Contract
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED
FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE PLEDGED, TRANSFERRED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR DELIVERY OF AN OPINION
OF
COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
ACT
OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.
INSITE
VISION INCORPORATED
Warrant
for the Purchase of Shares of
Common
Stock
Date:
August 15,
2006
|
No.
[·]
|
[·]
Shares
|
FOR
VALUE
RECEIVED, INSITE VISION INCORPORATED, a Delaware corporation (the “Company”),
hereby certifies that [·],
its
designee or its permitted assigns is entitled to purchase from the Company,
at
any time or from time to time, commencing on August 15, 2006 and prior to 5:00
P.M., New York City time, on August 15, 2011, [·]
fully
paid and non-assessable shares of common stock, $0.01 par value per share,
of
the Company for an aggregate purchase price of $[·].
(Hereinafter, (i) said common stock, $0.01 par value per share, of the Company,
is referred to as the “Common
Stock”;
(ii)
the shares of the Common Stock purchasable hereunder or under any other Warrant
(as hereinafter defined) are referred to as the “Warrant
Shares”;
(iii)
the aggregate purchase price payable for the Warrant Shares purchasable
hereunder is referred to as the “Aggregate
Warrant Price”;
(iv)
the price payable (initially $1.51 per share subject to adjustment) for each
of
the Warrant Shares hereunder is referred to as the “Per
Share Warrant Price”;
(v)
this Warrant, all similar Warrants issued on the date hereof in connection
with
the Subscription Agreement (as defined below) and all warrants hereafter issued
in exchange or substitution for this Warrant or such similar Warrants are
referred to as the “Warrants”;
(vi)
the holder of this Warrant is referred to as the “Holder”
and
the
holder of this Warrant and all other Warrants and Warrant Shares are referred
to
as the “Holders”
and
Holders of more than fifty percent (50%) of the outstanding Warrants and Warrant
Shares are referred to as the “Majority
of the Holders”);
and
(vii) the then current market price per share of the Common Stock (the
“Current
Market Price”)
shall
be deemed to be the last reported trade of the Common Stock on the trading
day
prior to such date or, in case no such reported sales take place on such day,
the average of the last reported bid and asked prices of the Common Stock on
such day, in either case on the principal national securi--ties exchange on
which the Common Stock is admitted to trading or listed, or if not listed or
admitted to trading on any such exchange, the representative closing sale price
of the Common Stock as reported by the National Association of Securities
Dealers, Inc. Automated Quota-tions System (“NASDAQ”),
or
other similar organization if NASDAQ is no longer reporting such information,
or, if the Common Stock is not reported on NASDAQ, the high per share sale
price
for the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or if not so available, the fair
market value of the Common Stock as determined in good faith by the Company’s
board of directors (the “Board
of Directors”).
The
Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
Price is subject to adjustment as hereinafter provided; in the event of any
such
adjustment, the number of Warrant Shares deliverable upon exercise of this
Warrant shall be adjusted by dividing the Aggregate Warrant Price by the Per
Share Warrant Price in effect immediately after such adjustment.
This
Warrant is issued pursuant to a Subscription Agreement (the “Subscription
Agreement”)
between the Company and the investor named therein in connection with a private
placement by the Company of its securities. By acceptance of this Warrant,
the
Holder agrees to comply with all applicable provisions of the Subscription
Agreement.
1. Exercise
of Warrant.
(a) This
Warrant may be exercised in whole at any time, or in part from time to time,
commencing on August 15, 2006 and prior to 5:00 P.M., New York City time, on
August 15, 2011 by the Holder by the surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the address set forth
in
Section 9(a) hereof, together with the cash payment of the Aggregate Warrant
Price, or the proportionate part thereof if this Warrant is exer-cised in part,
with payment for the Warrant Shares made by certified or official bank check
payable to the order of the Company.
(b) If
this
Warrant is exercised in part, this Warrant must be exercised for a number of
whole shares of the Common Stock and the Holder is entitled to receive a new
Warrant covering the Warrant Shares that have not been exercised and setting
forth the proportionate part of the Aggregate Warrant Price applicable to such
Warrant Shares. Upon surrender of this Warrant, the Company will (i) issue
a
certificate or certificates in the name of the Holder for the largest number
of
whole shares of the Common Stock to which the Holder shall be entitled and,
if
this Warrant is exercised in whole, in lieu of any fractional share of the
Common Stock to which the Holder shall be entitled, pay to the Holder cash
in an
amount equal to the fair value of such fractional share (determined in such
reasonable manner as the Board of Directors of the Company shall determine),
and
(ii) deliver the other securities and properties receivable upon the exercise
of
this Warrant, or the proportionate part thereof, if this Warrant is exercised
in
part, pursuant to the provisions of this Warrant.
