EXHIBIT 4.1
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase __________ Shares of Common Stock of
JAVELIN PHARMACEUTICALS, INC.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for
value received, _____________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial Exercise Date") and on or
prior to the close of business on the fifth anniversary of the Initial Exercise
Date (the "Termination Date") but not thereafter, to subscribe for and purchase
from Javelin Pharmaceuticals, Inc., a Delaware corporation (the "Company"), up
to ______ shares (the "Warrant Shares") of Common Stock, par value $0.001 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).
This Warrant is one of a series (the "Series") of Common Stock Purchase
Warrants initially issued for an aggregate of 711,111 shares of Common Stock and
as part of a private placement of 14,222,215 shares of Common Stock.
Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the "Purchase Agreement"), dated November 3, 2005, among the Company
and the purchasers signatory thereto.
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Section 2. Exercise.
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a) Exercise of Warrant. The purchase right represented by this
Warrant may be exercised by the holder hereof, in whole or in part and from time
to time through the Termination Date, at the election of the holder hereof, by
(x) the surrender of this Warrant (with the notice of exercise substantially in
the form attached hereto as Exhibit A-1 duly completed and executed) at the
principal office of the Company and by the payment to the Company, by certified
or bank check, or by wire transfer to an account designated by the Company
("Wire Transfer") of an amount equal to the then applicable Exercise Price
multiplied by the number of Warrant Shares for which this Warrant is then being
exercised or (y) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-2 duly completed and executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by certified or
bank check or by Wire Transfer from the proceeds of the sale of shares to be
sold by the holder in such public offering of an amount equal to the then
applicable Exercise Price per share multiplied by the number of Warrant Shares
then being purchased. The person or persons in whose name(s) any certificate(s)
representing the Warrant Shares shall be issuable upon exercise of this Warrant
shall be deemed to have become the holder(s) of record of, and shall be treated
for all purposes as the record holder(s) of, the Warrant Shares represented
thereby (and such Warrant Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. As soon as practicable after the exercise of this Warrant
and in any event within three trading days thereafter, upon the terms and
subject to the conditions of this Warrant, the Company at its expense will cause
to be issued in the name of and delivered to the holder, or as the holder may
direct to a broker or other persons, a certificate or certificates for the
number of Warrant Shares to which the holder shall be entitled on such exercise,
in such denominations as may be requested by the holder.
b) Exercise Price. The exercise price of the Common Stock under this
Warrant shall be $2.25, subject to adjustment hereunder (the "Exercise Price").
c) Net Exercises. In lieu of exercising this Warrant for cash, the
holder may elect to receive shares equal to the value of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at the principal
office of the Company together with notice of such election substantially in the
form attached hereto as Exhibit A-1 duly completed and executed ("Net
Exercise"). The Company shall issue to a holder who Net Exercises a number of
Warrant Shares computed using the following formula:
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Y (A - B)
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X = A
Where
X = The number of Warrant Shares to be issued to the holder.
Y = The number of Warrant Shares purchasable under this
Warrant or, if only a portion of the Warrant is being
exercised, the number of Warrant Shares for which the
Warrant is being exercised.
A = The fair market value of one (1) Warrant Share (at the
date of such calculation).
B = The Exercise Price (as adjusted to the date of such
calculation (the "Determination Date")).
For purposes of this Section 2, the fair market value of a Warrant
Share shall mean:
(i) If traded on a securities exchange, the Nasdaq National Market or
Nasdaq Capital Market, the fair market value of the Common Stock
shall be deemed to be the average of the closing prices of the
Common Stock on such exchange or market over the 10 trading days
immediately prior to the Determination Date;
(ii) If traded on the Over-the-Counter Bulletin Board or other
non-automated quotation system, the fair market value of the
Common Stock shall be deemed to be the average of the closing bid
prices of the Common Stock reported on such system over the 10
trading days immediately prior to the Determination Date; and
(iii) If there are no published quotations for the Common Stock, the
fair market value shall be the price per Warrant Share that the
Company could obtain from a willing buyer for Shares sold by the
Company from authorized but unissued Shares, as such prices
shall be determined in good faith by the Company's Board
of Directors.
