WARRANT AGREEMENT
Exhibit
4.10
Agreement
made as of [•], 2010 between Nephros, Inc., a Delaware corporation, with offices
at 00 Xxxxx Xxxxxx, Xxxxx Xxxx, Xxx Xxxxxx 00000 (together with its successors
and permitted assigns under Section 8.11, “Company”), and Continental Stock
Transfer & Trust Company, a New York corporation, with offices at 00 Xxxxxxx
Xxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (together with its successors and permitted assigns
under Section 7.2, “Warrant Agent”).
WHEREAS,
the Company is offering subscription rights (“Rights”) to its stockholders as of
5:00 p.m., Eastern Time, on [• ], 2010, to purchase up to 175,000,000 Units,
each Right entitling the holder thereof to purchase 4.185496618 Units at a
subscription price of $0.02 per Unit; and
WHEREAS,
each Unit consists of one share of the Company’s common stock, par value $0.001
per share (“Common Stock”), and a warrant to purchase 0.924532845 shares of
Common Stock at the exercise price of $0.02 per share (“Warrant”) for a period
of five years following [•], subject to adjustment as described herein;
and
WHEREAS,
the Company has filed with the Securities and Exchange Commission a Registration
Statement on Form S-1, No. [•] (the “Registration Statement”), for the
registration, under the Securities Act of 1933, as amended (the “Act”), of the
Rights, the Common Stock and Warrants issuable upon exercise of the Rights, and
the Common Stock issuable upon exercise of the Warrants; and
WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants; and
WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the
terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the
holders of the Warrants; and
WHEREAS,
all acts and things have been done and performed which are necessary to make the
Warrants, when executed on behalf of the Company and countersigned by or on
behalf of the Warrant Agent, as provided herein, the valid, binding and legal
obligations of the Company, and to authorize the execution and delivery of this
Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
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1.
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Appointment of Warrant
Agent. The Company hereby appoints the Warrant Agent to act as
agent for the Company for the Warrants, and the Warrant Agent hereby
accepts such appointment and agrees to perform the same in accordance with
the terms and conditions set forth in this
Agreement.
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2.
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Warrants.
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2.1.
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Form of
Warrant. Each Warrant shall be issued in registered form only,
shall be in substantially the form of Exhibit A hereto (“Warrant
Certificate”), the provisions of which are incorporated herein and shall
be signed by or bear the facsimile signature of the Acting Chief Executive
Officer and of the Secretary of the Company and shall bear a facsimile of
the Company’s seal. In the event the person whose facsimile signature has
been placed upon any Warrant shall have ceased to serve in the capacity in
which such person signed the Warrant before such Warrant is issued, it may
be issued with the same effect as if he or she had not ceased to be such
at the date of issuance.
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2.2.
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Effect of
Countersignature. Unless and until countersigned by the Warrant
Agent pursuant to this Agreement, a Warrant shall be invalid and of no
effect and may not be exercised by the holder
thereof.
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2.3.
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Registration.
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2.3.1.
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Warrant
Register. The Warrant Agent shall maintain books (“Warrant
Register”) at the location specified in the first paragraph of this
Agreement or at such other location in the Borough of Manhattan, the City
and State of New York, notice of which the Warrant Agent shall have given
to the Company and the holders in accordance with Section 8.2, for the
registration of original issuance and the registration of transfer of the
Warrants, in which the Company shall record the name and address of the
person in whose name each Warrant has been registered. Upon the initial
issuance of the Warrants, the Warrant Agent shall issue and register the
Warrants in the names of the respective holders thereof in such
denominations and otherwise in accordance with instructions delivered to
the Warrant Agent by the Company.
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2.3.2.
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Registered
Holder. Prior to due presentment for registration of transfer of
any Warrant, the Company and the Warrant Agent may deem and treat the
person in whose name such Warrant shall be registered upon the Warrant
Register (“registered holder”) as the absolute owner of such Warrant and
of each Warrant represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant Certificate 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.
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3.
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Terms and Exercise of
Warrants.
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3.1.
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Warrant Price.
Each Warrant shall, when countersigned by the Warrant Agent, entitle the
registered holder thereof, subject to the provisions of such Warrant and
of this Warrant Agreement, to purchase from the Company the number of
shares of Common Stock stated therein, at the price of $0.02 per whole
share, subject to the adjustments provided in Section 4 hereof. The term
“Warrant Price” as used in this Warrant Agreement refers to, subject to
Section 4.4, the price per share at which Common Stock may be purchased at
the time a Warrant is exercised.
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3.2.
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Duration of
Warrants. A Warrant may be exercised only during the period
(“Exercise Period”) commencing at 9:00 a.m., Eastern Time, on [•] and
terminating at 5:00 p.m., Eastern Time on [•] (“Expiration Date”). Each
Warrant not exercised on or before the Expiration Date shall become void,
and all rights thereunder and all rights in respect thereof under this
Agreement shall cease at the close of business on the Expiration
Date.
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3.3.
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Exercise of
Warrants.
