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EXHIBIT 10.1
WARRANT AGREEMENT
DATED AS OF SEPTEMBER 18, 1996
BETWEEN
CYPRESS BIOSCIENCE, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT
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Section 1. Appointment of Warrant Agent ................................... 1
Section 2. Purchase Price; Form of Warrant ................................ 1
Section 3. Registration and Countersignature .............................. 2
Section 4. Registration of Transfers and Exchanges ........................ 2
Section 5. Duration and Exercise of Warrants .............................. 3
Section 5A. Redemption of Warrants. ........................................ 4
Section 5B. Exchange, Transfer or Assignment of Warrants ................... 6
Section 6. Payment of Taxes ............................................... 6
Section 7. Mutilated or Missing Warrants .................................. 7
Section 8. Reservation of Common Stock .................................... 7
Section 9. Adjustments to Exercise Price and Number of Shares ............. 7
Section 10. Fractional Shares .............................................. 10
Section 11. Warrant Holder Not Deemed a Stockholder; Notices ............... 11
Section 12. Disposition of Proceeds on Exercise of Warrants ................ 11
Section 13. Merger or Consolidation or Change of Name of
Warrant Agent................................................... 11
Section 14. Duties of Warrant Agent ........................................ 12
Section 15. Change of Warrant Agent ........................................ 13
Section 16. Identity of Transfer Agent ..................................... 14
Section 17 Indemnification ................................................ 14
Section 18. Notices ........................................................ 14
Section 19. Supplements and Amendments ..................................... 15
Section 20. Successors ..................................................... 15
Section 21. Termination .................................................... 15
Section 22. Governing Law .................................................. 15
Section 23. Benefits of this Agreement ..................................... 15
Section 24. Descriptive Headings ........................................... 16
Section 25. Counterparts ................................................... 16
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WARRANT AGREEMENT
This WARRANT AGREEMENT dated as of September 18, 1996 (the "Agreement")
is made and entered into between CYPRESS BIOSCIENCE, INC., a Delaware
corporation (the "Company), and AMERICAN STOCK TRANSFER & TRUST
COMPANY, as warrant agent (the "Warrant Agent").
WHEREAS, pursuant to the terms of a Private Placement Memorandum to be
dated as of September 3, 1996 (the "Memorandum"), the Company is offering for
sale (the "Offering") up to an aggregate of 1,500,000 units (each a "Unit" and,
collectively the "Units"), each Unit consisting of two shares (each a "Share"
and, collectively, the "Shares") of Common Stock, $0.02 par value, of the
Company and one Common Stock Purchase Warrant (each a "Warrant" and,
collectively, the "Warrants"), entitling the holder thereof to purchase one
share of Common Stock of the Company at an exercise price of $2.00 at any time
until 5:00 P.M. Eastern Time, on October 1, 2001;
WHEREAS, the Units, the Shares, the Warrants and the shares of Common
Stock underlying the Warrants (the "Warrant Shares") are collectively referred
to herein as the "Securities;"
WHEREAS, the Company intends to register the Securities for resale
pursuant to a registration statement filed under the Securities Act of 1933, as
amended (the "Securities Act") on Form S-3 or other appropriate form as
determined by the Company (the "Registration Statement"); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, registration of transfer, replacement and exchange of
the certificates evidencing the warrants (the "Warrant Certificates") and the
exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter in this Agreement set forth, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. PURCHASE PRICE; FORM OF WARRANT. The Warrants shall be
evidenced by a Warrant Certificate. The text of the Warrant Certificate and of
the form
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of Assignment and Notice of Exercise shall be substantially as set forth in
Exhibit A attached hereto which is made a part hereof by this reference.
Each Warrant shall entitle the holder thereof to purchase one share of
Common Stock of the Company upon the exercise thereof at the applicable exercise
price (the "Exercise Price") specified in Section 5 hereof subject to adjustment
provided in Section 9. The Warrant shall be executed on behalf of the Company by
the manual or facsimile signature of the present or any future Chairman of the
Board or the Chief Executive Officer of the Company, under its corporate seal,
affixed or in facsimile, attested by the manual or facsimile signature of the
present or any future Secretary or Assistant Secretary of the Company. Warrants
shall be dated as of the date of their initial issuance.
