FORM OF COMMON STOCK PURCHASE WARRANT MABVAX THERAPEUTICS HOLDINGS, INC.
Exhibit
4.1
For
U.S. Persons:
[NEITHER]
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE] HAS [NOT] 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
APPLICABLE STATE SECURITIES LAWS, 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. TO THE
EXTENT PERMITTED BY APPLICABLE SECURITIES LAWS, THIS SECURITY [AND
THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY] MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
For
Non-U.S. Persons:
THESE
SECURITIES [AND THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO
ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”)
PURSUANT TO REGULATION S UNDER THE 1933 ACT. ACCORDINGLY, NONE OF
THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN
REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS,
AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE
UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED
UNLESS IN ACCORDANCE WITH THE 1933 ACT.
FORM
OF COMMON STOCK PURCHASE WARRANT MABVAX THERAPEUTICS HOLDINGS,
INC.
Warrant Shares:
[
]
Initial Issuance
Date: January [ ], 2018
Warrant No:
[
]
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, [ ] or its assigns (the
“Holder”)
is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on
or after the six month anniversary of the Initial Issuance Date
(the “Initial
Exercise Date”) and on or prior to the close of
business on the thirty six (36) month anniversary of the Initial
Exercise Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from MABVAX THERAPEUTICS HOLDINGS, INC., a
Delaware corporation (the “Company”), up to
[ ] shares (as subject to
adjustment hereunder, the “Warrant Shares”) of
Common Stock. The purchase price of one share of 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 defined herein shall have the meanings set
forth in that certain Securities Purchase Agreement (the
“Purchase
Agreement”), dated January [ ], 2018, among the
Company and the Holder.
-1-
Section
2.
Exercise.
a) Exercise
of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of the Company) of a
duly executed facsimile copy of the Notice of Exercise Form annexed
hereto. Within two (2) Trading Days following the date of exercise
as aforesaid, the Holder shall deliver the aggregate Exercise Price
for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier’s check drawn on a United States
bank unless the cashless exercise procedure specified in Section
2(c) below is specified in the applicable Notice of Exercise.
Notwithstanding anything herein to the contrary (although the
Holder may surrender the Warrant to, and receive a replacement
Warrant from, the Company), the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
No ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. The Holder and the Company
shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise Form within one (1) Trading
Day of delivery of such notice. Notwithstanding anything to the
contrary herein, all rules and requirements of the Company’s
transfer agent shall govern and supersede anything herein.
The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
b) Exercise
Price. The initial exercise price per share of the Common
Stock under this Warrant shall be $0.90, (the “Initial Exercise Price”)
subject to adjustment hereunder (as adjusted, the
“Exercise
Price”), payable, subject to Section 2(c) below, in
immediately available funds.
c) Cashless
Exercise. If at any time after the four (4) month
anniversary of the Initial Issuance Date, provided there is no
effective registration statement registering, or no current
prospectus available for the resale of the Warrant Shares by the
Holder, then after the Initial Exercise Date, this Warrant may also
be exercised at the Holder’s election, in whole or in part,
at such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) =
the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
-2-
If
Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of
the Securities Act, the Warrant Shares shall take on the
characteristics of the Warrants being exercised, and the holding
period of the Warrant Shares being issued may be tacked on to the
holding period of this Warrant. The Company agrees not to take any
position contrary to this Section 2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, unless
the Holder notifies the Company otherwise, if there is no effective
Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder and
the Exercise Price is greater than the VWAP on the Trading Day
immediately preceding the date on which the Warrant would otherwise
expire, then this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c). In the event the
issuance of Warrant Shares upon such automatic exercise would cause
the Holder to exceed the Beneficial Ownership Limitation, then the
delivery of such Warrant Shares shall be held in abeyance until
such time as the Holder notifies the Company that it may receive
any or all of such Warrant Shares without exceeding the Beneficial
Ownership Limitation.
d)
Mechanics of
Exercise.
(a) Delivery
of Certificates Upon Exercise. Certificates for shares
purchased hereunder shall be transmitted by the Company’s
transfer agent for its Common Stock (the “Transfer Agent”) to the
Holder by crediting the account of the Holder’s prime broker
with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) this Warrant is being exercised via cashless exercise and Rule
144 is available, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise by the date that
is the later to occur of (A) two (2) Trading Days after the
delivery to the Company of the Notice of Exercise, and (B) one (1)
Trading Day after the payment of the aggregate Exercise Price as
set forth above (including by cashless exercise, if permitted)
(such date, the “Warrant Share Delivery
Date”). 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, with payment to the Company of the Exercise Price (or by
cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the
issuance of such shares, having been paid. The Company understands
that a delay in the delivery of the Warrant Shares after the
Warrant Share Delivery Date could result in economic
loss to the Holder. As compensation to the Holder for such loss,
the Company agrees to pay (as liquidated damages and not as a
penalty) to the Holder for late issuance of Warrant Shares upon
exercise of this Warrant the proportionate amount of $10 per
Trading Day (increasing to $20 per Trading Day after the fifth
(5th) Trading Day) after the
Warrant Share Delivery Date for each $1,000 of Exercise Price of
Warrant Shares for which this Warrant is exercised which are not
timely delivered. The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.
