Exhibit 10.1
[SYNOVICS PHARMACEUTICALS LOGO]
April 20, 2007
Xx. Xxxxxxxxx Xxxxx
c/o Glopec International, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Dear Xx. Xxxxx:
We are pleased to set forth the terms of the retention of Xxxxxxxxx
Xxxxx ("XXXXX" or "YOU") by Synovics Pharmaceuticals, Inc., a Nevada corporation
(collectively with its affiliates, the "COMPANY") in this letter agreement
("AGREEMENT").
1) During the Term (as hereinafter defined), Xxxxx shall, on a non-exclusive
basis, render the following services to the Company:
a) Xxxxx will assist the Company in procuring products for current and
future over-the-counter formulations for manufacture at the Company
and its subsidiaries and will assist in procuring replacement sources
for raw materials and finished tablets in bulk for current products
and new products. The Company hereby agrees that Xxxxx shall be
entitled to recommend products and services from persons or entities
to which he is, directly or indirectly, associated; provided that in
such event Xxxxx shall fully disclose to the Company the nature of his
relationship with such persons or entities, it being understood that
the Company shall make the final determination as to whether to enter
into any transaction with such persons or entities;
b) Xxxxx will introduce to Synovics abbreviated new drug application, or
ANDA, opportunities of products pre-approved and to be approved;
c) Xxxxx will render strategic consulting services;
x) Xxxxx may identify and bring to Synovics merger and acquisition
opportunities; and
x) Xxxxx will from time to time use his commercially reasonable efforts
to make himself available, as reasonably requested by the Company to
meet with strategic investors, prospective investors, or others as
requested who may be potentially beneficial to the Company.
Further, subject to applicable laws and the fiduciary duties and requirements of
the directors and management of Synovics, you shall be, invited to attend, speak
at, be heard, and observe, but not vote at, every meeting of the board of
directors and each committee thereof, including the executive committee.
2) In connection with Xxxxx'x activities on the Company's behalf, Xxxxx will
familiarize himself with the business, operations, properties, financial
condition, and prospects of the Company. In connection with Xxxxx'x role as
the Company's advisor, the Company would expect his services to include
such additional advisory and related services as may be mutually agreed
upon by you and the Company. Your retention by the Company as an advisor as
described herein shall be for a period of three years from the date hereof,
unless sooner terminated pursuant to the terms hereof, which term shall
renew automatically for a successive periods of one year unless either
party shall give written
SYNOVICS PHARMACEUTICALS, INC.
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notice to the other to the contrary at least 30 days prior to the end of
the term of this Agreement (the "TERM"), or any successive term.
3) In connection with Xxxxx'x activities on the Company's behalf, the Company
will cooperate with Xxxxx and xxxx xxxxxxx Xxxxx with all information and
data concerning the Company, including the audited and unaudited financial
statements of the Company and its subsidiaries, on a consolidated and
non-consolidated basis, and including management reports and working papers
(collectively, the "INFORMATION") which Xxxxx deems appropriate and will
provide Xxxxx with access to the Company's managers, members, officers,
directors, employees, independent accountants, legal counsel, consultants,
and representatives. The Company represents and warrants that all
Information made available to Singh by the Company will, at all times
during the period of engagement of Xxxxx hereunder, be complete and correct
in all material respects and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading
in the light of the circumstances under which such statements are made. The
Company further represents and warrants that any projections provided by it
to Xxxxx will have been prepared in good faith and will be based upon
assumptions which, in light of the circumstances under which they are made,
are reasonable. The Company acknowledges and agrees that, in rendering his
services hereunder, Xxxxx will be using and relying on the Information
without independent verification thereof by Xxxxx or independent appraisal
by Xxxxx of any of the Company's assets. Xxxxx does not assume
responsibility for any information regarding the Company. Any advice
rendered by Xxxxx pursuant to this Agreement may not be disclosed publicly
without Xxxxx'x prior written consent. The Information provided pursuant to
this Paragraph 3 shall be subject to the confidentiality provisions set
forth in Paragraph 8 below.
4) In consideration of his services pursuant to this Agreement, Xxxxx shall be
entitled to receive, and the Company agrees to provide to Xxxxx,
compensation on the following terms:
a) (i) Upon the execution hereof, the Company shall issue to Singh
2,000,000 shares of common stock, par value $0.001 per share (the
"COMMON STOCK"), of the Company and warrants (the "INITIAL
CONSULTING WARRANTS") to acquire an aggregate of 1,000,000 shares
of Common Stock.
(ii) If the Company shall, at any time during the Term (or any
successive term) and irrespective of whether or not you are at
such time providing services to the Company pursuant to the terms
of this Agreement, achieve annual earnings before interest,
taxes, depreciation and amortization ("EBITDA") of US$20,000,000
(the "EBITDA THRESHOLD") or more on a consolidated basis, the
Company shall issue to Singh an additional 1,000,000 shares of
Common Stock and warrants (the "CONTINGENT CONSULTING WARRANTS",
and, together with the Initial Consulting Warrants, the
"CONSULTING WARRANTS") to acquire an additional 500,000 shares of
Common Stock. EBITDA shall be determined in accordance with
generally accepted accounting principles in effect in the United
States and shall be determined on a basis consistent with the
audited financial statements of Synovics.
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(iii) The Corporation shall set aside such number of shares of Common
Stock as is necessary to issue the shares of Common Stock set
out in Sections 4(a)(i) and (ii), including, resulting upon the
conversion of all of the Consulting Warrants, and when such
Common Stock is issued upon receipt of the consideration payable
upon conversion of the Consulting Warrants, such Common Stock
shall be fully paid and non-assessable.
(iv) A consulting fee in the amount of $10,000 per month during the
Term (and any successive term), payable in arrears with the
first payment being due May 31, 2007.
b) The Initial Consulting Warrants shall be deemed to be vested on the
date hereof and shall be exercisable, in whole or in part, from time
to time, at the exercise price of $2.00 per share (the "INITIAL
CONSULTING WARRANT EXERCISE PRICE") and on a net issuance or
"cashless" basis until the date which is the seventh anniversary of
the date hereof. The Initial Consulting Warrant Exercise Price and the
number of shares subject thereto shall be subject to adjustment in the
event of stock splits, stock dividends, reverse stock splits, and
similar events, and, additionally, in the case of a Change of Control
(as defined in the Consulting Warrants). The Contingent Consulting
Warrants shall be deemed vested on the date hereof and will be
exercisable, in whole or in part, from time to time, after the EBITDA
Threshold is met at the exercise price of $2.00 per share (the
"CONTINGENT WARRANT EXERCISE PRICE") and on a net issuance or
"cashless" basis until the date which is the seventh anniversary of
the date of the EBITDA Threshold being met, if at all. The Contingent
Warrant Exercise Price and the number of shares subject thereto shall
be subject to adjustment in the event of stock splits, stock
dividends, reverse stock splits, and similar events, and,
additionally, in the case of a Change of Control (as defined in the
Consulting Warrants). The terms of the Consulting Warrants shall be in
the form attached hereto as ANNEX B.
