EXHIBIT 4(h)
[FORM OF STOCK PURCHASE WARRANT BETWEEN THE COMPANY
AND XXXX X. XXXX]
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS SUBSCRIPTION AGREEMENT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE 1933 ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
STOCK PURCHASE WARRANT
To Purchase 65,000 Shares of Common Stock of
PHARMOS CORPORATION
THIS CERTIFIES that, for value received, XXXX X. XXXX (the
"Finder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after September 30, 1997 (the "Initial Date of
Exercise") and on or prior to September 30, 2007 (the "Termination Date") but
not thereafter, to subscribe for and purchase from PHARMOS CORPORATION, a Nevada
corporation (the "Company"), 65,000 Shares of Common Stock (the "Warrant
Shares"). The purchase price of one share of Common Stock (the "Exercise Price")
under this Warrant shall be One Dollar and Thirty-Four Cents ($1.34). The
Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This warrant is being issued
pursuant a Preferred Stock Securities Purchase Agreement dated September 30,
1996 complete with all listed exhibits thereto (the "Agreement") between the
Company, Paresco, Inc., Liberty Plus Fund and Liberty Fund, LLC, and is subject
to its terms. In the event of any conflict between the terms of this Warrant and
the Agreement, the Agreement shall control.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company, by
the holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant. Exercise of the purchase rights represented
by this Warrant may be made at any time or times, in whole or in part, on or
after the Initial Date of Exercise and before the close of business on the
Termination Date, or such earlier date on which this Warrant may terminate as
provided in paragraph 11 below, by the surrender of this Warrant and the
Subscription Form annexed hereto duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company) and upon payment of the Exercise Price of the
shares thereby purchased; whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares of Common Stock so purchased
immediately. In the event upon exercising the Warrant, the transfer agent
requires an opinion of counsel, the Company shall have such opinion furnished to
the transfer agent to the transfer agent's satisfaction. In the event the Finder
is relying on another exemption from registration under the 1933 Act, the Shares
shall be issued immediately, if the Finder furnishes an opinion of counsel,
reasonably satisfactory to the Company, that another exemption from registration
is available. Certificates for shares purchased hereunder shall be delivered to
the holder hereof within five business days after the date on which this Warrant
shall have been exercised as aforesaid. Payment of the Exercise Price of the
shares may be by certified check or cashier's check or by wire transfer to an
account designated by the Company in an amount equal to the Exercise Price
multiplied by the number of shares being purchased.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the holder hereof for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof, together with evidence satisfactory to the Company that such transfer or
assignment is being made in compliance with all applicable federal and state
securities laws; and provided further, that upon any transfer involved in the
issuance or delivery of any certificates for shares of Common Stock, the Company
may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
6. Closing of Books. The Company will at no time close its
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
7. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise thereof. If, however, at the time of the
surrender of this Warrant and purchase the holder hereof shall be entitled to
exercise this Warrant, the shares so purchased shall be and be deemed to be
issued to such holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be assigned
by the surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company); provided,
however, that this Warrant may not be resold or otherwise transferred except (i)
in a transaction registered under the Securities Act, or (ii) in a transaction
pursuant to an exemption, if available, from such registration and whereby, if
requested by the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that the
transaction is so exempt.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
or stock certificate, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a legal
holiday.
11. Effect of Certain Events.
(a) If at any time the Company proposes (i) to sell or otherwise
convey all or substantially all of its assets or (ii) to effect a transaction
(by merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "Sale or Merger Transaction"), in which
the consideration to be received by the Company or its shareholders consists
solely of cash, the Company shall give the holder of this Warrant thirty (30)
days' notice of the proposed effective date of the transaction specifying that
the Warrant shall terminate if the Warrant has not been exercised by the
effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or Merger
Transaction in which the consideration to be received by the Company or its
shareholders consists in part of consideration other than cash, the holder of
this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) Subject to the terms and conditions of the Preferred Stock
Securities Purchase Agreement of even date. The Company is required to register
certain Common Stock underlying the Common Stock underlying this Warrant.
