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Exhibit 10.2
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE THEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), OR UNDER
THE SECURITIES LAWS OF ANY JURISDICTION, AND MUST BE HELD INDEFINITELY UNLESS
THEY ARE TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT AND IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS, OR AFTER RECEIPT
OF AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO GLIATECH INC.,
TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED AND THE TRANSFER DOES NOT
VIOLATE ANY APPLICABLE SECURITIES LAW.
VOID AFTER FIVE YEARS AFTER THE DATE OF THIS WARRANT
WARRANT TO PURCHASE COMMON STOCK OF
GLIATECH INC.
REGISTERED STOCKHOLDER OF WARRANT: XXXX CAPITAL ROYALTY ACQUISITION FUND, L.P.
NO. OF SHARES FOR WHICH EXERCISABLE: 300,000
Gliatech Inc., a Delaware corporation (the "Company"), in connection
with the Revenue Interests Assignment Agreement (the "Assignment Agreement"),
dated as of April 26, 2001, by and between the Company and the Registered
Stockholder, for value received hereby certifies that the Registered Stockholder
named above or registered permitted assigns has the right at any time after the
date hereof and prior to the close of business on the five (5) year anniversary
of the date of this Warrant, at which date this Warrant expires, to purchase an
aggregate of 300,000 fully paid and non-assessable shares of common stock, $0.01
par value per share, of the Company (hereinafter referred to as "Common Stock")
at the price set forth herein, all as provided herein and upon compliance with
and subject to the conditions set forth herein.
ARTICLE I
TRANSFER
Section 1.01 TRANSFER BOOKS. The Company shall maintain books for the
transfer and registration of this Warrant.
Section 1.02 TRANSFER. The Company, from time to time, shall register
the transfer of this Warrant in the books to be maintained by the Company for
that purpose upon surrender at the principal office of the Company of this
Warrant properly endorsed or accompanied by appropriate instruments of transfer
and written instructions for
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transfer. Upon any such transfer, a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be canceled by the Company. The
Company may require the payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any such transfer.
Notwithstanding anything contained herein to the contrary, no transfer of this
Warrant is permitted without the prior written consent of the Company.
Section 1.03 TRANSFER RESTRICTIONS. This Warrant, and, except as set
forth in Article V hereof, the Common Stock underlying this Warrant, will not be
registered under the Securities Act of 1933 (the "1933 Act"), or any securities
act of any state or other jurisdiction, in reliance on registration exemptions
under such statutes for private offerings. This Warrant or any of the underlying
shares of Common Stock may not be sold or otherwise transferred except in
accordance with the 1933 Act and all other applicable securities laws, and prior
to any transfer (other than pursuant to an effective registration statement
under the 1933 Act and otherwise in compliance with applicable law) the holder
shall, upon the request of the Company, furnish to the Company a written opinion
of counsel, in form and substance satisfactory to the Company, to the effect
that registration under the 1933 Act is not required and that all requisite
action has been taken under all applicable securities laws in connection with
the proposed transfer.
ARTICLE II
NUMBER OF SHARES; WARRANT PRICE; DURATION;
AND EXERCISE OF WARRANT
Section 2.01 NUMBER OF SHARES; WARRANT PRICE; DURATION; COMPANY OPTION.
(a) This Warrant entitles the Registered Stockholder, subject to the
provisions hereof, to purchase from the Company at any time after the date
hereof and before the close of business on the fifth (5th) anniversary of the
date of this Warrant, an aggregate of 300,000 shares of Common Stock at an
exercise price per share to be calculated based on the average closing price of
the Common Stock on the NASDAQ National Market System, as reported in The Wall
Street Journal, for the twenty (20) consecutive trading days immediately
following the execution of the letter of intent, dated March 14, 2001, between
the Company and Xxxx Capital Partners, which has been subsequently amended,
subject to adjustment as provided in Article III hereof, payable in full at the
time of purchase. The "average closing price" shall equal a fraction the
numerator of which is the sum of such closing prices and the denominator of
which is twenty (20). The term "Warrant Price" as used herein refers to the
foregoing price per share in effect at any time.