2. Reservation
of Warrant Shares; Listing.
The
Company agrees that, prior to the expiration of this Warrant, the Company shall
at all times (a) have authorized and in reserve, and shall keep available,
solely for issuance and delivery upon the exercise of this Warrant, the shares
of the Common Stock and other securities and properties as from time to time
shall be receivable upon the exercise of this Warrant, free and clear of all
restrictions on sale or transfer, other than under Federal or state securities
laws, and free and clear of all preemptive rights and rights of first refusal
and (b) use its commercially reasonable efforts to have Warrant Shares
authorized for listing on the American Stock Exchange.
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3. Certain
Adjustments.
(a) If,
at
any time or from time to time after the date of this Warrant, the Company shall
issue or dis-tribute to all holders of shares of Common Stock by reason of
their
ownership thereof evidence of its indebtedness, any other securities of the
Company or any cash, property or other assets (excluding a subdivision,
combination or reclassification, or dividend or distribution payable in shares
of Common Stock, referred to in S-ection 3(b), and also excluding cash dividends
or cash distributions paid out of net profits legally available therefor in
the
full amount thereof (any such non-excluded event being herein called a
“Special
Dividend”)),
the
Per Share Warrant Price shall be adjusted by multiplying the Per Share Warrant
Price then in effect by a fraction, the numerator of which shall be the then
Current Market Price in effect on the record date of such issuance or
distribution less the fair market value (as determined in good faith by the
Company’s Board of Directors) of the evidence of indebtedness, cash, securities
or property, or other assets issued or distributed in such Special Dividend
applicable to one share of Common Stock and the denominator of which shall
be
the then Current Market Price in effect on the record date of such issuance
or
distribution. An adjustment made pursuant to this Subsection 3(a) shall become
effective immediately after the record date of any such Special
Dividend.
(b) In
case
the Company shall hereafter (i) pay a dividend or make a distribution on its
capital stock in shares of Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its Common Stock any shares of capital stock of the Company,
the Per Share Warrant Price shall be adjusted to be equal to a fraction, the
numerator of which shall be the Aggregate Warrant Price and the denominator
of
which shall be the number of shares of Common Stock or other capital stock
of
the Company that the Holder would have owned immediately following such action
had such Warrant been exercised immediately prior thereto. An adjustment made
pursuant to this Subsection 3(b) shall become effective immediately after the
record date in the case of a dividend or distribution, and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.
(c) In
case
of any capital reorganization or reclassification, or any consolidation or
merger to which the Company is a party other than a merger or consolidation
in
which the Company is the continuing corporation, or in case of any sale or
conveyance to another entity of all or substantially all of the assets of the,
or in the case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Company, but excluding any exchange of securities or merger
with another corporation in which the Company is a continuing corporation and
that does not result in any reclassification of or similar change in the Common
Stock), the Holder of this Warrant shall have the right thereafter to receive
on
the exercise of this Warrant the kind and amount of securities, cash or other
property which the Holder would have owned or have been entitled to receive
immediately after such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and in any such case, if necessary, appropriate adjustment shall be made in
the
application of the provisions set forth in this Section 3 with respect to the
rights and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Section 3 shall thereafter correspondingly
be
made applicable, as nearly as may reasonably be, in relation to any shares
of
stock or other securities or property thereafter deliverable on the exercise
of
this Warrant. The above provisions of this Section 3(c) shall similarly apply
to
successive reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The Company shall require the issuer
of any shares of stock or other securities or property thereafter deliverable
on
the exercise of this Warrant to be responsible for all of the agreements and
obligations of the Company hereunder. Notice of any such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and of said provisions so proposed to be made, shall be mailed to the Holders
of
the Warrants not less than 20 days prior to such event. A sale of all or
substantially all of the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger for the
foregoing purposes.