12. Registration Rights. If, upon exercise of all or any part of the
Warrant effected by the Finder pursuant to the terms of any part of this Warrant
and the terms of the Preferred Stock Securities Purchase Agreement at any time
after ninety (90) days from the date of this Warrant, the Company fails to issue
certificates for the shares of Common Stock issuable upon such exercise to the
Finder bearing no restrictive legend for any reason, other than a breach of
contract by Finder concerning the representations and warranties made by Finder
in this Agreement or the Notice of Exercise found herein were untrue when made,
then the Company shall be required, at the request of the Finder and at the
Company's expense, to effect the registration of the shares of Common Stock
issuable upon exercise of the shares of Common Stock under the 1933 Act, and
relevant Blue Sky laws as promptly as is practicable. The Company and the Finder
shall cooperate in good faith in connection with the furnishing of information
required for such registration and the taking of such other actions as may be
legally or commercially necessary in order to effect such registration. The
Company shall commence to prepare and file a registration statement within 10
days of Finder's demand therefor and shall use its best efforts to cause such
registration statement to become effective as soon as practicable thereafter.
Such best efforts shall include, but not be limited to, promptly responding to
all comments received from the staff of the Securities and Exchange Commission
with respect to such registration statement and promptly preparing and filing
amendments to such registration statement which are responsive to the comments
received from the staff of the Securities and Exchange Commission. Once declared
effective by the Securities and Exchange Commission, the Company shall cause
such registration statement to remain effective until the earlier of (i) the
sale by the Finder of all Securities registered, or (ii) 120 days after the
effective date of such registration statement.
In the event that the Company has not effected the registration of
the shares of Common Stock issuable upon the exercise of the Warrant under the
1933 Act and relevant Blue Sky Laws as soon as practicable after the date of the
Finder's demand therefor, the Company shall pay to the Finder by wire transfer,
as liquidated damages for such failure and not as a penalty, an amount in cash
equal to $10,000. If the Company does not remit the damages to the Finder as set
forth above, the Company will pay the Finder reasonable costs of collection,
including attorneys fees, in addition to the liquidated damages. Such payment
shall be made to the Finder immediately if the registration of the shares of
Common Stock is not effected; provided, however, that the payment of such
liquidated damages shall not relieve the Company from its obligations to
register the shares of Common Stock pursuant to this Section. The registration
of the shares of Common Stock pursuant to this provision shall not effect or
limit Finder's other rights or remedies as set forth in this Agreement.
13. Adjustments of Exercise Price and Number of Warrant Shares. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter set forth:
(a) In case the Company shall (i) declare or pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, the number of Warrant Shares purchasable
upon exercise of this Warrant immediately prior thereto shall be adjusted so
that the holder of this Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which he would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall issue rights, options or warrants to
holders of its outstanding Common Stock entitling them (for a period within 45
days after the record date mentioned below) to subscribe for or purchase shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock at a Price Per Share (as defined in paragraph (e) below) which
is lower at the date of issuance thereof than the then Current Market Price (as
defined in paragraph (f) below) per share of Common Stock at such date, the
number of Warrant Shares hereafter purchasable upon the exercise of this Warrant
shall be determined by multiplying the number of Warrant Shares theretofore
purchasable upon exercise of this Warrant by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights, options or warrants plus the number of additional
shares of Common Stock actually subscribed for and purchased, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights, options or warrants plus the number of shares
of Common Stock which the aggregate Proceeds (as defined in paragraph (e) below)
received by the Company on exercise of such rights, options and warrants would
purchase at the Current Market Price per share of Common Stock at the date of
issuance of such rights, options or warrants. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become effective
on the date of distribution retroactive to the record date for the determination
of stockholders entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to holders of its shares of
Common Stock evidences of its indebtedness or assets (excluding dividends or
distributions referred to in paragraph (a) above or in the paragraph immediately
following this paragraph and excluding any dividend or distribution paid out of
the retained earnings of the Company) or rights, options or warrants, or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in paragraph (b)
above), then in each case the number of Warrant Shares thereafter purchasable
upon the exercise of this Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon the exercise of this Warrant by a
fraction, of which the numerator shall be the then Current Market Price per
share of Common Stock on the date of such distribution, and of which the
denominator shall be such Current Market Price, less the then fair value (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive) of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of shareholders entitled to receive such distribution.