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3.3.1.
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Payment.
Subject to the provisions of the Warrant and this Warrant Agreement, a
Warrant, when countersigned by the Warrant Agent, may be exercised by the
registered holder thereof by surrendering it, at the office of the Warrant
Agent in the Borough of Manhattan, City and State of New York, with the
subscription form, as set forth in the Warrant, duly executed, and by
paying in full the Warrant Price for each full share of Common Stock as to
which the Warrant is exercised and any and all applicable taxes due in
connection with the exercise of the Warrant (other than those taxes
payable by the Company as specified in Section 7.1) by (A) delivery of
cash to the Warrant Agent at the location at which the Warrant Register is
maintained, (B) certified bank check or official bank check payable to the
order of the Company and delivered to the Warrant Agent at the location at
which the Warrant Register is maintained, or (C) wire transfer in
immediately available funds, to the account (No. __________; ABA No.
_________; Reference: __________; Attention: _______________) of the
Company at the Warrant Agent or such other account of the Company at such
banking institution in the United States of America as the Company shall
have given notice to the Warrant Agent and such holder in accordance with
Section 8.2 (or as otherwise agreed to by the Company). The delivery
of the Warrant and duly executed subscription form and payment of the
Warrant Price and any such taxes are the only procedures required of, and
no legal opinion or other information or instructions shall be required to
be delivered by, the holder to exercise any
Warrant.
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3.3.2.
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Issuance of
Certificates. As soon as practicable (and, in any event, within
[___] Business Days) after the exercise of any Warrant and the
clearance of the funds in payment of the Warrant Price, the Company shall
issue to, or upon the order of, the registered holder of such Warrant a
certificate or certificates for the number of full shares of Common Stock
to which such registered holder is entitled, registered in such name or
names as may be directed by him, her or it, and if such Warrant shall not
have been exercised in full, a new countersigned Warrant for the number of
shares as to which such Warrant shall not have been
exercised. Notwithstanding the foregoing, the Company shall not
be obligated to deliver any securities pursuant to the exercise of a
Warrant and shall have no obligation to settle such Warrant exercise
unless a registration statement under the Act with respect to the Common
Stock issuable upon exercise of such Warrant is effective, subject to the
Company’s satisfying its obligations under Section 6.4 hereof to use its
best efforts. In the event that a registration statement with
respect to the Common Stock underlying a Warrant is not effective under
the Act, the holder of such Warrant shall not be entitled to exercise such
Warrant and such Warrant may have no value and expire worthless. Further,
no Warrant will be exercisable and the Company will not be obligated to
issue any shares of Common Stock unless the shares of Common Stock
issuable upon such exercise have been registered or qualified or deemed to
be exempt from registration under the securities laws of the state of
residence of the holder of the Warrant. In no event will the Company be
required to net cash settle the Warrant
exercise.
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3.3.3.
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Valid Issuance.
All shares of Common Stock issued upon the proper exercise of a Warrant in
conformity with this Agreement shall be validly issued, fully paid and
non-assessable and free from all liens and charges with respect to
the issue thereof.
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3.3.4.
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Date of
Issuance. Each person in whose name any such certificate for shares
of Common Stock is issued shall for all purposes be deemed to have become
the holder of record of such shares, and the Warrant Agent shall cancel
such Warrant, immediately prior to the close of business on the date on
which the Warrant was surrendered and payment of the Warrant Price was
made, irrespective of the date of delivery of such certificate, except
that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to
have become the holder of such shares, and the Warrant Agent shall cancel
such surrendered Warrant, immediately prior to the close of business on
the next succeeding date on which the stock transfer books are
open.
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4.
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Adjustments.
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4.1.
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Stock Dividends —
Split-Ups. If, after the date hereof, and subject to the provisions
of Section 4.7, the number of outstanding shares of Common Stock is
increased by a stock dividend payable in shares of Common Stock, or by a
split-up of shares of Common Stock, or other similar event (in each
case, other than upon (x) a reclassification or reorganization involving
other than solely a change in the number of outstanding shares of Common
Stock or (y) a merger or consolidation or sale or transfer to which
Section 4.4 applies), then, immediately after the date for determination
of the holders of Common Stock entitled to receive such stock dividend or
the effective date of such split-up or similar event, the number of shares
of Common Stock issuable on exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares of Common
Stock.
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4.2.
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Aggregation of
Shares. If, after the date hereof, and subject to the provisions of
Section 4.7, the number of outstanding shares of Common Stock is decreased
by a consolidation, combination, reverse stock split or reclassification
of shares of Common Stock or other similar event (in each case, other
than upon (x) a reclassification or reorganization involving other than
solely a change in the number of outstanding shares of Common Stock or (y)
a merger or consolidation or sale or transfer to which Section 4.4
applies), then, immediately after the effective date of such
consolidation, combination, reverse stock split, reclassification or
similar event, the number of shares of Common Stock issuable on exercise
of each Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
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4.3.
