EXHIBIT 99.5
NEITHER THIS WARRANT NOR ISSUANCE OF THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF TO THE HOLDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. NEITHER THIS
WARRANT NOR SUCH SECURITIES MAY BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT OF 1933, APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS AND THE APPLICABLE RULES AND REGULATIONS THEREUNDER.
THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS PROVIDED IN SECTION 25.
No. W- Right to Purchase ______ Shares of Common Stock
of Viragen, Inc.
VIRAGEN, INC.
COMMON STOCK PURCHASE WARRANT
VIRAGEN, INC., a Delaware corporation, hereby certifies that,
for value received, ______________________ or registered assigns (the "Holder"),
is entitled, subject to the terms set forth below, to purchase from the Company
at any time or from time to time before 5:00 p.m., New York City time, on the
Expiration Date (such capitalized term and all other capitalized terms used
herein having the respective meanings provided herein), [BEFORE ISSUANCE INSERT
AMOUNT OF SHARES EQUAL TO 40% OF NUMBER OF SHARES INITIALLY ISSUABLE UPON
CONVERSION OF NOTE BEING ISSUED TO HOLDER OF WARRANT, DETERMINED WITHOUT REGARD
TO ANY LIMITATIONS ON CONVERSION] paid and nonassessable shares of Common Stock
at a purchase price per share equal to the Purchase Price. The number of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided in this Warrant.
1. DEFINITIONS.
(a) As used in this Warrant, the term "Holder" shall have the
meaning assigned to such term in the first paragraph of this Warrant.
(b) All the agreements or instruments herein defined shall
mean such agreements or instruments as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of this Warrant.
(c) The following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" means, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the subject
Person. For purposes of this definition, "control" (including, with
correlative meaning, the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Aggregate Purchase Price" means at any time an amount equal
to the product obtained by multiplying (x) the Purchase Price TIMES (y)
the number of shares of Common Stock for which this Warrant may be
exercised at such time.
"Aggregation Parties" shall have the meaning provided in
Section 2(c).
"AMEX" means the American Stock Exchange, Inc.
"Board of Directors" means the Board of Directors of the
Company.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in The City of New York are
authorized or required by law or executive order to remain closed.
"Common Stock" includes the Company's Common Stock, par value
$.01 per share, (and any purchase rights issued with respect to the
Common Stock in the future) as authorized on the date hereof, and any
other securities into which or for which the Common Stock (and any such
rights issued with respect to the Common Stock) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise and any stock (other than Common
Stock) and other securities of the Company or any other Person which
the Holder at any time shall be entitled to receive, or shall have
received, on the exercise of this Warrant, in lieu of or in addition to
Common Stock.
"Common Stock Equivalents" means any warrant, option,
subscription or purchase right with respect to shares of Common Stock,
any security convertible into, exchangeable for, or otherwise entitling
the holder thereof to acquire, shares of Common Stock or any warrant,
option, subscription or purchase right with respect to any such
convertible, exchangeable or other security.
"Company" shall include Viragen, Inc., a Delaware corporation,
and any corporation that shall succeed to or assume the obligations of
Viragen, Inc. hereunder in accordance with the terms hereof.
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"Current Fair Market Value" means when used with respect to
the Common Stock as of a specified date with respect to each share of
Common Stock, the average of the closing prices of the Common Stock
sold on all securities exchanges (including the AMEX, the Nasdaq and
the Nasdaq SmallCap) on which the Common Stock may at the time be
listed, or, if there have 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 the Common Stock
is not so listed, the average of the representative bid and asked
prices quoted in the Nasdaq System as of 4:00 p.m., New York City time,
or, if on such day the Common Stock is not quoted in the Nasdaq System,
the average of the highest bid and lowest asked price on such day in
the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of five Trading Days
consisting of the day as of which the Current Fair Market Value of
Common Stock is being determined (or if such day is not a Trading Day,
the Trading Day next preceding such day) and the four consecutive
Trading Days prior to such day. If on the date for which Current Fair
Market Value is to be determined the Common Stock is not listed on any
securities exchange or quoted in the Nasdaq System or the
over-the-counter market, the Current Fair Market Value of Common Stock
shall be the highest price per share which the Company could then
obtain from a willing buyer (not an employee or director of the Company
at the time of determination) in an arms'-length transaction for shares
of Common Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by the Board of Directors.
"Current Market Price" shall mean the arithmetic average of
the daily Market Prices per share of Common Stock for the five
consecutive Trading Days immediately prior to the date in question;
PROVIDED, HOWEVER, that (1) if the "ex" date (as hereinafter defined)
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Purchase Price pursuant
to Sections 4, 5, 6, 7 or 8 occurs during such ten consecutive Trading
Days, the Market Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Market Price by
the same fraction by which the Purchase Price is so required to be
adjusted as a result of such other event, (2) if the "ex" date for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Purchase Price pursuant
to Sections 4, 5, 6, 7 or 8 occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior to the
day in question, the Market Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such
Market Price by the reciprocal of the fraction by which the Purchase
Price is so required to be adjusted as a result of such other event,
and (3) if the "ex" date for the issuance or distribution requiring
such computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (1) or (2) of this
proviso, the Market Price for each Trading Day on or after such "ex"
date shall be adjusted by adding thereto the amount of any cash and the
fair market value (as determined in good faith by the Board of
Directors) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such "ex" date. For purposes of
this paragraph, the term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common
Stock trades, regular way, on the relevant exchange or in the relevant
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market from which the Market Price was obtained without the right to
receive such issuance or distribution, and (2) when used with respect
to any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades, regular way, on such
exchange or in such market after the time at which such subdivision or
combination becomes effective. Notwithstanding the foregoing, whenever
successive adjustments to the Purchase Price are called for pursuant to
Sections 4, 5, 6, 7 or 8, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the
intent of Sections 4, 5, 6, 7 and 8 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.
