
(c) In order to enforce the provisions of Section 4(b) above, in
the event there is any dispute or question as to the amount or payment of the
Paramount Fee, the Company is hereby expressly authorized to establish an
escrow account for the purpose of depositing the entire amount of the unpaid
Paramount Fee, which amount will be deducted from the net Warrant Proceeds paid
to the Company. The funds placed in the escrow account may not be released to
the Company without a written agreement from Paramount that the required
Paramount Fee has been received by Paramount. Paramount shall promptly notify
the escrow
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agent and the Company by facsimile and certified mail in the event of any such
dispute and when the Paramount Fee has been paid.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon
exercise of the Warrants shall, at the time of delivery (assuming full payment
of the purchase price thereof), be duly and validly issued, fully paid,
nonassessable and free from all issuance taxes, liens and charges with respect
to the issue thereof including, without limitation, adverse claims whatsoever
(with the exception of claims arising through the acts of the Holders
themselves and except as arising from applicable Federal and state securities
laws), that the Company shall have paid all taxes, if any, in respect of the
original issuance thereof and that upon issuance such shares, to the extent
applicable, shall be listed on AMEX and each other each national securities
exchange or eligible for inclusion on the Nasdaq National Market or the Nasdaq
SmallCap Market, on which the other shares of outstanding Common Stock of the
Company, if any, are then listed or eligible for inclusion.
(b) The Company covenants that if any securities to be reserved for
the purpose of exercise of Warrants hereunder require registration with, or
approval of, any governmental authority under any federal securities law before
such securities may be validly issued or delivered upon such exercise, then the
Company will in good faith and as expeditiously as reasonably possible,
endeavor to secure such registration or approval. The Company will use
reasonable efforts to obtain appropriate approvals or registrations under state
"blue sky" securities laws; provided, that the Company shall not be required to
qualify as a foreign corporation or file a general or limited consent to
service of process in any such jurisdictions or make any changes in its capital
structure or any other aspects of its business or enter into any agreements with
blue sky commissions, including any agreement to escrow shares of its capital
stock. With respect to any such securities, however, Warrants may not be
exercised by, or shares of Common Stock issued to, any Registered Holder in any
state in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes
and other similar governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance or delivery of any shares upon exercise
of the Class A Warrants; provided, however, that if the shares of Common Stock
are to be delivered in a name other than the name of the Registered Holder of
the Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Company the amount of transfer taxes or charges incident thereto, if any.
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SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Company at its Corporate Office, and upon
satisfaction of the terms and provisions hereof, the Company shall execute,
issue and deliver in exchange therefor the Warrant Certificate or Certificates
which the Registered Holder making the exchange shall be entitled to receive.
(b) The Company shall keep at its office books in which, subject to
such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof in accordance with its regular practice.
Upon due presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute, issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company, duly executed by the Registered Holder or his attorney-in-fact
duly authorized in writing.
(d) A service charge may be imposed by the Company on holders for
any exchange or registration of transfer of Warrant Certificates of such
holders. In addition, the Company may require payment by such holder of a sum
sufficient to cover any tax or governmental or other charge that may be imposed
in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly cancelled
by the Company and thereafter retained by the Company in a manner consistent
with its customary practices until termination of this Agreement, or, with the
prior written consent of Paramount, disposed of or destroyed.
(f) Prior to due presentment for registration of transfer thereof,
the Company may deem and treat the Registered Holder of any Warrant Certificate
as the absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made by anyone
other than a duly authorized officer of the Company) for all purposes and shall
not be affected by any notice to the contrary. The Warrants, which are being
offered in Units with shares of Preferred Stock pursuant to the Placement
Agency Agreement, will be immediately detachable from the Preferred Stock and
transferable separately therefrom.
SECTION 7. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and loss, theft, destruction or
mutilation of any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to it, and (in the case of mutilation)
upon surrender and cancellation thereof, the Company shall execute and
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deliver to the Registered Holder in lieu thereof a new Warrant Certificate of
like tenor representing an equal aggregate number of Class A Warrants.