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Adjustments in
Exercise Price. Whenever the number of shares of Common Stock
purchasable upon the exercise of the Warrants is adjusted, as provided in
Section 4.1, 4.2, 4.11 or 4.12, the Warrant Price shall be adjusted (to
the nearest tenth of a cent) by multiplying such Warrant Price immediately
prior to such adjustment by a fraction (x) the numerator of which shall be
the number of shares of Common Stock purchasable upon the exercise of the
Warrants immediately prior to such adjustment, and (y) the denominator of
which shall be the number of shares of Common Stock so purchasable
immediately thereafter.
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4.4.
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Replacement of
Securities upon Reorganization, etc. In case of any
reclassification or reorganization of the outstanding shares of Common
Stock (other than a change covered by Section 4.1 or 4.2 hereof), or in
the case of any merger or consolidation of the Company with or into
another corporation (other than a consolidation or merger in which the
Company is the continuing corporation and that does not result in any
reclassification or reorganization of, or dividend or distribution on, the
outstanding shares of Common Stock), or in the case of any sale or
transfer to another corporation or entity of the assets or other property
of the Company as an entirety or substantially as an entirety, (i) (x) the
Warrant holders shall thereafter have the right to purchase and receive,
upon the basis and upon the terms and conditions specified in the Warrants
and in lieu of the shares of Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented thereby, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon such
sale or transfer, that the Warrant holder would have received if such
Warrant holder had exercised his, her or its Warrant(s) immediately prior
to such event; and (y) in any such case, if necessary, the obligations of
the Company (or, in the case of any such merger or consolidation in which
the Company is not the continuing corporation or such a sale or transfer
(each, a “Non-Surviving Transaction”), the other person) set forth herein
with respect to the rights of the Warrant holder to exercise a Warrant in
exchange for the shares of Common Stock theretofore purchasable upon
exercise of a Warrant shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to such Warrant holder’s right
to exercise a Warrant in exchange for shares of stock or other securities
or property pursuant to this paragraph; and (ii) as a condition to the
consummation of any such merger or consolidation or sale or transfer, the
Company shall (or, in the case of a Non-Surviving Transaction, the Company
shall cause such other person to) execute and deliver to the Warrant Agent
a written instrument providing as set forth in clause (i)(x) and (y) above
and for adjustments which, for events subsequent to the effective date of
such written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The
provisions of this Section 4.4 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or
other transfers. In determining the kind and amount of stock,
securities or the property receivable upon exercise of a Warrant following
the consummation of such reclassification, reorganization, merger or
consolidation or sale or other transfer, if the holders of Common Stock
have the right to elect the kind or amount of consideration receivable
upon consummation of such reclassification, reorganization, merger or
consolidation or sale or other transfer, then the consideration that a
Warrant holder shall be entitled to receive upon exercise shall be deemed
to be the kinds and amounts of consideration received by the majority of
all holders of the shares of Common Stock (excluding any holder that is a
person into which the Company consolidated or into which the Company
merged or which merged into the Company or to which such sale or other
transfer is made or an Affiliate of any thereof) that affirmatively make
an election.
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4.5.
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[Reserved.]
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4.6.
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Notices of Changes in
Warrant. Upon every adjustment of the Warrant Price or the number
of shares issuable upon exercise of a Warrant, the Company shall give
written notice thereof to the Warrant Agent and to the holders of
Warrants, which notice shall state the Warrant Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of a Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such
event.
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4.7.
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No Fractional
Shares. Notwithstanding any provision contained in this Warrant
Agreement to the contrary, the Company shall not issue fractional shares
upon exercise of Warrants. If, by reason of any adjustment made pursuant
to this Section 4, the holder of any Warrant would be entitled, upon the
exercise of such Warrant, to receive a fractional interest in a share, the
Company shall, upon such exercise, round down to the nearest whole number
the number of shares of Common Stock to be issued to the Warrant
holder.
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4.8.
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Form of
Warrant. The form of Warrant need not be changed because of any
adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares
as is stated in the Warrants initially issued pursuant to this Agreement.
However, the Company may at any time in its sole discretion make any
change in the form of Warrant that the Company may deem appropriate and
that does not affect the substance thereof, and any Warrant thereafter
issued or countersigned, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so
changed.
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4.9.