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(d) No
adjustment in the Per Share Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least $0.01 per share
of
Common Stock; provided,
however,
that
any adjustments which by reason of this Subsection 3(d) are not required to
be
made shall be carried forward and taken into account in any subsequent
adjustment; provided,
further,
however, that adjustments shall be required and made in accordance with the
provisions of this Section 3 (other than this Subsection 3(d)) not later than
such time as may be required in order to preserve the tax-free nature of a
distribution (if any) to the Holder of this Warrant or Common Stock issuable
upon the exercise hereof. All calculations under this Section 3 shall be made
to
the nearest cent or to the nearest 1/100th of a share, as the case may be.
Anything in this Section 3 to the contrary notwithstanding, the Company shall
be
entitled to make such reductions in the Per Share Warrant Price, in addition
to
those required by this Section 3, as it in its discretion shall deem to be
advisable in order that any stock dividend, subdivision of shares or
distribution of rights to purchase stock or securities convertible or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable.
(e) Whenever
the Per Share Warrant Price is adjusted as provided in this Section 3 and upon
any modifi-cation of the rights of a Holder of Warrants in accordance with
this
Section 3, the Company shall promptly prepare a brief statement of the facts
requiring such adjustment or modification and the manner of computing the same
and cause copies of such certificate to be mailed to the Holders of the
Warrants. The Company may, but shall not be obligated to unless requested by
a
Majority of the Holders, obtain, at its expense, a certificate of a firm of
independent public accountants of recognized standing selected by the Board
of
Directors (who may be the regular auditors of the Company) setting forth the
Per
Share Warrant Price and the number of Warrant Shares in effect after such
adjustment or the effect of such modification, a brief statement of the facts
requiring such adjustment or modification and the manner of computing the same
and cause copies of such certificate to be mailed to the Holders of the
Warrants.
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(f) If
the
Board of Directors of the Company shall declare any dividend or other
distribution with respect to the Common Stock other than a cash distribution
out
of earned surplus, the Company shall mail notice thereof to the Holders of
the
Warrants not less than ten days prior to the record date fixed for determining
stock-holders entitled to participate in such dividend or other
distribution.
(g) If,
as a
result of an adjustment made pursuant to this Section 3, the Holder of any
Warrant thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock and
other capital stock of the Company, the Board of Directors (whose determination
shall be conclusive and shall be described in a written notice to the Holder
of
any Warrant promptly after such adjustment) shall determine the allocation
of
the adjusted Per Share Warrant Price between or among shares or such classes
of
capital stock or shares of Common Stock and other capital stock.
(h) Upon
the
expiration of any rights, options, warrants or conversion privileges with
respect to the issuance of which an adjustment to the Per Share Warrant Price
had been made, if such option, right warrant or conversion shall not have been
exercised, the number of Warrant Shares purchasable upon exercise of this
Warrant, to the extent this Warrant has not then been exercised, shall, upon
such expiration, be readjusted and shall thereafter be such as they would have
been had they been originally adjusted (or had the original adjustment not
been
required, as the case may be) on the basis of (A) the fact that Common Stock,
if
any, actually issued or sold upon the exercise of such rights, options, warrants
or conversion privileges, and (B) the fact that such shares of Common Stock,
if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants
or
conversion privileges whether or not exercised; provided,
however,
that no
such readjustment shall have the effect of decreasing the number of Warrant
Shares purchasable upon exercise of this Warrant by an amount in excess of
the
amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options, warrants or conversion privileges.
(i) In
case
any event shall occur as to which the other provisions of this Section 3 are
not
strictly applicable but as to which the failure to make any adjustment would
not
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles of the adjustments set forth in this
Section 3, then, in each such case, the Board of Directors of the Company shall
in good faith determine the adjustment, if any, on a basis consistent with
the
essential intent and principles established herein, necessary to preserve the
purchase rights represented by the Warrants. Upon such determination, the
Company will promptly mail a copy thereof to the Holder of this Warrant and
shall make the adjustments described therein.
4. Fully
Paid Stock; Taxes.
The
shares of the Common Stock represented by each and every certificate for Warrant
Shares delivered on the exercise of this Warrant shall, subject to the Holder’s
compliance with the terms hereof, at the time of such delivery, be duly
authorized, validly issued and outstanding, fully paid and nonassessable, and
not subject to preemptive rights or rights of first refusal on the part of
the
Company, and the Company will take all such actions as may be necessary to
assure that the par value, if any, per share of the Common Stock is at all
times
equal to or less than the then Per Share Warrant Price. The Company shall pay,
when due and payable, any and all Federal and state stamp, original issue or
similar taxes which may be payable in respect of the issue of any Warrant Share
or any certificate thereof to the extent required because of the issuance by
the
Company of such security.