Applicants for a substitute Warrant Certificate shall comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
SECTION 8. Redemption.
(a) At any time after the first anniversary of the Qualified IPO, on
not less than sixty (60) days' prior written notice given to Registered Holders
of the Warrants being redeemed, the Warrants may be redeemed, at the option of
the Company, at a redemption price of $0.10 per Warrant, provided the Market
Price of the Common Stock exceeds 200% of the Purchase Price per Class A Warrant
(the "Target Price"), subject to adjustment as set forth in Section 8(f) below,
for 20 trading days in the 30 consecutive trading day period ending five days
prior to the date of notice of redemption (which shall be the date of mailing of
such notice). All Class A Warrants must be redeemed if any are redeemed. The
date fixed for redemption of the Warrants is referred to herein as the
"Redemption Date."
(b) If the conditions set forth in Section 8(a) are met, and the
Company desires to exercise its right to redeem the Warrants, it shall mail a
notice of redemption to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not later than the sixtieth day before
the date fixed for redemption, at their last address as shall appear on the
records maintained pursuant to Section 6(b). Any notice mailed in the manner
provided herein shall be conclusively presumed to have been duly given whether
or not the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the redemption price,
(ii) the Redemption Date, (iii) the place where the Warrant Certificates shall
be delivered and the redemption price paid, (iv) that Paramount will assist
each Registered Holder of a Warrant and be entitled to a commission and
reimbursement of costs in connection with the exercise thereof and (v) that the
right to exercise the Warrant shall terminate at 5:00 P.M. (New York time) on
the business day immediately preceding the Redemption Date. No failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a Registered
Holder (a) to whom notice was not mailed or (b) whose notice was defective. An
affidavit of the Secretary or an Assistant Secretary of Paramount or the
Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 P.M.
(New York time) on the business day immediately preceding the Redemption Date.
On and after the Redemption Date, Holders of the Warrants shall have no further
rights except to receive, upon surrender of the Warrant, the Redemption Price.
(e) From and after the Redemption Date, the Company shall, at the
place specified in the notice of redemption, upon presentation and surrender to
the Company by or on
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behalf of the Registered Holder thereof of one or more Warrant Certificates
evidencing Warrants to be redeemed, deliver or cause to be delivered to or upon
the written order of such Holder a sum in cash equal to the redemption price of
each such Warrant. From and after the Redemption Date and upon the deposit or
setting aside by the Company of a sum sufficient to redeem all the Warrants
called for redemption, such Warrants shall expire and become void and all
rights hereunder and under the Warrant Certificates, except the right to
receive payment of the redemption price, shall cease.
(f) If the shares of the Company's Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, the Target
Price shall be proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding immediately after such
event.
SECTION 9. Adjustment of Exercise Price and Number of Shares of Common
Stock or Warrants.
(a) Except as otherwise provided herein, in the event the Company
shall, at any time or from time to time after the date hereof, (1) sell or
issue any shares of Common Stock for a consideration per share less than either
(i) the Purchase Price in effect on the date of such sale or issuance or (ii)
the Market Price of the Common Stock as of the date of the sale or issuance,
(2) issue any shares of Common Stock as a stock dividend to the holders of
Common Stock, or (3) subdivide or combine the outstanding shares of Common Stock
into a greater or lesser number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Purchase Price in effect immediately
prior to such Change of Shares shall be changed to a price (rounded to the
nearest cent) determined by multiplying the Purchase Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the
sum of the number of shares of Common Stock outstanding immediately prior to
the sale or issuance of such additional shares or such subdivision or
combination and the number of shares of Common Stock which the aggregate
consideration received (determined as provided in subsection 9(g)(F) below) for
the issuance of such additional shares would purchase at the greater of (i) the
Purchase Price in effect on the date of such issuance or (ii) the Market Price
as of such date, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after the sale or issuance of such
additional shares or such subdivision or combination. Such adjustment shall be
made successively whenever such an issuance is made.