c) The securities referenced herein may not be transferred or resold
except as permitted under the Securities Act of 1933, as amended, (the
"SECURITIES ACT") and applicable state securities laws, pursuant to
registration or exemption therefrom.
d) In the event this Agreement is terminated by the Company prior to the
expiry of its Term, or any successive term, for any reason whatsoever,
absent only fraud committed by you against the Company or your
intentional misconduct or gross negligence in the performance of your
duties hereunder, in addition to any other fees you are, or shall be
entitled to under this Agreement, you shall be entitled to termination
fee equal to $120,000 (the "Early Termination Fee"). The Early
Termination Fee will be paid in one lump sum upon the date this
Agreement is terminated.
e) In the event of a Change of Control (as defined in the Consulting
Warrants), in addition to any other fees you are, or shall, be
entitled to under this Agreement, you will be entitled to a fee equal
to $250,000. Such fee to be payable upon the earlier of the closing or
completion of the event resulting in the Change of Control (as defined
in the Consulting Warrants).
x) Xxxxx shall be entitled to piggyback registration rights with respect
to the shares of Common Stock granted in Section 4(a)(i) and the
shares of Common Stock underlying the Initial Consulting Warrants
granted in Section 4(a)(i) (collectively the "NON-CONTINGENT
REGISTRABLE
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SECURITIES) (as defined below), on terms set forth in Section B of the
Definitive Subscription Agreement dated March 12, 2007, as
supplemented (the "SUBSCRIPTION AGREEMENT"), a copy of which
Subscription Agreement has been provided to Singh by the Company, as
if the reference to "Shares" contained in Section B of the
Subscription Agreement referred to the shares of Common Stock granted
in Section 4(a)(i), as if the reference to "Warrants" contained in
Section B of the Subscription Agreement referred to the Initial
Consulting Warrants and as if the reference to "Purchasers" contained
in Section B of the Subscription Agreement included Singh MUTATIS
MUTANDIS. Notwithstanding the aforesaid, in the event that the
Securities and Exchange Commission (the "SEC") shall for any reason
require or request the Company to reduce or exclude the Non-Contingent
Registrable Securities covered in the Mandatory Registration Statement
(as defined in Section B of the Subscription Agreement) filed with the
SEC, the number of Non-Contingent Registrable Securities will be
reduced or excluded in accordance with the guidance of the SEC. In
such event, at such time that the Company files its first subsequent
registration statement on an appropriate form covering the resale of
the Company's Common Stock of any person or entity on an appropriate
form, the Company shall, subject to the registration rights of any
other party, include in such registration statement the Non-Contingent
Registrable Securities not included in the Mandatory Registration
Statement to the maximum extent possible permitted by the SEC and in
accordance with any SEC requests or guidance.
(g) If the additional shares of Common Stock referred to in Section
4(a)(ii) and the Contingent Consulting Warrants are issued to Singh
pursuant to Section 4(a)(ii), then the next time the Company proposes
to file a registration statement ("CONTINGENT PIGGYBACK REGISTRATION
STATEMENT"), whether or not for sale for the Company's own account, on
a form and in a manner that would also permit registration of shares
(other than in connection with a registration statement on Forms S-4
or S-8 or any other inapplicable form) the Company shall, subject to
any registration rights of any other party, give Xxxxx, written notice
of such proposed filing promptly, but in any case at least twenty (20)
days before the anticipated filing. The notice referred to in the
preceding sentence shall offer Xxxxx the opportunity to register such
amount of Contingent Registrable Securities (as defined below) as he
may request (a "CONTINGENT PIGGYBACK REGISTRATION"). Subject to this
section 4(g), the Company will include in each such Contingent
Piggyback Registration (and any related qualification under state blue
sky laws and other compliance filings, and in any underwriting
involved therein) all Contingent Registrable Securities with respect
to which the Company has received written request from Xxxxx for
inclusion therein within twenty (20) days after the written notice
from the Company is given.
In the event the Contingent Piggyback Registration is an underwritten
public offering, Xxxxx agrees to enter into and perform his
obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering.
It shall be a condition precedent to the obligations of the Company to
complete the Contingent Piggyback Registration with respect to the
Contingent Registrable Securities that Xxxxx shall furnish to the
Company such information regarding himself, the Contingent Registrable
Securities held by him and the intended method of disposition of the
Contingent Registrable Securities held by him as shall be reasonably
required to effect the registration of such Contingent Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
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Notwithstanding the foregoing, (i) if any underwriter shall determine
in good faith and advise the Company in writing that the distribution
of the Contingent Registrable Securities requested to be included in
the registration concurrently with the securities being registered by
the Company would materially adversely affect the distribution of such
securities by the Company, then Xxxxx shall withdraw the shares from
the Contingent Piggyback Registration, (ii) the Company shall not be
required to file a registration statement to include shares pursuant
to this section 4(g) if an opinion of counsel, reasonably satisfactory
to counsel for the Company, that the shares proposed to be disposed of
may be transferred pursuant to the provisions of Rule 144 under the
Securities Act, shall have been delivered to counsel for the Company,
and (iii) in the event that SEC shall for any reason require or
request the Company to reduce or exclude the Contingent Registrable
Securities covered in the Contingent Piggyback Registration Statement
filed with the SEC, the number of Contingent Registrable Securities
will be reduced or excluded in accordance with the guidance of the
SEC; PROVIDED that at such time that the Company files its first
subsequent registration statement covering the resale of the Company's
Common Stock of any person or entity on an appropriate form, the
Company shall, subject to the registration rights of any other party,
include in such registration statement the Contingent Registrable
Securities not included in the Contingent Piggyback Registration
Statement to the maximum extent possible permitted by the SEC and in
accordance with any SEC requests or guidance.
"Contingent Registrable Securities" means the additional shares of
Common Stock referred to in Section 4(a)(ii) and the shares of Common
Stock issuable upon exercise of the Contingent Consulting Warrants and
any securities issued upon any stock split or stock dividend in
respect thereof; provided, however, that with respect to any
particular Contingent Registrable Security, such security shall cease
to be a Contingent Registrable Security when, as of the date of
determination; (a) it has been effectively registered under the
Securities Act and disposed of pursuant thereto; (b) registration
under the Securities Act is no longer required for subsequent public
distribution of such security; or (c) it has ceased to be outstanding.
5) In addition to the fees described in Paragraph 4 above, the Company agrees
to promptly xxxxxxxxx Xxxxx for expenses incurred in connection with his
services hereunder when incurred or promptly thereafter, provided that
expenses which individually are greater than $2500 shall have been approved
in advance by the Company, and that all such expenses have been submitted
in a manner consistent with the documentation practices and procedures of
the Company.
