Exhibit 10.3
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EXHIBIT B
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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
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To Purchase Shares of Common Stock of
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Sinovac Biotech Ltd.
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THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for
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value received, (the "Holder"), is entitled, upon the terms and
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subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial Exercise Date") and on or
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prior to the close of business on the two year anniversary of the Initial
Exercise Date (the "Termination Date") but not thereafter, to subscribe for and
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purchase from Sinovac Biotech Ltd., a West Indies corporation (the "Company"),
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up to shares (the "Warrant Shares") of Common Stock, par value $0.001 per
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share, of the Company (the "Common Stock"). The purchase price of one share of
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Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise
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defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "Purchase Agreement"), dated December 31, 2004, among
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the Company and the purchasers signatory thereto.
Section 2. Exercise.
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a) Exercise of Warrant. Exercise of the purchase rights
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represented by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by
delivery to the Company of a duly executed facsimile copy of the Notice
of Exercise Form annexed hereto (or such other office or agency of the
Company as it may designate by notice in writing to the registered Holder
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at the address of such Holder appearing on the books of the Company);
provided, however, within 5 Trading Days of the date said Notice of
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Exercise is delivered to the Company, the Holder shall have surrendered
this Warrant to the Company and the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States bank.
b) Exercise Price. Subject to Section 2(f), the exercise price
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of the Common Stock under this Warrant shall (a) from the Initial
Exercise Date until the one year anniversary plus one Trading Day of the
Initial Exercise Date, be equal to $3.35, subject to adjustment as
provided hereunder and (b) from the one year plus one Trading Day
anniversary of the Initial Exercise Date until the Termination Date, be
equal to $4.00, subject to adjustment as provided hereunder (the
"Exercise Price").
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c) Cashless Exercise. If at any time after one year from the
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date of issuance of this Warrant there is no effective Registration
Statement registering, or no current prospectus available for, the resale
of the Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a "cashless exercise" in which the
Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) = the Closing Price on the Trading Day immediately
preceding the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this Warrant
by means of a cash exercise rather than a cashless
exercise.
Notwithstanding anything herein to the contrary, on the
Termination Date, this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).
d) Exercise Limitations; Holder's Restrictions. The Holder
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shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2(c) or otherwise, to the extent that after giving
effect to such issuance after exercise, the Holder (together with the
Holder's affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to such
issuance. For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such sentence is
being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including,
without limitation, any other Shares or Warrants) subject to a limitation
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on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act, it being acknowledged by Holder that the Company is
not representing to Holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(d) applies, the
determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder) and of which a portion of this
Warrant is exercisable shall be in the sole discretion of such Holder,
and the submission of a Notice of Exercise shall be deemed to be such
Holder's determination of whether this Warrant is exercisable (in
relation to other securities owned by such Holder) and of which portion
of this Warrant is exercisable, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify
or confirm the accuracy of such determination. For purposes of this
Section 2(d), in determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company's most recent Form 20-F or Form
6-K, as the case may be, (y) a more recent public announcement by the
Company or (z) any other notice by the Company or the Company's Transfer
Agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of the Holder, the Company shall within
two Trading Days confirm orally and 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 securities of the Company,
including this Warrant, by the Holder or its affiliates since the date as
of which such number of outstanding shares of Common Stock was reported.
The provisions of this Section 2(d) may be waived by the Holder upon, at
the election of the Holder, not less than 61 days' prior notice to the
Company, and the provisions of this Section 2(d) shall continue to apply
until such 61st day (or such later date, as determined by the Holder, as
may be specified in such notice of waiver).
e) Mechanics of Exercise.
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i. Authorization of Warrant Shares. The Company
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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).
ii. Delivery of Certificates Upon Exercise. Certificates
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for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the
account of the Holder's prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission ("DWAC")
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system if the Company is a participant in such system, and
otherwise by physical delivery to the address specified by the
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Holder in the Notice of Exercise within 5 Trading Days from the
delivery to the Company of the Notice of Exercise Form, surrender
of this Warrant and payment of the aggregate Exercise Price as set
forth above ("Warrant Share Delivery Date"). This Warrant shall be
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deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be deemed to
have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the Warrant has
been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to
Section 2(e)(vii) prior to the issuance of such shares, have been
paid.
iii. Delivery of New Warrants Upon Exercise. If this
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Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv. Rescission Rights. If the Company fails to cause its
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transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this
Section 2(e)(iv) by the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise.