In the event that this Warrant is exercised pursuant to this Section 2 in
connection with the consummation of the Company's sale of its Common Stock or
other securities pursuant to a registration statement under the Securities Act
of 1933, as amended (other than a registration statement relating either to sale
of securities to employees of the Company pursuant to its stock option, stock
purchase or similar plan or a Rule 145 transaction) ("Public Offering"), the
fair market value per Warrant Share shall be the per share offering price to the
public of the Public Offering.
d) Exercise Limitations. The Company shall not effect any exercise
of this Warrant, and a Holder shall not have the right to exercise any portion
of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after
giving effect to such issuance after exercise, such Holder (together with such
Holder's affiliates, and any other person or entity acting as a group together
with such Holder or any of such Holder's affiliates), as set forth on the
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applicable Notice of Exercise, would beneficially own in excess of 4.99% of the
number of shares of the Common Stock outstanding immediately after giving effect
to such issuance. For purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by such Holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such sentence is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (A) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by such Holder or any of its affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock or Warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by such Holder or any of its affiliates.
Except as set forth in the preceding sentence, for purposes of this Section
2(d)(i), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by a Holder that the Company is not representing to such
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and such Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by such Holder) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of a Holder, and the
submission of a Notice of Exercise shall be deemed to be each Holder's
determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(d), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in (x) the Company's most recent Form 10-Q or Form 10-K, as the case
may be, (y) a more recent public announcement by the Company or (z) any other
notice by the Company or the Company's Transfer Agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of a
Holder, the Company shall within three trading days confirm orally and in
writing to such Holder the number of shares of Common Stock then outstanding. In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by such Holder or its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. The
provisions of this Section 2(d) may be either (i) increased to apply at any
percentage between 5.00% and 9.99% instead of 4.99% or (ii) waived in whole or
in part by such Holder, at the election of such Holder, upon not less than 61
days' prior notice to the Company, and the provisions of this Section 2(d) shall
continue to apply until such 61st day (or such later date, as determined by such
Holder, as may be specified in such notice of waiver).
e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company covenants
that all Warrant Shares which may be issued upon the exercise of
the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be
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duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
ii. Delivery of Certificates Upon Exercise. Certificates for
shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of
the Holder's prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission ("DWAC") system
if the Company is a participant in such system, and otherwise by
physical delivery to the address specified by the Holder in the
Notice of Exercise within 3 trading days from the delivery to the
Company of the Notice of Exercise Form, surrender of this Warrant
(if required) and payment of the aggregate Exercise Price as set
forth above ("Warrant Share Delivery Date"). This Warrant shall
be deemed to have been exercised on the date the Exercise Price
is received by the Company. The Warrant Shares shall be deemed to
have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by the Holder,
if any, pursuant to Section 2(e)(vii) prior to the issuance of
such shares, have been paid.
iii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the
request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this
Warrant.
iv. Rescission Rights. In addition to any other rights and
remedies the Holder may have (including pursuant to Section
4.1(e) of the Purchase Agreement), if the Company fails to cause
its transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this
Section 2(e)(iv) by the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise.
v. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such
exercise, the Company shall pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction
multiplied by the fair market value of a Warrant Share.
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vi. Charges, Taxes and Expenses. Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in respect
of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that
in the event certificates for Warrant Shares are to be issued in
a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental
thereto.
vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding: (A) pays a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Company pursuant to this Warrant), (B) subdivides
outstanding shares of Common Stock into a larger number of shares, (C)
combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by
a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event and the number of
shares issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b) Fundamental Transaction. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the
Company with or into another Person, (B) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
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"Fundamental Transaction"), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each Warrant Share
that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, at the option of the Holder,
(a) upon exercise of this Warrant, the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the "Alternate
Consideration") receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a
Holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event or (b) if the Company is
acquired in an all cash transaction, cash equal to the value of this
Warrant as of the consummation of such Fundamental Transaction and as
determined in accordance with the Black-Scholes Pricing Model (as defined
below). If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Company or surviving entity in
such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder's right
to exercise such warrant into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply
with the provisions of this Section 3(b) and insuring that this Warrant (or
any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. For purposes
hereof, "Black Scholes Pricing Model" means the value determined using the
Black Scholes pricing model and employing an interest rate equal to 30 day
LIBOR on the day prior to valuation and a volatility equal to the
volatility of the Common Stock for the 30 trading days prior to the date of
valuation as reasonably determined by the Board of Directors; provided that
if the holder disagrees with such volatility, then the Company and the
holder shall request an investment bank acceptable to the Company and the
Substantial Investors to act as an appraiser with respect to determining
such volatility, which decision shall be final and conclusive.
c) Calculations. All calculations under this Section 3 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed
to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued
and outstanding.
d) Voluntary Adjustment By Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to
any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
E) [RESERVED]
f) Other Distributions. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend or make a
distribution to all of its stockholders with respect to its Common Stock,
in (i) cash (excluding cash dividends payable solely out of earnings or
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earned surplus of the Company) or (ii) additional stock, rights, warrants
or other securities or property (other than cash) by way of dividend, other
than additional shares of Common Stock, then and in each such case the
holder, on the exercise hereof as provided in Section 2, shall be entitled
to receive the amount of stock, rights, warrants and property (including
cash in the case referred to in subdivision (i) above) which the holder
would hold on the date of such exercise if on the date of such action (or
the record date therefor) the holder had been the holder of record of the
number of shares of Common Stock for which this Warrant is exercisable as
provided in Section 2 and had thereafter, during the period from the date
thereof to and including the date of such exercise, retained such shares
and all such other or additional stock, rights, warrants and property
(including cash in the case referred to in subdivision (i) above)
receivable by the holder as aforesaid during such period.
g) Issuances Below Exercise Price. Subject to the terms set forth
herein, if and whenever the Company shall issue or sell, or is, in
accordance with any of subsections (g)(l) through (g)(5) hereof, deemed to
have issued or sold, any shares of Common Stock for no consideration or for
a consideration per share less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then and in each such
case (a "Trigger Issuance") the then-existing Exercise Price, shall be
reduced, as of the close of business on the effective date of the Trigger
Issuance, to a price determined as follows:
Adjusted Exercise Price = (A x B) + D
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A+C
where
"A" equals the number of shares of Common Stock outstanding, treating for
this purpose as outstanding all shares of Common Stock issuable upon exercise of
Options outstanding immediately prior to such issue or upon conversion of
Convertible Securities outstanding immediately prior to such issue, immediately
preceding such Trigger Issuance;
"B" equals the Exercise Price in effect immediately preceding such Trigger
Issuance;
"C" equals the number of Additional Shares of Common Stock issued or deemed
issued hereunder as a result of the Trigger Issuance; and
"D" equals the aggregate consideration, if any, received or deemed to be
received by the Company upon such Trigger Issuance;
provided, however, that in no event shall the Exercise Price after giving
effect to such Trigger Issuance be greater than the Exercise Price in effect
prior to such Trigger Issuance.
For purposes of this subsection (g), "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the Company or deemed to be
issued pursuant to this subsection (g), other than Excluded Issuances (as
defined in subsection (h) hereof).
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For purposes of this subsection (g), the following subsections (g)(l) to
(g)(5) shall also be applicable:
(g)(1) Issuance of Rights or Options. In case at any time the Company
shall in any manner grant (directly and not by assumption in a merger or
otherwise) any warrants or other rights to subscribe for or to purchase, or any
options for the purchase of, Common Stock or any stock or security convertible
into or exchangeable for Common Stock (such warrants, rights or options being
called "Options" and such convertible or exchangeable stock or securities being
called "Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus (y) the
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus (z), in the case of such Options which relate
to Convertible Securities, the aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Exercise Price in effect immediately prior
to the time of the granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such price per
share as of the date of granting of such Options or the issuance of such
Convertible Securities and thereafter shall be deemed to be outstanding for
purposes of adjusting the Exercise Price. Except as otherwise provided in
subsection (g)(3), no adjustment of the Exercise Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(g)(2) Issuance of Convertible Securities. In case the Company shall
in any manner issue (directly and not by assumption in a merger or otherwise) or
sell any Convertible Securities, whether or not the rights to exchange or
convert any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the sum (which sum shall constitute the
applicable consideration) of (x) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus (y) the aggregate amount of additional consideration, if any, payable to
the Company upon the conversion or exchange thereof, by (ii) the total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the
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Exercise Price, provided that (a) except as otherwise provided in subsection
(g)(3), no adjustment of the Exercise Price shall be made upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities and (b) no further adjustment of the Exercise Price shall be made by
reason of the issue or sale of Convertible Securities upon exercise of any
Options to purchase any such Convertible Securities for which adjustments of the
Exercise Price have been made pursuant to the other provisions of subsection
(g).