6) The Corporation hereby represents and warrants, and understands that Xxxxx
is relying on the truth and accuracy of the Company's representations and
warranties, as follows:
a) The Company has all requisite right, power and authority and full
legal capacity to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated
herein;
b) This Agreement when executed by the parties hereto, will constitute,
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its respective terms, subject
to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium
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or similar laws affecting creditors' rights and remedies generally and
by general equitable principles; and
c) The authorized capital of the Company on the date hereof consists only
of (A) Common Stock, of which 27,582,127 shares of Common Stock are
issued and outstanding as of the date hereof; and (B) Series A
Convertible Preferred Stock, par value $0.001 per share, of which
591,850 shares of Series A Convertible Preferred Stock are issued and
outstanding as of the date hereof. The issuance of the shares of
Common Stock, including the issuance of shares of Common Stock
issuable upon conversion of the Consulting Warrants have been duly
authorized by all necessary corporation action on the part of the
Company, and each share of Common Stock, when issued and delivered to,
and in the case of the shares of Common Stock issuable upon payment of
the consideration payable therefor in accordance with the terms of the
Consulting Warrants, will be validly issued, fully paid and
non-assessable and free of any preemptive rights.
7) The Company agrees to indemnify Xxxxx in accordance with the
indemnification provisions (the "INDEMNIFICATION PROVISIONS") attached to
in this Agreement as Annex A, which Indemnification Provisions are
incorporated herein and made a part hereof.
8) As a result of the services to be rendered by you to the Company:
a) Xxxxx will be given access to material non-public information relating
to the Company, including the financial statements and management
reports of the Company and each of its subsidiaries ("CONFIDENTIAL
INFORMATION"). You shall treat any information concerning the Company
(whether oral or written and whether prepared by or on behalf of the
Company) which is furnished by or on behalf of the Company as
confidential and proprietary. Such Confidential Information shall
include any documents or other information previously supplied by or
on behalf of the Company, and shall also include information prepared
by you based on such Confidential Information. Such Confidential
Information does not include information which (i) becomes generally
available to the public other than as a result of a disclosure by the
Company or its directors, officers, affiliates or employees, (ii)
becomes available to you on a non-confidential basis from a source
other than the Company or its advisors, provided that such source is
not bound by a confidentiality agreement with the Company or a third
party, or (iii) has been independently developed by Xxxxx.
x) Xxxxx hereby agrees that the Confidential Information will be used
solely for the purpose of assisting the Company, and that such
information will be kept confidential by Xxxxx and by all persons who
receive such Confidential Information directly or indirectly from
Xxxxx, which persons shall be limited to only those of either Xxxxx'x
employees and advisors who need to know such information and who will
use such information solely for the purpose of assisting the Company.
Any such person to whom Confidential Information is disclosed directly
or indirectly by a party shall be informed by such party of the
confidential nature of such information and shall be directed to treat
such information confidentially.
c) In the event that Xxxxx or his representatives become legally
compelled (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process) or otherwise believes it is required by law to
disclose any of the Confidential Information, Xxxxx agrees that he or
his representatives, as the case may be, will provide the
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PAGE 7
Company with prompt written notice of such request(s) so that the
Company may seek a protective order or other appropriate remedy. In
the event that such protective order or other remedy is not obtained,
Xxxxx agrees that he will furnish only that portion of the
Confidential Information and other information which he is legally
required and will exercise all commercially reasonable efforts, and at
the cost and expense of the Company, to obtain reliable assurance that
confidential treatment will be accorded to that portion of the
Confidential Information and other information which is being
disclosed.
d) At the request of the Company, Xxxxx shall promptly return to the
Company all written Confidential Information and any other written
material containing any information in or derived from the
Confidential Information, and will not retain any copies, extracts or
other reproductions in whole or part of such written material.
e) It is understood that the Company would sustain irreparable injury in
the event of a breach of this Agreement. Accordingly, in the event of
any such breach, the Company will be entitled to seek and obtain
immediate injunctive relief. Nothing herein shall limit any legal or
equitable right otherwise available to the Company, including, but not
limited to, rights relating to trade secrets or intellectual property.
9) The Company may terminate this Agreement at any time upon 30 days' prior
written notice, without liability or continuing obligation, except as set
forth in the following sentence. Neither termination of this Agreement nor
completion of the assignment contemplated hereby shall affect: (i) any
compensation earned by Xxxxx up to the date of termination or completion,
as the case may be, pursuant to Paragraph 4(a) hereof. For the purposes of
greater clarity, (A) Xxxxx shall be deemed to have earned the full amount
of 2,000,000 shares of Common Stock set out in Section 4(a)(i) and the
Initial Consulting Warrants set out in 4(a)(i); and (B) Singh shall be
deemed to have earned the full amount of the 1,000,000 shares of Common
Stock set out in Section 4(a)(ii) as well as the Contingent Consulting
Warrants set out in Section 4(a)(ii), except that Xxxxx'x entitlement to
the said 1,000,000 shares of Common Stock and Contingent Consulting
Warrants is dependent upon the Company achieving the milestone set forth in
Section 4(a)(ii) during the three years from the date hereof or any
successive renewal period pursuant to Section 2; (ii) the reimbursement of
expenses incurred by Xxxxx up to the date of termination or completion, as
the case may be, (iii) the following provisions: Paragraphs 4(b), 4(c),
4(d), 4(f), 7, 8, 9 and 10 of this Agreement and (iv) the Indemnification
Provisions attached as Annex A hereto which are incorporated herein, all of
which shall remain operative and in full force and effect.
10) The validity and interpretation of this Agreement shall be governed by the
laws of the State of New York applicable to agreements made and to be fully
performed therein. The Company irrevocably submits to the jurisdiction of
any court of the State of New York or the United States District Court for
the Southern District of the State of New York for the purpose of any suit,
action, or other proceeding arising out of this Agreement, or any of the
agreements or transactions contemplated hereby, which is brought by or
against the Company and (i) hereby irrevocably agrees that all claims in
respect of any such suit, action, or proceeding may be heard and determined
in any such court and (ii) to the extent that the Company has acquired, or
hereafter may acquire, any immunity from jurisdiction of any such court or
from any legal process therein, the Company hereby waives, to the fullest
extent permitted by law, such immunity. The Company hereby waives, and
agrees not to
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PAGE 8
assert in any such suit, action, or proceeding, in each case, to the
fullest extent permitted by applicable law, any claim that (a) the Company
is not personally subject to the jurisdiction of any such court, (b) the
Company is immune from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution,
execution, or otherwise) with respect to the Company's property or (c) any
such suit, action, or proceeding is brought in an inconvenient forum.
11) The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto and of the indemnified parties hereunder and
their successors and assigns and representatives, and the obligations and
liabilities assumed in this Agreement by the parties hereto shall be
binding upon their respective successors and assigns.
12) All dollar amounts referenced herein shall be references to United States
of America dollars.
13) It is the express intention of the parties that Xxxxx render his services
hereunder in the capacity of an independent contractor and that the Company
shall not have the right to direct, control or xxxxxxxxx Xxxxx in the
performance of such services. In keeping with this status, Xxxxx shall be
free to control his method of work within the framework of his obligation
to the Company. Xxxxx shall not be treated as an employee, officer, agent,
joint venture or representative of the Company for any purpose, and Xxxxx
shall not participate in or have any rights under any employee benefit
plans or other compensation arrangements maintained by the Company for its
employees. It is also understood that Xxxxx shall not have the power or
authority to supervise, direct or manage any employee of the Company, or to
enter into contracts on behalf of the Company or to borrow or incur debts
or liabilities on behalf of the Company of any kind or nature whatsoever.
