EXHIBIT 4.3
Form of
WARRANT AGREEMENT
HYSEQ, INC.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS SECURITY UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO HYSEQ, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase __________
Shares of Common Stock
of Hyseq, Inc.
No. __-___
HYSEQ, INC.
Common Stock Purchase Warrant
HYSEQ, INC., a Nevada corporation (the "Company"), hereby certifies that,
for value received, ________________________ (the "Holder"), or its successors
or registered assigns, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time before 5:00 p.m., New
York time, on the Expiration Date (as hereinafter defined), that number of fully
paid and non-assessable shares of Common Stock of the Company as shall be equal
to the Warrant Number (as hereinafter defined), at an initial purchase price per
share of $____ (the "Purchase Price"). The Warrant Number and the Purchase
Price are subject to adjustment as provided in this Warrant.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Hyseq, Inc., and any
corporation that shall succeed to or assume the obligations of Hyseq,
Inc. hereunder.
(b) The term "Common Stock" includes (i) the Company's common
stock, $.001 par value, as authorized on the date hereof, (ii) any
other capital stock of any class or classes (however designated) of
the Company, authorized on or after such date, the holders of which
shall have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any
shares entitled to preference and (iii) any other securities into
which or for which any of the securities described in (i) or (ii) may
be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.
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(d) The term "Expiration Date" means ____________.
(e) The term "Warrant Number" shall mean, subject to adjustment
pursuant to Sections 3, 4 or 5 hereof, ______________________ (_____)
shares of Common Stock.
1. Exercise of Warrant.
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1.1 Exercise. This Warrant may be exercised in full or in part at
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any time or from time to time until the Expiration Date by the holder hereof by
surrender of this Warrant and the subscription form annexed hereto (duly
executed) by such holder, to the Company at its principal office, accompanied by
payment, in cash or by certified or official bank check payable to the order of
the Company in the amount obtained by multiplying (a) the number of shares of
Common Stock designated by the Holder in the subscription form by (b) the
Purchase Price then in effect. On any partial exercise, the Company at its
expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, providing in the aggregate on the face or faces thereof for the
number of shares of Common Stock for which such Warrant or Warrants may still be
exercised.
1.2 Right to Convert Warrant. Notwithstanding the payment provision
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of subsection 1.1 hereof:
(a) the Holder shall have the right (the "Conversion Right") to
require the Company to convert this Warrant, in whole or in part, at any
time prior to the Expiration Date into shares of Common Stock as provided
for in this subsection 1.2. At the sole option of the Holder, upon
exercise of the Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of any Purchase Price) that number of shares
of Common Stock equal to the quotient obtained by dividing (x) the value of
the Warrant at the time the Conversion Right is exercised (determined by
subtracting the aggregate Purchase Price for the shares of Common Stock
then issuable upon exercise of this Warrant (the "Warrant Shares") in
effect immediately prior to the exercise of the Conversion Right from the
aggregate Fair Market Value (as defined below) for the Warrant Shares
immediately prior to the exercise of the Conversion Right) by (y) the Fair
Market Value of one share of Common Stock immediately prior to the exercise
of the Conversion Right.
(b) The Conversion Right may be exercised by the Holder, at any time,
or from time to time, prior to the Expiration Date, on any business day by
delivering a written notice (the "Conversion Notice") to the Company
exercising the Conversion Right and specifying (i) the total number of
shares of Common Stock the Holder will purchase pursuant to such conversion
and (ii) a place and date not less than one nor more than 20 business days
from the date of the Conversion Notice for the closing of such purchase.
(c) At any closing under this subsection 1.2, (i) the Holder will
surrender the Warrant and (ii) the Company will deliver to the Holder a
certificate or certificates for the number of shares of Common Stock
issuable upon such conversion, together with cash, in lieu of any fraction
of a share, as provided in Section 2 below.
(d) Fair Market Value of a share of Common Stock as of a particular
date (the "Determination Date") shall mean the Fair Market Value of a share
of the Company's Common Stock. Fair Market Value of a share of Common
Stock as of a Determination Date shall mean:
(i) If the Company's Common Stock is traded on an exchange or is
quoted on the Nasdaq National Market ("Nasdaq"), then the closing or
last sale price, respectively, reported for the last business day (on
which a sale in the Common Stock was made) immediately preceding the
Determination Date.
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(ii) If the Company's Common Stock is not traded on an exchange
or on Nasdaq but is traded in the over-the-counter market, then the
mean of the closing bid and asked prices reported for the last
business day (on which a sale in the Common Stock was made)
immediately preceding the Determination Date.