"Escrow Funding Date" shall have the meaning provided in the
Purchase Agreement.
"Excluded Shares" shall have the meaning provided in Section
2(c).
"Expiration Date" means [PRIOR TO ISSUANCE, INSERT THE DATE
WHICH IS THREE YEARS AFTER DATE OF ISSUANCE], 2007.
"Issuance Date" means the date of original issuance of this
Warrant or its predecessor instrument.
"Market Price" means with respect to any security on any day
the closing bid price of such security on such day on the Nasdaq or the
NYSE or the AMEX, as applicable, or, if such security is not listed or
admitted to trading on the Nasdaq, the NYSE or the AMEX, on the
principal national securities exchange or quotation system on which
such security is quoted or listed or admitted to trading, in any such
case as reported by Bloomberg, L.P. or, if not quoted or listed or
admitted to trading on any national securities exchange or quotation
system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question, as
reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not so available, in such
manner as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors for that purpose, or a
price determined in good faith by the Board of Directors.
"Nasdaq" means the Nasdaq National Market.
"Nasdaq SmallCap" means the Nasdaq SmallCap Market.
"1934 Act" means the Securities Exchange Act of 1934, as
amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Note" means any of the 7% Convertible Notes due 2006 issued
by the Company pursuant to the Purchase Agreement and the Other
Purchase Agreements.
"NYSE" means the New York Stock Exchange, Inc.
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"Other Purchase Agreements" means the several Purchase
Agreements, dated as of the date of the Purchase Agreement, by and
between the Company and the several buyers named therein.
"Other Securities" means any stock (other than Common Stock)
and other securities of the Company or any other Person which the
Holder at any time shall be entitled to receive, or shall have
received, on the exercise of this Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 5.
"Other Warrants" shall mean the Common Stock Purchase Warrants
(other than this Warrant) issued or issuable pursuant to the Other
Purchase Agreements and the Common Stock Purchase Warrants issued or
issuable pursuant to the Notes.
"Person" means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint
stock company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other form
of entity not specifically listed herein.
"Purchase Agreement" means the Purchase Agreement, dated as of
April 1, 2004, by and between the Company and the original Holder of
this Warrant.
"Purchase Price" means $[PRIOR TO ISSUANCE OF THIS WARRANT,
INSERT 120% OF THE CONVERSION PRICE OF THE NOTES IN EFFECT ON THE DATE
OF ISSUANCE OF THIS WARRANT], subject to adjustment as provided in this
Warrant.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of , 2004, by and between the Company and the
original Holder of this Warrant.
"Registration Statement" shall have the meaning provided in
the Registration Rights Agreement.
"Reorganization Event" means the occurrence of any one or more
of the following events:
(i) any consolidation, merger or similar transaction
of the Company or any Subsidiary with or into another entity
(other than a merger or consolidation or similar transaction
of a Subsidiary into the Company or a wholly-owned
Subsidiary); or the sale or transfer of all or substantially
all of the assets of the Company and the Subsidiaries in a
single transaction or a series of related transactions; or
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(ii) the occurrence of any transaction or event in
connection with which all or substantially all the Common
Stock shall be exchanged for, converted into, acquired for or
constitute the right to receive securities of any other Person
(whether by means of a Tender Offer, liquidation,
consolidation, merger, share exchange, combination,
reclassification, recapitalization, or otherwise); or
(iii) the acquisition by a Person or group of Persons
acting in concert as a partnership, limited partnership,
syndicate or group, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or
otherwise, of beneficial ownership of securities of the
Company representing 50% or more of the combined voting power
of the outstanding voting securities of the Company ordinarily
(and apart from rights accruing in special circumstances)
having the right to vote in the election of directors.
"Restricted Ownership Percentage" shall have the meaning
provided in Section 2(c).
"Restricted Securities" means securities that are not eligible
for resale pursuant to Rule 144(k) under the 1933 Act (or any successor
provision).
"Reverse Stock Split" shall have the meaning provided in the
Purchase Agreement.
"Rule 144A" means Rule 144A as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"SEC Filings" shall have the meaning provided in the Purchase
Agreement.
"Subsidiary" means any corporation or other entity of which a
majority of the capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions are at the time directly or
indirectly owned by the Company.
"Tender Offer" means a tender offer, exchange offer or other
offer by the Company to repurchase outstanding shares of its capital
stock.
"Trading Day" means a day on whichever of the national
securities exchange, the Nasdaq or the Nasdaq SmallCap which then
constitutes the principal securities market for the Common Stock is
open for general trading.
2. EXERCISE OF WARRANT.
(a) EXERCISE. This Warrant may be exercised by the Holder in
whole at any time or in part from time to time on or before the Expiration Date
by (x) surrendering this Warrant to the Company, (y) giving a subscription form
in the form of EXHIBIT 1 to this Warrant (duly executed by the Holder) to the
Company, and (z) making payment, in cash or by certified or official bank check
payable to the order of the Company, or by wire transfer of funds to the account
of the Company, in any such case, in the amount obtained by multiplying (a) the
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number of shares of Common Stock designated by the Holder in the subscription
form by (b) the Purchase Price then in effect. On any partial exercise the
Company will forthwith issue and deliver to or upon the order of the Holder a
new Warrant or Warrants of like tenor, in the name of the Holder or as the
Holder (upon payment by the Holder of any applicable transfer taxes) may
request, providing in the aggregate on the face or faces thereof for the
purchase of the number of shares of Common Stock for which such Warrant or
Warrants may still be exercised. The subscription form may be surrendered by
telephone line facsimile transmission to such telephone number for the Company
as shall have been specified in writing to the Holder by the Company; PROVIDED,
HOWEVER, that if the subscription form is given to the Company by telephone line
facsimile transmission the Holder shall send an original of such subscription
form to the Company within ten Business Days after such subscription form is so
given to the Company; PROVIDED FURTHER, HOWEVER, that any failure or delay on
the part of the Holder in giving such original of any subscription form shall
not affect the validity or the date on which such subscription form is so given
by telephone line facsimile transmission.