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Notice of Certain
Transactions. In the event that the Company shall propose to (a)
offer the holders of its Common Stock rights to subscribe for or to
purchase any securities convertible into shares of Common Stock or shares
of stock of any class or any other securities, rights or options, (b)
issue any rights, options or warrants entitling the holders of Common
Stock to subscribe for shares of Common Stock, (c) make a tender offer,
redemption offer or exchange offer with respect to the Common Stock, (d)
take any action of the type described in Sections 4.1, 4.2, 4.4, 4.10,
4.11 or 4.12 (but only if the action of the type described in Sections
4.1, 4.2, 4.4, 4.10, 4.11 or 4.12 would result in an adjustment in the
Warrant Price or the number of shares of Common Stock purchasable upon
exercise of Warrants or a change in the kind or amount of securities or
property (including cash) to be delivered upon exercise of a Warrant) or
(e) effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, in each such case, the Company shall send
to the Warrant holders a notice of such proposed action or offer. Such
notice shall be mailed to the registered holders at their addresses as
they appear in the Warrant Register, which shall specify the record date
for the purposes of such dividend, distribution or rights, or the date
such issuance or event is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed,
and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of shares of Common Stock and any other shares
of stock and other property, if any, issuable upon exercise of each
Warrant and the Warrant Price after giving effect to any adjustment
pursuant to this Section 4 which would be required as a result of such
action. Such notice shall be given as promptly as practicable after the
Board of Directors of the Company (the “Board”) has determined to take any
such action and (x) in the case of any dividend or distribution at least
10 days prior to the record date for determining the holders of the Common
Stock for purposes of such action or (y) in the case of any other such
action at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common
Stock, whichever shall be the
earlier.
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4.10.
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Adjustment for
Property Dividends. If the Company declares a dividend or any other
distribution upon the Common Stock that is payable in any of its assets
(including cash) or debt securities or any rights, options or warrants to
purchase debt securities, assets or other securities of the Company (other
than (i) a distribution of Common Stock pursuant to which Section 4.1
applies or (ii) a distribution upon a reclassification, reorganization,
merger or consolidation or sale or transfer to which Section 4.4 applies)
(a “Property Dividend”), then and in each such event the Warrant Price for
this Warrant in effect immediately prior to the close of business on the
date for the determination of the holders of Common Stock entitled to
receive such dividend or distribution shall be decreased by the fair
market value (as determined in good faith by the Board, whose
determination shall be conclusive and evidenced by a board resolution
filed with the Company) on the ex date for such distribution of such
Property Dividend so distributed for each share of Common Stock (after
taking into account, in the case of rights, warrants or options, the
consideration required to be paid upon exercise
thereof).
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Any
adjustment under this Section 4.10 shall become effective immediately after the
date for the determination of the holders of Common Stock entitled to receive
the Property Dividend. If the Board determines the fair market value of any
Property Dividend for purposes of this Section 4.10 or Section 4.11 by reference
to the actual or when issued trading market for any securities comprising such
Property Dividend, the Board must in doing so consider the prices in such market
on the same Trading Day that is or would be required to be used pursuant to
Section 4.11 in computing the VWAP for “M” in the formula in Section
4.11.
For
purposes of clarity, if a declared Property Dividend would have reduced the
Warrant Price to an amount below the par value per share of the Common Stock,
the Warrant Price will be reduced to the par value per share of the Common Stock
and any remaining fair market value of the Property Dividend that would have
resulted in a reduction of the Warrant Price below the par value per share of
the Common Stock shall be reflected in an increase of the number of shares
issuable upon exercise of this Warrant pursuant to Section 4.11
hereto.
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4.11.
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Adjustment for
Property Dividend In Special Circumstances. In the event
that the Warrant Price is or has been reduced to the par value per share
of the Common Stock or a price that rounds to the par value per share of
the Common Stock due to adjustments to the Warrant Price pursuant to
Section 4.10 and the Company declares a dividend or any other distribution
upon the Common Stock that is a Property Dividend, this Section 4.11 shall
apply and the number of shares of Common Stock issuable upon exercise of
the Warrant shall be adjusted in accordance with the
formula:
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N’ = N x
M
M
- F
where:
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N’ =
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the
adjusted number of shares of Common Stock issuable upon exercise of this
Warrant.
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N =
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the
current number of shares of Common Stock issuable upon exercise of this
Warrant.
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M =
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the
VWAP for the Trading Day immediately preceding the ex date for such
distribution.
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F =
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the
fair market value on the ex date for such distribution of the Property
Dividend distributable to one share of Common Stock after taking into
account, in the case of any rights, options or warrants, the consideration
required to be paid upon exercise thereof. The Board shall reasonably
determine the fair market value in good
faith.
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The
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the date for the determination of
holders of Common Stock entitled to receive such
distribution.
If any
adjustment is made pursuant to this Section 4.11 as a result of the issuance of
rights, options or warrants and at the end of the period during which any such
rights, options or warrants are exercisable, not all such rights, options or
warrants shall have been exercised, this Warrant (to the extent not then
exercised) shall be immediately readjusted as if “F” in the above formula was
the fair market value on the ex date for such distribution of the indebtedness
or assets actually distributed upon exercise of such rights, options or warrants
divided by the number of shares of Common Stock outstanding on the ex-dividend
date for such distribution and taking into account the consideration paid upon
exercise thereof.
“ex date”
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the VWAP was obtained
without the right to receive such issuance or distribution.
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4.12.