Upon each adjustment of the Purchase Price pursuant to this Section 9,
the total number of shares of Common Stock purchasable upon the exercise of
each Class A Warrant shall (subject to the provisions contained in Section 9(b)
hereof) be such number of shares (calculated to the nearest tenth) purchasable
at the Purchase Price in effect immediately prior to such adjustment multiplied
by a fraction, the numerator of which shall be the Purchase Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Purchase Price in effect immediately after such adjustment.
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(b) The Company may elect, upon any adjustment of the Purchase Price
hereunder, to adjust the number of Class A Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the
exercise of each Warrant as hereinabove provided, so that each Class A Warrant
outstanding after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to such adjustment of
the number of Warrants shall become that number of Warrants (calculated to the
nearest tenth) determined by multiplying the number one by a fraction, the
numerator of which shall be the Purchase Price in effect immediately prior to
such adjustment and the denominator of which shall be the Purchase Price in
effect immediately after such adjustment. Upon each adjustment of the number
of Warrants pursuant to this Section 9, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant Certificates evidencing,
subject to Section 10 hereof, the number of additional Warrants to which such
Holder shall be entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such Holder in substitution and
replacement for the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new Warrant
Certificates evidencing the number of Warrants to which such Holder shall be
entitled after such adjustment.
(c) In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock other than the number thereof), or
in case of any sale or conveyance to another corporation of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, upon the terms and
conditions specified in the Warrants and in lieu of the shares of Common Stock
immediately theretofore purchasable upon exercise of the Warrants, to purchase
the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization
or other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been purchased upon exercise
of such Warrant immediately prior to such reclassification, capital
reorganization or other change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 9. The Company shall not effect any such consolidation, merger or sale
unless prior to or simultaneously with the consummation thereof the successor
(if other than the Company) resulting from such consolidation or merger or the
corporation purchasing assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of each Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holders may be entitled to purchase and the other obligations under this
Agreement. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations
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and other changes of outstanding shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(d) If, at any time or from time to time, the Company shall issue or
distribute to the holders of shares of Common Stock evidence of its
indebtedness, any other securities of the Company or any cash, property or
other assets (excluding an issuance or distribution governed by one of the
preceding subsections of this Section 9 and also excluding cash dividends or
cash distributions paid out of net profits legally available therefor in the
full amount thereof (any such non-excluded event being herein called a "Special
Dividend")), then in each case the Purchase Price shall be adjusted by
multiplying the Purchase Price theretofore in effect by a fraction, the
numerator of which shall be the Market Price in effect on the record date of
such issuance or distribution less the fair market value (as determined in good
faith by the Company's Board of Directors) of the evidence of indebtedness,
cash, securities or property, or other assets issued or distributed in such
Special Dividend applicable to one share of Common Stock and the denominator of
which shall be such Market Price. Such adjustment shall be made whenever any
such distribution is made and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(e) Irrespective of any adjustments or changes in the Purchase Price
or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(b) hereof, continue to express the same Purchase Price
per share, number of shares purchasable thereunder and Redemption Price
therefor as the Purchase Price per share, the number of shares purchasable and
Redemption Price therefor as were expressed in the Warrant Certificates when
the same were originally issued.
(f) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and, if the
Company shall have elected to adjust the number of Warrants pursuant to Section
9(b), the number of Warrants to which the registered holder of each Warrant
shall then be entitled, and the adjustment in Redemption Price resulting
therefrom, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will cause a brief summary thereof to be sent by
ordinary first class mail to Paramount and to each registered holder of
Warrants at his last address as it shall appear on the registry books of the
Company. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of such adjustment. The affidavit of
the Secretary or an Assistant Secretary of the Company that such notice has
been mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated therein.
(g) For purposes of Sections 9(a) and 9(b) hereof, the following
provisions (A) to (F) shall also be applicable:
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(A) The number of shares of Common Stock deemed outstanding at
any given time shall include all shares of capital stock convertible
into or exchangeable for Common Stock and all shares of Common Stock
issuable upon the exercise of any convertible debt, warrants outstanding
on the date hereof (including the Warrants) and options outstanding on
the date hereof.