Xxxxx shall be responsible for obtaining all necessary licenses, permits
and visas for the conduct of his business and in all other ways to fully
comply with the requirements of applicable laws.
14) Xxxxx acknowledges that all payments to be made hereunder shall be made
without any deduction by the Company for federal, state and local payroll,
withholding and social security taxes, or any unemployment and workers'
compensation insurance costs, all of which taxes and deductions shall
remain the exclusive responsibility of Xxxxx.
15) For the convenience of the parties hereto, any number of counterparts of
this Agreement may be executed, including by facsimile, by the parties
hereto. Each such counterpart shall be, and shall be deemed to be, an
original instrument, but all such counterparts taken together shall
constitute one and the same Agreement. This Agreement may not be modified
or amended except in writing signed by the parties hereto.
16) The Company covenants to Xxxxx that within seven (7) days from the mutual
execution of this Agreement, the Company will deliver to Xxxxx a customary
opinion of Company's counsel for this type of transaction in such form to
be mutually agreed upon between the Company and Xxxxx.
If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us.
SYNOVICS PHARMACEUTICALS, INC.
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Very truly yours,
SYNOVICS PHARMACEUTICALS, INC.
BY: /S/ XXXXXX XXXX
-----------------------------
NAME: XXXXXX XXXX
TITLE: DIRECTOR AND PRESIDENT
CONFIRMED AND AGREED TO:
THIS _20TH DAY OF APRIL, 2007
/S/ XXXXXXXXX XXXXX
-------------------
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SYNOVICS PHARMACEUTICALS, INC.
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ANNEX A
INDEMNIFICATION PROVISIONS
Synovics Pharmaceuticals, Inc. (the "COMPANY") agrees to indemnify and
hold harmless Xxxxxxxxx Xxxxx ("XXXXX") against any and all losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses, and disbursements (and any and all actions, suits, proceedings, and
investigations in respect thereof and any and all legal and other costs,
expenses, and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including, without limitation the costs,
expenses, and disbursements, as and when incurred, of investigating, preparing,
or defending any such action, suit, proceeding, or investigation (whether or not
in connection with litigation in which Xxxxx is a party), directly or
indirectly, caused by, relating to, based upon, arising out of, or in connection
with Xxxxx'x acting for the Company, including, without limitation, any act or
omission by Xxxxx in connection with his acceptance of or the performance or
non-performance of his obligations under the letter agreement dated April 20,
2007, between Xxxxx and the Company, as it may be amended from time to time (the
"AGREEMENT"); PROVIDED, HOWEVER, such indemnity agreement shall not apply to any
portion of any such loss, claim, damage, obligation, penalty, judgment, award,
liability, cost, expense, or disbursement to the extent it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) to
have resulted primarily and directly from the willful misconduct of Xxxxx. The
Company also agrees that Xxxxx shall not have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection
with the engagement of Xxxxx, except to the extent that any such liability is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have resulted primarily and directly from Xxxxx'x willful
misconduct.
These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to Singh or the persons indemnified below
in this sentence and shall extend to the following: Xxxxx, his affiliated
entities, directors, officers, employees, legal counsel, agents, and controlling
persons (within the meaning of the federal securities laws). All references to
Xxxxx in these Indemnification Provisions shall be understood to include any and
all of the foregoing. The parties agree that Xxxxx holds the benefit of the
provisions of these Indemnification Provisions in trust for each of the persons
named in this paragraph and each of the said persons shall be entitled to
enforce the covenants contained herein for and on their own behalf.
SYNOVICS PHARMACEUTICALS, INC.
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If any action, suit, proceeding, or investigation is commenced, as to
which Xxxxx proposes to demand indemnification, he shall notify the Company with
reasonable promptness; PROVIDED, HOWEVER, that any failure by Xxxxx to notify
the Company shall not relieve the Company from its obligations hereunder. Xxxxx
shall have the right to retain counsel of his own choice to represent him, and
the Company shall pay the fees, expenses, and disbursements of such counsel; and
such counsel shall, to extent consistent with its professional responsibilities,
cooperate with the Company and any counsel designated by the Company. The
Company shall be liable for any settlement of any claim against Xxxxx made with
the Company's written consent, which consent shall not be unreasonably withheld.
The Company shall not, without the prior written consent of Xxxxx, settle or
compromise any claim, or permit a default or consent to the entry of any
judgment in respect thereof, unless such settlement, compromise, or consent
includes, as an unconditional term thereof, the giving by the claimant to Xxxxx
of an unconditional release from all liability in respect of such claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made, but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and Xxxxx, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses, and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, and Xxxxx, on the other hand, and also the relative
fault of the Company, on the one hand, and Xxxxx on the other hand, in
connection with the statements, acts, or omissions which resulted in such
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses, or disbursements and the relevant equitable considerations
shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation. Notwithstanding the
foregoing, Xxxxx shall not be obligated to contribute any amount hereunder that
exceeds the amount of fees previously received by Xxxxx pursuant to the
Agreement.
Neither termination nor completion of the engagement of Xxxxx referred
to above shall affect these Indemnification Provisions which shall then remain
operative and in full force and effect.
SYNOVICS PHARMACEUTICALS, INC.
XXXXXXXXX XXXXX
APRIL 20, 2007
PAGE 12
ANNEX B
NEITHER THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF THIS WARRANT OR SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THIS
WARRANT OR SUCH SECURITIES, AS APPLICABLE, MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED, OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
SYNOVICS PHARMACEUTICALS, INC.
WARRANTS FOR THE PURCHASE OF
SHARES OF COMMON STOCK, PAR VALUE $0.001 PER SHARE
NO.
THIS CERTIFIES that, for consideration, the receipt and sufficiency of
which are hereby acknowledged, and other value received,
_______________________, a ____________________ (the "HOLDER") is entitled to
subscribe for, and purchase from, SYNOVICS PHARMACEUTICALS, INC., a Nevada
corporation (the "COMPANY"), upon the terms and conditions set forth herein, at
any time or from time to time on or after ________ (the "EFFECTIVE TIME") until
5:00 P.M. New York City local time on the seventh anniversary of the Effective
Time (the "EXERCISE PERIOD"), up to an aggregate of ______________ shares of
common stock, par value $0.001 per share (the "COMMON STOCK"), of the Company.
This Warrant is initially exercisable at $2.00 per share; provided, however,
that upon the occurrence of any of the events specified in Section 9 hereof, the
rights granted by this Warrant, including the exercise price and the number of
shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified. The term "EXERCISE PRICE" shall mean, depending on the
context, the initial exercise price (as set forth above) or the adjusted
exercise price per share.
As used herein, the term "THIS WARRANT" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part. Each share of Common
Stock issuable upon the exercise hereof shall be hereinafter referred to as a
"WARRANT SHARE".