(b) NET EXERCISE. Notwithstanding anything to the contrary
contained in Section 2(a), the Holder may elect to exercise this Warrant, in
whole at any time or in part from time to time, by receiving shares of Common
Stock equal to the net issuance value (as determined below) of this Warrant, or
any part hereof, upon surrender of the subscription form annexed hereto (duly
executed by the Holder) to the Company (followed by surrender of this Warrant to
the Company within three Trading Days after surrender of such subscription
form), in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
X = Y X (A - B)
-----------
A
where,
X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock as to which this
Warrant is to be exercised
A = the Current Fair Market Value of one share of
Common Stock calculated as of the last Trading Day
immediately preceding the exercise of this Warrant
B = the Purchase Price
(c) 9.9% LIMITATION.
(1) Notwithstanding anything to the contrary contained herein,
the number of shares of Common Stock that may be acquired by the Holder upon
exercise pursuant to the terms hereof at any time shall not exceed a number
that, when added to the total number of shares of Common Stock deemed
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beneficially owned by the Holder (other than by virtue of the ownership of
securities or rights to acquire securities that have limitations on the Holder's
right to convert, exercise or purchase similar to the limitation set forth
herein (the "Excluded Shares"), together with all shares of Common Stock deemed
beneficially owned at such time (other than by virtue of the ownership of the
Excluded Shares) by Persons whose beneficial ownership of Common Stock would be
aggregated with the beneficial ownership by the Holder for purposes of
determining whether a group exists or for purposes of determining the Holder's
beneficial ownership (the "Aggregation Parties"), in either such case for
purposes of Section 13(d) of the 1934 Act and Regulation 13D-G thereunder
(including, without limitation, as the same is made applicable to Section 16 of
the 1934 Act and the rules promulgated thereunder), would result in beneficial
ownership by the Holder or such group of more than 9.9% of the shares of Common
Stock for purposes of Section 13(d) or Section 16 of the 1934 Act and the rules
promulgated thereunder (as the same may be modified by the Holder as provided
herein, the "Restricted Ownership Percentage"). The Holder shall have the right
at any time and from time to time to reduce its Restricted Ownership Percentage
immediately upon notice to the Company in the event and only to the extent that
Section 16 of the 1934 Act or the rules promulgated thereunder (or any successor
statute or rules) is changed to reduce the beneficial ownership percentage
threshold thereunder to a percentage less than 9.9%. If at any time the limits
in this Section 2(c) make this Warrant unexercisable in whole or in part, the
Company shall not by reason thereof be relieved of its obligation to issue
shares of Common Stock at any time or from time to time thereafter but prior to
the Expiration Date upon exercise of this Warrant as and when shares of Common
Stock may be issued in compliance with such restrictions.
(2) For purposes of this Section 2(c), in determining the
number of outstanding shares of Common Stock at any time the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (1) the
Company's then most recent Form 10-Q, Form 10-K or other public filing with the
SEC, as the case may be, (2) a public announcement by the Company that is later
than any such filing referred to in the preceding clause (1) or (3) any other
notice by the Company or its transfer agent setting forth the number shares of
Common Stock outstanding and knowledge the Holder may have about the number of
shares of Common Stock issued upon conversion or exercise of Common Stock
Equivalents by any Person, including the Holder, which are not reflected in the
preceding clauses (1) through (3). Upon the written request of the Holder, the
Company shall within three Business Days confirm in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of Common Stock Equivalents, including the Notes and
the Warrants, by the Holder or its Affiliates, in each such case subsequent to,
the date as of which such number of outstanding shares of Common Stock was
reported.
3. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. (a) As
soon as practicable after the exercise of this Warrant and in any event within
five Trading Days thereafter, upon the terms and subject to the conditions of
this Warrant, the Company at its expense (including the payment by it of any
applicable issue or stamp taxes) will cause to be issued in the name of and
delivered to the Holder, or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such exercise, in such
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denominations as may be requested by the Holder, which certificate or
certificates shall be free of restrictive and trading legends (except to the
extent permitted under Section 6.12 of the Purchase Agreement), plus, in lieu of
any fractional share to which the Holder would otherwise be entitled, cash equal
to such fraction multiplied by the then Current Fair Market Value of one full
share of Common Stock, together with any other stock or Other Securities or any
property (including cash, where applicable) to which the Holder is entitled upon
such exercise pursuant to Section 2 or otherwise. In lieu of delivering physical
certificates for the shares of Common Stock or (Other Securities) issuable upon
any exercise of this Warrant, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Holder, the Company shall use
commercially reasonable efforts to cause its transfer agent electronically to
transmit such shares of Common Stock (or Other Securities) issuable upon
conversion to the Holder (or its designee), by crediting the account of the
Holder's (or such designee's) broker with DTC through its Deposit Withdrawal
Agent Commission system (provided that the same time periods herein as for stock
certificates shall apply). The Company shall pay any taxes and other
governmental charges that may be imposed under the laws of the United States of
America or any political subdivision or taxing authority thereof or therein in
respect of the issue or delivery of shares of Common Stock (or Other Securities)
or payment of cash upon exercise of this Warrant (other than income taxes
imposed on the Holder). The Company shall not be required, however, to pay any
tax or other charge imposed in connection with any transfer involved in the
issue of any certificate for shares of Common Stock (or Other Securities)
issuable upon exercise of this Warrant or payment of cash to any Person other
than the Holder, and in case of such transfer or payment the Company shall not
be required to deliver any certificate for shares of Common Stock (or Other
Securities) upon such exercise or pay any cash until such tax or charge has been
paid or it has been established to the Company's reasonable satisfaction that no
such tax or charge is due. If the Company fails to deliver or cause to be
delivered to the Holder such shares of Common Stock (or Other Securities)
pursuant to this Section 3(a) (free of any restrictions on transfer or legends
except to the extent permitted under Section 6.12 of the Purchase Agreement) in
accordance herewith, within five Trading Days after a particular exercise of
this Warrant, then, in addition to any other liability the Company may have, the
Company shall pay to the Holder, in cash, an amount, computed at the rate of 2%
per month of the Current Fair Market Value of the shares of Common Stock (or
Other Securities) not timely delivered by the Company, for the period such
failure continues (the "Exercise Delay Payments"), with each change in the
Current Fair Market Value during such period being given effect. Upon exercise
of this Warrant as provided herein, the Company's obligation to issue and
deliver the certificates for Common Stock shall be absolute and unconditional,
irrespective of the absence of any action by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, any failure or
delay in the enforcement of any other obligation of the Company to the Holder,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with such
exercise.