(B) No adjustment of the Purchase Price shall be made unless
such adjustment would require an increase or decrease of at least $.01
in such price; provided that any adjustments which by reason of this
clause (B) are not required to be made shall be carried forward and
shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment(s) so carried forward,
shall require an increase or decrease of at least $.01 in the Purchase
Price then in effect hereunder.
(C) In case of (1) the sale by the Company (including as a
component of a unit) of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or any
securities convertible into or exchangeable for Common Stock (such
securities convertible, exercisable or exchangeable into Common Stock
being herein called "Convertible Securities"), or (2) the issuance by
the Company, without the receipt by the Company of any consideration
therefor, of any rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or Convertible Securities,
whether or not such rights, warrants or options, or the right to convert
or exchange such Convertible Securities, are immediately exercisable,
and the consideration per share for which Common Stock is issuable upon
the exercise of such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities (determined by dividing (x)
the minimum aggregate consideration, as set forth in the instrument
relating thereto without regard to any antidilution or similar
provisions contained therein for a subsequent adjustment of such amount,
payable to the Company upon the exercise of such rights, warrants or
options, plus the consideration received by the Company for the issuance
or sale of such rights, warrants or options, plus, in the case of such
Convertible Securities, the minimum aggregate amount, as set forth in
the instrument relating thereto without regard to any antidilution or
similar provisions contained therein for a subsequent adjustment of such
amount, of additional consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by (y) the
total maximum number, as set forth in the instrument relating thereto
without regard to any antidilution or similar provisions contained
therein for a subsequent adjustment of such amount, of shares of Common
Stock issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities issuable
upon the exercise of such rights, warrants or options) is less than the
Purchase Price or the Market Price of the Common Stock as of the date of
the issuance or sale of such rights, warrants or options, then such
total maximum number of shares of Common Stock issuable
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upon the exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities (as of the date of the issuance or sale
of such rights, warrants or options) shall be deemed to be "Common Stock" for
purposes of Sections 9(a) and 9(b) hereof and shall be deemed to have been sold
for an amount equal to such consideration per share and shall cause an
adjustment to be made in accordance with Sections 9(a) and 9(b).
(D) In case of the sale by the Company of any Convertible Securities,
whether or not the right of conversion or exchange thereunder is immediately
exercisable, and the price per share for which Common Stock is issuable upon the
conversion or exchange of such Convertible Securities (determined by dividing
(x) the total amount of consideration received by the Company for the sale of
such Convertible Securities, plus the minimum aggregate amount, as set forth in
the instrument relating thereto without regard to any antidilution or similar
provisions contained therein for a subsequent adjustment of such amount, of
additional consideration, if any, other than such Convertible Securities,
payable upon the conversion or exchange thereof, by (y) the total maximum
number, as set forth in the instrument relating thereto without regard to any
antidilution or similar provisions contained therein for a subsequent adjustment
of such amount, of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than the Purchase Price or the
Market Price of the Common Stock as of the date of the sale of such Convertible
Securities, then such total maximum number of shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities (as of the date
of the sale of such Convertible Securities) shall be deemed to be "Common
Stock" for purposes of Sections 9(a) and 9(b) hereof and shall be deemed to
have been sold for an amount equal to such consideration per share and shall
cause an adjustment to be made in accordance with Sections 9(a) and 9(b).
(E) In case the Company shall modify the rights of conversion, exchange
or exercise of any of the securities referred to in (C) above or any other
securities of the Company convertible, exchangeable or exercisable for shares of
Common Stock, for any reason other than an event that would require adjustment
to prevent dilution, so that the consideration per share received by the Company
after such modification is less than the Purchase Price or the Market Price as
of the date prior to such modification, then such securities, to the extent not
theretofore exercised, converted or exchanged, shall be deemed to have expired
or terminated immediately prior to the date of such modification and the Company
shall be deemed for purposes of calculating any adjustments pursuant to this
Section 9 to have issued such new securities upon such new terms on the date of
modification. Such adjustment shall become effective as of the date upon which
such modification shall take effect. On the expiration or cancellation of any
such right, warrant or option or the termination or cancellation of any such
right to convert or exchange any such Convertible Securities, (a) the Purchase
Price then
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in effect hereunder shall forthwith be readjusted to such Purchase Price as
would have obtained had the adjustments made upon the issuance or sale of
such rights, warrants, options or Convertible Securities been made upon the
basis of the issuance of only the number of shares of Common Stock
theretofore actually delivered (and the total consideration received
therefor) upon the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities and (b) the purchase
price in effect for all transactions which were affected by any adjustment
of the Purchase Price pursuant to the first sentence of this Section
9(g)(E) shall be readjusted to such purchase price as would have obtained
had such adjustment of the Purchase Price been made as described in clause
(a) of this Section 9(g)(E).