Furthermore, in addition to any other remedies which may be
available to the Holder, in the event that the Company fails for
any reason to effect delivery of the Warrant Shares by the Warrant
Share Delivery Date, the Holder may revoke all or part of the
relevant Warrant exercise by delivery of a notice to such effect to
the Company, whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to the
exercise of the relevant portion of this Warrant, except that the
liquidated damages described above shall be payable through the
date notice of revocation or rescission is given to the
Company.
-3-
i. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part,
the Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to
the Holder a new Warrant evidencing the rights of the 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.
ii. Rescission
Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right,
at any time prior to issuance of such Warrant Shares, to rescind
such exercise.
iii. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the 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) or the Holder’s brokerage firm
otherwise purchases, 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 (A) pay in cash to the Holder the amount, if any, 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 (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) 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 (in which
case such exercise shall be deemed rescinded) 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 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 (A) 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 and, upon request of the Company, evidence of the amount
of such loss. 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.
-4-
iv. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
v. Charges,
Taxes and Expenses. Issuance of 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, 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.
The Company shall pay all Transfer Agent fees required for same-day
processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation
performing similar functions) required for same-day electronic
delivery of the Warrant Shares.
vi. Closing
of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
-5-
e) Xxxxxx’s Exercise
Limitations. (i) The Company shall not effect any exercise
of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to
the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the 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(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within one Trading Day
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 or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon notice to the Company,
may increase or decrease the Beneficial Ownership Limitation
provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such notice is delivered to
the Company. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(e) to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this
Warrant.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise
makes 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 upon
exercise of this Warrant or pursuant to any of the other
Transaction Documents), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of
this Warrant shall remain unchanged. 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.
-6-
b) Subsequent Rights Offerings. In
addition to any adjustments pursuant to Section 3(a) above, if at
any time the Company grants, issues or sells any Common Stock
Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to all of the record holders of any class
of shares of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of
shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
c) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the extent that the Holder exercises this Warrant immediately
before the date of which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the
participation in such Distribution.
d) Fundamental Transaction. If, at
any time while this Warrant is outstanding, (i) the Company,
directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another
Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect,
purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders
of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Stock, (iv)
the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization 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, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the 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 any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For 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. The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant and the other Transaction Documents in accordance with the
provisions of this Section 3(e) pursuant to written agreements and
shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Warrant and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.
-7-
e) Calculations.
All calculations under this Section 3 shall be made to the nearest
cent or the nearest whole share, as the case may be. 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.
f)
Notice to
Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise
Price after such adjustment and any resulting adjustment to the
number of Warrant Shares and setting forth a brief statement of the
facts requiring such adjustment.
ii. Notice to Allow Exercise by
Xxxxxx. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) 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 or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, or (E)
the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, to the extent that such information
constitutes material non-public information (as determined in good
faith by the Company) the Company shall follow the procedure
described in the Purchase Agreement and shall deliver to the Holder
at its last address 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 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. To the extent that any notice provided
hereunder constitutes, or contains, material, non- public
information regarding the Company or any of the Subsidiaries, the
Company shall simultaneously file such notice with the Commission
SEC pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the
event triggering such notice except as may otherwise be expressly
set forth herein.
Section
4.
Transfer of
Warrant.
a) Transferability.
Subject to compliance with any applicable securities laws and the
provisions of the Purchase Agreement, this Warrant and all rights
hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company or its designated
agent, 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, as applicable, 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. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant
to the Company unless the Holder has assigned this Warrant in full,
in which case, the Holder shall surrender this Warrant to the
Company within three (3) Trading Days of the date on which the
Holder delivers an assignment form to the Company assigning this
Warrant in full. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
-8-
b) New Warrants. This Warrant may
be divided or combined with 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. All Warrants issued on transfers or exchanges shall be
dated the initial issuance date of this Warrant and shall be
identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon
records to be maintained by the Company or its transfer agent 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.