(b) If in any case the Company shall fail to issue and deliver
or cause to be delivered the shares of Common Stock to the Holder within five
Trading Days of a particular exercise of this Warrant, in addition to any other
liabilities the Company may have hereunder and under applicable law, (A) the
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Company shall pay or reimburse the Holder on demand for all out-of-pocket
expenses, including, without limitation, reasonable fees and expenses of legal
counsel, incurred by the Holder as a result of such failure; (B) if as a result
of such failure the Holder shall suffer any direct damages or liabilities from
such failure (including, without limitation, margin interest and the cost of
purchasing securities to cover a sale (whether by the Holder or the Holder's
securities broker) or borrowing of shares of Common Stock by the Holder for
purposes of settling any trade involving a sale of shares of Common Stock made
by the Holder during the period beginning on the Issuance Date and ending on the
date the Company delivers or causes to be delivered to the Holder such shares of
Common Stock), then, in addition to any amounts payable pursuant to Section
3(a), the Company shall upon demand of the Holder pay to the Holder an amount
equal to the actual, direct, demonstrable out-of-pocket damages and liabilities
suffered by the Holder by reason thereof which the Holder documents to the
reasonable satisfaction of the Company, and (C) the Holder may by written notice
(which may be given by mail, courier, personal service or telephone line
facsimile transmission) or oral notice (promptly confirmed in writing), given at
any time prior to delivery to the Holder of the shares of Common Stock issuable
in connection with such exercise of the Holder's right, rescind such exercise
and the subscription form relating thereto, in which case the Holder shall
thereafter be entitled to exercise that portion of this Warrant as to which such
exercise is so rescinded and to exercise its other rights and remedies with
respect to such failure by the Company. Notwithstanding the foregoing the
Company shall not be liable to the Holder under clauses (A) or (B) of the
immediately preceding sentence to the extent the failure of the Company to
deliver or to cause to be delivered such shares of Common Stock results from
fire, flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, or any similar event
outside the control of the Company (it being understood that the action or
failure to act of the Company's Transfer Agent shall not be deemed an event
outside the control of the Company except to the extent resulting from fire,
flood, storm, earthquake, shipwreck, strike, war, acts of terrorism, crash
involving facilities of a common carrier, acts of God, or any similar event
outside the control of such Transfer Agent or the bankruptcy, liquidation or
reorganization of such Transfer Agent under any bankruptcy, insolvency or other
similar law). The Holder shall notify the Company in writing (or by telephone
conversation, confirmed in writing) as promptly as practicable following the
third Trading Day after the Holder exercises this Warrant if the Holder becomes
aware that such shares of Common Stock so issuable have not been received as
provided herein, but any failure so to give such notice shall not affect the
Holder's rights under this Warrant or otherwise.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time on or after the
Escrow Funding Date, all holders of Common Stock (or Other Securities) shall
have received, or (on or after the record date fixed for the determination of
stockholders eligible to receive) shall have become entitled to receive, without
payment therefor,
(a) other or additional stock, rights, warrants or other
securities or property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
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(c) other or additional stock, rights, warrants or other
securities or property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or similar
corporate rearrangement,
other than (i) additional shares of Common Stock (or Other Securities) issued as
a stock dividend or in a stock-split (adjustments in respect of which are
provided for in Section 6) and (ii) rights or warrants to subscribe for Common
Stock at less than the Current Fair Market Value (adjustments in respect of
which are provided in Section 7), then and in each such case the Holder, on the
exercise hereof as provided in Section 2, shall be entitled to receive the
amount of stock, rights, warrants and Other Securities and property (including
cash in the cases referred to in subdivisions (b) and (c) of this Section 4)
which the Holder would hold on the date of such exercise if on the date of such
action specified in the preceding clauses (a) through (c) (or the record date
therefor) the Holder had been the holder of record of the number of shares of
Common Stock called for on the face of this Warrant and had thereafter, during
the period from the date thereof to and including the date of such exercise,
retained such shares and all such other or additional stock, rights, warrants
and Other Securities and property (including cash in the case referred to in
subdivisions (b) and (c) of this Section 4) receivable by the Holder as
aforesaid during such period, giving effect to all adjustments called for during
such period by Section 5.
5. EXERCISE UPON A REORGANIZATION EVENT. In case of any
Reorganization Event the Company shall, as a condition precedent to the
consummation of the transactions constituting, or announced as, such
Reorganization Event, cause effective provisions to be made so that the Holder
shall have the right thereafter, by exercising this Warrant (in lieu of the
shares of Common Stock of the Company and Other Securities or property
purchasable and receivable upon exercise of the rights represented hereby
immediately prior to such Reorganization Event) to purchase the kind and amount
of shares of stock and Other Securities and property (including cash) receivable
upon such Reorganization Event by a holder of the number of shares of Common
Stock that might have been received upon exercise of this Warrant immediately
prior to such Reorganization Event. Any such provision shall include provisions
for adjustments in respect of such shares of stock and Other Securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The provisions of this Section 5 shall
apply to successive Reorganization Events.
