EX-4.4
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
ELITE 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 Initial Exercise Date (as defined in Section
2) and on or prior to the close of business on the five year anniversary of the
Initial Exercise Date (the "TERMINATION DATE") but not thereafter, to subscribe
for and purchase from Elite Pharmaceuticals, Inc., a Delaware corporation (the
"COMPANY"), up to ______ shares (the "WARRANT SHARES") of Common Stock, par
value $.01 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).
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 March 15, 2006, among the Company
and the purchasers signatory thereto.
SECTION 2. EXERCISE.
a) EXERCISE OF WARRANT. Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at any time
or times on or after the date of issue of this Warrant (the "Initial
Exercise Date") and on or before the Termination Date by delivery to the
Company of a duly executed facsimile copy of the Notice of Exercise Form
annexed hereto (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address of
such Holder appearing on the books of the Company); and, within 3 Trading
Days of the date said Notice of
Exercise is delivered to the Company, the Holder shall have surrendered
this Warrant to the Company and the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States bank. Partial
exercises of this Warrant resulting in purchases of a portion of the
total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases. The
Company shall deliver any objection to any Notice of Exercise Form within
1 Business Day of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error.
b) EXERCISE PRICE. The exercise price per share of the Common
Stock under this Warrant shall be $2.25 subject to adjustment hereunder
(the "EXERCISE PRICE").
c) CASHLESS EXERCISE. If at any time after the date hereof
this Warrant may also be exercised at such time by means of a "cashless
exercise" in which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date
of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by
means of a cash exercise rather than a cashless exercise.
d) EXERCISE LIMITATIONS.
i. HOLDER'S RESTRICTIONS. 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 as set
forth on the applicable Notice of 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 applicable Notice of Exercise, would beneficially own
in excess of the Beneficial Ownership Limitation (as
defined below). 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 such determination is being
made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the
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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 Preferred 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 together
with any Affiliates) 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 together with any Affiliates) 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 two 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 "Beneficial Ownership Limitation" shall be 4.99% of the
number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares
of Common Stock issuable upon exercise of this Warrant. The
Beneficial Ownership Limitation provisions of this Section
2(d)(i) may be waived by such Xxxxxx, at the election of
such Holder, upon not less than 61 days' prior notice to
the Company to change the Beneficial Ownership
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Limitation to 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this
Warrant, and the provisions of this Section 2(d) shall
continue to apply. Upon such a change by a Holder of the
Beneficial Ownership Limitation from such 4.99% limitation
to such 9.99% limitation, the Beneficial Ownership
Limitation may not be further waived by such Holder. The
provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(d)(i) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this
Warrant.
ii. TRADING MARKET RESTRICTIONS. If the Company
has not obtained Shareholder Approval (as defined below),
then the Company may not issue upon exercise of this
Warrant a number of shares of Common Stock, which, when
aggregated with any shares of Common Stock issued (A) upon
conversion of or as payment of dividends on the Preferred
Stock issued pursuant to the Purchase Agreement, (B) upon
prior exercise of this or any other Warrant issued pursuant
to the Purchase Agreement and (C) pursuant to any warrants
issued to any registered broker-dealer as a fee in
connection with the Securities pursuant to the Purchase
Agreement, would exceed 19.999% of the number of shares of
Common Stock outstanding on the Trading Day immediately
preceding the Closing Date (such number of shares, the
"ISSUABLE MAXIMUM"). If on any attempted exercise of this
Warrant, the issuance of Warrant Shares would exceed the
Issuable Maximum and the Company shall not have previously
obtained the vote of shareholders to approve the issuance
of shares of Common Stock in excess of the Issuable Maximum
pursuant to the terms hereof (the "SHAREHOLDER APPROVAL"),
then the Company shall issue to the Holder requesting a
Warrant exercise such number of Warrant Shares as may be
issued below the Issuable Maximum and, with respect to the
remainder of the aggregate number of Warrant Shares, this
Warrant shall not be exercisable until and unless
Shareholder Approval has been obtained.