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5. Registration
Under Securities Act of 1933.
(a) The
Holder shall have the right to participate in the registration rights granted
to
purchasers of the Securities pursuant to Article VI of the Subscription
Agreement between such purchasers and the Company that were entered into at
the
time of the initial sale of the Securities. By acceptance of this Warrant,
the
Holder agrees to comply with the provisions in Article VI of the Subscription
Agreement to same extent as if it were a party thereto.
(b) Until
all
of the Warrant Shares have been sold under a Registration Statement or pursuant
to Rule 144(k), the Company shall use its commercially reasonable efforts to
file with the Securities and Exchange Commission all current reports and the
information as may be necessary to enable the Holder to effect sales of its
shares in reliance upon Rule 144(K) promulgated under the Act.
6. Investment
Intent; Limited Transferability.
(a) The
Holder represents to the Company, by accepting this Warrant, that it understands
that this Warrant and any securities obtainable upon exercise of this Warrant
have not been registered for sale under Federal or state securities laws and
are
being offered and sold to the Holder pursuant to one or more exemptions from
the
registration requirements of such securities laws. In the absence of an
effective registration of such securities or an exemption therefrom, any
certificates for such securities shall bear the legend set forth on the first
page hereof. The Holder understands that it must bear the economic risk of
its
investment in this Warrant and any securities obtainable upon exercise of this
Warrant for an indefinite period of time, as this Warrant and such securities
have not been registered under Federal or state securities laws and therefore
cannot be sold unless subsequently registered under such laws, unless an
exemption from such registration is available. The Holder further represents
to
the Company, by accepting this Warrant, that is has full power and authority
to
enter into this Warrant and make the representations set forth
herein.
(b) The
Holder, by its acceptance of this Warrant, represents to the Company that it
is
acquiring this Warrant and will acquire any securities obtainable upon exercise
of this Warrant for its own account for investment and not with a view to,
or
for sale in connection with, any distribution thereof in violation of the Act.
The Holder, by acceptance of this Warrant, agrees that this Warrant and any
such
securities will not be sold or otherwise transferred unless (i) a registration
statement with respect to such transfer is effective under the Act and any
applicable state securities laws or (ii) such sale or transfer is made pursuant
to one or more exemptions from the Act and in accordance with the legend set
forth on the first page hereof.
(c) Either
by
reason of such Holder’s business or financial experience or the business or
financial experience of its professional advisors (who are unaffiliated with
and
who are not compensated by the Company or any affiliate, finder or selling
agent
of the Company, directly or indirectly), such Holder has the capacity to protect
such Holder’s interests in connection with the transactions contemplated by this
warrant and the Purchase Agreement. The Holder, by its acceptance of this
Warrant, represents to the Company that that it is able to fend for itself,
can
bear the economic risk of its investment, has such knowledge and experience
in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in this Warrant, has received and reviewed a copy of
the
Company’s public filings with the Securities and Exchange Commission and has had
the opportunity to ask questions and receive answers from the Company regarding
its business and financial condition. Holder also represents it has not been
organized for the purpose of acquiring this Warrant.
6
(d) This
Warrant may not be sold, transferred, assigned or hypothecated except
in
to an “Accredited Investor” as defined in Rule 501(a) of the Securities Act, and
otherwise
in
accordance with the legend on the first page hereof and in compliance with
the
provisions of the Securities Act and the applicable state securities “blue sky”
laws, and is so transferable only upon the books of the Company which it shall
cause to be maintained for such purpose. By acceptance of this Warrant each
Holder (including any transferee of this Warrant or any portion hereof), makes
the representations set forth herein. The Company may treat the registered
Holder of this Warrant as it appears on the Company’s books at any time as the
Holder for all purposes. The Company shall permit any Holder of a Warrant or
its
duly authorized attorney, upon written request during ordinary business hours,
to inspect and copy or make extracts from its books showing the registered
Holders of Warrant. All Warrants issued upon the transfer or assignment of
this
Warrant will be dated the same date as this Warrant, and all rights and
obligations of the holder thereof shall be identical to those of the
Holder.
(e) The
Holder has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the Warrants or the exercise of the
Warrants; and (ii) the opportunity to request such additional information which
the Company possesses or can acquire without unreasonable effort or
expense.
