EXHIBIT 10.2
COMMONWEALTH BIOTECHNOLOGIES, INC.
WARRANT AGREEMENT
June 25, 1997
Xxxxxxxx & Xxxxxxxxx, Incorporated
0000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Commonwealth Biotechnologies, Inc., a Virginia corporation (the
"Company"), agrees to issue and sell to you warrants (the "Warrants") to
purchase the number of shares of common stock (the "Common Stock"), of the
Company set forth herein, subject to the terms and conditions contained herein.
1. Issuance of Warrants; Exercise Price. The Warrants, which shall
be in the form attached hereto as Exhibit A, shall be issued to you concurrently
with the execution hereof in consideration of the payment by you to the Company
of the sum of $0.001 cash per share of Common Stock subject to the Warrants, the
receipt and sufficiency of which are hereby acknowledged. The Warrants shall
provide that you and such other holder or holders of the Warrants shall have the
right to purchase an aggregate of 50,000 shares of Common Stock for an exercise
price equal to $9.90 per share (the "Exercise Price") or $495,000 in the
aggregate. The number, character and Exercise Price of such shares of Common
Stock are subject to adjustment as hereinafter provided, and the term "Common
Stock" shall mean, unless the context otherwise requires, the stock and other
securities and property receivable upon exercise of the Warrants. The term
"Exercise Price" shall mean, unless the context otherwise requires, the price
per share of the Common Stock purchasable under the Warrants as set forth in
this Section 1, as adjusted from time to time pursuant to Section 5.
2. Notices of Record Date; Etc.. In the event of (i) any taking by
the Company of a record date with respect to the holders of any class of
securities of the Company for purposes of determining which of such holders are
entitled to dividends or other distributions (other than regular quarterly
dividends), or any right to subscribe for, purchase or otherwise acquire shares
of stock of any class or any other securities or property, or to receive any
other right, (ii) any capital reorganization of the Company, or reclassification
or recapitalization of capital stock of the Company or any transfer in one or
more related transactions of all or a majority of the assets or revenue or
income generating capacity of the Company to, or
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consolidation or merger of the Company with or into, any other entity or person,
or (iii) any voluntary or involuntary dissolution or winding up of the Company,
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant at the time outstanding a notice specifying, as the case may
be, (A) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right; or (B) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or any other class of stock or securities of the Company, or another
issuer pursuant to Section 5, receivable upon the exercise of the Warrants)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such event. Any
such notice shall be deposited in the United States mail, postage prepaid, at
least ten (10) days prior to the date therein specified, and the holder(s) of
the Warrant(s) may exercise the Warrant(s) and participate in such event as a
registered holder of Common Stock, upon exercise of the Warrant(s) so held,
within the ten (10) day period from the date of mailing of such notice.
3. No Impairment. The Company shall not, by amendment of its
organizational documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Agreement or of the Warrants, but will at all times in good faith take
any and all action as may be necessary in order to protect the rights of the
holders of the Warrants against impairment. Without limiting the generality of
the foregoing, the Company (a) will at all times reserve and keep available,
solely for issuance and delivery upon exercise of the Warrants, shares of Common
Stock issuable from time to time upon exercise of the Warrants, (b) will not
increase the par value of any shares of stock receivable upon exercise of the
Warrants above the amount payable in respect thereof upon such exercise, and (c)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable stock upon
the exercise of the Warrants, or any of them.