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Certain Repurchases of
Common Stock. In the case the Company effects a Pro Rata
Repurchase of Common Stock, then the number of shares of Common Stock
issuable upon exercise of each Warrant shall be increased to the amount
determined by multiplying the number of shares of Common Stock issuable
upon exercise of each Warrant in effect immediately prior to the Effective
Date of such Pro Rata Repurchase by a fraction of which the numerator
shall be the product of (i) the number of shares of Common Stock
outstanding immediately prior to such Pro Rata Repurchase minus the number
of shares of Common Stock so repurchased and (ii) the VWAP on the Trading
Day immediately preceding the first public announcement by the Company or
any of its Affiliates of the intent to effect such Pro Rata Repurchase and
of which the denominator shall be (i) the product of (x) the number of
shares of Common Stock outstanding immediately before such Pro Rata
Repurchase and (y) the VWAP on the Trading Day immediately preceding the
first public announcement by the Company or any of its Affiliates of the
intent to effect such Pro Rata Repurchase, minus (ii) the aggregate
purchase price of the Pro Rata
Repurchase.
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“Pro Rata
Repurchase” means any purchase of shares of Common Stock by the Company or any
Affiliate thereof pursuant to (A) any tender offer or exchange offer subject to
Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated
thereunder or (B) any other offer available to substantially all holders of
Common Stock, in the case of both (A) and (B), whether for cash, shares of
Capital Stock of the Company, other securities of the Company, evidences of
indebtedness of the Company or any other Person or any other property
(including, without limitation, shares of Capital Stock, other securities or
evidences of indebtedness of a subsidiary), or any combination thereof, effected
while any Warrant is outstanding. The “Effective Date” of a Pro Rata
Repurchase shall mean the date of acceptance of shares for purchase or exchange
by the Company under any tender or exchange offer which is a Pro Rata Repurchase
or the date of purchase with respect to any Pro Rata Repurchase that is not a
tender or exchange offer.
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4.13.
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Adjustment
Rules. Any adjustments pursuant to this Section 4 shall
be made successively whenever an event referred to herein shall
occur. If an adjustment in Warrant Price made hereunder would
reduce the Warrant Price to an amount below the par value per share of the
Common Stock, then such adjustment in Warrant Price made hereunder shall
reduce the Warrant Price to the par value per share of the Common
Stock.
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4.14.
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Other Events.
If any event occurs as to which the foregoing provisions of this Section 4
are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board, fairly and adequately protect the
purchase rights of the registered holders of the Warrants in accordance
with the essential intent and principles of such provisions, then the
Board shall make such adjustments in the application of such provisions,
in accordance with such essential intent and principles, that result
solely in a decrease in the Warrant Price or an increase in the number of
shares of Common Stock and other property, if any, issuable upon exercise
of a Warrant as shall be reasonably necessary, in the good faith opinion
of the Board, to protect such purchase rights as
aforesaid.
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5.
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Transfer and Exchange
of Warrants.
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5.1.
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Registration of
Transfer. The Warrant Agent shall register the transfer, from time
to time, of any outstanding Warrant upon the Warrant Register, upon
surrender of such Warrant for transfer, properly endorsed with signatures
properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant representing an equal
aggregate number of Warrants shall be issued and the old Warrant shall be
cancelled by the Warrant Agent. The Warrants so cancelled shall be
delivered by the Warrant Agent to the Company from time to time upon
request.
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5.2.
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Procedure for
Surrender of Warrants. Warrants may be surrendered to the Warrant
Agent, together with a written request for exchange or transfer, and
thereupon the Warrant Agent shall issue in exchange therefor one or more
new Warrants as requested by the registered holder of the Warrants so
surrendered, representing an equal aggregate number of Warrants, and the
Warrant Agent shall cancel the surrendered
Warrant.
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5.3.
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Fractional
Warrants. The Warrant Agent shall not be required to effect any
registration of transfer or exchange which will result in the issuance of
a warrant certificate for a fraction of a
Warrant.
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5.4.
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Service
Charges. No service charge shall be made for any exchange or
registration of transfer of
Warrants.
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5.5.
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Warrant Execution and
Countersignature. The Warrant Agent is hereby authorized to
countersign and to deliver, in accordance with the terms of this
Agreement, the Warrants required to be issued pursuant to the provisions
of Sections 3.3.2 and 6.2 and this Section 5, 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.
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5.6.
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Warrants Deemed
Outstanding. The Warrants outstanding at any time are
all Warrants evidenced on all Warrant Certificates countersigned by the
Warrant Agent except for those canceled, or then required hereunder to be
canceled, by the Warrant Agent. A Warrant ceases to be
outstanding if the Company holds the
Warrant.
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5.7.
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Warrants To Be
Identical. All Warrants issued upon any registration of
transfer or exchange, or upon exercise or replacement, pursuant to the
terms of this Agreement shall be the valid obligations of the Company,
entitled to the same benefits under this Agreement as the Warrants
surrendered upon such registration for transfer or
exchange.
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7
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6.
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Other Provisions
Relating to Rights of Holders of
Warrants.
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6.1.
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No Rights as
Stockholder. Subject
to Section 3.3.4, a Warrant does not entitle the registered holder thereof
to any of the rights of a stockholder of the Company, including, without
limitation, the right to receive dividends, or other distributions,
exercise any preemptive rights to vote or to consent or to receive notice
as shareholders in respect of the meetings of shareholders or the election
of directors of the Company or any other
matter.