(F) In case of the sale of any shares of Common Stock, any
Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefor shall be
deemed to be the gross sales price therefor without deducting therefrom any
expense paid or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in connection
therewith. In the event that any securities shall be issued in connection
with any other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated among the
securities, then each of such securities shall be deemed to have been
issued for such consideration as the Board of Directors of the Company
determines in good faith; provided, however that if holders of in excess of
10% of the then outstanding Warrants disagrees with such determination, the
Company shall retain an independent investment banking firm for the purpose
of obtaining an appraisal.
(h) Notwithstanding any other provision hereof, no adjustment to the
Purchase Price of the Warrants or to the number of shares of Common Stock
purchasable upon the exercise of each Warrant will be made
(i) upon the exercise of any of the options presently outstanding
or to be granted under the Company's currently existing stock option plan
provided that the aggregate number of shares of Common Stock authorized
under such plan shall in no event exceed 3,600,000; or
(ii) upon sale of any shares of Common Stock, warrants to purchase
Common Stock or Convertible Securities in a firm commitment underwritten
public offering, including, without limitation, shares sold upon the
exercise of any overallotment option granted to the underwriters in
connection with such offering; or
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(iii) upon the issuance or sale of Common Stock or Convertible
Securities pursuant to the exercise of any rights, options or warrants
to receive, subscribe for or purchase, or any options for the purchase
of, Common Stock or Convertible Securities, whether or not such rights,
warrants or options were outstanding on the date of the original sale of
the Warrants or were thereafter issued or sold, provided that an
adjustment was either made or not required to be made in accordance with
Sections 9(a) and 9(b) in connection with the issuance or sale of such
securities or any modification of the terms thereof; or
(v) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, provided that any
adjustments required to be made upon the issuance or sale of such
Convertible Securities or any modification of the terms thereof were so
made, and whether or not such Convertible Securities were outstanding on
the date of the original sale of the Warrants or were thereafter issued
or sold;
provided that, in the event the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (i) through (iii)
above, for any reason other than an event that would require adjustment to
prevent dilution pursuant to customary antidilution provisions, such that the
consideration per share received by the Company after such modification is less
than the Market Price as of the date prior to such modification, the Purchase
Price shall be adjusted as of the date of such modification to the Purchase
Price that would obtain under the remaining provisions of this Section 9 as a
result of such modification, provided further that, in the event the
consideration per share received by the Company after such modification is less
than the Purchase Price (whether or not it is also less than the Market Price)
as of the date prior to such modification, the Purchase Price shall be adjusted
as of the date of such modification to the lower of (I) the Purchase Price that
would obtain under the remaining provisions of this Section 9 as a result of
such modification of (II) such modified consideration per share.
(i) As used in this Section 9, the term "Common Stock" shall mean
and include the Company's Common Stock authorized on the date of the original
issue of the Units and shall also include any capital stock of any class of the
Company thereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the shares
issuable upon exercise of the Warrants shall include only shares of such class
designated in the Company's Certificate of Incorporation as Common Stock on the
date of the original issue of the Units or (i), in the case of any
reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 9(c) hereof, the stock, securities or property
provided for in such section or (ii), in the case of any reclassification or
change in the outstanding shares of Common Stock issuable upon exercise of the
Warrants as a result of a subdivision or combination or consisting of a change
in par value, or from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or changed.