6. ADJUSTMENT FOR CERTAIN EXTRAORDINARY EVENTS. If on or after
the Escrow Funding Date the Company shall (i) issue additional shares of the
Common Stock as a dividend or other distribution on outstanding Common Stock,
(ii) subdivide or reclassify its outstanding shares of Common Stock, or (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
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happening of any successive event or events described herein in this Section 6.
The Holder shall thereafter, on the exercise hereof as provided in Section 2, be
entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock which would be issuable on such
exercise immediately prior to such issuance, subdivision or combination, as the
case may be, by a fraction of which (i) the numerator is the Purchase Price in
effect immediately prior to such issuance and (ii) the denominator is the
Purchase Price in effect on the date of such exercise.
7. ISSUANCE OF RIGHTS OR WARRANTS TO COMMON STOCKHOLDERS AT
LESS THAN CURRENT FAIR MARKET VALUE. If the Company shall on or after the Escrow
Funding Date issue rights or warrants to all holders of its outstanding shares
of Common Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Fair Market Value on the record
date fixed for the determination of stockholders entitled to receive such rights
or warrants, then
(a) the Purchase Price shall be adjusted so that the same
shall equal the price determined by multiplying the Purchase Price in
effect at the opening of business on the day after such record date by
a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on such record date
plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Current Fair
Market Value, and the denominator shall be the number of shares of
Common Stock outstanding on the close of business on such record date
plus the total number of additional shares of Common Stock so offered
for subscription or purchase; and
(b) the number of shares of Common Stock which the Holder may
thereafter purchase upon exercise of this Warrant at the opening of
business on the day after such record date shall be increased to a
number equal to the quotient obtained by dividing (x) the Aggregate
Purchase Price in effect immediately prior to such adjustment in the
Purchase Price pursuant to clause (a) of this Section 7 BY (y) the
Purchase Price in effect immediately after such adjustment in the
Purchase Price pursuant to clause (a) of this Section 7.
Such adjustment shall become effective immediately after the opening of business
on the day following the record date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock are not delivered pursuant to such rights or warrants, upon the expiration
or termination of such rights or warrants, the Purchase Price shall be
readjusted to the Purchase Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered and the number of shares of Common Stock for which this Warrant may
thereafter be exercised shall be readjusted (subject to proportionate adjustment
for any intervening exercises of this Warrant) to the number which would then be
in effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights or warrants are not so issued,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed and the number of
shares of Common Stock for which this Warrant may thereafter be exercised shall
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again be adjusted (subject to proportionate adjustment for any intervening
exercises of this Warrant) to be the number which would then be in effect if
such record date had not been fixed. In determining whether any rights or
warrants entitle the Holder to subscribe for or purchase shares of Common Stock
at less than such Current Fair Market Value, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into account
any consideration received for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors.
8. ADJUSTMENTS FOR CERTAIN ISSUANCES OF NEWLY ISSUED SHARES.
(a) In case at any time on or after the Escrow Funding Date
the Company shall issue shares of its Common Stock or Common Stock
Equivalents (collectively, the "Newly Issued Shares"), other than an
issuance pro rata to all holders of its outstanding Common Stock, at a
price below the greater of (x) the Current Fair Market Value of the
Common Stock at the time of such issuance and (y) the Purchase Price in
effect immediately prior to such issuance, then following such issuance
of Newly Issued Shares the Purchase Price shall be reduced as provided
in Section 8(b) and the number of shares of Common Stock which may be
issued upon exercise of this Warrant shall be increased as Section
8(c).
(b) The reduction in the Purchase Price following any such
adjustment shall be determined by multiplying the Purchase Price
immediately prior to such adjustment by a fraction, of which the
numerator shall be the sum of (i) the number of shares of Common Stock
outstanding immediately prior to the issuance of the Newly Issued
Shares (calculated on a fully-diluted basis assuming the exercise or
conversion of all options, warrants, purchase rights or convertible
securities which are exercisable or convertible at the time of the
issuance of the Newly Issued Shares) PLUS (ii) the number of shares of
Common Stock which the aggregate consideration, if any, received by the
Company for the number of Newly Issued Shares would purchase at a price
equal to the greater of (x) the Current Fair Market Value of the Common
Stock at the time of such issuance and (y) the Purchase Price in effect
immediately prior to such issuance, and the denominator shall be the
sum of (X) the number of shares of Common Stock outstanding immediately
prior to the issuance of the Newly Issued Shares (calculated on a
fully-diluted basis assuming the exercise or conversion of all options,
warrants, purchase rights or convertible securities which are
exercisable or convertible at the time of the issuance of the Newly
Issued Shares) PLUS (Y) the number of Newly Issued Shares. The
adjustment provided for in this Section 8(b) may be expressed as the
following mathematical formula:
( O +(C / MP)) x PP
------------------
NPP = ( O + N )
where,
C = aggregate consideration received by the Company for
the Newly Issued Shares
N = number of Newly Issued Shares
O = number of shares of Common Stock outstanding (on a
fully diluted basis, as described above) immediately
prior to the issuance of the Newly Issued Shares
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MP = greater of (x) Current Fair Market Value of the
Common Stock at the time of issuance of the Newly
Issued Shares and (y) Purchase Price at the time of
issuance of the Newly Issued Shares
PP = Purchase Price immediately prior to the issuance of
the Newly Issued Shares
NPP = Purchase Price immediately after the issuance of the
Newly Issued Shares
(c) If the Purchase Price is reduced in connection with the
issuance of Newly Issued Shares as provided in Section 8(b), then the
number of shares of Common Stock for which this Warrant may thereafter
be exercised shall be increased at the time of such reduction in the
Purchase Price to a number equal to the quotient obtained by dividing
(x) the Aggregate Purchase Price in effect immediately prior to such
issuance of Newly Issued Shares BY (y) the Purchase Price in effect
immediately after such issuance of Newly Issued Shares after such
reduction in the Purchase Price pursuant to Section 8(b).