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6.2.
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Lost, Stolen,
Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen,
mutilated, or destroyed, the Company and the Warrant Agent may on such
terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination, tenor, and date as the
Warrant so lost, stolen, mutilated, or destroyed and, in the case of
a mutilated Warrant, the Warrant Agent shall cancel the old Warrant. Any
such new Warrant shall constitute a substitute contractual obligation of
the Company, whether or not the allegedly lost, stolen, mutilated, or
destroyed Warrant shall be at any time enforceable by
anyone.
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6.3.
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Reservation of Common
Stock. The Company shall at all times reserve and keep available a
number of its authorized but unissued shares of Common Stock that will be
sufficient to permit the exercise in full of all outstanding Warrants
issued pursuant to this Agreement.
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6.4.
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Registration of Common
Stock. The Company shall use its best efforts to ensure that all
such shares of Common Stock issuable upon exercise of Warrants may be so
issued and freely sold and transferred without violation of any applicable
federal or state securities law (including the Act) or other applicable
law or governmental regulation or any requirements of any domestic stock
exchange upon which shares of Common Stock may be listed (except for
official notice of issuance which shall be immediately delivered by the
Company upon each such issuance).
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The
Company shall, from and after the date of original issuance of the Warrants
until the end of the Exercise Period, maintain on file with the Securities and
Exchange Commission a post-effective amendment to the Registration Statement, or
a new registration statement for registration of the offer and sale by the
Company and subsequent resale by holders upon exercise (and cause a current
prospectus to be available to holders for such resales), under the Act, of, and
it shall take such action as is necessary to qualify for sale, in those states
in which the Warrants were initially offered by the Company, the Common Stock
issuable upon exercise of the Warrants. In either case, the Company will use its
best efforts to cause the same to become effective and to maintain the
effectiveness of such registration statement until the expiration of the
Warrants in accordance with the terms of this Agreement. In no event will the
registered holder of a Warrant be entitled to receive a net-cash settlement of
shares of Common Stock or other consideration as a result of the Company’s
noncompliance with this Section 6.4.
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6.5.
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Rights of
Action. All rights of action against the Company in
respect of this Agreement, except rights of action vested in the Warrant
Agent, are vested in the holders of the Warrants, and any holder of any
Warrant, without the consent of the Warrant Agent or the holder of any
other Warrant, may, in such holder’s own behalf and for such holder’s own
benefit, enforce and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in
respect of, such holder’s right to exercise such holder’s Warrants in the
manner provided in this Agreement.
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7.
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Concerning the Warrant
Agent and Other Matters.
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7.1.
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Payment of
Taxes. The Company will from time to time promptly pay all taxes
and charges (other than income taxes) that may be imposed upon the Company
or the Warrant Agent or otherwise payable in respect of the issuance or
delivery of shares of Common Stock upon the exercise of Warrants, but the
Company shall not be obligated to pay any transfer taxes in respect of
the issue or delivery of such shares in the name other than that in
which the Warrants were
registered.
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8
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7.2.
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Resignation,
Consolidation, or Merger of Warrant
Agent.
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7.2.1.
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Appointment of
Successor Warrant Agent. The Warrant Agent may resign its duties
and be discharged from all further duties and liabilities hereunder after
giving sixty (60) days’ notice in writing to the Company. If the office of
the Warrant Agent becomes vacant by resignation or incapacity to act or
otherwise, the Company shall appoint in writing a successor Warrant Agent
in place of the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in
writing of such resignation or incapacity by the Warrant Agent or by the
holder of any Warrant (who shall, with such notice, submit his Warrant for
inspection by the Company), then the holder of any Warrant may apply to
the Supreme Court of the State of New York for the County of New York for
the appointment of a successor Warrant Agent at the Company’s cost. Any
successor Warrant Agent, whether appointed by the Company or by such
court, shall be a corporation organized and existing under the laws of the
State of New York, in good standing and having its principal office in the
Borough of Manhattan, City and State of New York, and authorized under
such laws to exercise corporate trust powers and subject to supervision or
examination by federal or state authority. After appointment, any
successor Warrant Agent shall be vested with all the authority, powers,
rights, immunities, duties, and obligations of its predecessor Warrant
Agent with like effect as if originally named as Warrant Agent hereunder,
without any further act or deed; but if for any reason it becomes
necessary or appropriate, the predecessor Warrant Agent shall execute and
deliver, at the expense of the Company, an instrument transferring to such
successor Warrant Agent all the authority, powers, and rights of such
predecessor Warrant Agent hereunder; and upon request of any successor
Warrant Agent the Company shall make, execute, acknowledge, and deliver
any and all instruments in writing for more fully and effectually vesting
in and confirming to such successor Warrant Agent all such authority,
powers, rights, immunities, duties, and
obligations.
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7.2.2.