(f) The
Holder did not (i) receive or review any advertisement, article, notice or
other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or
(ii) attend any seminar, meeting or investor or other conference whose attendees
were, to such Holder’s knowledge, invited by any general solicitation or general
advertising.
(g) The
Holder is an “accredited investor” within the meaning of Regulation D under the
Act. Such Holder is acquiring the Warrants for its own account and not with
a
present view to, or for sale in connection with, any distribution thereof in
violation of the registration requirements of the Act, without prejudice,
however, to such Holder’s right, subject to the provisions of the Subscription
Agreement and this Warrant, at all times to sell or otherwise dispose of all
or
any part of such Warrants and Warrant Shares.
7. Loss,
etc., of Warrant.
Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and of indemnity reasonably satisfactory to
the
Company, if lost, stolen or destroyed, and upon surrender and cancellation
of
this Warrant, if mutilated, the Company shall execute and deliver to the Holder
a new Warrant of like date, tenor and denomination.
7
8. Warrant
Holder Not Stockholder.
This
Warrant does not confer upon the Holder any right to vote on or consent to
or
receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, nor any other rights or liabilities as a stockholder, prior
to the exercise hereof; this Warrant does, however, require certain notices
to
Holders as set forth herein.
9. Communication.
No
notice
or other communi-cation under this Warrant shall be effective or deemed to
have
been given unless, the same is in writing and is mailed by first-class mail,
postage prepaid, or via recognized overnight courier with confirmed receipt,
addressed to:
(a) the
Company at Insite Vision Incorporated, Chief Financial Officer, 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, XX 00000, or other such address as the Company has designated
in writing to the Holder.
(b) the
Holder at the address of such Holder as set forth on the signature page to
the
Subscription Agreement or other such address as the Holder has designated in
writing to the Company.
10. Headings.
The
headings of this Warrant have been inserted as a matter of convenience and
shall
not affect the construction hereof.
11. Applicable
Law.
This
Warrant shall be governed by and construed in accordance with the law of the
State of New York without giving effect to the principles of conflicts of law
thereof.
12. Amendment,
Waiver, etc.
Except
as expressly provided herein, neither this Warrant nor any term hereof may
be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought; provided, however, that any provisions
hereof may be amended, waived, discharged or terminated upon the written consent
of the Company and the Majority of the Holders.
8
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
President this 15th
day of
August, 2006.
| INSITE VISION INCORPORATED | ||
| By:__________________________ | ||
| Name: X. Xxxxx Xxxxxxxxxxxxxx, Ph.D. | ||
| Title: Chief Executive Officer |
9
SUBSCRIPTION (cash)
The
undersigned, ___________________, pursuant to the provisions of the foregoing
Warrant, hereby agrees to subscribe for and purchase ____________________ shares
of the Common Stock, par value $0.01 per share, of InSite Vision Incorporated
covered by said Warrant, and makes payment therefor in full at the price per
share provided by said Warrant.
| Dated:_______________ | Signature:____________________ | |
| Address:______________________ |
10
ASSIGNMENT
FOR
VALUE
RECEIVED _______________ hereby sells, assigns and transfers unto
____________________ (“Transferee”)
the
foregoing Warrant and all rights evidenced thereby, and does irrevocably
constitute and appoint _____________________, attorney, to transfer said Warrant
on the books of InSite Vision Incorporated. By acceptance of the foregoing
Warrant, Transferee shall become a Holder under said Warrant and subject to
the
rights, obligations and representations of Holder set forth in said
Warrant.
| Dated:_______________ | Signature:____________________ | |
| Address:______________________ |
PARTIAL
ASSIGNMENT
FOR
VALUE
RECEIVED _______________ hereby assigns and transfers unto ____________________
the right to purchase _______ shares of Common Stock, par value $0.01 per share,
of InSite Vision Incorporated covered by the foregoing Warrant, and a
proportionate part of said Warrant and the rights evidenced thereby, and does
irrevocably constitute and appoint ____________________, attorney, to transfer
such part of said Warrant on the books of InSite Vision Incorporated. By
acceptance of the proportionate part of foregoing Warrant, Transferee shall
become a Holder under said proportionate part of said Warrant and subject to
the
rights, obligations and representations of Holder set forth in said
Warrant.
| Dated:_______________ | Signature:____________________ | |
| Address:______________________ |
11