1. (a) Subject to the terms of this Warrant, this Warrant may be
exercised at any time in whole and from time to time in part, at the option of
the Holder, on or after the Effective Time and on or prior to the end of the
Exercise Period. This Warrant shall initially be exercisable in whole or in part
for an aggregate of ________ fully paid and nonassessable shares of Common Stock
for an exercise price per share equal to the Exercise Price, by delivery to the
Company at its office at 0000 Xxxx Xxxxxxxxx Xxxx Xxxxx 000, Xxxxxxx, Xxxxxxx
00000, or at such other place as is designated in writing by the Company, of:
(i) a completed Election to Purchase, in the form set forth in
EXHIBIT I, executed by the Holder exercising all or part of the
purchase rights represented by this Warrant;
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the initial
registered Holder, an assignment in the form set forth in EXHIBIT III
hereto evidencing the assignment of this Warrant to the current Holder;
and
(iv) payment of an amount equal to the product of the Exercise Price
multiplied by the number of shares of Common Stock being purchased upon
such exercise in the form of, at the Holder's option, (A) a certified
or bank cashier's check payable to the Company, or (B) a wire transfer
of funds to an account designated by the Company.
(b) Additionally, the Holder may exercise this Warrant by delivery to
the Company at its office at 0000 Xxxx Xxxxxxxxx Xxxx Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000, or at such other place as is designated in writing by the
Company, of:
(i) a completed Notice to Exercise (Cashless), in the form set forth
in EXHIBIT II, executed by the Holder exercising all or part of the
exchange rights represented by this Warrant;
(ii) this Warrant; and
(iii) if this Warrant is not registered in the name of the initial
registered Holder, an assignment in the form set forth in EXHIBIT III
hereto evidencing the assignment of this Warrant to the current Holder;
Such presentation and delivery (a "CASHLESS EXERCISE") shall be deemed
a waiver of the Holder's obligation to pay the Exercise Price or, in the case of
a partial exercise of this Warrant, of the portion of the Exercise Price that
would otherwise be payable in connection with such partial
-2-
exercise. Upon such presentation and delivery in connection with a Cashless
Exercise, the number of Warrant Shares subject to this Warrant shall be reduced
by the number of Warrant Shares specified on the Notice to Exercise (Cashless)
form, and in exchange for such reduction the Holder shall receive the number of
Warrant Shares, as the case may be, specified on the Notice to Exercise
(Cashless) form (up to the total number of Warrant Shares which are subject to
this Warrant) multiplied by a fraction, the numerator of which shall be the
excess of the then Fair Market Value per Warrant Share over the Exercise Price,
and the denominator of which shall be the then Fair Market Value per Warrant
Share.
(c) As used herein "FAIR MARKET VALUE" of a security shall mean, on any
given day, the average of the closing prices of such security's sales on all
securities exchanges on which such security may at the time be listed on such
day, or, if there has been no sales on any such exchange on such day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on such day such security is not so listed, the average
of the representative bid and asked prices quoted on the over-the-counter
bulletin board (the "OTCBB") as of 4:00 P.M., New York time, or, if on such day
such security is not quoted on the OTCBB, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the PinkSheet, LLC, or any similar successor organization or on any
exchange on which the Common Stock is then listed. If at any time such security
is not listed on any securities exchange or quoted on the OTCBB or the
over-the-counter market, the "Fair Market Value" shall be as determined by the
Board of Directors in good faith, absent manifest error.
(d) Upon the exercise of this Warrant, the Company shall issue and
cause promptly to be delivered upon such exercise to, or upon the written order
of, the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares to which such
Holder shall be entitled, together with cash in lieu of any fraction of a
Warrant Share otherwise issuable upon such exercise in an amount equal to the
product of (i) such fraction multiplied by (ii) the Fair Market Value on the
date of exercise. Such certificate or certificates shall be deemed to have been
issued, and any person so designated to be the person or persons entitled to
receive the Warrant Shares issuable upon exercise of this Warrant shall be
deemed to have become a holder of record of such Warrant Shares for all
purposes, as of the close of business on the date of the surrender of this
Warrant and full payment of the Exercise Price.
(e) If this Warrant is exercised in respect of less than all of the
Warrant Shares evidenced by this Warrant at any time prior to the end of the
Exercise Period, a new Warrant evidencing the remaining Warrant Shares shall be
issued to the Holder, or its nominee(s), without charge therefor.
2. Intentionally Deleted.
3. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the transfer books of the Company shall then be
closed or certificates representing the Warrant Shares with respect to which
this Warrant was exercised shall not then have been actually delivered to the
Holder. As soon as practicable after each such exercise of this Warrant, the
Company shall issue
-3-
and deliver to the Holder a certificate or certificates representing the Warrant
Shares issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a Warrant
evidencing the right of the Holder to purchase the balance of the aggregate
number of Warrant Shares purchasable hereunder as to which this Warrant has not
been exercised or assigned.
4. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be numbered and shall be registered in a warrant register (the
"WARRANT REGISTER") as they are issued. The Company shall be entitled to treat
the registered holder of any Warrant on the Warrant Register as the owner in
fact thereof for all purposes, notwithstanding any notice to the contrary except
as provided herein. This Warrant shall be transferable on the books of the
Company only upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment, or authority to transfer. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act, and the rules and regulations thereunder.
5. The Company shall pay all federal and state taxes (other than taxes
on income of the Holder), documentary taxes, stamp taxes, if any, and other
governmental charges that may be imposed upon the issuance or delivery of this
Warrant or upon the issuance or delivery of Warrant Shares upon the exercise of
this Warrant, PROVIDED, HOWEVER, that the Company shall not be required to pay
any taxes payable in connection with any transfer involved in the issuance or
delivery of any Warrants or Warrant Shares in a name other than that of the
Holder in respect of which such Warrant Shares are issued. The Company may
refuse to deliver the certificates representing the Warrant Shares being issued
in a name other than the Holder's name until the Company receives a sum
sufficient to pay any tax that will be due because such shares are to be issued
in a name other than the Holder's name.
6. (a) The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of providing
for the exercise of the Warrants, such number of shares of Common Stock as
shall, from time to time, be sufficient therefor. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase 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), without any personal liability attaching to the ownership
thereof and will not be issued in violation of any preemptive or similar rights
of stockholders. 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
-4-
issue the necessary certificates for the Warrant Shares 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 Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of the trading market upon which the Common Stock may be listed.
(b) The transfer agent for the Common Stock and every subsequent
transfer agent for any of the Company's securities issuable upon the exercise of
this Warrant shall be irrevocably authorized and directed at all times to
reserve such number of authorized securities as shall be required for such
purpose. The Company shall keep a copy of this Warrant on file with the transfer
agent for the Common Stock and with every subsequent transfer agent for shares
of the Company's securities issuable upon the exercise of this Warrant. The
Company shall supply such transfer agent with duly executed certificates
representing the Common Stock or other securities for such purposes and shall
provide or otherwise make available any cash that may be payable as provided in
Section 11 hereof.