(b) The Company may require the Registered Stockholder to exercise its
warrants if the average closing price of the Common Stock on the NASDAQ National
Market System, as reported in The Wall Street Journal, for any twenty (20)
consecutive trading day period averages not less than 400% of the Warrant Price
by providing notice (the "Option Notice") thereof to the Registered Stockholder,
and the Registered Stockholder would be required to exercise its warrants within
twenty (20) business days following the
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receipt of the Option Notice; provided, however, that the number of warrants
that the Company could require the Registered Stockholder to exercise would not
be more than 5% of the sum of the aggregate trading volume of the Common Stock
of the Company for the twenty (20) trading days immediately prior to the
Registered Stockholder's receipt of the Option Notice from the Company; and
provided, further, that the Company would not be permitted to make subsequent
requirements for the Registered Stockholder to exercise additional warrants
within forty (40) days of a prior Option Notice. Such Option Notice shall
contain a certification of an officer of the Company on behalf of the Company
that as of the date thereof, to the knowledge of the Company, no event or
circumstance exists which could reasonably be expected to result in a
Disadvantageous Condition (as defined in Section 5.01(b)). In the event the
Company exercises its option under this Section 2.01(b), the Company shall have
the right to cause the Registered Stockholder to exercise such warrants in
accordance with Section 2.02(h).
Section 2.02 EXERCISE.
(a) This Warrant may be exercised, in whole or in part, by surrendering
this Warrant, at the principal office of the Company, with the election to
exercise notice form (the "Election to Exercise Notice") attached hereto as
Exhibit A duly executed, and by paying in full the Warrant Price for each share
of Common Stock as to which this Warrant is exercised and any applicable taxes,
other than taxes that the Company is required to pay hereunder. Such payment may
be (i) in cash or by bank check or (ii) as provided in either Section 2.02(g) or
Section 2.02(h).
(b) As soon as practicable after the exercise of this Warrant, the
Company shall cause to be issued to or upon the order of the holder of this
Warrant a certificate or certificates for the number of full shares of Common
Stock to which it is entitled, registered in such name or names as may be
directed by it.
(c) Notwithstanding anything contained herein to the contrary, the
Company shall not be required to issue any fraction of a share in connection
with the exercise of this Warrant, but in any case where the holder hereof
would, except for the provisions of this Section 2.02, be entitled under the
terms of this Warrant to receive a fraction of a share upon the exercise hereof,
the Company shall, upon the exercise of this Warrant and receipt of the Warrant
Price, issue a certificate for the largest number of full shares of Common Stock
then called for hereby and pay a sum in cash equal to the market value of such
fraction of a share (based upon the most recent closing market price of the
Common Stock on the NASDAQ National Market System). The Registered Stockholder
by its acceptance of this Warrant expressly waives its right to receive any
fraction of a share.
(d) All shares of Common Stock issued upon the exercise of this Warrant
shall be validly issued, fully paid and non-assessable, and the Company shall
pay all taxes in respect of the issue thereof.
(e) Each certificate for shares of Common Stock initially issued upon
exercise of this Warrant, unless at the time of exercise such shares are
registered under the 1933 Act, shall bear a legend substantially similar to the
following, in addition to any other legends
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required to be placed on such share certificates pursuant to any other
agreements by which the Company is bound:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "1933 Act"), or the
securities laws of any state. They may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of
except pursuant to an effective registration statement relating to such
transaction under the 1933 Act and all other applicable securities laws
or pursuant to an exemption from the registration provisions of the
1933 Act and other applicable securities laws."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the 1933 Act
of the securities represented thereby) shall also bear a legend substantially
similar to the foregoing, unless, in the opinion of counsel reasonably
satisfactory to the Company, the securities represented thereby need no longer
be subject to the restrictions on transferability. The provisions of this
Section 2.02(e) shall be binding upon all subsequent holders of this Warrant.
(f) Each person in whose name any such certificate for shares of Common
Stock is issued shall for all purposes be deemed to have become the holder of
record of such shares on the date on which this Warrant was surrendered and
payment of the purchase price and any applicable taxes was made, irrespective of
the date of delivery of such certificate, except that, if the date of such
surrender and payment is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of such shares at
the close of business on the next succeeding date on which the stock transfer
books are open.