4. Exercise of Warrants. At any time and from time to time on and after
June 25, 1998 and expiring on June 25, 2002 at 5:00 p.m., Richmond, Virginia
time, Warrants may be exercised as to all or any portion of the whole number of
shares of Common Stock covered by the Warrants by the holder thereof by
surrender of the Warrants, accompanied by a subscription for shares to be
purchased in the form attached hereto as Exhibit B and by a check payable to the
order of the Company in the amount required for purchase of the shares as to
which the Warrant is being exercised, delivered to the Company at its principal
office at Commonwealth Biotechnologies, Inc., 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx 00000, Attention: Chairman. Upon the exercise of a Warrant in whole or
in part, the Company will within five (5) days thereafter, at its expense
(including the payment by the Company of any applicable issue or transfer
taxes), cause to be issued in the name of and delivered to the
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Warrant holder a certificate or certificates for the number of fully paid and
non-assessable shares of Common Stock to which such holder is entitled upon
exercise of the Warrant. In the event such holder is entitled to a fractional
share, in lieu thereof such holder shall be paid a cash amount equal to such
fraction, multiplied by the Current Value of one full share of Common Stock on
the date of exercise. Certificates for shares of Common Stock issuable by reason
of the exercise of the Warrant or Warrants shall be dated and shall be effective
as of the date of the surrendering of the Warrant for exercise, notwithstanding
any delays in the actual execution, issuance or delivery of the certificates for
the shares so purchased. In the event a Warrant or Warrants is exercised as to
less than the aggregate amount of all shares of Common Stock issuable upon
exercise of all Warrants held by such person, the Company shall issue a new
Warrant to the holder of the Warrant so exercised covering the aggregate number
of shares of Common Stock as to which Warrants remain unexercised.
For purposes of this section, Current Value is defined (i) in the case
for which a public market exists for the Common Stock at the time of such
exercise, at a price per share equal to (A) the average of the means between the
closing bid and asked prices of the Common Stock in the over-the-counter market
for 20 consecutive business days commencing 30 business days before the date of
such notice, (B) if the Common Stock is quoted on Nasdaq, at the average of the
means of the daily closing bid and asked prices of the Common Stock for 20
consecutive business days commencing 30 business days before the date of such
notice, or (C) if the Common Stock is listed on any national securities exchange
or The Nasdaq National Market, at the average of the daily closing prices of the
Common Stock for 20 consecutive business days commencing 30 business days before
the date of such notice, and (ii) in the case no public market exists at the
time of such exercise, at the Appraised Value. For the purposes of this
Agreement, "Appraised Value" is the value determined in accordance with the
following procedures. For a period of five (5) days after the date of an event
(a "Valuation Event") requiring determination of Current Value at a time when no
public market exists for the Common Stock (the "Negotiation Period"), each party
to this Agreement agrees to negotiate in good faith to reach agreement upon the
Appraised Value of the securities or property at issue, as of the date of the
Valuation Event, which will be the fair market value of such securities or
property, without premium for control or discount for minority interests,
illiquidity or restrictions on transfer. In the event that the parties are
unable to agree upon the Appraised Value of such securities or other property by
the end of the Negotiation Period, then the Appraised Value of such securities
or property will be determined for purposes of this Agreement by a recognized
appraisal or investment banking firm mutually agreeable to the holders of the
Warrants and the Company (the "Appraiser"). If the holders of the Warrants and
the Company cannot agree on an Appraiser within two (2) business days after the
end of the Negotiation Period, the Company, on the one hand, and the holders of
the Warrants, on the other hand, will each select an Appraiser within ten (10)
business days after the end of the Negotiation Period and those Appraisers will
determine the fair market value of such securities or property, without premium
for control or discount for minority interests. Such independent Appraiser(s)
will be directed to determine fair market value of such securities or property
as
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soon as practicable, but in no event later than thirty (30) days from the date
of its selection. The determination by Appraiser(s) of the fair market value
will be conclusive and binding on all parties to this Agreement. If there are
two Appraisers, and they do not agree as to fair market value, then fair market
value shall be determined to be the average of the fair market values as
determined by each Appraiser. Appraised Value of each share of Common Stock at a
time when (i) the Company is not a reporting company under the Securities
Exchange Act of 1934 and (ii) the Common Stock is not traded in the organized
securities markets, will, in all cases, be calculated by determining the
Appraised Value of the entire Company taken as a whole and dividing that value
by the number of shares of Common Stock then outstanding, without premium for
control or discount for minority interests, illiquidity or restrictions on
transfer. The costs of the Appraiser(s) will be borne by the Company. In no
event will the Appraised Value of the Common Stock be less than the per share
consideration received or receivable with respect to the Common Stock or
securities or property of the same class in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction.