SECTION 3. REGISTRATION AND COUNTERSIGNATURE. The Warrant Agent shall maintain
books for the registration, and certification of transfer, of the Warrants. The
Warrants shall be countersigned by the Warrant Agent and shall not be valid for
any purpose unless so countersigned. The Warrants shall be so countersigned,
however, by the Warrant Agent and shall be delivered by the Warrant Agent,
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have ceased to be such officers
at the time of such countersignature or delivery.
Prior to due presentment for registration of transfer of the Warrants,
the Company and the Warrant Agent may deem and treat the registered Warrant
holder thereof as the absolute owner of the Warrants (notwithstanding any
notation of ownership or other writing thereon made by anyone other than the
Company or the Warrant Agent), for the purpose of any exercise thereof and for
all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. The Warrant Agent shall from
time to time register the transfer of any outstanding Warrants upon the books to
be maintained by the Warrant Agent for that purpose, upon surrender thereof to
the Company or the Warrant Agent accompanied (if so required by the Company or
the Warrant Agent) by a written instrument or instruments of transfer in form
satisfactory to the Company and the Warrant Agent, duly executed by the
registered Warrant holder or by a duly authorized representative or attorney.
Upon any such registration of transfer, a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be canceled by the Warrant Agent.
Warrants so canceled shall be delivered by the Warrant Agent to the Company from
time to time or otherwise disposed of by the Warrant Agent in a manner
satisfactory to the Company. Warrants may be exchanged at the option of the
Warrant holder thereof, when surrendered at the principal office of the Warrant
Agent in New York, New York or the principal office of the Company in San Diego,
California (in which event the Company shall forward the Warrants surrendered
and the instruments
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of transfer to the Warrant Agent) for another Warrant or other Warrants of like
tenor and representing in the aggregate the number of Warrants evidenced by the
Warrant or Warrants so surrendered. The Warrant Agent shall countersign and
deliver, in accordance with the provisions of this Section 4 and of Section 3,
the new Warrant or Warrants required pursuant to the provisions of this Section
4, and the Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose.
SECTION 5. DURATION AND EXERCISE OF WARRANTS. The Warrants may be exercised at
any time commencing from the date of the closing of the Offering, but prior to
redemption, until 5:00 p.m., Eastern Time on October 1, 2001 (the "Expiration
Date"), at which time all rights evidenced by the Warrants shall cease and the
Warrants shall become void. Subject to the provisions of this Agreement, the
holder of each Warrant shall have the right to purchase from the Company (and
the Company shall issue and sell to such holder of a Warrant) one fully paid and
non-assessable share of Common Stock at an exercise price of $2.00 per share
(the "Exercise Price") (subject to adjustment as provided in Section 9) upon
surrender of the Warrants to the Company at the principal office of the Warrant
Agent in New York, New York with the form of Notice of Exercise appearing as the
last page thereof duly filled in and signed, and upon payment of the Exercise
Price in lawful money of the United States of America to the Warrant Agent for
the account of the Company. No adjustment shall be made for any dividends on any
share of Common Stock issuable on the exercise of a Warrant.
The Exercise Price payable upon exercise of Warrants may, at the option
of the Warrant holder, be paid by check or bank draft made payable to the order
of the Company. Subject to Sections 6 and 11, upon such surrender of a Warrant
and payment of the Exercise Price (and if the Exercise Price is paid by check
other than a certified or bank cashier's check, upon collection of the proceeds
of such check) the Company shall issue and cause to be registered, countersigned
and delivered to or upon the written order of the registered holder of such
Warrant and in such name or names as may duly be designated, a certificate for
the shares of Common Stock being issued pursuant to the Warrant then being
exercised (as adjusted as provided in Section 9). Such certificate shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such share or shares of
Common Stock, as of the date of the surrender of such Warrant and payment of the
Exercise Price; provided, however, that if, at the date of surrender of such
Warrant and payment of such Exercise Price, the transfer books for the Common
Stock shall be closed, the certificate for such share of shares of Common Stock
shall be issuable as of the date on which such books shall next be opened
(whether before, on or after the Expiration Date) and until such date the
Company shall be under no duty to deliver any certificate for such share or
shares; provided, further, that such books, unless otherwise required by law,
shall not be closed at any one time for a period longer than twenty (20)
calendar days.