(g) In addition and subject to the procedures set forth above, if
Regulation T of the Securities Exchange Act of 1934, or such future laws or
regulations with respect to the same subject matter ("Regulation T") is
applicable to the exercise of this Warrant and so permits, the person entitled
to exercise this Warrant may direct the Company in the Election to Exercise
Notice to deliver all or any part of the number of shares or other securities to
which it is entitled upon exercise of this Warrant directly to a broker
specified in such election notice. In such event, the Company shall accept
payment of the Warrant Price (and the related tax amounts) in cash or by check
from such broker on behalf of the person entitled to exercise this Warrant and
shall take all action necessary to effect the prompt delivery of such shares or
other securities to such broker in accordance with the provisions of Regulation
T and in accordance with such additional rules and regulations as may be
specified by such broker.
(h) Notwithstanding the foregoing, upon the exercise of this Warrant
and in lieu of payment of cash, the person entitled to exercise this Warrant may
exercise this Warrant, in whole or in part, by surrendering to the Company this
Warrant in exchange for which such person will receive the number of shares of
Common Stock equal to the product of (x) the number of shares as to which this
Warrant is being exercised, multiplied by (y) a fraction, the numerator of which
is the fair market value of the
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Common Stock on the date of exercise (as determined pursuant to Section 2.02(c))
less the Warrant Price for such shares and the denominator of which is the fair
market value of the Common Stock (as so determined).
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK PURCHASABLE
AND WARRANT PRICE
Section 3.01 ADJUSTMENT OF WARRANT PRICE. The Warrant Price specified
in Section 2.01 hereof shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (i) pay a dividend on Common Stock in
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares or (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, the Warrant Price in effect immediately prior
thereto shall be adjusted proportionately so that the adjusted Warrant Price
will bear the same relation to the Warrant Price in effect immediately prior to
any such event as the total number of shares of Common Stock outstanding
immediately prior to any such event shall bear to the total number of shares of
Common Stock outstanding immediately after any such event. An adjustment made
pursuant to this Section 3.01(a) shall become effective immediately after the
record date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(b) Subject to Section 3.09 hereof, in case the Company shall issue
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the current Warrant Price at the record date mentioned below, the Warrant Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Warrant Price in effect immediately prior thereto by a fraction,
of which the numerator shall be the number of shares of Common Stock outstanding
on the record date mentioned below plus the number of additional shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so offered would purchase at such current Warrant Price, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock offered for
subscription or purchase. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights or warrants.
(c) In case the Company shall distribute to all holders of its Common
Stock shares of its capital stock (other than Common Stock), evidences of its
indebtedness or assets (excluding ordinary cash dividends) or rights or warrants
to subscribe or purchase such shares, evidences of indebtedness or assets
(excluding those referred to in Section 3.01(b) above), then in each such case
the Warrant Price in effect thereafter shall be determined by multiplying the
Warrant Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the total number of outstanding shares of Common Stock
multiplied by the Warrant Price on the record date mentioned below, less the
fair market value (as determined by the Board of Directors of the Company) of
the
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capital stock, assets or evidences of indebtedness so distributed or of such
rights or warrants, and of which the denominator shall be the total number of
outstanding shares of Common Stock multiplied by such current Warrant Price.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(d) Subject to Section 3.09 hereof, in case the Company shall issue or
sell any Additional Shares of Common Stock (as defined below in this Section
3.01(d)), Convertible Securities (as defined below in this Section 3.01(d)),
warrants or other rights to subscribe for or purchase any Additional Shares of
Common Stock or Convertible Securities, whether or not the right to exercise,
exchange or convert thereunder is immediately exercisable, and the consideration
per share for which Additional Shares of Common Stock are issued or may at any
time thereafter be issuable pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities is less than the current
Warrant Price at the time of the issuance or sale, the Warrant Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Warrant Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding immediately
prior thereto plus the quotient obtained by dividing the aggregate minimum
amount of consideration received or receivable for such Additional Shares of
Common Stock by the then current Warrant Price and of which the denominator
shall be the number of shares of Common Stock outstanding immediately prior
thereto plus the number of Additional Shares of Common Stock issued or issuable.
For the purposes of this Section 3.01(d), the date on which the current
Warrant Price shall be computed shall be the earliest of the date on which the
Company shall actually issue, or the date the Company shall enter into a firm
contract for the issuance of, such Additional Shares of Common Stock,
Convertible Securities or warrants or other rights to subscribe for or purchase
any Additional Shares of Common Stock or Convertible Securities. No adjustment
of the Warrant Price shall be made pursuant to this Section 3.01(d) upon the
issuance of any Convertible Securities that are issued pursuant to the exercise
of any warrants or other rights therefor if any such adjustment shall previously
have been made upon the issuance of any such warrants or rights.