(d) Notwithstanding the foregoing, no adjustment shall be made
under this Section 8 by reason of:
(1) the issuance by the Company of shares of Common
Stock pro rata to all holders of the Common Stock so long as
(i) any adjustment required by Section 6 is made and (ii) the
Company shall have given notice thereof to the Holder pursuant
to Section 15;
(2) the issuance by the Company of Newly Issued
Shares in an offering for cash for the account of the Company
that is underwritten on a firm commitment basis and is
registered with the SEC under the 1933 Act;
(3) the issuance by the Company of the Notes or the
Other Warrants or shares of Common Stock upon conversion of
the Notes or upon exercise of this Warrant or the Other
Warrants in accordance with the terms hereof and thereof;
(4) the issuance by the Company of shares of Common
Stock in lieu of payment of cash interest on the Notes in
accordance with the terms thereof;
(5) the issuance by the Company of Newly Issued
Shares upon grant or exercise of options for employees,
directors and consultants under the Company's 1995 Stock
Option Plan and 1997 Stock Option Plan;
(6) the issuance by the Company of Newly Issued
Shares to the lessor or vendor in any equipment lease or
similar equipment financing transaction in which the Company
or any Subsidiary obtains the use of equipment for its
business; and
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(7) the issuance by the Company of Newly Issued
Shares upon conversion or exercise of Common Stock Equivalents
outstanding on the date of the Purchase Agreement and
disclosed in the Purchase Agreement or the SEC Filings.
9. ADJUSTMENT IN RESPECT OF REVERSE STOCK SPLIT. If the
stockholder approval of the Reverse Stock Split contemplated by Section 6.1(b)
of the Purchase Agreement is obtained and after giving effect to the adjustment
provided for in Section 6 in respect of the Reverse Stock Split, the Purchase
Price is greater than 120% of the Current Market Price for the 6th Trading Day
after the earlier of (x) the effective date of the Reverse Stock Split and (y)
the first Trading Day on which "ex" trading of the Common Stock begins in
respect of the Reverse Stock Split, the Purchase Price shall be reduced to the
greater of (A) 120% of such Current Market Price and (B) the product of $.15
TIMES the number of shares of Common Stock outstanding immediately prior to the
Reverse Stock Split as shall have, by reason of the Reverse Stock Split, become
one share of Common Stock immediately after the Reverse Stock Split TIMES 1.2.
If the Purchase Price is reduced in connection with the Reverse Stock Split
pursuant to this Section 9, then the number of shares of Common Stock for which
this Warrant may thereafter be exercised shall be increased at the time of such
reduction in the Purchase Price to a number equal to the quotient obtained by
dividing (x) the Aggregate Purchase Price in effect immediately prior to such
reduction in the Purchase Price BY (y) the Purchase Price in effect immediately
after such reduction in the Purchase Price pursuant to this Section 9.
10. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
(a) If any of the following events occur, namely:
(i) any reclassification or change of the outstanding shares
of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a
subdivision or combination),
(ii) any consolidation, merger statutory exchange or
combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to
or in exchange for such Common Stock, or
(iii) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to any other Person as
a result of which holders of Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) with
respect to or in exchange for such Common Stock,
then the Company or the successor or purchasing Person, as the case may be,
shall execute with the Holder a written agreement providing that:
(x) this Warrant shall thereafter entitle the Holder to
purchase the kind and amount of shares of stock and Other Securities or
property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, statutory exchange,
combination, sale or conveyance by the holder of a number of shares of
Common Stock issuable upon exercise of this Warrant (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock
available to exercise this Warrant) immediately prior to such
reclassification, change, consolidation, merger, statutory exchange,
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combination, sale or conveyance assuming such holder of Common Stock
did not exercise such holder's rights of election, if any, as to the
kind or amount of securities, cash or other property receivable upon
such consolidation, merger, statutory exchange, combination, sale or
conveyance (PROVIDED that, if the kind or amount of securities, cash or
other property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purposes of this Section
10 the kind and amount of securities, cash or other property receivable
upon such consolidation, merger, statutory exchange, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the non-electing shares),
(y) in the case of any such successor or purchasing Person,
upon such consolidation, merger, statutory exchange, combination, sale
or conveyance such successor or purchasing Person shall be jointly and
severally liable with the Company for the performance of all of the
Company's obligations under this Warrant, the Purchase Agreement and
the Registration Rights Agreement and
(z) if registration or qualification is required under the
1933 Act or applicable state law for the public resale by the Holder of
such shares of stock and Other Securities so issuable upon exercise of
this Warrant, such registration or qualification shall be completed
prior to such reclassification, change, consolidation, merger,
statutory exchange, combination or sale.
Such written agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. If, in the case of any such reclassification, change, consolidation,
merger, statutory exchange, combination, sale or conveyance, the stock or other
securities or other property or assets receivable thereupon by a holder of
shares of Common Stock includes shares of stock, other securities, other
property or assets of a Person other than the Company or any such successor or
purchasing Person, as the case may be, in such reclassification, change,
consolidation, merger, statutory exchange, combination, sale or conveyance, then
such written agreement shall also be executed by such other Person and shall
contain such additional provisions to protect the interests of the Holder as the
Board of Directors shall reasonably consider necessary by reason of the
foregoing.
(b) The above provisions of this Section 10 shall similarly
apply to successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances.
(c) If this Section 10 applies to any event or occurrence,
Section 5 shall not apply.
11. TAX ADJUSTMENTS. The Company may make such reductions in
the Purchase Price, in addition to those required by Sections 4, 5, 6, 7, 8 and
9as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
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stock) or from any event treated as such for income tax purposes.