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The Warrants shall be exercisable immediately upon issuance by the
Company, at the election of the registered Warrant holders thereof, either as an
entirety or from time to time for part only of the number of shares purchasable
upon exercise of the Warrant. In the event that less than all of the Warrants
are exercised as an entirety on or after the date hereof and prior to redemption
or before 5:00 p.m. Eastern Time on the Expiration Date, a new Warrant will be
issued for the remaining number of Warrants exercisable pursuant to the Warrant
so surrendered, and the Warrant Agent shall countersign and deliver the required
new Warrant pursuant to the provisions of this Section 5 and of Section 3 and
the Company, whenever required by the Warrant holder, will supply the Warrant
Agent with a Warrant duly executed on behalf of the Company for such purpose.
All Warrants surrendered upon exercise shall be canceled by the Warrant Agent
and shall thereafter be delivered to the Company or otherwise disposed of in a
manner satisfactory to the Company.
SECTION 5A. REDEMPTION OF WARRANTS. Warrants may be redeemed at the option of
the Company, in whole or in part, on either a selective or non-discriminatory
basis, at a price equal to $0.10 per Warrant (the "Redemption Price") at any
time (i) commencing twelve (12) months after the date hereof if the First
Average Closing Price Requirement (as hereafter defined) is satisfied or (ii)
after their initial issuance by the Company if the Second Average Closing Price
Requirement (as hereafter defined) is satisfied (with any such date of
redemption referred to herein as the "Redemption Date"). The First Average
Closing Price Requirement will be satisfied if the average closing bid price of
the Common Stock as reported by the National Association of Securities Dealers,
Inc. electronic interdealer quotation system ("Nasdaq") (or average closing
sales price, if the Common Stock is quoted on the Nasdaq National Market System)
equals or exceeds $3.00 per share of Common Stock for any twenty (20) trading
days within a period of thirty (30) consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption. The Second Average
Closing Price Requirement will be satisfied if the average closing bid or, if
applicable, closing sales price as determined and for the periods specified in
the preceding sentence exceeds $4.00. On the Redemption Date, the holders of
record of redeemed Warrants shall be entitled to payment of the Redemption Price
upon surrender of such redeemed Warrants to the Company at the principal office
of the Warrant Agent in New York, New York.
Notice of redemption of Warrants shall be given at least twenty (20)
and not more than forty-five (45) calendar days prior to the Redemption Date by
mailing, by registered or certified mail, return receipt requested, a copy of
such notice to all of the holders of record of Warrants to be redeemed at their
respective addresses appearing on the books or transfer records of the Company
or such other address designated in writing by the holder of record to the
Warrant Agent not less than sixty (60) calendar days prior to the Redemption
Date and shall be effective upon receipt. In addition, notice of such redemption
will be published in The Wall Street Journal not less than ten (10) nor more
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than twenty (20) calendar days prior to the mailing of the notice. Any Warrant
so called for redemption may be exercised until the close of business on the
fifth business day preceding the Redemption Date specified in such notice of
redemption. If less than all the Warrants are to be redeemed, the Warrant Agent
shall select the Warrants to be redeemed by a method the Warrant Agent considers
fair and appropriate.
From and after the Redemption Date, all rights of the holders of
Warrants (except the right to receive the Redemption Price) shall terminate, but
only if (a) on or prior to the Redemption Date the Company shall have
irrevocably deposited with the Warrant Agent (or its successor as Warrant Agent)
a sufficient amount to pay on the Redemption Date the Redemption Price for all
Warrants called for redemption and (b) the notice of redemption shall have
stated the name and address of the Warrant Agent and the intention of the
Company to deposit such amount with the Warrant Agent on or before the
Redemption Date.
The Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of Warrants
to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled under the provisions of this Agreement.
Any amounts deposited with the Warrant Agent which are not required for
redemption of Warrants may be withdrawn by the Company. Any amounts deposited
with the Warrant Agent which shall be unclaimed after six (6) months after the
Redemption Date may be withdrawn by the Company, and thereafter the holders of
the Warrants called for redemption for which such funds were deposited shall
look solely to the Company for payment. The Company shall not be entitled to the
interest, if any, on funds deposited with the Warrant Agent, and the holders of
redeemed Warrants shall have no right to any such interest.