The term "Convertible Securities" as used herein shall mean evidences
of indebtedness, shares of stock or other securities which are convertible into
or exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
arrival of a specified date or the happening of a specified event, other than
Excluded Securities (as defined below). The term "Additional Shares of Common
Stock" as used herein shall mean all shares of Common Stock issued by the
Company after the date of the Assignment Agreement other than Excluded
Securities. The term "Excluded Securities" shall mean (i) options and warrants
outstanding on the date of the Assignment Agreement, (ii) options which may be
issued by the Company after the date of the Assignment Agreement in connection
with any option plan of the Company, (iii) options or warrants or Common Stock
which may be issued in connection with any merger of
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another Company and the Company and (iv) Common Stock issued by the Company upon
exercise of any of the foregoing options and/or warrants and this Warrant.
(e) If at any time after any adjustment shall have been made pursuant
to Section 3.01(d) hereof:
(1) any of such warrants or rights or the right of conversion
or exchange in such Convertible Securities shall expire unexercised; and/or
(2) the consideration per share for which Additional Shares of
Common Stock or Convertible Securities are issuable pursuant to such warrants or
rights or the terms of such Convertible Securities shall increase solely by
virtue of provisions contained therein for an automatic increase in such
consideration upon the arrival of a specified date or the happening of a
specified event,
the Warrant Price shall immediately be readjusted pursuant to the terms of
Section 3.01(d) hereof.
(f) No adjustment of the Warrant Price shall be made if the amount of
such adjustment shall be less than $0.01 per share, but in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment so carried forward, shall amount
to not less than $0.01 per share. In case the Company shall at any time issue
Common Stock by way of dividend on any stock of any Company or subdivide or
combine the outstanding shares of the Common Stock, said amount of $0.01 per
share (as theretofore increased or decreased, if the said amount shall have been
adjusted in accordance with the provisions of this subparagraph) shall forthwith
be proportionately increased in the case of a combination or decreased in the
case of such a subdivision or stock dividend so as appropriately to reflect the
same.
(g) Notwithstanding anything contained herein to the contrary, if at
any time after an adjustment shall have been made to the Warrant Price pursuant
to any event enumerated in Section 3.01(a) through Section 3.01(d) and such
event does not actually occur, the Warrant Price shall immediately be readjusted
to the Warrant Price in effect immediately prior to such adjustment.
Section 3.02 ADJUSTMENT OF NUMBER OF SHARES. Subject to Section 3.09
hereof, upon each adjustment of the Warrant Price pursuant to Section 3.01
hereof, the number of shares of Common Stock purchasable upon exercise of this
Warrant shall be adjusted to the number of shares of Common Stock, calculated to
the nearest one hundredth of a share, obtained by multiplying the number of
shares of Common Stock purchasable immediately prior to such adjustment upon the
exercise of this Warrant by the Warrant Price in effect prior to such adjustment
and dividing the product so obtained by the new Warrant Price.
Section 3.03 REORGANIZATION. In case of any capital reorganization of
the Company, or of any reclassification of the Common Stock, or in case of the
consolidation of the Company with or the merger of the Company into any other
Company or entity
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(other than a consolidation or merger in which the Company is the continuing
entity) or of the sale of the properties and assets of the Company as, or
substantially as, an entirety to any other entity, this Warrant shall after such
capital reorganization, reclassification, consolidation, merger or sale be
exercisable, upon the terms and conditions specified in this Agreement, for the
number of shares of stock or other securities or property of the entity
resulting from such consolidation or surviving such merger or to which such sale
shall be made, or any other entity, as the case may be, which the holders of
Common Stock issuable (at the time of such capital reorganization,
reclassification, consolidation, merger or sale) upon exercise of this Warrant
would have been entitled to receive upon such capital reorganization,
reclassification, consolidation, merger or sale if such exercise had taken
place. The Company shall not effect any such consolidation, merger or sale
unless prior to or simultaneously with the consummation thereof the successor
entity (if other than the Company) resulting from such consolidation or merger,
or the entity purchasing such assets and any other entity the shares of stock or
other securities or property of which are receivable thereupon by the holder of
this Warrant, shall expressly assume, by written instrument executed, delivered
and satisfactory in form to the Company (and the holder of this Warrant), (i)
the obligation to deliver to the holders of this Warrant such shares of stock,
securities or assets, as, in accordance with the foregoing provisions, such
holder may be entitled to purchase and (ii) all other obligations under this
Warrant.