(d) For purposes of this Section 13, "Price Per Share" shall be
defined and determined according to the following formula:
R
P = ------------
N
where
P = Price Per Share,
R = the "Proceeds" received or receivable by the Company which
(i) in the case of shares of Common Stock is the total amount
received or receivable by the Company in consideration for the
sale and issuance of such shares; (ii) in the case of rights,
options or warrants to subscribe for or purchase shares of
Common Stock or of securities convertible into or exchangeable
or exercisable for shares of Common Stock, is the total amount
received or receivable by the Company in consideration for the
sale and issuance of such rights, options, warrants or
convertible or exchangeable or exercisable securities, plus
the minimum aggregate amount of additional consideration,
other than the surrender of such convertible or exchangeable
securities, payable to the Company upon exercise, conversion
or exchange thereof; and (iii) in the case of rights, options
or warrants to subscribe for or purchase convertible or
exchangeable or exercisable securities, is the total amount
received or receivable by the Company in consideration for the
sale and issuance of such rights, options or warrants, plus
the minimum aggregate amount of additional consideration other
than the surrender of such convertible or exchangeable
securities, payable upon the exercise, conversion or exchange
of such rights, options or warrants and upon the conversion or
exchange or exercise of the convertible or exchangeable or
exercisable securities; provided that in each case the
proceeds received or receivable by the Company shall be
deemed to be the gross cash proceeds without deducting
therefrom any compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or
dealers or other performing similar services or any expenses
incurred in connection therewith,
and
N = the "Number of shares," which (i) in the case of Common
Stock is the number of shares issued; (ii) in the case of
rights, options or warrants to subscribe for or purchase
shares of Common Stock or of securities convertible into or
exchangeable or exercisable for shares of Common Stock, is the
maximum number of shares of Common Stock initially issuable
upon exercise, conversion or exchange thereof; and (iii) in
the case of rights, options or warrants to subscribe for or
purchase convertible or exchangeable or exercisable
securities, is the maximum number of shares of Common Stock
initially issuable upon conversion, exchange or
exercise of the convertible, exchangeable or exercisable
securities issuable upon the exercise of such rights, options
or warrants.
If the Company shall issue shares of Common Stock or rights,
options, warrants or convertible or exchangeable or exercisable securities for a
consideration consisting, in whole or in part, of property other than cash, the
amount of such consideration shall be determined in good faith by the Board of
Directors of the Company whose determination shall be conclusive.
(e) For the purpose of any computation under paragraphs (b), (c) or
(d) of this Section 13, the "Current market Price" per share of Common Stock at
any date shall be the average of the Closing NASDAQ Price of the Common Stock
for the thirty (30) trading days commencing 30 trading days before the date of
determination.
(f) Whenever the number of Warrant Shares purchasable upon the
exercise of this Warrant is adjusted, as herein provided, the Exercise Price
payable upon exercise of this Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment, and of which the denominator
shall be the number of Warrant Shares purchasable immediately thereafter.
(g) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would result in an increase
or decrease of at least one percent (1%) percent of the Exercise Price; provided
that any adjustments which by reason of this paragraph (h) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(h) No adjustment in the number of Warrant Shares purchasable upon
the exercise of this Warrant need be made under paragraph (b), (c) or (d) if the
Company issues or distributes to the holder of this Warrant the shares, rights,
options, warrants or convertible or exchangeable securities, or evidences of
indebtedness or assets referred to in those paragraphs which the holder of this
Warrant would have been entitled to receive had this Warrant been exercised
prior to the happening of such event or the record date with respect thereto. In
no event shall the Company be required or obligated to make any such
distribution otherwise than in its sole discretion. No adjustment in the number
of Warrant shares purchasable upon the exercise of this Warrant need by made for
sales of Common Stock pursuant to a Company plan for reinvestment of dividends
or interest. No adjustment need be made for a change in the par value of the
Common Stock.
(i) In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the holder of this Warrant shall become
entitled to purchase any securities of the Company other than shares of Common
Stock, thereafter the number of such other shares so purchasable upon exercise
of this Warrant and the Exercise Price of such shares shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
paragraphs (a) through (i), inclusive, above.
14. Voluntary Adjustment by the Company. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exchange
Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the transfer agent for the Common Stock and to the holder of this Warrant
notice of such adjustment or adjustments setting forth the number of Warrant
Shares (and other securities or property) purchasable upon the exercise of this
Warrant and the Exercise Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth computation by which such adjustment was made. Such notice, in
absence of manifest error, shall be conclusive evidence of the correctness of
such adjustment.
16. Authorized Shares. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of NASDAQ
or any domestic securities exchange upon which the Common Stock may be listed.
17. Miscellaneous.
(a) Issue Date. The provisions of this Warrant shall be construed
and shall be given effect in all respects as if it had been issued and delivered
by the Company on the date hereof. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of New York and for all purposes shall be construed in accordance
with and governed by the laws of said state without regard to its conflict of
law, principles or rules.
(b) Restrictions. The holder hereof acknowledges that the Common
Stock acquired upon the exercise of this Warrant, if not registered, may have
restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: September 30, 1996
PHARMOS CORPORATION
By__________________________
Officer
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is _______________
_______________________________________________________________________________.
________________________________________________________________________________
Dated: ______________, 199_
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