If the Company fails to make a sufficient deposit with the Warrant
Agent as provided above, the holder of any Warrants called for redemption may at
the option of the holder (a) by notice to the Company declare the notice of
redemption a nullity, or (b) maintain an action against the Company for the
Redemption Price. If the holder brings such an action, the Company will pay
reasonable attorneys' fees of the holder. If the holder fails to bring an action
against the Company for the redemption price within sixty (60) days after the
Redemption Date, the holder shall be deemed to have elected to declare the
notice of redemption to be a nullity and such notice shall be without any force
or effect.
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SECTION 5B. EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANTS
Prior to the effective date of the Registration Statement, or earlier
if so notified by the Company (the "Separation Date"), a Warrant may not be
divided or combined with other Warrants or exchanged, assigned or transferred
apart from the Common Stock with which it was sold as a Unit to the Warrant
holder. Absent an effective Registration Statement, the Warrant Agent will not
record an exchange, assignment or transfer of a Warrant in the Warrant Register
without certification that the Warrant holder has transferred its Common Stock
to the assignee named on the form of Warrant Assignment contained in the
Warrant.
After the Separation Date, and subject to compliance with all
applicable securities laws, the Warrants may be exchanged or transferred, at the
option of the Warrant holder, upon presentation and surrender of Warrants to the
Warrant Agent or to the Company, for other Warrants of different denominations,
entitling the holder or holders thereof to exercise in the aggregate the same
number of Warrants. Subject to the preceding sentence, a Warrant may be divided
or combined with other Warrants that carry the same rights upon presentation
thereof at the office of the Warrant Agent or the Company, together with written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the holder thereof.
After the Separation Date, Warrants may be assigned or transferred, at
the option of the Warrant holder, upon surrender of Warrants to the Warrant
Agent, with the Warrant assignment form contained therein duly executed and
accompanied by funds sufficient to pay any transfer tax. The Warrant Agent shall
execute and deliver a new Warrant in the name of the assignee or assignees named
in such instrument or assignment and, if the holder's entire interest in the
Warrants is not being transferred or assigned, in the name of the Warrant
holder, and the Warrant surrendered shall promptly be canceled.
Any transfer, exchange or assignment of the Warrants shall be without
charge (other than the cost of any transfer tax to be paid by the Warrant holder
pursuant to Section 6 hereof) to the Warrant holder and any new Warrant issued
pursuant to this Section 5B shall be dated the date such new Warrant is issued.
SECTION 6. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the original issuance of shares of Common Stock upon the
exercise of Warrants; provided, however, that the Company shall not be required
(i) to pay any tax which may be payable in respect of any transfer involved in
the transfer and delivery of Warrants or the issuance or delivery of
certificates of Common Stock in a name other than that of the registered holder
of the Warrant surrendered for purchase, or (ii) to issue or deliver any
certificate for shares of Common Stock upon the exercise of any Warrants
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until any such tax required to be paid under paragraph (i) shall have been paid,
all such tax being payable by the holder of such Warrant at the time of
surrender.
SECTION 7. MUTILATED OR MISSING WARRANTS. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company may in its discretion
issue and the Warrant Agent may countersign and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the lost, stolen or destroyed Warrant, a new Warrant of
like tenor and evidencing the number of shares purchasable upon exercise of the
Warrant so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence satisfactory to the Warrant Agent of such loss, theft or destruction of
such Warrant and indemnity, if requested, also satisfactory to it. Applicants
for such substitute Warrants shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
SECTION 8. RESERVATION OF COMMON STOCK. There have been reserved, and
the Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the Warrants. Unless all Warrants shall have been exercised prior to
the Expiration Date of the Warrants, the Warrant Agent shall certify to the
Company, as of the close of business on the Expiration Date, the total aggregate
amount of Warrants then outstanding and thereafter no shares of Common Stock
shall be subject to reservation in respect of such Warrants.
SECTION 9. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SHARES.