5. Protection Against Dilution. The Exercise Price for the shares
of Common Stock and number of shares of Common Stock issuable upon exercise of
the Warrants is subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Reclassifications, Etc..
In case at any time or from time to time after the date of execution of this
Agreement, the Company shall (i) take a record of the holders of Common Stock
for the purpose of entitling them to receive a dividend or a distribution on
shares of Common Stock payable in shares of Common Stock or other class of
securities, (ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its outstanding
Common Stock into a smaller number of shares, then, and in each such case, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted in such a manner that the Exercise Price for
the shares issuable upon exercise of the Warrants immediately after such event
shall bear the same ratio to the Exercise Price in effect immediately prior to
any such event as the total number of shares of Common Stock outstanding
immediately prior to such event shall bear to the total number of shares of
Common Stock outstanding immediately after such event.
(b) Adjustment of Number of Shares Purchasable. When any
adjustment is required to be made in the Exercise Price under this Section 5,
(i) the number of shares of Common Stock issuable upon exercise of the Warrants
shall be changed (upward to the nearest full share) to the number of shares
determined by dividing (x) an amount equal to the number of shares issuable
pursuant to the exercise of the Warrants immediately prior to the
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adjustment, multiplied by the Exercise Price in effect immediately prior to the
adjustment, by (y) the Exercise Price in effect immediately after such
adjustment, and (ii) upon exercise of the Warrant, the holder will be entitled
to receive the number of shares of other securities referred to in Section 5(a)
that such holder would have received had the Warrant been exercised prior to the
events referred to in Section 5(a).
(c) Adjustment for Reorganization, Consolidation, Merger,
Etc.. In case of any reorganization or consolidation of the Company with, or any
merger of the Company with or into, another entity (other than a consolidation
or merger in which the Company is the surviving corporation) or in case of any
sale or transfer to another entity of the majority of assets of the Company, the
entity resulting from such reorganization or consolidation or surviving such
merger or to which such sale or transfer shall be made, as the case may be,
shall make suitable provision (which shall be fair and equitable to the holders
of Warrants) and shall assume the obligations of the Company hereunder (by
written instrument executed and mailed to each holder of the Warrants then
outstanding) pursuant to which, upon exercise of the Warrants, at any time after
the consummation of such reorganization, consolidation, merger or conveyance,
the holder shall be entitled to receive the stock or other securities or
property that such holder would have been entitled to upon consummation if such
holder had exercised the Warrants immediately prior thereto, all subject to
further adjustment as provided in this Section 5.
(d) Certificate as to Adjustments. In the event of
adjustment as herein provided in paragraphs of this Section 5, the Company shall
promptly mail to each Warrant holder a certificate setting forth the Exercise
Price and number of shares of Common Stock issuable upon exercise after such
adjustment and setting forth a brief statement of facts requiring such
adjustment. Such certificate shall also set forth the kind and amount of stock
or other securities or property into which the Warrants shall be exercisable
after any adjustment of the Exercise Price as provided in this Agreement.
(e) Minimum Adjustment. Notwithstanding the foregoing, no
certificate as to adjustment of the Exercise Price hereunder shall be made if
such adjustment results in a change in the Exercise Price then in effect of less
than five cents ($0.05) and any adjustment of less than five cents ($0.05) of
any Exercise Price shall be carried forward and shall be made at the time of and
together with any subsequent adjustment that, together with the adjustment or
adjustments so carried forward, amounts to five cents ($0.05) or more; provided
however, that upon the exercise of a Warrant, the Company shall have made all
necessary adjustments (to the nearest cent) not theretofore made to the Exercise
Price up to and including the date upon which such Warrant is exercised.
6. Registration Rights. Each Warrant holder shall be entitled to
the registration rights with respect to the Warrants and the Common Stock that
are described on Exhibit C.
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7. Representations and Warranties. You hereby acknowledge,
represent and warrant to, and agree with, the Company as follows:
(a) You are acquiring the Warrants and the Common Stock for
your own account, for investment purposes only, and not with a view to or for
the resale, distribution or fractionalization thereof, in whole or in part, and
no other person has a direct or indirect beneficial interest in the Warrants
herein agreed to be purchased or in the Common Stock.