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 duly authorized, validly
issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect
of the issue thereof (other than
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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 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 (or by cashless exercise, if permitted) 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, 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. 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. COMPENSATION FOR BUY-IN ON FAILURE TO TIMELY
DELIVER CERTIFICATES UPON EXERCISE. In addition to any
other rights available to the Holder, if the Company fails
to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share
Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market
transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such
exercise (a "BUY-IN"), then the Company shall (1) pay in
cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds
(y) the amount
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obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price
at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the
Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise
was not honored or deliver to the Holder the number of
shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of
shares of Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause
(1) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon
request of the Company, evidence of the amount of such
loss. Nothing herein shall limit a Holder's right to pursue
any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company's failure to timely deliver certificates
representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.
vi. 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
at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next
whole share.
vii. 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.
viii. 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.
6
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 upon exercise of 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) SUBSEQUENT EQUITY SALES. If the Company or any Subsidiary
thereof, as applicable, at any time while this Warrant is outstanding,
shall sell or grant any option to purchase or sell or grant any right to
reprice its securities, or otherwise dispose of or issue (or announce any
offer, sale, grant or any option to purchase or other disposition) any
Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock, at an effective price per share less than the
then applicable Conversion Price (as such term is defined in the
Certificate of Designations) of the Preferred Stock (such issuances
collectively, a "DILUTIVE ISSUANCE") (if the holder of the Common Stock
or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which are issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the then applicable Conversion Price,
such issuance shall be deemed to have occurred for less than the then
applicable Conversion Price on such date of the Dilutive Issuance), then
the Exercise Price shall be reduced and only reduced by multiplying the
Exercise Price by a fraction, the numerator
7
of which is the number of shares of Common Stock issued and outstanding
immediately prior to the Dilutive Issuance plus the number of shares of
Common Stock which the offering price for such Dilutive Issuance would
purchase at the then applicable Conversion Price, and the denominator of
which shall be the sum of the number of shares of Common Stock issued and
outstanding immediately prior to the Dilutive Issuance plus the number of
shares of Common Stock so issued or issuable in connection with the
Dilutive Issuance and the number of Warrant Shares issuable hereunder
shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price,
shall be equal to the aggregate Exercise Price prior to such adjustment.
Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no adjustments
shall be made, paid or issued under this Section 3(b) in respect of an
Exempt Issuance. The Company shall notify the Holder in writing, no later
than the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this section, indicating therein the
applicable issuance price, or applicable reset price, exchange price,
conversion price and other pricing terms (such notice the "DILUTIVE
ISSUANCE NOTICE"). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section
3(b), upon the occurrence of any Dilutive Issuance, after the date of
such Dilutive Issuance the Holder is entitled to receive a number of
Warrant Shares based upon the adjusted Exercise Price regardless of
whether the Holder accurately refers to the adjusted Exercise Price in
the Notice of Exercise.
c) SUBSEQUENT RIGHTS OFFERINGS. If the Company, at any time
while the Warrant is outstanding, shall issue rights, options or warrants
to all holders of Common Stock (and not to Holders) entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the VWAP at the record date mentioned below, then the Exercise
Price shall be multiplied by a fraction, of which the denominator shall
be the number of shares of the Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of additional shares
of Common Stock offered for subscription or purchase, and of which the
numerator shall be the number of shares of the Common Stock outstanding
on the date of issuance of such rights or warrants plus the number of
shares which the aggregate offering price of the total number of shares
so offered (assuming receipt by the Company in full of all consideration
payable upon exercise of such rights, options or warrants) would purchase
at such VWAP. Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
such rights, options or warrants. If any such rights, options or warrants
expire without having been exercised, the Exercise Price as adjusted upon
the issuance of such rights, options or warrants shall be readjusted to
the Exercise Price which would have been in effect had an adjustment been
made on the basis that only additional shares of Common Stock so issued
were the additional shares of Common Stock, if any, actually issued or
sold on the exercise of such rights, options or warrants and such
additional shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Corporation upon such exercise,
plus the consideration, if any, actually received by the Corporation for
the granting of all such rights, options or warrants, whether or not
exercised, provided that such readjustment shall not apply to prior
exercises of the Warrant.