(c) The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant; but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, and (b) take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.
7. The Company will obtain and keep effective any and all
authorizations, permits, consents and approvals of Federal or state governmental
agencies and authorities and make all filings under Federal and state securities
laws, that are required in connection with the issuance and delivery of this
Warrant, the exercise of this Warrant, and the issuance and delivery of the
Warrant Shares issued upon exercise of this Warrant.
8. If the Company purchases or otherwise acquires this Warrant, the
Company shall cancel this Warrant, and any Warrant surrendered for exchange,
substitution, transfer or exercise in whole or in part.
9. The Exercise Price for the Warrants in effect from time to time, and
the number of Warrant Shares issuable upon exercise of the Warrants, shall be
subject to adjustment as follows:
(a) If the Company, at any time while this Warrant is outstanding: (A)
pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company
-5-
pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock
into a larger number of shares, (C) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to
this Section 9(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.
(b) If at any time or from time to time after the original issuance
date of this Warrant, shall distribute to all holders of Common Stock (and not
to Holder of the Warrants) evidences of its indebtedness or assets (including
cash and cash dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock (which shall be subject to Section 9(a)),
then in each such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the Fair Market Value determined as
of the record date mentioned above, and of which the numerator shall be such
Fair Market Value on such record date less the then per share Fair Market Value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors of the Company in good faith. In either
case, the adjustments shall be described in a statement provided to the Holder
of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(c) (A) If the Company at any time and from time to time shall offer,
sell, grant any option to purchase or offer, sell or grant any right to reprice,
or otherwise dispose of or issue, any Common Stock or Common Stock Equivalents
(as defined below) entitling any person or entity to acquire shares of Common
Stock, at an effective price per share less than $1.00 (such issuances,
individually and collectively, a "DILUTIVE ISSUANCE"), as adjusted hereunder,
then the Exercise Price shall be reduced in accordance with the following
formula:
X = ((A)(Y)) + ((B)(Z))
------------------
Y + Z
where: X = the new Exercise Price;
A = the Exercise Price in effect immediately
before the Dilutive Issuance;
Y = the number of shares of Common Stock
outstanding immediately before the Dilutive
Issuance, including all shares of Common Stock
issuable upon exercise, conversion or exchange
of Common Stock
-6-
Equivalents outstanding immediately before the
Dilutive Issuance, whether or not then
exercisable, convertible or exchangeable, but
excluding any treasury shares;
B = Base Share Price (as defined in Section 9(c)
(B), (C) and (D) below); and
Z = the number of shares of Common Stock issued in
the Dilutive Issuance or issuable upon
conversion or exercise of Common Stock
Equivalents issued in the Dilutive Issuance.
Such adjustment to the Exercise Price shall be made upon each
occurrence of a Dilutive Issuance. Notwithstanding the foregoing, no adjustment
to the Exercise Price shall be made under this Section 9(c) in respect of an
Exempt Issuance (as defined below).
(B) In the case of the issuance of Common Stock for cash, the Base
Share Price shall be deemed to be the amount of cash paid per share therefor.
(C) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the Base Share Price shall be
deemed to be the sum of such cash and the fair value of such consideration as
determined by the Board of Directors in good faith irrespective of any
accounting treatment, on a per share basis.
(D) In the case of the issuance of Common Stock Equivalents, the
following provisions shall apply for all purposes of this Section 9:
(i) The aggregate maximum number of shares of Common Stock
deliverable upon conversion or exercise of, or in exchange for, any
such Common Stock Equivalents shall be deemed to have been issued at
the time such Common Stock Equivalents were issued and for a
consideration equal to the consideration (for purposes hereof, the
Base Share Price), if any, received by the Company for the Common
Stock Equivalents (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Company (without taking
into account potential anti-dilution adjustments) upon the
conversion, exchange or exercise of such Common Stock Equivalents;
PROVIDED that if the minimum amount of consideration payable to the
Company upon the exercise or conversion of Common Stock Equivalents
is reduced over time or on the occurrence or non-occurrence of
specified events other than by reason of anti-dilution adjustments,
the then Base Share Price shall be recalculated using the figure to
which such minimum amount of consideration is reduced; PROVIDED
FURTHER that if the minimum amount of consideration payable to the
Company upon the exercise or conversion of such Common Stock
Equivalents is subsequently increased, the then Base Share Price
shall be again recalculated using the increased minimum amount of
consideration payable to the Company upon the exercise or conversion
of such Common Stock Equivalents.
(ii) Upon the expiration or termination of any Common Stock
Equivalents,
-7-
the Exercise Price shall be adjusted to reflect the Exercise Price
in effect prior to the issuance of such Common Stock Equivalents.
(E) As used in this Section 9(c), the following terms have the
meanings set forth below:
(i) "COMMON STOCK EQUIVALENTS" means any securities of the
Company or the subsidiaries of the Company which would entitle the
holder thereof to acquire at any time Common Stock, including
without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
(ii) "EXEMPT ISSUANCE" means the issuance (i) of shares of
Common Stock, warrants or options to employees, officers or
directors of the Company pursuant to any stock or option plan or
restricted stock option, (ii) of securities upon the exercise of,
exchange of or conversion of convertible securities, exchangeable
securities, options or warrants issued and outstanding on the date
of this Warrant, and (iii) of securities issued pursuant to
acquisitions or strategic transactions, equipment lease financings
or bank credit arrangements, provided any such issuance shall not
include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital.
(d) In the case of a Change of Control (as defined below) the
Exercise Price will be $1.00 per share, as adjusted hereunder.
"CHANGE OF CONTROL" means any transaction or series of transactions
that result in a Person (as defined below) becoming an "ACQUIRING PERSON" (as
defined below).