(b) You acknowledge your understanding that the offering and
sale of the Warrants and the Common Stock is intended to be exempt from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
furtherance thereof, you represent and warrant and agree with the Company as
follows:
(i) You have the financial abilioty to bear the
economic risk of your investment in the Company (including its possible loss),
have adequate means of providing for your current needs and personal
contingencies and have no need for liquidity with respect to your investment.
(ii) You have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Warrants and the Common Stock and have obtained,
in your judgment, sufficient information from the Company to evaluate the merits
and risks of such an investment.
(c) You represent, warrant and agree that the you will not
sell or otherwise transfer the Warrants or the Common Stock without registration
under the Act or an exemption therefrom as evidenced by an opinion of legal
counsel having sufficient expertise in the transfer of restricted securities,
which opinion shall be satisfactory to the Company, and fully understands and
agrees that you may bear the economic risk of this investment for an indefinite
period of time because, among other reasons, the Warrants and the Common Stock
have not been registered under the Act or under the securities laws of states
and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Act and under applicable
securities laws of such states or an exemption from such registration is
available. You also understand that sales or transfers of the Warrants and the
Common Stock are further restricted by state securities laws.
The foregoing representations and warranties will be deemed to have been given
on the date of this Agreement and on the date of each exercise of the Warrants.
8. Restrictive Legend. Executed copies of this Agreement shall be
filed in the principal office of the Company. Instruments evidencing all or
part of the Warrants or the Common Stock, whether now or hereafter issued, shall
contain the legend shown on Exhibit A.
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9. Successors and Assigns; Binding Effect. This Agreement shall be
binding upon and inure to the benefit of you and the Company and their
respective successors and permitted assigns.
10. Notices. Any notice hereunder shall be given by registered or
certified mail, if to the Company, at its principal office referred to in
Section 5 and, if to the holders, to their respective addresses shown in the
Warrant ledger of the Company, provided that any holder may at any time on three
(3) days' written notice to the Company designate or substitute another address
where notice is to be given. Notice shall be deemed given and received after a
certified or registered letter, properly addressed with postage prepaid, is
deposited in the U.S. mail.
11. Severability. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the remainder
of this Agreement.
12. Assignment; Replacement of Warrants. The Warrants may be sold,
transferred, assigned, pledged or hypothecated by you prior to June 25, 1998
only to bona fide officers of Xxxxxxxx & Xxxxxxxxx, Incorporated, who in turn
shall be subject to the same restriction. If the Warrant or Warrants are
assigned, in whole or in part, the Warrants shall be surrendered at the
principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the holder thereof covering the
number of shares not assigned, and the assignee shall be entitled to receive a
new Warrant covering the number of shares so assigned. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and appropriate bond or indemnification protection,
the Company shall issue a new Warrant of like tenor.
13. Rights of Stockholders. Until exercised, the Warrants shall not
entitle the holders thereof to any of the rights of a stockholder of the
Company.
14. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Virginia without giving
effect to the principles of choice of laws thereof.
15. Definition. All references to the word "you" in this Agreement
shall be deemed to apply with equal effect to any persons or entities to whom
Warrants have been transferred in accordance with the terms hereof, and, where
appropriate, to any persons or entities holding shares of Common Stock issuable
upon exercise of Warrants.
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16. Headings. The headings herein are for purposes of reference
only and shall not limit or otherwise affect the meaning of any of the
provisions hereof.
Very truly yours,
COMMONWEALTH BIOTECHNOLOGIES, INC.
By:
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President
Accepted as of the 25th day of June, 1997.
XXXXXXXX & XXXXXXXXX, INCORPORATED
By:
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X. XxXxxxxx Downs, III
Senior Vice President
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EXHIBIT A
No. _________
_______ Shares
COMMONWEALTH BIOTECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
NEITHER THIS SECURITY NOR ANY SECURITY FOR WHICH IT MAY BE EXERCISED HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY SECURITY FOR
WHICH IT MAY BE EXERCISED NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF AT ANY TIME IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.