(g)(3) Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if the purchase price provided for in
any Option referred to in subsection (g)(l) hereof, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subsections (g)(l) or (g)(2), or the rate
at which Convertible Securities referred to in subsections (g)(l) or (g)(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the time
of such event shall forthwith be readjusted to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold. On the termination of any Option for which any
adjustment was made pursuant to this subsection (g) or any right to convert or
exchange Convertible Securities for which any adjustment was made pursuant to
this subsection (g) (including without limitation upon the redemption or
purchase for consideration of such Convertible Securities by the Company), the
Exercise Price then in effect hereunder shall forthwith be changed to the
Exercise Price which would have been in effect at the time of such termination
had such Option or Convertible Securities, to the extent outstanding immediately
prior to such termination, never been issued.
(g)(4) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the net amount received by
the Company therefor, after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company shall be
deemed to be the fair value of such consideration as determined in good faith by
the Board of Directors of the Company, after deduction of any expenses incurred
or any underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any Options shall be issued in connection with the
issue and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
for such consideration as determined in good faith by the Board of Directors of
the Company. If Common Stock, Options or Convertible Securities shall be issued
or sold by the Company and, in connection therewith, other Options or
Convertible Securities (the "Additional Rights") are issued, then the
consideration received or deemed to be received by the Company shall be reduced
by the fair market value of the Additional Rights (as determined using the
Black-Scholes option pricing model or another method selected in good faith by
the Company's Board of Directors). The Board of Directors of the Company shall
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respond promptly, in writing, to an inquiry by the Warrantholder as to the fair
market value of the Additional Rights.
(g)(5) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company or any of its wholly-owned subsidiaries, and the
disposition of any such shares (other than the cancellation or retirement
thereof) shall be considered an issue or sale of Common Stock for the purpose of
this subsection (g).
h) Excluded Issuances. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment
of the Exercise Price in the case of the issuance of (A) capital stock,
Options or Convertible Securities issued to directors, officers, employees
or consultants of the Company in connection with their service as directors
of the Company, their employment by the Company or their retention as
consultants by the Company pursuant to an equity compensation program
approved by the Board of Directors of the Company or the compensation
committee of the Board of Directors of the Company, (B) shares of Common
Stock issued upon the conversion or exercise of Options or Convertible
Securities issued prior to the date hereof, provided such securities are
not amended after the date hereof to increase the number of shares of
Common Stock issuable thereunder or to lower the exercise or conversion
price thereof, (C) securities issued pursuant to the Purchase Agreement and
securities issued upon the exercise or conversion of those securities, (D)
shares of Common Stock issued or issuable by reason of a dividend, stock
split or other distribution on shares of Common Stock (but only to the
extent that such a dividend, split or distribution results in an adjustment
in the Exercise Price pursuant to the other provisions of this Warrant),
(E) shares of Common Stock issued in an offering for cash for the account
of the Company that is underwritten on a firm commitment basis and is
registered with the SEC under the Act (other than an "at-the-market
offering" as defined in Rule 415(a)(4) under the 1933 Act and "equity
lines"), (F) shares of Common Stock issued or issuable to the lessor or
vendor in any office lease or equipment lease or similar equipment
financing transaction in which the Company or any Subsidiary obtains the
use of such office space or equipment for its business, approved in good
faith by the Board of Directors, (G) shares of Common Stock issued or
issuable to a bank or similar financial institution in connection with a
credit line or facility, and (H) shares of Common Stock issued to parties
that are suppliers, customers or strategic partners investing in connection
with a commercial relationship with the Company, approved in good faith by
the Board of Directors, the primary purpose of which issuance is not to
raise capital (collectively, "Excluded Issuances").