Section 5. Certain Definitions. For
purposes of this Warrant, the following terms shall have the
following meanings:
(a) “Affiliate”
shall mean as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition,
“control” (including, with correlative meanings, the
terms “controlling”, “controlled by” and
“under common control with”), as applied to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or
by contract or otherwise. For purposes of this definition, a Person
shall be deemed to be “controlled by” a Person
if such latter Person possesses, directly or indirectly, power to
vote 10% or more of the securities having ordinary voting power for
the election of directors of such former Person
(b)
“Bloomberg” means Bloomberg
Financial Markets.
(c)
“Business Day” means any day other
than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.
(d) “Closing
Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such
security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as
reported in the “pink sheets” by the OTC Markets Group
LLC. If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price,
as the case may be, of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder.
All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.
-9-
(e)
“Common Stock” means (i) the
Company’s shares of Common Stock, $0.01 par value per share,
and (ii) any share capital into which such Common Stock shall have
been changed or any share capital resulting from a reclassification
of such Common Stock.
(f) “Common
Stock Equivalents” means any securities of the Company
or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation,
any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock
(g) “Person”
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department
or agency thereof.
(h) “Principal
Market” means The NASDAQ Capital Market or the
principal securities exchange or securities market on which the
Common Stock is then quoted or traded.
(i) “Rule
144” means Rule 144 promulgated by the SEC pursuant to
the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same purpose and effect
as such Rule
(j) “Subsidiary”
means any subsidiary of the Company including any direct or
indirect subsidiary of the Company formed or acquired after the
date hereof.
(k) “Trading
Day” means any day on which the Common Stock are
traded on the Principal Market, or, if the Principal Market is not
the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the
Common Stock are then traded; provided that “Trading Day”
shall not include any day on which the Common Stock are scheduled
to trade on such exchange or market for less than 4.5 hours or any
day that the Common Stock are suspended from trading during the
final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending
at 4:00:00 p.m., New York time).
(l) “VWAP”
means, for any security as of any date, the dollar volume-weighted
average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such
security, then on the principal securities exchange or securities
market on which such security is then traded) during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its
“HP” function set to “weighted average” or,
if the foregoing does not apply, the dollar volume-weighted average
price of such security in the over-the-counter market on the
electronic bulletin board for such security during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg, or, if no dollar
volume- weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers
for such security as reported in the “pink sheets” by
OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP
cannot be calculated for such security on such date on any of the
foregoing bases, the VWAP of such security on such date shall be
the fair market value as mutually determined by the Company and
such Holder. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or
other similar transaction during such period
-10-
Section
6.
Miscellaneous.
a) No
Rights as Stockholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set
forth in Section 2(d)(i).
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (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.
c) 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 not be a Trading Day, then, such action may be
taken or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized Shares.
(i) The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock 100% of the maximum number of shares 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 Principal Market upon which the Common Stock
may be listed. The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights
represented by this Warrant and payment for such Warrant Shares in
accordance herewith, be duly authorized,
validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
-11-
(ii) 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
(i) 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, (ii) 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 (iii) 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.
(iii) 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.
e) Jurisdiction.
All questions concerning governing law, jurisdiction, venue and the
construction, validity, enforcement and interpretation of this
Warrant shall be determined in accordance with the provisions of
the Purchase Agreement.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, or unless exercised in
a cashless exercise when Rule 144 is available, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
g) Non-waiver
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 the Holder’s
rights, powers or remedies. Without limiting any other provision of
this Warrant or the Purchase Agreement, if the Company
intentionally 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 the 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 the Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
h) 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.
i) Limitation
of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the
rights or privileges of the Holder, shall give rise to any
liability of the 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.
-12-
j) Remedies. The 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 and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
k) 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 and permitted
assigns of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the
benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant
Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holders of
not less than a majority of the then outstanding Warrants issued
pursuant to the Purchase Agreement.
m) 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.
n) 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.
********************
(Signature Page Follows)
-13-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
|
|
|
|
|
By:
Name:
Title:
|
-14-
NOTICE
OF EXERCISE
(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
[ ] [if
permitted] 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:
(4) After
giving effect to this Notice of Exercise, the undersigned will not
have exceeded the Beneficial Ownership Limitation.
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
__________________________________
__________________________________
__________________________________
[SIGNATURE OF
HOLDER]
Name of Investing
Entity: __________________________________
Signature of Authorized Signatory of Investing
Entity: __________________________________
Name of Authorized
Signatory: __________________________________
Title of Authorized
Signatory: __________________________________
Date:
__________________________________
-15-
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, [ _____ ] all of or [ _____ ]
shares of 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.
-16-