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Notice of Successor
Warrant Agent. In the event a successor Warrant Agent shall be
appointed, the Company shall give notice thereof to the predecessor
Warrant Agent and the transfer agent for the Common Stock not later than
the effective date of any such
appointment.
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7.2.3.
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Merger or
Consolidation 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 shall be the successor Warrant Agent under
this Agreement without any further
act.
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7.3.
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Fees and Expenses of
Warrant Agent.
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7.3.1.
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Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for
its services as such Warrant Agent hereunder and will reimburse the
Warrant Agent upon demand for all expenditures that the Warrant Agent may
reasonably incur in the execution of its duties
hereunder.
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7.3.2.
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Further
Assurances. The Company agrees to perform, execute, acknowledge,
and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as
may reasonably be required by the Warrant Agent for the carrying out or
performing of the provisions of this
Agreement.
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7.4.
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Liability of Warrant
Agent.
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7.4.1.
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Reliance on Company
Statement. Whenever in the performance of its duties under this
Warrant Agreement, the Warrant Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement signed
by the Acting Chief Executive Officer or Chairman of the Board of the
Company and delivered to the Warrant Agent. The Warrant Agent may rely
upon such statement for any action taken or suffered in good faith by it
pursuant to the provisions of this
Agreement.
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9
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7.4.2.
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Indemnity. The
Warrant Agent shall be liable hereunder only for its own negligence,
willful misconduct or bad faith. The Company agrees 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 the Warrant Agent’s negligence, willful misconduct, or bad
faith.
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7.4.3.
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Exclusions. The
Warrant Agent shall have no responsibility with respect to the validity of
this Agreement or with respect to the validity or execution of any Warrant
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Warrant; nor shall it be responsible to make any
adjustments required under the provisions of Section 4 hereof or
responsible for the manner, method, or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock to be issued pursuant to this Agreement or any
Warrant or as to whether any shares of Common Stock will, when issued, be
valid and fully paid and
non-assessable.
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7.5.
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Acceptance of
Agency. The Warrant Agent hereby accepts the agency established by
this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and among other things, shall account promptly
to the Company with respect to Warrants exercised and concurrently account
for, and pay to the Company, all moneys received by the Warrant Agent for
the purchase of shares of Common Stock through the exercise of
Warrants.
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8.
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Miscellaneous
Provisions.
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8.1.
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Successors. All
the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrant Agent shall bind and inure to the benefit of
their respective successors and
assigns.
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8.2.
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Notices. Any
notice, statement or demand authorized by this Warrant Agreement to be
given or made by the Warrant Agent or by the holder of any Warrant to or
on the Company shall be sufficiently given when so delivered, if by hand
or overnight delivery or if sent by certified mail or private courier
service, within five days after deposit of such notice, postage prepaid,
addressed (until another address is filed in writing by the Company with
the Warrant Agent and notice thereof is given to all holders of
Warrants), as follows:
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Nephros,
Inc.
00 Xxxxx
Xxxxxx
Xxxxx
Xxxx, XX 00000
Attn:
Xxxx X. Xxxxxx, Acting Chief Executive Officer
with a
copy to:
Xxxxxx
Xxxxxxx Xxxxx & Xxxxxx LLP
0000 Xxxx
Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxxxx X. Xxxxxxxxx, Esquire
Any
notice, statement or demand authorized by this Agreement to be given or made by
the holder of any Warrant or by the Company to or on the Warrant Agent shall be
sufficiently given when so delivered, if by hand or overnight delivery or if
sent by certified mail or private courier service, within five days after
deposit of such notice, postage prepaid, addressed (until another address is
filed in writing by the Warrant Agent with the Company and notice thereof is
given to all holders of Warrants), as follows:
10
Continental
Stock Transfer & Trust Company
00
Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn:
Compliance Department
Any
notice, statement or demand authorized by this Agreement to be given or made by
the Warrant Agent or by the Company to or on the holder of any Warrant shall be
given in writing and shall be sufficiently given (unless otherwise herein
expressly provided) when so delivered, if by hand or overnight delivery or if
sent by certified mail or private courier service, within five days after
deposit of such notice, postage prepaid, addressed to such holder, at the
address of such holder as it appears in the Warrant Register.
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8.3
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Applicable law.
The validity, interpretation, and performance of this Agreement and of the
Warrants shall be governed in all respects by the laws of the State of New
York, without giving effect to conflicts of law principles that would
result in the application of the substantive laws of another jurisdiction.
The Company hereby agrees that any action, proceeding or claim against it
arising out of or relating in any way to this Agreement shall be brought
and enforced in any state court sitting in the County of New York or
federal court sitting in the Southern District of the State of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenience forum. Any
such process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address for
notices as provided in Section 8.2 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any
action, proceeding or claim. To the extent permitted by law,
any judgment in respect of a dispute arising out of or relating to this
Agreement or any Warrant may be enforced in any other jurisdiction within
or outside the United States by suit on the judgment, a certified copy of
such judgment being conclusive evidence of the fact and amount of such
judgment.