The initial Exercise Price and the number of shares of Common Stock
issuable upon exercise of any Warrant (the "Warrant Shares") shall be subject to
adjustment from time to time as follows:
(a) In case, prior to the expiration of any Warrant by
exercise or by its terms, the Company shall issue any shares of its Common Stock
as a stock dividend or subdivide the number of outstanding shares of Common
Stock into a greater number of shares, then, in either of such cases, the
Exercise Price per share of the Warrant Shares purchasable pursuant to any
Warrant in effect at the time of such action shall be proportionately reduced
and the number of Warrant Shares at that time purchasable pursuant to any
Warrant shall be proportionately increased; and conversely, in the event the
Company shall contract the number of outstanding shares of Common Stock by
combining such shares into a smaller number of shares, then in such case, the
Exercise Price per share of the Warrant Shares in effect at the time of such
action shall be proportionately increased and the number of Warrant Shares at
that time purchasable pursuant to any Warrant shall be proportionately
decreased. Any dividend paid or
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distributed upon the Common Stock in stock or any other class of securities
convertible into shares of Common Stock shall be treated as a dividend paid in
Common Stock to the extent that shares of Common Stock are issuable upon the
conversion thereof.
(b) In case, prior to the expiration of any Warrant by
exercise or by its terms, the Company shall be recapitalized by reclassifying
its outstanding Common Stock, par value $.02, into stock with a different par
value or by changing its outstanding Common Stock with par value to stock
without par value, or the Company or a successor corporation shall be
consolidated or merge with or convey all or substantially all of its or any
successor corporation's property and assets to any other corporation or
corporations (any such corporation being included within the meaning of the term
"successor corporation" in the event of any consolidation or merger of any such
corporation with, or the sale of all or substantially all of the property of any
such corporation to, another corporation or corporations), in exchange for stock
or securities of a successor corporation, the holder of any Warrant shall
thereafter have the right to purchase upon the terms and conditions and during
the time specified in such Warrant, in lieu of the Warrant Shares theretofore
purchasable upon the exercise of such Warrant, the kind and amount of shares of
stock and other securities receivable upon such recapitalization or
consolidation, merger or conveyance by a holder of the number of shares of
Common Stock which the holder of such Warrant might have purchased immediately
prior to such recapitalization or consolidation, merger or conveyance.
(c) In case, prior to the expiration of any Warrant by
exercise or by its terms, the Company shall issue to all holders of its
outstanding Common Stock rights, warrants or options (expiring forty five (45)
days after the record date for determining shareholders entitled to receive such
rights, warrants or options) to subscribe for or purchase shares of Common Stock
at less than current market price, then, in such case, the Exercise Price per
share of the Warrant Shares purchasable pursuant to any Warrant shall be
proportionately increased.
(d) In case, prior to the expiration of any Warrant by
exercise or by its terms, the Company shall distribute to all holders of shares
of stock (other than Common Stock), evidences of indebtedness, or assets
(excluding cash dividends or distributions payable out of Common Stock) rights,
warrants or options (other than those described in paragraph (c) above) to
subscribe for or purchase shares of Common Stock, then, in such case, the
Exercise Price per share of the Warrant Shares purchasable pursuant to any
Warrant shall be proportionately increased.
(e) In case:
(i) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive
a dividend or any other
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distribution in respect of the Common Stock (including cash),
pursuant to, without limitation, any spin-off, split-off or
distribution of the Company's assets; or
(ii) the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to
subscribe for or purchase any shares of stock of any class or
to receive any other rights; or
(iii) the Company shall take a record of the holders
of its Common Stock for the purpose of any classification,
reclassification or other reorganization of the capital stock
of the Company, consolidation or merger of the Company with or
into another corporation, or conveyance of all or
substantially all of the assets of the Company; or
(iv) the Company shall take a record of the holders
of its Common Stock for the purpose of the voluntary or
involuntary dissolution, liquidation or winding up of the
Company;
then, and in any such case, the Company shall mail by
first-class mail, postage prepaid, to the Warrant holder, at
least fifteen (15) calendar days prior thereto, a notice
stating the date or expected date on which a record is to be
taken for the purpose of such dividend, distribution or
rights, or the date on which such classification,
reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up is to take
place, as the case may be. Such notice shall also specify the
date or expected date, if any is to be fixed, as of which
holders of Common Stock of record shall be entitled to
participate in said dividend, distribution or rights, or shall
be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or
winding up, as the case may be. The failure to give such
notice shall not affect the validity of any such proceeding or
transaction and shall not affect the right of the holder of
any Warrant to participate in said dividend, distribution or
rights or any such exchange.