Section 3.04 CERTIFICATE. Subject to Section 3.09 hereof, whenever the
Warrant Price is adjusted as herein provided:
(a) The Company shall compute the adjusted Warrant Price in accordance
with Section 3.01 hereof and shall prepare a certificate signed by its President
or a Vice President and its principal accounting officer setting forth the
adjusted Warrant Price (and the adjusted number of share issuable hereunder) and
showing in reasonable detail the method of calculation of such adjustment and
the facts requiring the adjustment and upon which such calculation is based; and
(b) Such certificate shall be sent to the holder of this Warrant
promptly following the event giving rise to such adjustment.
Section 3.05 NOTICE OF CERTAIN EVENTS. In case at any time after the
date of this Agreement:
(a) the Company shall declare a dividend (or any other distribution) on
its shares of Common Stock payable otherwise than in cash out of its earned
surplus; or
(b) the Company shall authorize the granting to the holders of its
shares of Common Stock rights to subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
(c) the Company shall authorize any reclassification of the shares of
its Common Stock (other than a subsection or combination of its outstanding
shares of Common Stock); or any consolidation or merger to which it is a party
and for which approval of
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any shareholders of the Company is required, or the sale or transfer of all or
substantially all of its assets; or
(d) events shall have occurred resulting in the voluntary or
involuntary dissolution, liquidation or winding up of the Company;
then the Company shall send to the holder of this Warrant at least twenty (20)
days (or ten (10) days in any case specified in clause (a) or (b) above) prior
to the applicable record date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights, or, if a record is not to be taken, the date as of which
the holders of shares of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares for securities or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give any such notice or any defect therein
shall not affect the validity of the proceeding referred to in clauses (a), (b),
(c) and (d) above.
Section 3.06 CHANGES TO CERTIFICATES. The form of this Warrant need not
be changed because of any change in the Warrant Price pursuant to this Article,
and any replacement Warrant issued after such change may state the same Warrant
Price and the same number of shares of Common Stock as are stated in this
Warrant.
Section 3.07 NO ENTITLEMENT TO DIVIDENDS. No registered holder of this
Warrant shall, upon the exercise thereof, be entitled to any dividends that may
have accrued with respect to shares of Common Stock specified in this Warrant
prior to the date of the purchase thereof.
Section 3.08 CERTAIN RULES OF COMPUTATION. For the purposes of any
computation under Section 3.01 hereof respecting consideration received, the
following rules shall apply:
(a) in the case of the issuance of shares of Additional Shares of
Common Stock or Convertible Securities for cash, the consideration shall be the
amount of such cash, excluding the amount of any accrued interest or dividends,
provided that in no case shall any deduction be made for any commission,
discounts or other expenses incurred by the Company for any underwriting of the
issue or otherwise in connection therewith;
(b) in the case of the issuance of Additional Shares of Common Stock or
Convertible Securities for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the current fair market
value thereof as of the date of issuance, provided that in no case shall any
deduction be made for any commissions, discounts or other expenses incurred by
the Company for any underwriting of the issue or otherwise in connection
therewith;
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(c) in the case of the issuance of any rights to acquire Additional
Shares of Common Stock, including without limitation, options or warrants, or of
any Convertible Securities, the consideration received therefor shall be deemed
to be the consideration, if any, received by the Company for the issuance of
such rights or Convertible Securities plus the consideration, if any, to be
received by the Company upon each exercise, conversion or exchange thereof (the
consideration in each case to be determined in the same manner as provided in
Section 3.08(a) and Section 3.08(b));
(d) in the case of Additional Shares of Common Stock or Convertible
Securities or any warrants or other rights to subscribe for or purchase
Additional Shares of Common Stock or Convertible Securities for property other
than cash or in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be the fair
market value of such property or portion of the assets and business of the
nonsurviving Company, in either case as the Board of Directors in good faith
shall determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, warrants or other rights, as the case may be; and
(e) in the case of the issuance at any time of any Additional Shares of
Common Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Company shall be
deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.