v. Compensation for Buy-In on Failure to Timely Deliver
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Certificates Upon Exercise. In addition to any other rights
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available to the Holder, if the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such
exercise (a "Buy-In"), then the Company shall (1) pay in cash to
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the Holder the amount by which (x) the Holder's total purchase
price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was
required to deliver to the Holder in connection with the exercise
at issue times (B) the price at which the sell order giving rise
to such purchase obligation was executed, and (2) at the option of
the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was
not honored or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total
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purchase price of $11,000 to cover a Buy-In with respect to an
attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the Company
shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the
Company. Nothing herein shall limit a Holder's right to pursue any
other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company's failure to
timely deliver certificates representing shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
vi. No Fractional Shares or Scrip. No fractional shares
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or scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such exercise,
the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Exercise Price.
vii. Charges, Taxes and Expenses. Issuance of
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certificates for Warrant Shares shall be made without charge to
the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided, however,
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that in the event certificates for Warrant Shares are to be issued
in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company
may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental
thereto.
viii. Closing of Books. The Company will not close its
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stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
f) Call Provision. Subject to the provisions of this Section
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2(f), if after the Effective Date (i) the Closing Price for each of 10
consecutive Trading Days (the "Measurement Period", which period shall
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not have commenced until after the Effective Date) exceeds $4.99 ,
subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of the Purchase Agreement (the
"Threshold Price") and (ii) the daily trading volume of the Common Stock
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on the Trading Market for each Trading Day during the Measurement Period
exceeds 50,000 shares, subject to adjustment for reverse and forward
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stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of the
Purchase Agreement, then the Company may, within one Trading Day of the
end of such period, call for cancellation of all or any portion of this
Warrant for which a Notice of Exercise has not yet been delivered (such
right, a "Call"). To exercise this right, the Company must deliver to the
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Holder an irrevocable written notice (a "Call Notice"), indicating
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therein the portion of unexercised portion of this Warrant to which such
notice applies. If the conditions set forth below for such Call are
satisfied from the period from the date of the Call Notice through and
including the Call Date (as defined below), then any portion of this
Warrant subject to such Call Notice for which a Notice of Exercise shall
not have been received by the Call Date will be cancelled at 6:30 p.m.
(New York City time) on the tenth Trading Day after the date the Call
Notice is received by the Holder (such date, the "Call Date"). Any
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unexercised portion of this Warrant to which the Call Notice does not
pertain will be unaffected by such Call Notice. In furtherance thereof,
the Company covenants and agrees that it will honor all Notices of
Exercise with respect to Warrant Shares subject to a Call Notice that are
tendered through 6:30 p.m. (New York City time) on the Call Date. The
parties agree that any Notice of Exercise delivered following a Call
Notice shall first reduce to zero the number of Warrant Shares subject to
such Call Notice prior to reducing the remaining Warrant Shares available
for purchase under this Warrant. For example, if (x) this Warrant then
permits the Holder to acquire 100 Warrant Shares, (y) a Call Notice
pertains to 75 Warrant Shares, and (z) prior to 6:30 p.m. (New York City
time) on the Call Date the Holder tenders a Notice of Exercise in respect
of 50 Warrant Shares, then (1) on the Call Date the right under this
Warrant to acquire 25 Warrant Shares will be automatically cancelled, (2)
the Company, in the time and manner required under this Warrant, will
have issued and delivered to the Holder 50 Warrant Shares in respect of
the exercises following receipt of the Call Notice, and (3) the Holder
may, until the Termination Date, exercise this Warrant for 25 Warrant
Shares (subject to adjustment as herein provided and subject to
subsequent Call Notices). Subject again to the provisions of this Section
2(f), the Company may deliver subsequent Call Notices for any portion of
this Warrant for which the Holder shall not have delivered a Notice of
Exercise. Notwithstanding anything to the contrary set forth in this
Warrant, the Company may not deliver a Call Notice or require the
cancellation of this Warrant (and any Call Notice will be void), unless,
from the beginning of the 10th consecutive Trading Days used to determine
whether the Common Stock has achieved the Threshold Price through the
Call Date, (i) the Company shall have honored in accordance with the
terms of this Warrant all Notices of Exercise delivered by 6:30 p.m. (New
York City time) on the Call Date, (ii) the Registration Statement shall
be effective as to all Warrant Shares and the prospectus thereunder
available for use by the Holder for the resale of all such Warrant Shares
and (iii) the Common Stock shall be listed or quoted for trading on the
Trading Market. The Company's right to Call the Warrant shall be
exercised ratably among the Holders based on each Holder's initial
purchase of Common Stock pursuant to the Purchase Agreement
Section 3. Certain Adjustments.