(iii) If the Determination Date is the date on which the
Company's Common Stock is first sold to the public by the Company in a
firm commitment public offering under the Securities Act of 1933, as
amended (the 1933 Act"), then the initial public offering price
(before deducting commissions, discounts or expenses) at which the
Common Stock is sold in such offering.
(iv) If the Company's stock is not publicly traded, then as
determined in good faith by the Company's Board of Directors upon
review of relevant factors.
1.3 Trustee for Warrant Holders. In the event that a bank or trust
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company shall have been appointed as trustee for the holder of the Warrant
pursuant to subsection 4.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant to Section 14 and shall accept,
in its own name for the account of the Company or such successor person as may
be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1. The Company shall give the holder of the Warrant notice of the
appointment of any trustee and any change thereof.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
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practicable after the exercise of this Warrant, and in any event within 3
(three) days thereafter, the Company at its expense (including the payment by it
of any applicable issue or stamp taxes) will cause to be continued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled on such
exercise, in such denominations as may be requested by such holder, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of the full
share, together with any other stock or other securities and property (including
cash, where applicable) to which such holder is entitled upon such exercise
pursuant to Section 1 or otherwise. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of the shares as of the close of business on the date on which this Warrant
shall have been delivered to the Company and payment made for such shares as
aforesaid.
3. Adjustment for Dividends in Other Stock, Property, etc.;
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Reclassification, etc. In case at any time or from time to time, the holders of
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Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement
other than additional shares of Common Stock (or Other Securities) issued
as a stock dividend or in a stock-split (adjustments in respect of which
are provided for in Section 5), then and in each such case the holder of
this Warrant, on the exercise hereof as provided in Section 1, shall be
entitled to receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and (c) of
this Section 3) which such holder would hold on the date of such exercise
if on the date hereof he had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date hereof to and including the
date of such exercise, retained such shares and all such other or
additional stock and other securities and properly
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(including cash in the cases referred to in subdivisions (b) and (c) of
this Section 3) receivable by him as aforesaid during such period, giving
effect to all adjustments called for during such period by Sections 4 and
5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
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4.1 Reorganization. In case at any time or from time to time, the
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Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 3 and 5.
4.2 Dissolution. In the event of any dissolution of the Company
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following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holder of this Warrant after the effective date of
such dissolution pursuant to this Section 4 to the holder of a bank or trust
company having its principal office in New York, New York as trustee for the
holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
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merger or transfer (and any dissolution following any transfer referred to in
this Section 4) this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially, all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
5. Other Adjustments.
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5.1 Adjustment for Extraordinary Events. In the event that the
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Company shall (i) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this subsection
5.1. The Holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1, be entitled to receive that number of shares of Common
Stock determined by multiplying the number of shares of Common Stock which would
be issuable on such exercise as of immediately prior to such issuance by a
fraction of which (i) the numerator is the Purchase Price in effect immediately
prior to such issuance and (ii) the denominator is the Purchase Price in effect
on the date of such exercise.
[5.2 Adjustment for Anti-dilution Provisions Contained in the Company's
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Charter. The Company and the holder hereof agree that the Purchase Price
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(defined above) is the amount which is 110% of the initial Conversion Price of
the Series A Convertible Preferred Stock, $.001 par value ("Series A Preferred
Stock"), as set forth in Section 7(y) of the subscription agreement (the
"Subscription Agreement") to subscribe for shares of
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the Series A Preferred Stock pursuant to the Company's Confidential Private
Placement Memorandum dated April 16, 1996, as the same may be amended or
supplemented. The Company and the holder hereof further agree that if any
adjustment in the Conversion Price or the number of shares of Common Stock
issuable upon conversion of the Series A Preferred Stock should occur by
operation of Section 7(y) of the Subscription Agreement, appropriate adjustments
shall be made to the Purchase Price and the Warrant Number in accordance with
the terms of Section 7(y) of the Subscription Agreement.]
6. No Impairment. The Company will not, by amendment of its Articles of
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Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, or any other similar 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 action as may be necessary or appropriate in order to
protect the rights of the holder of the Warrant against impairment due to such
event. Without limiting the generality of the foregoing, the Company (a) will
not increase the par value of any shares of stock receivable on the exercise of
the Warrants above the amount payable therefor on such exercise and (b) will
take all action that may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of stock, free
from all taxes, liens and charges with respect to the issue thereof, on the
exercise of all of the Warrants from time to time outstanding.
7. Certificate as to Adjustments. In each case of any adjustment or
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readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
principal financial or accounting officer to compute such adjustment or
readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment, the Purchase Price
resulting therefrom and the increase or decrease, if any, in the number of
shares purchasable at such price upon exercise of the Warrant, and showing in
detail the facts and computation upon which such adjustment or readjustment is
based. The Company will forthwith mail a copy of each such certificate to each
registered holder of this Warrant, and will, on the written request at any time
of the holder of this Warrant, furnish to such holder a like certificate setting
forth the Purchase Price at the time in effect and showing how it was
calculated.