12. MINIMUM ADJUSTMENT. (a) No adjustment in the Purchase
Price (and no related adjustment in the number of shares of Common Stock which
may thereafter be purchased upon exercise of this Warrant) shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this Section 12 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All such calculations under this
Warrant shall be made by the Company and shall be made to the nearest cent or to
the nearest one hundredth of a share, as the case may be.
(b) No adjustment need be made for a change in the par value
of the Common Stock or from par value to no par value or from no par value to
par value.
13. NOTICE OF ADJUSTMENTS. Whenever the Purchase Price is
adjusted as herein provided, the Company shall promptly, but in no event later
than five Trading Days thereafter, give a notice to the Holder setting forth the
Purchase Price and number of shares of Common Stock which may be purchased upon
exercise of this Warrant after such adjustment and setting forth a brief
statement of the facts requiring such adjustment but which such statement shall
not include any information which would be material non-public information for
purposes of the 1934 Act. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
14. FURTHER ASSURANCES. The Company will take all action that
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of stock, free from all taxes,
liens and charges with respect to the issue thereof, on the exercise of all or
any portion of this Warrant from time to time outstanding.
15. NOTICE TO HOLDER PRIOR TO CERTAIN ACTIONS. In case on or
after the Issuance Date:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock (other than in cash out of retained earnings);
or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any share of
any class or any other rights or warrants; or
(c) the Board of Directors shall authorize any
reclassification of the Common Stock (other than a subdivision or combination of
its outstanding Common Stock, or a change in par value, or from par value to no
par value, or from no par value to par value), or any consolidation or merger or
other business combination transaction to which the Company is a party and for
which approval of any stockholders of the Company is required, or the sale or
transfer of all or substantially all of the assets of the Company; or
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(d) there shall be pending the voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
the Company shall give the Holder, as promptly as possible but in any event at
least ten Trading Days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, other business
combination transaction, sale, transfer, dissolution, liquidation or winding-up
is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record who shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, other business combination
transaction, sale, transfer, dissolution, liquidation or winding-up shall be
determined. Such notice shall not include any information which would be
material non-public information for purposes of the 1934 Act. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. In the case of any such action
of which the Company gives such notice to the Holder or is required to give such
notice to the Holder, the Holder shall be entitled to give a subscription form
to exercise this Warrant in whole or in part that is contingent on the
completion of such action.
16. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF
WARRANTS. The Company will at all times reserve and keep available out of its
authorized but unissued shares of capital stock, solely for issuance and
delivery on the exercise of this Warrant, a sufficient number of shares of
Common Stock (or Other Securities) to effect the full exercise of this Warrant
and the exercise, conversion or exchange of all other Common Stock Equivalents
from time to time outstanding (or Other Securities), and if at any time the
number of authorized but unissued shares of Common Stock (or Other Securities)
shall not be sufficient to effect such exercise, conversion or exchange, the
Company shall take such action as may be necessary to increase its authorized
but unissued shares of Common Stock (or Other Securities) to such number as
shall be sufficient for such purposes.
17. TRANSFER OF WARRANT. This Warrant shall inure to the
benefit of the successors to and assigns of the Holder. This Warrant and all
rights hereunder, in whole or in part, are registrable at the office or agency
of the Company referred to below by the Holder in Person or by his duly
authorized attorney, upon surrender of this Warrant properly endorsed
accompanied by an assignment form in the form attached to this Warrant, or other
customary form, duly executed by the transferring Holder.
18. REGISTER OF WARRANTS. The Company shall maintain, at the
principal office of the Company (or such other office as it may designate by
notice to the Holder), a register in which the Company shall record the name and
address of the Person in whose name this Warrant has been issued, as well as the
name and address of each successor and prior owner of such Warrant. The Company
shall be entitled to treat the Person in whose name this Warrant is so
registered as the sole and absolute owner of this Warrant for all purposes.
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19. EXCHANGE OF WARRANT. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the office or agency of the Company
referred to in Section 17, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each of such new Warrants to represent the right to subscribe for and purchase
such number of shares as shall be designated by the Holder at the time of such
surrender.
20. REPLACEMENT OF WARRANT. On receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and (a) in the case of loss, theft or
destruction, of indemnity from the Holder reasonably satisfactory in form to the
Company (and without the requirement to post any bond or other security), or (b)
in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver to the Holder a new Warrant of like tenor
without charge to the Holder.
21. WARRANT AGENT. The Company may, by written notice to the
Holder, appoint the transfer agent and registrar for the Common Stock as the
Company's agent for the purpose of issuing Common Stock (or Other Securities) on
the exercise of this Warrant pursuant to Section 2, and the Company may, by
written notice to the Holder, appoint an agent having an office in the United
States of America for the purpose of exchanging this Warrant pursuant to Section
18, and replacing this Warrant pursuant to Section 20, or any of the foregoing,
and thereafter any such exchange or replacement, as the case may be, shall be
made at such office by such agent.
22. REMEDIES. The Company stipulates that the remedies at law
of the Holder in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
23. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant
shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company. Nothing contained in this Warrant shall be construed
as conferring upon the Holder the right to vote or to consent or to receive
notice as a stockholder of the Company on any matters or with respect to any
rights whatsoever as a stockholder of the Company. No dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the Common Stock (or Other Securities) purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised in accordance with its terms.
24. NOTICES, ETC. All notices and other communications from
the Company to the Holder shall be in writing and delivered personally, by
confirmed facsimile, by a nationally recognized overnight courier service or
mailed by first class certified mail, postage prepaid, at such facsimile
telephone number or address as may have been furnished to the Company in writing
by the Holder or at such facsimile telephone number or the address shown for the
Holder on the register of Warrants referred to in Section 18.