Section 3.09 CHARTER PROVISIONS. Notwithstanding anything contained
herein to the contrary, in the event that and for so long as any adjustment in
price and/or in the number of shares of Common Stock purchasable upon exercise
of the Warrant in accordance with this Article III shall violate or otherwise
conflict with any provision included, at the specific request of a certain
significant stockholder of the Company, in the certificate of incorporation of
the Company, as such may from time to time be amended, or the bylaws of the
Company, as such may from time to time be amended, then any such adjustment
shall be deemed null and void and shall not be given effect.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF STOCKHOLDERS OF THIS WARRANT
Section 4.01 NO RIGHTS AS STOCKHOLDER. This Warrant does not entitle
the holder hereof to any of the rights of a stockholder of the Company.
Section 4.02 LOST WARRANT, ETC. If this Warrant is lost, stolen,
mutilated or destroyed, the Company may, upon receipt of a proper affidavit (and
surrender of any mutilated Warrant Certificate) and bond of indemnity in form
and amount and with corporate surety satisfactory to the Company in each
instance protecting the Company, issue a new Warrant of like tenor and date. Any
such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant Certificate shall be at any time enforceable by anyone.
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Section 4.03 AUTHORIZED SHARES.
(a) The Company shall at all times have authorized the issuance of a
number of shares of Common Stock sufficient to permit the exercise in full of
this Warrant and shall have available a sufficient number of certificates
therefor.
(b) Upon the issuance of any shares of Common Stock in connection with
any exercise of this Warrant, the Company shall secure the listing of such
shares of Common Stock upon any securities exchange where shares of Common Stock
are then listed.
(c) If the taking of any action would cause an adjustment in the
Warrant Price so that the exercise of this Warrant while such Warrant Price is
in effect would cause shares to be issued at a price below their then par value,
the Company will take such action as may, in the opinion of its counsel, be
necessary in order that it may validly and legally issue fully paid and
non-assessable shares of Common Stock upon the exercise of this Warrant.
ARTICLE V
REGISTRATION
Section 5.01 DEMAND REGISTRATION.
(a) GENERAL. At any time and from time to time following the date of
this Agreement, the Registered Stockholder may make a written request, on no
more than two occasions (each, a "Demand Registration"), that the Company
register under the 1933 Act the resale of Common Stock issued to the Registered
Stockholder pursuant to the exercise of this Warrant (the "Registrable Common
Shares"; provided, however, that such shares will cease to be Registrable Common
Shares when: (i) a registration statement with respect to the sale of such
securities shall have become effective under the 1933 Act and such securities
shall have been disposed of in accordance with such registration statement, (ii)
the full number of such shares shall be eligible to be sold pursuant to Rule 144
(or any successor provision) under the 1933 Act in a three-month period based on
a cash exercise by the Registered Stockholder or a cashless exercise by the
Registered Stockholder, whichever method is used by the Registered Stockholder
or (iii) they shall have ceased to be outstanding); provided, however, that in
no event shall the Registered Stockholder request a Demand Registration within
120 days of the effective date of any registration statement filed in accordance
with any exercisable demand registration rights existing as of the date hereof.