8
d) PRO RATA DISTRIBUTIONS. If the Company, at any time prior
to the Termination Date, shall distribute to all holders of Common Stock
(and not to Holders of the Warrants) evidences of its indebtedness or
assets (including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security other than the Common Stock (which
shall be subject to Section 3(b)), then in each such case the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which
the denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on such
record date less the then per share fair market value at such record date
of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by
the Board of Directors in good faith. In either case the adjustments
shall be described in a statement provided to the Holder of the portion
of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
e) 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
"FUNDAMENTAL TRANSACTION"), then,
i. subject to clause (ii) below, 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 and payment of the Exercise
Price, 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 determined in accordance with the
Black-Scholes option pricing formula; or
ii. if the Company is acquired in an all cash
transaction, in the option of the Company or its
acquiror, the Holder may be paid cash equal to the
9
value of this Warrant as determined in accordance
with the Black-Scholes option pricing formula and
upon payment of such cash, the Warrant shall
terminate.
For purposes of any such exercise by the Holder, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in
respect of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. 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(d) and insuring that this Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
f) 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.
g) 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.
h) NOTICE TO HOLDERS.
i. ADJUSTMENT TO EXERCISE PRICE. Whenever the
Exercise Price is adjusted pursuant to any provision of
this Section 3, the Company shall promptly mail to each
Holder a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment. If the Company issues a variable
rate security, despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have
issued Common Stock or Common Stock Equivalents at the
lowest possible conversion or exercise price at which such
securities may be converted or exercised in the case of a
Variable Rate Transaction (as defined in the Purchase
Agreement).
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ii. NOTICE TO ALLOW EXERCISE BY HOLDER. If (A)
the Company shall declare a dividend (or any other
distribution in whatever form) 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.
SECTION 4. TRANSFER OF WARRANT.
a) TRANSFERABILITY. The Warrant and the other rights of the
Holder pursuant to this Warrant certificate are not severable from this
Warrant certificate, and shall not be assignable or transferable except
in connection with a transfer or assignment of this Warrant certificate
in accordance with the terms hereof. Any instrument purporting to make a
transfer or assignment in violation of this Section 4(a) shall be void
and of no effect. Subject to compliance with any applicable securities
laws and the conditions set forth in Section 4(d) hereof and to the
provisions of Section 4.1 of the Purchase Agreement, this Warrant and all
rights hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this Warrant
certificate at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially
in the form attached hereto duly
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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
compliance with the foregoing and 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) TRANSFER RESTRICTIONS. If, at the time of the surrender of
this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer (i) that the Holder or transferee of
this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the
Securities Act and under applicable state securities or blue sky laws,
(ii) that the holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and
(iii) that the transferee be an "accredited investor" as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
Securities Act or a "qualified institutional buyer" as defined in Rule
144A(a) under the Securities Act.
SECTION 5. MISCELLANEOUS.
a) 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 as set forth in
Section 2(e)(ii).
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b) 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.
c) 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 not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding Business Day.
d) 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.
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.
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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.
e) 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.
f) 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.
g) 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.
h) 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.
i) LIMITATION OF LIABILITY. No provision hereof, in the
absence of any affirmative action by Holder to exercise this Warrant to
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.
j) 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 and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
k) 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
14
from time to time of this Warrant and shall be enforceable by any such
Holder or holder of Warrant Shares.
l) AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder.
m) 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.
n) 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.
********************
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: March ___, 2006
ELITE PHARMACEUTICALS, INC.
By:_____________________________________
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
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NOTICE OF EXERCISE
TO: ELITE PHARMACEUTICALS, INC.
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] [if permitted] the cancellation of such number of
Warrant Shares as is necessary, in accordance with
the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection
2(c).
(3) Please issue a certificate or certificates representing
said Warrant Shares in the name of the undersigned or in such other name as is
specified below:
----------------------------------------
The Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
----------------------------------------
----------------------------------------
----------------------------------------
(4) ACCREDITED INVESTOR. The undersigned is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
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, [____] all of or [_______] shares of 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.