8. Notices of Record Date, etc. In the event of
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(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend on, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer, of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation, or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
registered holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up, and (iii) the amount and character of any stock or other securities,
or rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom
such proposed issue or grant is to be offered or made. Such notice shall also
state that the action in question or the record date is subject
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to the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or a favorable vote of stockholders if
either is required. Such notice shall be mailed at least 20 days prior to the
date specified in such notice on which any such action is to be taken or the
record date, whichever is earlier.
9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
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Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.
10. Transfer of Warrant; Restrictions on Transfer. The holder hereof
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shall not transfer this Warrant, in whole or in part, without the prior written
consent of the Company, which consent shall not be unreasonably withheld;
provided, however, that the transfer of this Warrant, in whole or in part, to
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any officer, director, shareholder or affiliate of the original Holder shall not
require the Company's consent. The foregoing to the contrary notwithstanding,
this Warrant and all shares of Common Stock (or Other Securities) from time to
time issuable on the exercise of the Warrant (a) shall be subject to any
applicable terms and restrictions of other agreements between the Company and
the holder and (b) may not be sold, offered for sale, transferred, pledged or
hypothecated in the absence of an effective registration statement under the
Securities Act and applicable state securities laws or an opinion of counsel
reasonably satisfactory to the Company that such registration is not required.
11. Register of Warrants; Registration Rights. The Company shall
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maintain, at the principal office of the Company (or such other office as it may
designate by notice to the holder hereof), a register for Warrants, in which the
Company records the name and address of the person in whose name a Warrant has
been issued, as well as the name and address of each transferee and each prior
owner of such Warrant. The shares of Common Stock issuable upon exercise of
this Warrant shall, upon issuance, be entitled to the same rights and privileges
set forth in that certain Registration Rights Agreement dated as of even date
herewith between the Company and the Holder.
12. Exchange of Warrants. This Warrant is exchangeable, upon the
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surrender hereof by the Holder hereof at the office or agency of the Company
referred to in Section 11, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each of such new Warrants to represent the right to subscribe for and purchase
such number of shares as shall be designated by said Holder hereof at the time
of such surrender.
13. Replacement of Warrants. On receipt of evidence reasonably
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satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
14. Warrant Agent. The Company by written notice to the registered holder
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of this Warrant may appoint an agent having an office in New York, New York, for
the purpose of issuing Common Stock (or Other Securities) on the exercise of the
Warrant pursuant to Section 1, exchanging this Warrant to Section 12, and
replacing this Warrant pursuant to Section 13, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
15. Remedies. The Company stipulates that the remedies at law of the
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holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
16. Closing of Books. The Company will at no time close its transfer
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books against the transfer of any Warrant or of any shares of Common Stock
issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of this Warrant.
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17. No Rights or Liabilities as a Stockholder. This Warrant shall not
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entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
18. Notices, etc. All notices and other communications from the Company
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to the registered holder of this Warrant shall be mailed in writing by hand-
delivery, first class registered or certified mail, postage prepaid, telex or
telecopies, at such address as may have been furnished to the Company in writing
by such holder or at the address shown on such holder's Warrant.
[REMAINDER OF THIS PAGE INTENTIONALLY BLANK]
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19. Miscellaneous. This Warrant and any terms hereof may be changed,
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waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York, without
reference to its conflicts of law provisions. The headings in this Warrant are
for purpose of reference only, and shall not limit or otherwise affect any of
the terms hereof. This Warrant is being executed as an instrument under seal.
The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
Dated: __________, 199_ HYSEQ, INC.
By:____________________________
Title:_________________________
Attest:
By:_________________________
Title:______________________
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FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
HYSEQ, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, __________
shares of Common Stock for HYSEQ, INC. and hereby makes payment of
$_____________ therefor in cash and requests that the certificates for such
shares be issued in the name of, and delivered to _______________________ whose
address is _______________________.
Dated:___________________
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(Signature must conform to name
of holder as specified on the
fact of the Warrant)
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(Address)
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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For values received, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the within Warrant to
purchase __________ shares of Common Stock of HYSEQ, INC. to which the within
Warrant relates, and appoints ___________________________ Attorney to transfer
such right on the books of HYSEQ, INC. with full power of substitution in the
premises.
Dated:______________________
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(Signature must conform
to name of holder as specified
on the face of the Warrant)
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(Address)
Signed in the presence of:
___________________________
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