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(j) Any determination as to whether an adjustment in the Purchase
Price in effect hereunder is required pursuant to Section 9, or as to the
amount of any such adjustment, if required, shall be binding upon the holders
of the Warrants and the Company if made in good faith by the Board of Directors
of the Company.
(k) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company may at its option elect to concurrently therewith grant to
each Registered Holder as of the record date for such transaction of the
Warrants then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date used to
determine the stockholders entitled to the rights, warrants or options being
granted by the Company, the Registered Holder were the holder of record of the
number of whole shares of Common Stock then issuable upon exercise of his
Warrants. If the Company shall so elect under this Section 9(k), then such
grant by the Company to the holders of the Warrants shall be in lieu of any
adjustment which otherwise might be called for pursuant to this Section 9.
SECTION 10. FRACTIONAL WARRANTS AND FRACTIONAL SHARES.
(a) If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 9 hereof, the Company
nevertheless shall not be required to issue fractions of shares, upon exercise
of the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the current market value of such fractional share,
determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or
listed for trading on the Nasdaq National Market, the current market
value shall be the last reported sale price of the Common Stock on such
exchange or market on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day, the
average of the closing bid and asked prices for such day on such
exchange or market; or
(2) If the Common Stock is not listed or admitted to
unlisted trading privileges, the current market value shall be the mean
of the last reported bid and asked prices reported by the Nasdaq Small
Cap Market or, if not traded thereon, by the National Quotation Bureau,
Inc. on the last business day prior to the date of the exercise of this
Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market
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value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
SECTION 11. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained
herein be construed to confer upon the holder of Warrants, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
SECTION 12. RIGHTS OF ACTION. All rights of action with respect to
this Agreement are vested in the respective Registered Holders of the Warrants,
and any Registered Holder of a Warrant, without consent of the Company or of the
holder of any other Warrant, may, in his own behalf and for his own benefit,
enforce against the Company his right to exercise his Warrants for the purchase
of shares of Common Stock in the manner provided in the Warrant Certificate and
this Agreement.
SECTION 13. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant,
by his acceptance thereof, consents and agrees with the Company and every other
holder of a Warrant that:
(a) The Warrants are transferrable only on the registry books of the
Company by the Registered Holder thereof in person or by his attorney duly
authorized in writing and only if the Warrant Certificates representing such
Warrants are surrendered at the office of the Company, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the Company in
its sole discretion, together with payment of any applicable transfer taxes; and
(b) The Company may deem and treat the person in whose name the Warrant
Certificate is registered as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes, and the Company
shall not be affected by any notice or knowledge to the contrary, except as
otherwise expressly provided in Section 7 hereof.
SECTION 14. CANCELLATION OF WARRANT CERTIFICATES. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same, by redemption or otherwise, shall thereupon
be canceled by it and retired. The Company shall also cancel the Warrant
Certificate or Warrant Certificates following exercise of any or all of the
Warrants represented thereby or delivered to it for transfer, split up,
combination or exchange.
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SECTION 15. CONCERNING THE WARRANT AGENT. The Company may elect to
appoint a successor to serve as Warrant Agent hereunder. Such appointment shall
be effective upon the receipt by the Company of acceptance in writing of such
appointment by the new warrant agent, whereupon the Warrant Agent will act as
agent and in a ministerial capacity for the Company, and its duties shall be
determined solely by the provisions hereof. Such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the Company.