THIS IS TO CERTIFY that XXXXXXXX & XXXXXXXXX, INCORPORATED or its
assigns as permitted in that certain Warrant Agreement (the "Warrant Agreement")
dated June 25, 1997 between the Company (as hereafter defined) and Xxxxxxxx &
Strudwick, Incorporated is entitled to purchase at any time or from time to time
on or after June 25, 1998 until 5:00 p.m., Richmond, Virginia time on June 25,
2002, 50,000 shares of Common Stock of Commonwealth Biotechnologies, Inc., a
Virginia corporation (the "Company"), for an exercise price per share as set
forth in the Warrant Agreement referred to herein. This Warrant is issued
pursuant to the Warrant Agreement, and all rights of the holder of this Warrant
are further governed by, and subject to the terms and provisions of such Warrant
Agreement, copies of which are available upon request to the Company. The holder
of this Warrant and the shares issuable upon the exercise hereof shall be
entitled to the benefits, rights and privileges and subject to the obligations,
duties and liabilities provided in the Warrant Agreement.
UNTIL JUNE 25, 1998, NEITHER XXXXXXXX & XXXXXXXXX, INCORPORATED NOR ANY
ASSIGNEE OF ALL OR A PORTION OF THE RIGHTS PURSUANT TO THIS WARRANT MAY SELL,
TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE ANY OF ITS RIGHTS PURSUANT TO THIS
WARRANT OTHER THAN TO BONA FIDE OFFICERS OF XXXXXXXX & STRUDWICK, INCORPORATED.
Subject to the provisions of the Securities Act of 1933, of the Warrant
Agreement and of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, only to the extent expressly permitted in
such documents and then only at the office of the Company at Commonwealth
Biotechnologies, Inc., 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000,
Attention: Chairman, by the holder hereof or by a duly authorized
attorney-in-fact, upon surrender of this Warrant duly endorsed, together with
the Assignment hereof duly endorsed. Until transfer hereof on the books of the
Company, the Company may treat the registered holder hereof as the owner hereof
for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and its corporate seal to be hereunto affixed by its proper corporate officers
thereunto duly authorized.
COMMONWEALTH BIOTECHNOLOGIES, INC.
By: (SEAL)
--------------------------
President
ATTEST:
------------------------------
Secretary
EXHIBIT B
FORM OF SUBSCRIPTION
To Commonwealth Biotechnologies, Inc.:
The undersigned, the holder of Warrant Number , hereby irrevocably
elects to exercise the purchase right represented by such Warrant, and to
purchase thereunder * shares of Common Stock of Commonwealth
Biotechnologies, Inc. and herewith makes a payment in cash or by check of
$ thereof and requests that the certificate or certificates for such
shares be issued in the name of and delivered to the undersigned. The
undersigned acknowledges and agrees that the shares of Common Stock to be
received by the undersigned are subject to the restrictions on transfer set
forth in the Warrant.
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(Signature)
--------------------------
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(Address)
Dated:
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*Insert here the number of shares set forth on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised), in either case without making any adjustment (which
adjustment will be made in the issuance of such Common Stock, other stock,
securities, property, or cash) for additional Common Stock or any other stock or
other securities or property or cash that, pursuant to the adjustment provisions
of the Warrant, is deliverable upon exercise.
FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto the right represented by Warrant Number to purchase shares
of Common Stock of Commonwealth Biotechnologies, Inc. to which the attached
Warrant related, and appoints as Attorney-in-Fact to transfer
such right on the books of Commonwealth Biotechnologies, Inc. with the full
power of substitution in the premises.
The undersigned represents and warrants that the transfer of the
attached Warrant is permitted by the terms of the Warrant Agreement pursuant to
which the attached Warrant has been issued, and the transferee hereof, by
acceptance of this Assignment, agrees to be bound by the terms of the Warrant
Agreement with the same force and effect as if a signatory thereto.
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(Signature)
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(Address)
Dated:
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EXHIBIT C
REGISTRATION RIGHTS