i) Adjustment of Number of Shares. Upon each adjustment in the
Exercise Price, the number of Warrant Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Warrant Shares purchasable immediately prior to
such adjustment in the Exercise Price by a fraction, the numerator of which
shall be the Exercise Price immediately prior to such adjustment and the
denominator of which shall be the Exercise Price immediately thereafter.
11
j) Notice to Holders.
i. Adjustment to Exercise Price. Whenever the Exercise Price
or the number of Warrant Shares purchasable hereunder shall be
adjusted pursuant to Section 3 hereof, the Company shall make a
certificate signed by its chief executive officer, chief
financial officer or any vice president 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 Warrant
Shares purchasable hereunder after giving effect to such
adjustment, and shall cause copies of such certificate to be
mailed (without regard to Section 7(i) hereof, by first class
mail, postage prepaid) to the holder of this Warrant.
ii. Notice to Allow Exercise by Xxxxxx. If (A) the Company
shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs
of the Company; then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon
the Warrant Register of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to
be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of
the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to
be specified in such notice. The Holder is entitled to exercise
this Warrant during the 20-day period commencing on the date of
such notice to the effective date of the event triggering such
notice.
12
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable
securities laws and the conditions set forth
in Sections 4(a) and 4(d) hereof and to the provisions of Section 4.1 of
the Purchase Agreement, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of
this Warrant not so assigned, and this Warrant shall promptly be cancelled.
A Warrant, if properly assigned, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 4(a), as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
c) Warrant Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
d) Compliance with Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that such holder will not offer, sell or
otherwise dispose of this Warrant, or any Shares except under circumstances
which will not result in a violation of the Act or any applicable state
securities laws. This Warrant and all Shares issued upon exercise of this
Warrant (unless then registered for resale under the Act and any applicable
state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
13
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO
THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER
LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR
OTHER LOAN SECURED BY SUCH SECURITIES."
Said legend shall be removed by the Company, upon the request of a holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated. The legend set forth above shall be removed or not
imprinted upon any Warrant Shares in accordance with the terms of the Purchase
Agreement.
(b) Applicability of Restrictions. The restrictions of any legend
described in this Warrant shall not apply to any transfer or grant of a
security interest in, this Warrant (or the Shares of Common Stock issuable
upon the exercise hereof) or any part hereof (i) to a partner of the holder
if the holder is a partnership or to a member of the holder if the holder
is a limited liability company, (ii) to a partnership of which the holder
is a partner or a limited liability company of which the holder is a
member, or (iii) to any affiliate of the holder if the holder is a
corporation; provided, however, in any such transfer, if applicable, the
transferee shall on the Company's request agree in writing to be bound by
the terms of this Warrant as if an original holder hereof.
Section 5. Registration Rights. The Company has granted certain
registration rights to the holder of this Warrant for any Shares issuable upon
the exercise hereof as set forth in the Registration Rights Agreement.
Section 6. Mergers. The Company shall provide the holder of this Warrant
with at least twenty (20) days' written notice prior to the closing thereof of
the terms and conditions of any of the following transactions: (i) the sale,
lease, exchange, conveyance or other disposition of all or substantially all of
the Company's property or business or (ii) its merger into or consolidation with
any other corporation in which the Company is not the surviving entity (other
than a wholly-owned subsidiary of the Company) or (iii) any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of;
provided, however, that any SEC filing made by the Company on Xxxxx related to
any of the transactions referenced in clauses (i), (ii) or (iii) shall serve as
notice for the purpose of this Section 6.