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a) Stock Dividends and Splits. If the Company, at any time
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while this Warrant is outstanding: (A) pays a stock dividend or otherwise
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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 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 before such event and of which the denominator shall be the
number of shares of Common Stock outstanding after such event and the
number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted. Any adjustment made pursuant to this Section
3(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) Subsequent Equity Sales. If the Company or any Subsidiary
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thereof, as applicable, at any time while this Warrant is outstanding,
shall offer, sell, grant any option to purchase or offer, sell or grant
any right to reprice its securities, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share
less than $3.00, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this
Agreement (such lower price, the "Base Share Price" and such issuances
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collectively, a "Dilutive Issuance") (if the holder of the Common Stock
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or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which is issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the Exercise Price, such issuance
shall be deemed to have occurred for less than the Exercise Price), then,
the Exercise Price shall be reduced (never increased) to equal, prior to
the one year anniversary of the Initial Exercise Date plus one Trading
Day, 112% of the Base Share Price and after the one year anniversary of
the Initial Exercise Date plus one Trading Day, 133% of the Base Share
Price. The Company shall notify the Holder in writing, no later than the
Trading Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable
issuance price, or of applicable reset price, exchange price, conversion
price and other pricing terms (such notice the "Dilutive Issuance
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Notice"). For purposes of clarification, whether or not the Company
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provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares
based upon the Base Share Price regardless of whether the Holder
accurately refers to the Base Share Price in the Notice of Exercise.
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c) Pro Rata Distributions. If the Company, at any time prior
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to the Termination Date, shall distribute to all holders of Common Stock
(and not to Holders of the Warrants) evidences of its indebtedness or
assets or rights or warrants to subscribe for or purchase any security
other than the Common Stock (which shall be subject to Section 3(b)),
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 Closing
Price determined as of the record date mentioned above, and of which the
numerator shall be such Closing Price 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 in good faith. In either case the adjustments shall be
described in a statement provided to the Holders 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.
d) Fundamental Transaction. If, at any time while this Warrant
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is outstanding, (A) the Company effects any merger or consolidation of
the Company with or into another Person, (B) the Company effects any sale
of all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"Fundamental Transaction"), then, upon any subsequent conversion of this
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Warrant, the Holder shall have the right to receive, for each Warrant
Share that would have been issuable upon such exercise absent such
Fundamental Transaction, at the option of the Holder, (a) upon exercise
of this Warrant, the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving
corporation, and Alternate Consideration receivable upon or as a result
of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to such event or
(b) if the Company is acquired in an all cash transaction, cash equal to
the value of this Warrant as determined in accordance with the
Black-Scholes option pricing formula (the "Alternate Consideration"). For
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purposes of any such exercise, the determination of the Exercise Price
shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one
share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same choice
as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. To the extent necessary
to effectuate the foregoing provisions, any successor to the Company or
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surviving entity in such Fundamental Transaction shall issue to the
Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder's right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor
or surviving entity to comply with the provisions of this Section 3(d)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.
e) Exempt Issuance. Notwithstanding the foregoing, no
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adjustments, Alternate Consideration nor notices shall be made, paid or
issued under this Section 3 in respect of an Exempt Issuance.
f) Calculations. All calculations under this Section 3 shall
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be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. The number of shares of Common Stock outstanding at any
given time shall not includes shares of Common Stock owned or held by or
for the account of the Company, and the description of any such shares of
Common Stock shall be considered on issue or sale of Common Stock. For
purposes of this Section 3, the number of shares of Common Stock deemed
to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any)
issued and outstanding.
g) Voluntary Adjustment By Company. The Company may at any
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time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the
Board of Directors of the Company.
h) Notice to Holders.
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i. Adjustment to Exercise Price. Whenever the Exercise
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Price is adjusted pursuant to this Section 3, the Company shall
promptly mail to each Holder a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. If the Company issues a
variable rate security, despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have issued
Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be
converted or exercised in the case of a Variable Rate Transaction
(as defined in the Purchase Agreement).
ii. Notice to Allow Exercise by Holder. If (A) the
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Company shall declare a dividend (or any other distribution) on
the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock;
(C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
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or transfer of all or substantially all of the assets of the
Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall cause to be mailed to the Holder at
its last addresses as it shall appear upon the Warrant Register of
the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if
a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided,
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that the failure to mail such notice or any defect therein or in
the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is
entitled to exercise this Warrant during the 20-day period
commencing the date of such notice to the effective date of the
event triggering such notice.