The terms "ACQUIRING PERSON", "PERSON" and such other terms referred
to therein and referred to in such other terms shall for the purposes of this
section 9(d) bear such meanings as ascribed to them below:
"ACQUIRING PERSON" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall become, at any time after
September 8, 2006 (the "DESIGNATED DATE") (whether or not such status continues
for any period), the Beneficial Owner of shares of Common Stock representing 20%
or more of the Common Stock then outstanding, other than as a result of a
Permitted Offer, or any Person who or which, on the Designated Date, together
with all Affiliates and Associates of such Person, owns in excess of 20% or more
of the Common Stock outstanding as of the Designated Date, who or which becomes,
at any time after the Designated Date (whether or not such status continues for
any period), the Beneficial Owner of additional shares of Common Stock
representing 1% or more of the Common Stock then outstanding above that number
of shares of Common Stock of which such Person, together with all Affiliates and
Associates of such Person, was the Beneficial Owner on the Designated Date,
other than as a result of a Permitted Offer. Notwithstanding the foregoing, (A)
the term "ACQUIRING PERSON" shall not include (i) the Company, any Subsidiary of
the Company, or any employee benefit plan of the Company or any Subsidiary of
the Company, or (ii) any Person, which together with all Affiliates and
Associates of such Person, shall become the Beneficial Owner of 20% or more of
-8-
the then outstanding Common Stock as a result of the acquisition of shares of
Common Stock directly from the Company following the Designated Date (provided,
however, that if, after such acquisition, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any additional shares
of Common Stock in an acquisition not made directly from the Company, then such
Person shall be deemed an Acquiring Person), or (iii) any Person, which together
with all Affiliates and Associates of such Person, owns in excess of 20% or more
of the Common Stock outstanding as of the Designated Date, shall become the
Beneficial Owner of an additional 1% or more of the then outstanding Common
Stock as a result of the acquisition of shares of Common Stock directly from the
Company following the date hereof (provided, however, that if, after such
acquisition, such Person, or an Affiliate or Associate of such Person, becomes
the Beneficial Owner of any additional shares of Common Stock in an acquisition
not made directly from the Company, then such Person shall be deemed an
Acquiring Person) and (B) no Person shall be deemed to be an "ACQUIRING PERSON"
either (X) as a result of the acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person; except that if (i) a
Person would become an Acquiring Person (but for the operation of this subclause
(X)) as a result of the acquisition of shares of Common Stock by the Company,
and (ii) after such share acquisition by the Company, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial Owner of any
additional shares of Common Stock, then such Person shall be deemed an Acquiring
Person, or (Y) if (x) (i) such Person, or an Affiliate or Associate of such
Person inadvertently becomes the Beneficial Owner of 20% or more of the
outstanding Common Stock, (ii) within eight days thereafter such Person notifies
the Board of Directors of the Company that such Person did so inadvertently, and
(iii) within two days after such notification, such Person is the Beneficial
Owner of less than 20% of the outstanding Common Stock, or (y) (i) such Person,
together with all Affiliates and Associates of such Person, that owns in excess
of 20% or more of the Common Stock outstanding as of the Designated Date, shall
inadvertently become the Beneficial Owner of an additional 1% or more of the
then outstanding Common Stock, (ii) within eight days thereafter such Person
notifies the Board of Directors that such Person did so inadvertently, and (iii)
within two days after such notification, such Person is the Beneficial Owner of
less than that number of share of Common Stock held as of the Designated Date
plus 1% of the then outstanding Common Stock.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended ("EXCHANGE ACT").
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to have acquired "beneficial ownership" of, or to "beneficially own", any
securities (i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act as of the
Designated Date; (ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement, or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
-9-
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights, as defined herein), warrants or options,
or otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by, or on behalf of, such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement, or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement, or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (iii) which are beneficially owned, directly
or indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement, or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of "BENEFICIAL OWNER" to
the contrary, the phrase "THEN OUTSTANDING", when used with reference to a
Person's beneficial ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
"COMMON STOCK," when used with reference to the Company, shall mean
the Company's common stock, par value $0.001 per share, and any other class or
classes or series of common stock of the Company resulting from any subdivision,
combination, recapitalization, or reclassification of shares of such common
stock. "COMMON STOCK" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such first
mentioned Person.
"PERMITTED OFFER" shall mean a tender or exchange offer or other
offer which is for all outstanding Common Stock at a price and on terms
determined, prior to the purchase of shares under such tender or exchange offer,
by at least a majority of the members of the Board of Directors of the Company
who are not officers of the Company and who are not (or would not be, if the
offer were consummated) Acquiring Persons or Affiliates, Associates, nominees,
or representatives of an Acquiring Person, to be adequate and otherwise in the
best interest of the Company and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose basis the offer is being made). In
determining whether an offer is adequate or in the best interests of the Company
and its stockholders, the Board of Directors of the Company may take into
account all factors that it deems relevant including, without limitation, (1)
the consideration being offered in the proposal in relation to the Board's
estimate of: (i) the current value of the Company in a freely negotiated sale of
either the Company by merger, consolidation, or otherwise, or all or
substantially all of the Company's assets, (ii) the current value of the Company
if orderly liquidated, and (iii) the
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future value of the Company over a period of years as an independent entity
discounted to current value; (2) then existing political, economic, and other
factors bearing on security prices generally or the current market value of the
Company's securities in particular; (3) whether the proposal might violate
federal, state, or local laws; (4) the financial conditions and earnings
prospects of the person making the proposal, including the person's ability to
service its debt and other existing or likely financial obligations; and (5) the
competence, experience, and integrity of the person making the acquisition
proposal.
"PERSON" shall mean any individual, firm, partnership, corporation,
trust, association, joint venture, or other entity, and shall include any
successor (by merger or otherwise) of such entity. Notwithstanding anything
herein to the contrary, when two or more Persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring, holding, or
disposing of shares of Common Stock or other securities of the Company, such
partnership, limited partnership, syndicate, or group shall be deemed a "PERSON"
for the purposes of this Agreement.
"RIGHTS" shall mean the rights to purchase shares of Common Stock
authorized by the Board of Directors of the Company after September __, 2006.
"SUBSIDIARY" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(e) When any adjustment is required to be made in the Exercise Price
pursuant to subsections 9(a), 9(b), 9(c) or 9(d), the number of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to product of the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment
multiplied by the Exercise Price in effect immediately prior to such adjustment,
by (ii) the Exercise Price in effect immediately after such adjustment.
(f) Upon the occurrence of each adjustment or readjustment of the
Exercise Price pursuant to this Section 9(a), (b), (c) or (d), the Company at
its expense shall, as promptly as reasonably practicable but in any event not
later than fifteen (15) days thereafter, compute such adjustment or readjustment
in accordance with the terms hereof and furnish to the Holder a certificate
setting forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable
and the Exercise Price) and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, as promptly as
reasonably practicable after the written request at any time of the Holder (but
in any event not later than 15 days thereafter), furnish or cause to be
furnished to the Holder a certificate setting forth (i) the Exercise Price then
in effect and (ii) the number and class or series of Warrant Shares and the
amount, if any, of other securities, cash or property which then would be
received upon the exercise of this Warrant.
(g) All calculations under this Section 9 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
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(h) The Company shall not be required upon the exercise of this
Warrant to issue any fractional shares, but shall pay the value thereof to the
Holder in cash on the basis of the Fair Market Value per Warrant Share, as
determined pursuant to subsection 1(b) above.
10. Unless registered, the Warrant Shares issued on exercise of the
Warrants shall be subject to a stop transfer order and the certificate or
certificates representing the Warrant Shares shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED, ASSIGNED,
OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SECURITIES
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED IN
THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.
11. The Company covenants that upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, 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 date, tenor and denomination , in lieu
of such Warrant or stock certificate
12. (a) The Holder of any Warrant shall not have, solely on account
of such status, any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other proceedings
of the Company, except as provided in this Warrant.
(b) No provision hereof, in the absence of affirmative action by
Xxxxxx to Warrant Shares, and no enumeration herein of the rights or privileges
of Holder hereof, shall give rise to any liability of such Holder for the
purchase price of any Common Stock or as a stockholder of Company, whether such
liability is asserted by Company or by creditors of Company.