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8.4
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Persons Having Rights
under this Agreement. Nothing in this Agreement expressed and
nothing that may be implied from any of the provisions hereof is intended,
or shall be construed, to confer upon, or give to, any person or
corporation other than the parties hereto and the registered holders of
the Warrants any right, remedy, or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise, or
agreement hereof. All covenants, conditions, stipulations, promises, and
agreements contained in this Warrant Agreement shall be for the sole and
exclusive benefit of the parties hereto and their successors and assigns
and of the registered holders of the
Warrants.
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8.5
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Examination of the
Warrant Agreement. A copy of this Agreement shall be available at
all reasonable times at the office of the Warrant Agent in the Borough of
Manhattan, City and State of New York, for inspection by the registered
holder of any Warrant. The Warrant Agent may require any such holder to
submit his Warrant for inspection by
it.
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8.6
|
Counterparts.
This Agreement may be executed in any number of original or facsimile
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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8.7
|
Effect of
Headings. The Section headings herein are for convenience only and
are not part of this Warrant Agreement and shall not affect the
interpretation thereof.
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8.8
|
Amendments.
This Agreement may be amended by the parties hereto without the consent of
any registered holder for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained
herein or adding or changing any other provisions with respect to matters
or questions arising under this Agreement as the parties may deem
necessary or desirable and that shall not adversely affect the interest of
the registered holders in any material respect. All other modifications or
amendments, including any amendment to increase the Warrant Price or
shorten the Exercise Period, shall require the written consent of the
registered holders of a majority of the then outstanding
Warrants.
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Any such
amendment to this Agreement shall be effected by a written instrument executed
and delivered by the Company and the Warrant Agent. Promptly after
the execution by the Company and the Warrant Agent of any such amendment, the
Company shall give notice to the holders of Warrants, setting forth in general
terms the substance of such amendment, in accordance with the provisions of
Section 8.2.
11
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8.9
|
Severability.
This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms
to such invalid or unenforceable provision as may be possible and be valid
and enforceable.
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8.10
|
Entire
Agreement. This Agreement sets forth the entire
agreement of the parties hereto as to the subject matter hereof and
supersedes all previous agreements among all or some of the parties hereto
with respect thereto, whether written, oral or
otherwise.
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8.11
|
Non-Surviving
Transaction. So long as Warrants remain outstanding, the
Company will not enter into any Non-Surviving Transaction (as defined in
Section 4.4) unless the acquirer shall expressly assume by a supplemental
agreement, executed and delivered to the Warrant Agent, in form reasonably
satisfactory to the Warrant Agent, the due and punctual performance of
every covenant of this Agreement on the part of the Company to be
performed and observed and shall have provided for exercise rights in
accordance with Section 4.4. Upon the consummation of such
Non-Surviving Transaction, the acquirer shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Agreement with the same effect as if such acquirer had been
named as the Company herein.
|
Except as
provided in the preceding paragraph, neither this Agreement nor any Warrant nor
any of the rights, interests or obligations hereunder or thereunder may be
assigned, by operation of law or otherwise, in whole or in part, by the Company
without the prior written consent of holder of each Warrant affected
thereby.
|
8.12
|
Attorneys’
Fees. In the event of any litigation or other proceeding
concerning this Agreement or any Warrant or the transactions contemplated
hereby, including any such litigation or proceeding with respect to the
enforcement of this Agreement or any Warrant against any defaulting party,
the prevailing party in such litigation or proceeding shall be entitled to
reimbursement from the party opposing such prevailing party for all
attorneys’ fees and costs incurred by such prevailing party in such
litigation or proceeding.
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8.13
|
Miscellaneous
Definitions.
|
“Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
legal holiday in the State of New York or a day on which banking institutions
and trust companies in the State of New York are authorized or obligated by law,
regulation or executive order to close.
“VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted for trading
on the New York Stock Exchange, American Stock Exchange, Nasdaq Capital Market,
Nasdaq Global Market, Nasdaq Global Select Market or the OTC Bulletin Board, or
any successor to any of the foregoing (a “Trading Market”), the volume weighted
average price of the Common Stock on the Trading Market on which the Common
Stock is then listed or quoted for trading as reported by Bloomberg L.P. for the
immediately preceding ten (10) Trading Days; (b) if the Common Stock is not
then listed or quoted for trading on a Trading Market and if prices for the
Common Stock are then reported in the “Pink Sheets” published by Pink Sheets,
LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the average of the bid price per share of the
Common Stock so reported for the immediately preceding ten (10) Trading Days; or
(c) in all other cases, the fair market value on such date of a share of
Common Stock as determined by an independent appraiser selected in good faith by
the Company. “Trading
Day” means from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)
on each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on
which securities are not traded on the applicable securities exchange or
securities market.
12
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as
of the day and year first above written.
|
CONTINENTAL
STOCK TRANSFER & TRUST COMPANY
|
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By:
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|
Name:
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|
Title:
|
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NEPHROS,
INC.
|
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By:
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Name:
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Title:
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13