Notwithstanding clause (ii) of the preceding sentence, the Registered
Stockholder may request a Demand Registration prior to the expiration of this
Warrant if the product of (i) the number of Registrable Common Shares subject to
such Demand Registration and (ii) the average closing price per share of the
Common Stock for the twenty (20) consecutive trading days immediately prior to
such request for Demand Registration equals or exceeds $5.0 million. The Company
shall file with the Securities and Exchange Commission (the "Commission") and
use commercially reasonable efforts to cause to become effective under the 1933
Act a registration statement with respect to such Registrable Common Shares
within (i) 90
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days of receipt of such written request for a Demand Registration if the Company
is then eligible to register an offering pursuant to Form S-3 under the 1933
Act; (ii) 120 days of receipt of such written request for a Demand Registration
if the Company is not then eligible to register an offering pursuant to Form S-3
under the 1933 Act but is then qualified as a reporting company under the
Exchange Act; or (iii) 180 days of receipt of such written request for a Demand
Registration in any other case, provided, however, that, if the Company
determines reasonably and in good faith that a Disadvantageous Condition (as
defined below) shall have occurred during such applicable period, then the
Company may delay either (i) the filing of the registration statement in the
event that the registration statement has not been filed or (ii) the request for
acceleration of effectiveness in the event that the registration statement has
not yet been declared effective by the Commission, for up to 120 days in its
sole discretion. Any such Demand Registration will specify the number of
Registrable Common Shares proposed to be sold, but in no event shall such Demand
Registration register the resale of less than 50% of the Registrable Common
Shares then outstanding. All sales made pursuant to any registration statement
required pursuant to Section 5.01(a) shall be made in "broker's transactions"
(as defined in Rule 144 of the 1933 Act), and shall be subject to (i) customary
exemptions and (ii) customary terms and conditions. All costs and expenses
related to such sales shall be borne by the Registered Stockholder.
Subject to Section 5.01(c) hereof, no other securities of the Company
except (i) Registrable Common Shares held by the Registered Stockholder, (ii)
equity securities to be offered and sold for the account of the Company and
(iii) any equity securities of the Company held by any person having
"piggy-back" registration rights pursuant to any contractual obligation of the
Company shall be included in a Demand Registration. The inclusion of any such
securities for the account of the Company or any other Person shall be on the
same terms as that of the Registrable Common Shares.
(b) EFFECTIVE REGISTRATION. A registration statement will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the Commission and the Company has complied in all material
respects with all of its obligations under this Agreement with respect thereto;
provided, however, that if, after such registration statement has become
effective, the offering of Registrable Common Shares pursuant to such
registration statement is or becomes the subject of any stop order, injunction
or other order or requirement of the Commission or any other governmental or
administrative agency or court that prevents, restrains or otherwise limits the
sale of Registrable Common Shares pursuant to such registration statement for
any reason not attributable to the Registered Stockholder participating in such
registration and such restraint is not lifted within 60 days after being
imposed, such registration statement will be deemed not to have been effected.
If (i) a registration requested pursuant to this Section 5.01 is deemed not to
have been effected or (ii) a Demand Registration does not remain effective under
the 1933 Act until at least the earlier of (A) an aggregate of 180 days
following the effective date thereof or (B) the consummation of the distribution
by the Registered Stockholder of all of the Registrable Common Shares covered
thereby, then such registration shall not count towards determining if the
Company has satisfied its obligation to effect two Demand Registrations pursuant
to this Section 5.01, provided, however, that with respect to such registration
statement, the Company may suspend, for
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up to 120 days in its sole discretion, use of such registration statement at any
time if the Company determines reasonably and in good faith that a
Disadvantageous Condition exists and any such suspension shall toll the 180-day
time period referred to in this Section 5.01(b) (provided that the Company shall
use reasonable commercial efforts to cause the period during which the
registration statement shall remain effective to be extended by the number of
days of any such suspension and any such extension shall count toward the
180-day time period referred to in this Section 5.01(b)). In the event of a
Disadvantageous Condition, the Company shall provide notice to the Registered
Stockholder of the Company's determination that a Disadvantageous Condition
exists. The Company shall promptly notify the Registered Stockholder in writing
once the Company determines that a Disadvantageous Condition no longer exists.
"Disadvantageous Condition" shall mean the existence of a condition such that
the preparation and filing of a registration statement, for purposes of Section
5.01(a) and Section 5.03, and the use of an effective registration statement for
purposes of this Section 5.01(b), would (i) interfere with or affect the
negotiation or completion of any plan or proposal by the Company to engage in
any significant transaction that is being contemplated by the Company (whether
or not a final decision has been made to undertake such transaction) at the time
the right to delay is undertaken or (ii) require disclosure of information that
the Company has a bona fide business purpose for preserving as confidential.