Section 4. Transfer of Warrant.
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a) Transferability. Subject to compliance with any applicable
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securities laws and the conditions set forth in Sections 5(a) and 4(d)
hereof and to the provisions of Section 4.1 of the Purchase Agreement,
this Warrant and all rights hereunder are transferable, in whole or in
part (but if in part, in denominations of not less than 100,000 Warrant
Shares, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the
Common Stock that occur after the date of the Purchase Agreement, or such
lesser amount as it then held by the Holder) on no more than 2 occasions
in any 12 month period upon surrender of this Warrant at the principal
office of the Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of
this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant
issued.
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b) New Warrants. This Warrant may be divided or combined with
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other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section 4(a),
as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
c) Warrant Register. The Company shall register this Warrant,
----------------
upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to
----------------
time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise
hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of
---------------------
this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer (i) that the Holder or transferee of
this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the
Securities Act and under applicable state securities or blue sky laws,
(ii) that the holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and
(iii) that the transferee be an "accredited investor" as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the
Securities Act or a qualified institutional buyer as defined in Rule
144A(a) under the Securities Act.
Section 5. Miscellaneous.
--------- -------------
a) Title to Warrant. Prior to the Termination Date and subject
----------------
to compliance with applicable laws and Section 4 of this Warrant, this
Warrant and all rights hereunder are transferable, in whole or in part,
at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed. The transferee shall
sign an investment letter in form and substance reasonably satisfactory
to the Company.
b) No Rights as Shareholder Until Exercise. This Warrant does
---------------------------------------
not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the
surrender of this Warrant and the payment of the aggregate Exercise Price
(or by means of a cashless exercise), the Warrant Shares so purchased
shall be and be deemed to be issued to such Holder as the record owner of
such shares as of the close of business on the later of the date of such
surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The
-----------------------------------------------------
Company covenants that upon receipt by the Company of evidence reasonably
11
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 (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of
such cancellation, in lieu of such Warrant or stock certificate.
d) Saturdays, Sundays, Holidays, etc. If the last or appointed
---------------------------------
day for the taking of any action or the expiration of any right required
or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
e) Authorized Shares.
-----------------
The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
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.
Except and to the extent as waived or consented to by the
Holder, 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 Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (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 Warrant
Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
12
Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this Warrant
is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.
f) Jurisdiction. All questions concerning the construction,
------------
validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the provisions of the Purchase Agreement.
g) Restrictions. The Holder acknowledges that the Warrant
------------
Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal
securities laws.
h) Nonwaiver and Expenses. No course of dealing or any delay
-----------------------
or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights,
powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results in any
material damages to the Holder, the Company shall pay to Holder such
amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.
i) Notices. Any notice, request or other document required or
-------
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase
Agreement.
j) Limitation of Liability. No provision hereof, in the
-------------------------
absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
k) Remedies. Holder, in addition to being entitled to exercise
--------
all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The
Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities
-----------------------
laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of all Holders from time
13
to time of this Warrant and shall be enforceable by any such Holder or
holder of Warrant Shares.
m) Amendment. This Warrant may be modified or amended or the
---------
provisions hereof waived with the written consent of the Company and the
Holder.
n) Severability. Wherever possible, each provision of this
------------
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions
of this Warrant.
o) Headings. The headings used in this Warrant are for the
--------
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
********************
14
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: December , 2004
--
SINOVAC BIOTECH LTD.
--------------------
By:
----------------------------------
Name:
Title:
15
NOTICE OF EXERCISE
------------------
To: SINOVAC BIOTECH LTD.
(1) The undersigned hereby elects to purchase Warrant Shares of
--------
the Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[_] in lawful money of the United States; or
[_] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
------------------------------------
The Warrant Shares shall be delivered to the following:
------------------------------------
------------------------------------
------------------------------------
(4) Accredited Investor. The undersigned is an "accredited investor" as
-------------------
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity:
------------------------------------------------------
Signature of Authorized Signatory of Investing Entity:
-------------------------
Name of Authorized Signatory:
--------------------------------------------------
Title of Authorized Signatory:
-------------------------------------------------
Date:
--------------------------------------------------------------------------
16
ASSIGNMENT FORM
---------------
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
-----------------------------------------------
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ,
--------------- -------
Holder's Signature:
--------------------------------
Holder's Address:
----------------------------------
----------------------------------
Signature Guaranteed:
-------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
17