13. Promptly upon the appointment of any subsequent transfer agent
of the Common Stock, or any other securities issuable upon the exercise of this
Warrant, the Company will deliver to the Holder a statement setting forth the
name and address of such subsequent transfer agent.
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14. All notices and other communications provided for or permitted
hereunder shall be in writing and shall be deemed given (i) when made, if made
by hand delivery, (ii) upon confirmation, if made by telecopier, or (iii) one
business day after being deposited with a reputable next-day courier, postage
prepaid, to the parties as follows:
if to the Company:
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx Ph.D.
Telecopy: (000) 000-0000
if to the Holder:
As set forth in the Warrant Register of the Company.
The Company or the Holder by notice to the other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication mailed to the Holder shall be mailed by first
class mail or other equivalent means at such Holder's address and shall be
sufficiently given to such Holder if so mailed within the time prescribed.
15. The Company and the Holder may from time to time supplement,
modify or amend this Warrant, except, this Warrant may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, without the written consent of the Company and the
Holder.
16. All the covenants and provisions of this Warrant by or for the
benefit of the Company or the Holder shall be binding upon and shall inure to
the benefit of their respective permitted successors and assigns hereunder.
17. The Company shall not merge or consolidate with or into any
other entity unless the entity resulting from such merger or consolidation (if
not the Company) shall expressly assume, by supplemental agreement satisfactory
in form to the Holder and executed and delivered to the Holder, the due and
punctual performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.
18. The validity, interpretation and performance of this warrant
shall be governed by the laws of the State of New York, as applied to contracts
made and performed within the state of New York, without regard to principles of
conflicts of law (other than the N.Y. Gen. Oblig. L. ss.5-1401 and ss.5-1402).
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New York and the United States District Court for the
Southern District of New York, in each case sitting in the Borough of Manhattan,
City of New York, for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this letter agreement. Service of process in
connection with any such suit, action or proceeding may be
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served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Warrant. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
19. The provisions hereof have been and are made solely for the
benefit of the Company and the Holder, and their respective successors and
assigns, and no other person shall acquire or have any right hereunder or by
virtue hereof.
20. The headings in this Warrant are for convenience only and shall
not limit or otherwise affect the meaning hereof.
21. If any term, provision, covenant or restriction of this Warrant
is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, illegal, void or unenforceable.
22. This Warrant is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Warrant supersedes all prior agreements and understandings between
the parties with respect to such subject matter. Notwithstanding the foregoing,
the Holder shall be entitled to the benefits of the registration rights set
forth in that certain Subscription Agreement between the Company and the Holder
with respect to the Warrant Shares.
23. In any action or proceeding brought to enforce any provision of
this Warrant, or where any provision hereof is validly asserted as a defense,
the prevailing party, as determined by the court, shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
24. Each party hereto agrees to use all reasonable efforts to obtain
all consents and approvals, and to do all other things, necessary for the
transactions contemplated by this Warrant on or prior to the end of the Exercise
Period. The parties agree to take such further action and to deliver or cause to
be delivered to each other after the date hereof such additional agreements or
instruments as any of them may reasonably request for the purpose of carrying
out this Warrant and the agreements and transactions contemplated hereby and
thereby.
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25. Each party hereto acknowledges and agrees that irreparable harm,
for which there may be no adequate remedy at law and for which the ascertainment
of damages would be difficult, would occur in the event any of the provisions of
this Warrant were not performed in accordance with its specific terms or were
otherwise breached. Each party hereto accordingly agrees that each other party
hereto shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Warrant, or any agreement contemplated hereunder, and to
enforce specifically the terms and provisions hereof or thereof in any court of
the United States or any state thereof having jurisdiction, in each instance
without being required to post bond or other security and in addition to, and
without having to prove the inadequacy of, other remedies at law.
Dated: __________, 2007
SYNOVICS PHARMACEUTICALS, INC.
BY: ___________________________
NAME:
TITLE:
[Seal]
----------------------
Secretary
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EXHIBIT I
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant and to purchase the shares of Common Stock or other
securities issuable upon the exercise of said Warrants, and requests that
Certificates for such shares be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------
(Name)
-----------------------------------------------------
(Address, Including Zip Code)
-----------------------------------------------------
(Social Security or Tax Identification Number)
DELIVER TO:
-----------------------------------------------------
(Name)
-----------------------------------------------------
(Address, Including Zip Code)
In payment of the purchase price with respect to this Warrant
exercised, the undersigned hereby tenders payment of $ by (i) certified or
bank cashiers check payable to the order of the Company [ ]; or (ii) a wire
transfer of such funds to an account designated by the Company [ ] (CHECK
APPLICABLE BOX). If the number of Warrant Shares hereby exercised is fewer than
all the Warrant Shares represented by this Warrant, the undersigned requests
that a new Warrant representing the number of full Warrant Shares not exercised
to be issued and delivered as set forth below:
Name of Holder or Assignee:
----------------------------------------------------
(Please Print)
Address:
-------------------------------------------------------
-------------------------------------------------------
Signature: DATED: , 200__
------------------------------ -------------------
(Signature must conform in all respects to name of holder as specified on the
fact of this Warrant)
Signature Guaranteed:
------------------------------------------------
EXHIBIT II
NOTICE TO EXERCISE (CASHLESS)
The undersigned Holder ___________________, pursuant to the
provisions of the Warrant, hereby elects to exchange its Warrant, in whole or in
part, as appropriate, for ______ shares of Common Stock or other securities
issuable upon the exercise of said Warrants of the Company pursuant to the
cashless exercise provisions of Section 1(c) of the Warrant and requests that
Certificates for such shares be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------
(Name)
-----------------------------------------------------
(Address, Including Zip Code)
-----------------------------------------------------
(Social Security or Tax Identification Number)
DELIVER TO:
-----------------------------------------------------
(Name)
-----------------------------------------------------
(Address, Including Zip Code)
If the number of Warrant Shares hereby exchanged is fewer than
all the Warrant Shares represented by this Warrant, the undersigned requests
that a new Warrant representing the number of full Warrant Shares not exchanged
to be issued and delivered as set forth below:
Name of Holder or Assignee:
--------------------------------------------
(Please Print)
Address:
------------------------------------------------------------------
------------------------------------------------------------------
Signature: DATED: , 200__
------------------------------- -------------------
(Signature must conform in all respects to name of holder as specified on the
fact of this Warrant)
Signature Guaranteed:
------------------------------------------------
EXHIBIT III
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant, with respect to the number of Warrant Shares
set forth below:
TAXPAYER
NUMBER OF IDENTIFICATION
NAME OF ASSIGNEE ADDRESS WARRANT SHARES NUMBER
---------------- ------- -------------- ------
and does hereby irrevocably constitute and appoint ___________________,
Attorney, to make such transfer on the Warrant Register maintained at the
principal office of the Company with full power of substitution in the premises.
Dated: ____________________________________200__ __________________________
Signature
(Signature must conform in all respects to name of holder as specified on the
face of this Warrant).
Signature Guaranteed:
--------------------------------------------------------------------------------