14
Section 7. Miscellaneous.
a) Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant, this Warrant
and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed. The transferee shall sign
an investment letter in form and substance reasonably satisfactory to the
Company.
b) No Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of
the Company prior to the exercise hereof. Upon the surrender of this
Warrant and the payment of the aggregate Exercise Price (or by means of a
cashless exercise), the Warrant Shares so purchased shall be and be deemed
to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant or any stock certificate relating to the Warrant Shares, and in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of
such cancellation, in lieu of such Warrant or stock certificate.
d) Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday, Sunday or a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.
e) Authorized Shares.
The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and
issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will
take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of the
Trading Market upon which the Common Stock may be listed.
15
Except and to the extent as waived or consented to by the Holder,
the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of
Holder as set forth in this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (a) not
increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant, and
(c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company
to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in
the number of Warrant Shares for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having
jurisdiction thereof.
f) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the provisions of the Purchase
Agreement.
g) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
h) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Xxxxxx's rights, powers or
remedies, notwithstanding the fact that all rights hereunder terminate on
the Termination Date. If the Company willfully and knowingly fails to
comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as
shall be sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
i) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase
Agreement.
16
j) Limitation of Liability. No provision hereof, in the absence of
any affirmative action by Holder to exercise this Warrant or purchase
Warrant Shares, and no enumeration herein of the rights or privileges of
Holder, shall give rise to any liability of Holder for the purchase price
of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
k) Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
successors and permitted assigns of Holder. The provisions of this Warrant
are intended to be for the benefit of all Holders from time to time of this
Warrant and shall be enforceable by any such Holder or holder of Warrant
Shares.
m) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and
holders of Warrants that are exercisable for a majority of the Warrant
Shares issuable as part of the Series. Notwithstanding the foregoing, (i)
no such waiver, amendment, modification or termination shall be effective
if such waiver, amendment, modification or termination shall materially
adversely affect any holder without the prior written consent of such
holder, and (ii) if the Exercise Price hereof shall be reduced for any
Warrant in the Series, then the Exercise Price of all Warrants in the
Series shall simultaneously be reduced to such Exercise Price.
n) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Warrant.
o) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
********************
17
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: November 7, 2005
JAVELIN PHARMACEUTICALS, INC.
By:/s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx MD
Title: Chief Executive Officer
18
EXHIBIT A-1
-----------
Notice of Exercise
------------------
The undersigned hereby:
[ ] elects to purchase _____ shares of Common Stock of the
Company pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares
in full.
[ ] elects to exercise its issuance rights pursuant to Section
2(b) of the attached Warrant with respect to ____ shares of
Common Stock of the Company.
Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:
-------------------------------------
(Name)
-------------------------------------
-------------------------------------
-------------------------------------
(Address)
The undersigned represents that the aforesaid shares are being acquired for
the account of the undersigned for its own account and not with a view to, or
for resale in connection with, the distribution thereof and that the undersigned
has no present intention of distributing or reselling such shares, all except as
in compliance with applicable securities laws.
-----------------------------------
(Signature)
Dated:
-----------------------------
EXHIBIT A-2
-----------
Notice of Exercise
------------------
1. Contingent upon and effective immediately prior to the closing
("Closing") of the Company's public offering contemplated by the
Registration Statement filed with the Securities and Exchange
Commission filed on _____________, the undersigned hereby:
[ ] elects to purchase _____ shares of Common Stock of the
Company (or such lesser number of shares as may be sold on
behalf of the undersigned at the Closing) pursuant to the
terms of the attached Warrant.
Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
The undersigned has instructed the custodian for the selling stockholders
to deliver to the Company $_____ or, if less, the net proceeds due the
undersigned from the sale of shares in the aforesaid public offering. If such
net proceeds are less than the purchase price for such shares, the undersigned
agrees to deliver the difference to the Company prior to the Closing.
-----------------------------------
(Name)
-----------------------------------
-----------------------------------
-----------------------------------
(Address)
Dated:
-------------------------
ASSIGNMENT FORM
(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
whose address is
---------------------------------------------
---------------------------------------------------------------.
---------------------------------------------------------------
Dated:
------------------, ---------
Holder's Signature:
---------------------------------
Holder's Address:
---------------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