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25. TRANSFER RESTRICTIONS. This Warrant has not been and is
not being registered under the provisions of the 1933 Act or any state
securities laws and this Warrant may not be transferred prior to the end of the
holding period applicable to sales hereof under Rule 144(k) unless (1) the
transferee is an "accredited investor" (as defined in Regulation D under the
0000 Xxx) or a QIB in a transfer that meets the requirements of Rule 144A and
(2) the Holder shall have delivered to the Company an opinion of counsel,
reasonably satisfactory in form, scope and substance to the Company, to the
effect that this Warrant may be sold or transferred without registration under
the 1933 Act. Prior to any such transfer, such transferee shall have represented
in writing to the Company that such transferee has requested and received from
the Company all information relating to the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company deemed relevant by such transferee; that such transferee has been
afforded the opportunity to ask questions of the Company concerning the
foregoing and has had the opportunity to obtain and review the Registration
Statement and the prospectus related thereto, each as amended or supplemented to
the date of transfer to such transferee, and the reports and other information
concerning the Company which at the time of such transfer have been filed by the
Company with the SEC pursuant to the 1934 Act and which are incorporated by
reference in such prospectus as of the date of such transfer. If such transfer
is intended to assign the rights and obligations of the Holder the Purchase
Agreement and the Registration Rights Agreement, such transfer shall otherwise
be made in compliance with the applicable provisions of the Purchase Agreement
and the Registration Rights Agreement.
26. RULE 144A INFORMATION REQUIREMENT. Within the period prior
to the expiration of the holding period applicable to sales hereof under Rule
144(k) under the 1933 Act (or any successor provision), the Company covenants
and agrees that it shall, during any period in which it is not subject to
Section 13 or 15(d) under the 1934 Act, make available to the Holder and the
holder of any shares of Common Stock issued upon exercise of this Warrant which
continue to be Restricted Securities in connection with any sale thereof and any
prospective purchaser of this Warrant from the Holder, the information required
pursuant to Rule 144A(d)(4) under the 1933 Act upon the request of the Holder
and it will take such further action as the Holder may reasonably request, all
to the extent required from time to time to enable the Holder to sell this
Warrant without registration under the 1933 Act within the limitation of the
exemption provided by Rule 144A, as Rule 144A may be amended from time to time.
Upon the request of the Holder, the Company will deliver to the Holder a written
statement as to whether it has complied with such requirements.
27. LEGEND. The provisions of Section 6.12 of the Purchase
Agreement and the related definitions of capitalized terms used therein and
defined in the Purchase Agreement are by this reference incorporated herein as
if set forth in full at this place.
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28. AMENDMENT; WAIVER. This Warrant and any terms hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. Notwithstanding anything to the contrary contained
herein, no amendment or waiver shall increase or eliminate the Restricted
Ownership Percentage, whether permanently or temporarily, unless, in addition to
complying with the other requirements of this Warrant, such amendment or waiver
shall have been approved in accordance with the General Corporation Law of the
State of Delaware and the Company's By-laws by holders of the outstanding shares
of Common Stock entitled to vote at a meeting or by written consent in lieu of
such meeting.
29. MISCELLANEOUS. This Warrant shall be construed and
enforced in accordance with and governed by the internal laws of the State of
New York. The headings, captions and footers in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
30. ATTORNEYS' FEES. In any litigation, arbitration or court
proceeding between the Company and Holder relating hereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed on its behalf by one of its officers thereunto duly authorized.
Dated: VIRAGEN, INC.
By:
-----------------------------------
Name:
Title:
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ASSIGNMENT
For value ____________ hereby sell(s), assign(s) and transfer(s) unto
____________ (Please insert social security or other Taxpayer Identification
Number of assignee: ____________ the attached original, executed Warrant to
purchase ____________ share of Common Stock of Viragen, Inc., a Delaware
corporation (the "Company"), and hereby irrevocably constitutes and appoints
____________ attorney to transfer the Warrant on the books of the Company, with
full power of substitution in the premises.
In connection with any transfer of the Warrant within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the 1933 Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
1933 Act), the undersigned confirms that such Warrant is being transferred:
[ ] To the Company or a Subsidiary; or
[ ] To a QIB pursuant to and in compliance with Rule 144A; or
[ ] To an "accredited investor" (as defined in Regulation D
under the 0000 Xxx) pursuant to and in compliance with the
1933 Act; or
[ ] Pursuant to and in compliance with Rule 144 under the 1933
Act;
and unless the box below is checked, the undersigned confirms that, to the
knowledge of the undersigned, such Warrant is not being transferred to an
"affiliate" (as defined in Rule 144 under the 0000 Xxx) of the Company.
[ ] The transferee is an affiliate of the Company.
Capitalized terms used in this Assignment and not defined in this
Assignment shall have the respective meanings provided in the Warrant.
Dated: NAME:
----------- -------------------------------------
Signature(s)
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EXHIBIT 1
FORM OF SUBSCRIPTION
VIRAGEN, INC.
(To be signed only on exercise of Warrant)
TO: Viragen, Inc.
000 XX 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
shares (the "Exercise Shares") of Common Stock, as defined in the Warrant, of
Viragen, Inc., a Delaware corporation (the "Company").
2. The undersigned Holder (check one):
[ ] (a) elects to pay the Aggregate Purchase Price for such shares
of Common Stock (i) in lawful money of the United States or by
the enclosed certified or official bank check payable in
United States dollars to the order of the Company in the
amount of $ , or (ii) by wire transfer of United States funds
to the account of the Company in the amount of $ , which
transfer has been made before or simultaneously with the
delivery of this Form of Subscription pursuant to the
instructions of the Company;
or
[ ] (b) elects to receive shares of Common Stock having a value
equal to the value of the Warrant calculated in accordance
with Section 2(b) of the Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other name(s) as is specified below:
Name:
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Address:
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I-1
Social Security or Tax Identification Number (if any):
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Dated:
----------------------
(Signature must conform to name of Holder
as specified on the face of the Warrant)
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(Address)
I-2