The Warrant Agent shall not, by issuing and delivering Warrant Certificates or
by any other act hereunder be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property delivered upon
exercise of any Warrant or whether any stock issued upon exercise of any Warrant
is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or responsibility to
any holder of Warrant Certificates to make or cause to be made any adjustment of
the Purchase Price or the Redemption Price provided in this Agreement, or to
determine whether any fact exists which may require any such adjustments, or
with respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. It shall not (i) be liable
for any recital or statement of facts contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connection with this Agreement except for
its own negligence or wilful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it (who
may be counsel for the Company) and shall incur no liability or responsibility
for any action taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand of the
Company shall be sufficiently evidenced by an instrument signed by the Chairman
of the Board, President, or any Vice President and its Secretary, or Assistant
Secretary, (unless other evidence in respect thereof is herein specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for its
services hereunder and to reimburse it for its reasonable expenses hereunder as
governed by a separate agreement to be entered into between the Warrant Agent
and the Company; it further agrees to
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indemnify the Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and reasonable counsel
fees, for anything done or omitted by the Warrant Agent in the execution of its
duties and powers hereunder except losses, expenses and liabilities arising as
a result of the Warrant Agent's negligence or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of
the Warrant Agent's own negligence or wilful misconduct), after giving 30 days'
prior written notice to the Company. At least 15 days prior to the date such
resignation is to become effective, the Warrant shall cause a copy of such
notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability
of the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered Holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. At any time after a Qualified IPO, any new
warrant agent, whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant Agent. Not later
than the effective date of any such appointment the Company shall file notice
thereof with the resigning Warrant Agent and shall forthwith cause a copy of
such notice to be mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent may be
converted or merged or any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its or their
officers or directors, may buy and hold or sell Warrants or other securities of
the Company and otherwise deal with the Company in the same manner and to the
same extent and with like effects as though it were not Warrant Agent. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
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SECTION 16. Modification of Agreement. Subject to the provisions of
Section 4(b), the parties hereto and the Company may by supplemental agreement
make any changes or corrections in this Agreement (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; (ii) to reflect an
increase in the number of Class A Warrants which are to be governed by this
Agreement resulting from a subsequent offering of Company securities which
includes Class A Warrants having the same terms and conditions as the Class A
Warrants, originally covered by or subsequently added to this Agreement under
this Section 16; or (iii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders of Warrant Certificates representing in
excess of 50% of the Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon the exercise
of any Warrant, or the Purchase Price therefor, or the acceleration of the
Warrant Expiration Date, shall be made without the consent in writing of the
Registered Holder of the Warrant Certificate representing such Warrant, other
than such changes as are specifically prescribed by this Agreement (including
those contemplated in Section 1(i)) as originally executed or are made in
compliance with applicable law.
SECTION 17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at
the address of such holder as shown on the registry books maintained by the
Company; if to the Company, at 00000 Xxxxx Xxxxxxxxx, Xxxxxxx, XX 00000, Attn:
Xxxxxxx Xxxxxxxxx, President; if to Paramount, at Paramount Capital Inc., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx.
SECTION 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, Paramount, and their respective successors
and assigns, and the holders from time to time of Warrant Certificates. Nothing
in this Agreement is intended or shall be construed to confer upon any other
person any right, remedy or claim, in equity or at law, or to impose upon any
other person any duty, liability or obligation.
SECTION 20. Termination. This Agreement shall terminate at the close of
business on the Warrant Expiration Date of all the Warrants or such earlier
date upon which all Warrants have been exercised.
SECTION 21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
RIBOGENE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------
Authorized Officer
PARAMOUNT CAPITAL, INC.
By: /s/ [Signature Illegible]
--------------------------
Authorized Officer
22
[FORM OF FACE OF CLASS A WARRANT CERTIFICATE]
No. AW __________ Class A Warrants
VOID AFTER __________________, 2003
CLASS A WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
RIBOGENE, INC.
This certifies that FOR VALUE RECEIVED ___________________
or registered assigns (the "Registered Holder") is the owner of the number of
Class A Warrants ("Class A Warrants") specified above. Each Class A Warrant
represented hereby initially entitles the Registered Holder to purchase, subject
to the terms and conditions set forth in this Warrant Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and nonassessable
share of Common Stock, no par value ("Common Stock"), of RiboGene, Inc., a
California corporation (the "Company"), at any time between _______________,
1997, and the Expiration Date (as hereinafter defined), upon the presentation
and surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of the Company, or its
successor as warrant agent, accompanied by payment of the lesser of (a) $2.25
and (b) the per share price of the Common Stock sold in the Qualified IPO (as
defined in the Warrant Agreement) (the "Purchase Price") in lawful money of the
United States of America in cash or by official bank or certified check made
payable to the Company.