(f) In case the Company at any time while any Warrant shall
remain unexpired and unexercised, shall dissolve, liquidate or wind up its
affairs, the holder of any Warrant may thereafter receive upon exercise hereof
in lieu of each share of Common Stock of the Company which it would have been
entitled to receive, the same kind and amount of any securities or assets as may
be issuable, distributable or payable upon any such dissolution, liquidation or
winding up with respect to each share of Common Stock of the Company.
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(g) Whenever the Exercise Price shall be adjusted as required
by the provisions of this Section 9, the Company shall forthwith file in the
custody of its Secretary at its principal office, with the Warrant Agent, and
with its stock transfer agent, if different than the Warrant Agent, an officer's
certificate showing the adjusted Exercise Price determined as therein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, the consideration for such shares, determined as in this Section 9
provided, and such other facts as shall be necessary to show the reason for and
the manner of computing such adjustment. Each such officer's certificate shall
be made available at all reasonable times for inspection by the Warrant holder
and the Company shall, forthwith after each such adjustment, mail by first-class
mail, postage prepaid, a copy of such certificate to the Warrant holder, and
thereafter said certificate shall be conclusive and shall be binding upon each
Warrant holder unless contested by such Warrant holder by written notice to the
Company within ten (10) calendar days after receipt of the certificate by the
Warrant holder.
SECTION 10. FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of any Warrant.
With respect to any fraction of a share called for upon exercise hereof, the
Company shall pay to the Warrant holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, which shall be
determined by the Company as follows:
(a) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange (or is
quoted on the Nasdaq National Market System) the current value shall be the last
reported sale price of the Common Stock on such exchange or the National Market
System on the last business day prior to the date of exercise of the Warrant; or
(b) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the closing bid
price as furnished by Nasdaq on the last business day prior to the date of
exercise, or if not so quoted on Nasdaq, the current market value shall be the
average of the high bid and low asked prices as reported on the "pink sheets" by
the National Daily Quotation Bureau, Inc., dated the last business day prior to
the date of exercise of any Warrant; provided that the term "business day" as
used in this sentence shall mean a day on which trading took place in the
domestic over-the-counter market.
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than book value, determined by the
Company in such reasonable manner as may be prescribed by the Board of Directors
of the Company.
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SECTION 11. WARRANT HOLDER NOT DEEMED A STOCKHOLDER; NOTICES. No
holder, as such, of any Warrant shall be entitled to vote or receive dividends
or be deemed the holder of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise thereof for any purpose
whatever, nor shall anything contained herein or in any Warrant be construed to
confer upon the holder of any Warrant, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance or otherwise), or to
receive notice of meetings, or to receive dividends or subscription rights, or
otherwise, until such Warrant shall have been exercised in accordance with the
provisions hereof and the receipt by the Warrant Agent of the Exercise Price
payable upon such exercise.
SECTION 12. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS.
(a) The Warrant Agent shall account promptly to the Company
with respect to Warrants exercised and concurrently pay to the Company all
monies received by the Warrant Agent for the purchase of shares of Common Stock
through the exercise of such Warrants.
(b) The Warrant Agent shall keep copies of this Agreement
available for inspection by holders of Warrants during normal business hours at
its principal office in New York, New York.
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 15. In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, and in case at that
time any of the Warrants shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
predecessor warrant agent and deliver such Warrants so countersigned; and in
case at that time any of the Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrants either in the name
of the predecessor warrant agent or in the name of the successor warrant agent;
and in all such cases such Warrants shall have the full force and effect
provided in the Warrants and in this Agreement.
11.
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In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, the Warrant Agent may countersign
such Warrants either in its prior name or in its changed name; and in all such
cases such Warrants shall have the full force and effect provided in the
Warrants and in this Agreement.
SECTION 14. DUTIES OF WARRANT AGENT. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the delivery of Warrants except
as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this Agreement
or in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel,
provided the Warrant Agent shall have exercised reasonable care in the selection
and continued employment of such counsel.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant for any action
taken in reliance on any notice, resolution, waiver, consent, order, certificate
or other paper, document or instrument believed by it to be genuine and to have
been signed, sent or presented by the party or parties to this Agreement.
(e) The Company agrees (i) to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, (ii) to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Agreement (other
than taxes measured by the Warrant Agent's net
12.
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income), and (iii) upon request, to advance to the Warrant Agent funds to pay
cash in lieu of fractional shares of Common Stock issuable on exercise of
Warrants.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more registered holders
of Warrants shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.
(g) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
The Warrant Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own gross negligence or bad faith.
SECTION 15. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company
notice in writing, and to the holders of the Warrants notice in writing and sent
by first-class mail, postage prepaid, to each registered holder of a Warrant at
such holder's address appearing in the Warrant register, specifying a date when
such resignation shall take effect, which notice shall be sent at least thirty
(30) calendar days prior to the date so specified. The Company may replace the
Warrant Agent by giving written notice to the Warrant Agent and to the holders
of the Warrants, such notice to be sent by first-class mail, postage prepaid, to
each registered holder of a Warrant at such holder's address appearing in the
Warrant Register, specifying a date when such replacement shall take effect,
which notice shall be sent at least thirty (30) calendar days prior to the date
so specified. If the Warrant Agent shall resign, be replaced or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of
thirty (30) calendar days after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
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Warrant Agent or by the registered holder of a Warrant (who shall, with such
notice, submit such holder's Warrant Certificate for inspection by the Company),
then the registered holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. After
appointment the successor warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor warrant agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to give any notice provided for
in this Section 15, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor warrant agent, as the case may be.
SECTION 16. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment
after the date hereof of any Transfer Agent for the Common Stock other than the
Warrant Agent, or of any subsequent Transfer Agent for shares of the Common
Stock, the Company will file with the Warrant Agent a statement setting forth
the name and address of such Transfer Agent.
SECTION 17. INDEMNIFICATION. The Company agrees to pay to the Warrant
Agent reasonable compensation for all services rendered by the Warrant Agent in
the execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Agreement and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Agreement
except as a result of Warrant Agent's negligence or bad faith.
SECTION 18. NOTICES. Any notice pursuant to this Agreement to be given
by the Warrant Agent or by the registered holder of any Warrant Certificate to
the Company shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Cypress Bioscience, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
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American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Stock Transfer Department
SECTION 19. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Warrants. The Company and the Warrant
Agent also may supplement or amend the Warrant Agreement in any other respect
with the written consent of the holders of at least two-thirds in number of the
Warrants then outstanding; however, no such supplement nor amendment may (a)
make any modification of the terms upon which the Warrants are exercisable or
may be redeemed or (b) change the percentage of the holders of the Warrants who
must consent to such amendment or supplement, without the consent of each
Warrant holder affected thereby.
SECTION 20. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrant Agent or holders of
the Warrants shall bind and inure to the benefit of their respective successors,
assigns, heirs and personal representatives.
SECTION 21. TERMINATION. This Agreement shall terminate at 5:00 p.m.,
Eastern Time, on October 1, 2001 or such earlier date upon which all Warrants
have been exercised or redeemed, except that the Warrant Agent shall account to
the Company pursuant to Section 12 for all cash held by it at 5:00 p.m., Eastern
Time, on such date of termination. The provisions of Section 14 shall survive
such termination.
SECTION 22. GOVERNING LAW. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be construed in accordance with the laws of
said State.
SECTION 23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the holders of the Warrants any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be for the sole
and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Warrants.
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SECTION 24. DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meanings or construction of any of the provisions
hereof.
SECTION 25. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
CYPRESS BIOSCIENCE, INC.
By:_____________________________
Name:___________________________
Title:__________________________
[seal]
Attest:
______________________________
Xxxxx X. Xxxxxx, Secretary
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:_______________________________
Name:_____________________________
Title:____________________________
[seal]
Attest:
______________________________
17.