This Warrant Certificate and each Class A Warrant represented hereby
are issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement"), dated
[___], 1997, between the Company and Paramount Capital, Inc.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject
to purchase upon the exercise of each Class A Warrant represented hereby are
subject to modification or adjustment.
Each Class A Warrant represented hereby is exercisable at the option of
the Registered Holder, but no fractional shares of Common Stock will be issued.
In the case of the exercise of less than all the Class A Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor for the balance of such Class A Warrants.
23
The term "Expiration Date" shall mean 5:00 P.M. (New York time) on
______________, 2003, or such earlier date as the Class A Warrants shall be
redeemed. If such date shall in the State of New York be a holiday or a day on
which banks are authorized to close, then the Expiration Date shall mean 5:00
P.M. (New York time) the next following day which in the State of New York is
not a holiday or a day on which banks are authorized to close. Upon notice to
all Registered Holders of the Class A Warrants, the Company shall have the
right to extend the Expiration Date.
The Holder of this Warrant shall have the registration rights as
provided in Investor Rights Agreement (the "Rights Agreement") dated as of the
date hereof between the Company and such Holder. The Class A Warrants
represented hereby shall not be exercisable by a Registered Holder in any state
where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Company, for a new Warrant
Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Class A Warrants, each of such new Warrant Certificates to
represent such number of Class A Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment with any
applicable transfer fee per certificate in addition to any tax or other
governmental charge imposed in connection therewith, for registration of
transfer of this Class A Warrant Certificate at such office, a new Warrant
Certificate or Warrant Certificates representing an equal aggregate number of
Class A Warrants will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Class A Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
The Class A Warrants represented hereby may be redeemed at the option
of the Company, at a redemption price of $.10 per Class A Warrant, provided
the Market Price (as defined in the Warrant Agreement) for the Common Stock
shall exceed the Target Price (as defined in the Warrant Agreement). Notice of
redemption shall be given not later than the sixtieth day before the date fixed
for redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect
to the Class A Warrants represented hereby except to receive the $.10 per Class
A Warrant upon surrender of this Warrant Certificate.
Prior to due presentment for registration of transfer hereof, the
Company may deem and treat the Registered Holder as the absolute owner hereof
and of each Class A Warrant represented hereby (notwithstanding any notations
of ownership or writing hereon made by anyone other than a duly authorized
officer of the Company) for all purposes and shall not be affected by any
notice to the contrary.
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24
The Company has agreed to pay a fee of 5% of the Purchase Price to
Paramount Capital, Inc. upon certain conditions as specified in the Warrant
Agreement upon the exercise of the Class A Warrants represented hereby. Any
costs incurred by the Placement Agent in connection with the solicitation of
Warrant exercises or the redemption of Warrants shall be reimbursed by the
Company.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
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25
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile, by two of its officers thereunto
duly authorized.
RIBOGENE, INC.
Dated: By:
-------------------------------------
By:
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26
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $ PER CERTIFICATE ISSUED
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise Class A Warrants represented by this Warrant Certificate,
and to purchase the securities issuable upon the exercise of such Class A
Warrants, and requests that certificates for such securities shall be issued in
the name of .
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
[please print or type name and address]
and be delivered to
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
[please print or type name and address]
and if such number of Class A Warrants shall not be all the Class A Warrants
evidenced by this Warrant Certificate, that a new Class A Warrant Certificate
for the balance of such Class A Warrants be registered in the name of, and
delivered to, the Registered Holder at the address stated below.
The undersigned represents that the exercise of the within Class A
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. If not solicited by an NASD member, please write "unsolicited" in
the space below. Unless otherwise indicated by
A-5
27
listing the name of another NASD member firm, it will be assumed that the
exercise was solicited by Paramount Capital, Inc.
----------------------------------------
(Name of NASD Member)
Dated: X
---------------------------- -------------------------------------
-------------------------------------
-------------------------------------
Address
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Taxpayer Identification Number
----------------------------------------
Signature Guaranteed
----------------------------------------
A-6