(c) PRIORITY IN DEMAND REGISTRATION. In a registration pursuant to
Section 5.01 hereof involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Registered Stockholder that in such underwriter's
or underwriters' opinion the total number of securities which the Registered
Stockholder and any other person entitled to participate in such registration
pursuant to Section 5.01 hereof intend to include in such offering is such as to
adversely affect the success of such offering, including the price at which such
securities can be sold, then the Company will be required to include in such
registration only the amount of securities which it is so advised should be
included in such registration. In such event, securities shall be registered in
such registration in the following order of priority: (i) first, the Registrable
Common Shares which have been requested to be included in such registration by
the Registered Stockholder and the securities of other persons entitled to
exercise "piggy-back" registration rights pursuant to contractual commitments of
the Company (pro rata based on the amount of Registrable Common Shares held by
the Registered Stockholder and the amount of securities held by such Persons),
and (ii) second, provided that no securities sought to be included by the
Registered Stockholder or any other Person sought to be included therein have
been excluded from such registration, securities to be offered and sold for the
account of the Company.
Section 5.02 INCIDENTAL REGISTRATION.
(a) GENERAL. If the Company at any time proposes to register any of its
securities under the 1933 Act (other than on Form S-8 or Form S-4 or any
successor or similar forms), whether or not for sale for its own account, it
will each such time promptly (but in no event fewer than twenty (20) days before
the anticipated filing or ten (10) days if
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the Company is subject to filing reports under the Exchange Act and able to use
Form S-3 under the 1933 Act) give written notice to the Registered Stockholder
of its intention to do so. Upon the written request of the Registered
Stockholder made within fifteen (15) days after the receipt of such notice
(which request shall specify the Registrable Common Shares intended to be
disposed of by the Registered Stockholder and the intended method of
distribution thereof), the Company will use reasonable commercial efforts to
effect the registration under the 1933 Act of all Registrable Common Shares that
the Company has been so requested to register by the Registered Stockholder
thereof to the extent requisite to permit the disposition of the Registrable
Common Shares so to be registered in accordance with the intended methods of
distribution thereof specified in such request; provided, however, that (i) if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register such securities, the Company may, at its election, be relieved
of its obligation to register any Registrable Common Shares in connection with
such registration, and (ii) in case of a determination by the Company to delay
registration of its equity securities, the Company shall be permitted to delay
the registration of such Registrable Common Shares for the same period as the
delay in registering such other equity securities.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the managing underwriter
for a registration pursuant to this Section 5.02 that involves an underwritten
offering shall advise the Company in writing that, in its opinion, the inclusion
in such registration of the securities proposed to be included in such
registration by the Company for its own account, plus the number of Registrable
Common Shares requested to be included in such registration by the Registered
Stockholder, plus the securities requested to be included by any other
securityholders would materially adversely effect the ability of the Company
with respect to securities to be disposed of for its own account to dispose of
their securities in an orderly manner in such offering within a price range
acceptable to the Company, the Company shall include (i) first, all the
securities which the Company proposes to register for its own account or which
are proposed to be registered pursuant to demand registration rights, (ii)
second, all the securities that the Company proposes to register for the account
of any other stockholder who exercises certain piggy-back registration rights
existing as of the date hereof, and (iii) third, to the extent that their
inclusion would not have a material adverse effect in the manner described
above, the number of Registrable Common Shares and other equity securities and
the principal amount of debt securities requested to be included by the
Registered Stockholder and other securityholders allocated pro rata among the
Registered Stockholder and such other securityholders on the basis of the
relative number of Registrable Common Shares and equity securities and the
principal amount of such debt securities requested to be included in such
registration. Notwithstanding anything contained herein to the contrary, in the
event the Company proposes to register its securities under the 1933 Act for the
account of any stockholder who exercises certain demand registration rights
existing as of the date hereof, then the Company shall include in such
registration statement (i) first, all such securities being registered in
connection with such demand registration rights existing as of the date hereof,
(ii) second, all the securities the Company proposes to register for its own
account, if any, and (iii) third, the Registrable Common Shares.
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Section 5.03 COMPANY REGISTRATION. In the event that the Company
requires the Registered Stockholder to exercise its warrants in accordance with
Section 2.01(b) within two (2) years from the date hereof, then the Company
shall use reasonable commercial efforts to file and cause to become effective a
resale registration statement on Form S-3, or any successor form thereto, to
register the resale of the Registrable Common Shares received upon such exercise
on or about 90 days from the date of the Option Notice, in accordance with
applicable federal securities laws, provided, however, that, if the Company
determines reasonably and in good faith that a Disadvantageous Condition shall
have occurred during such period, then the Company may delay either (i) the
filing of the registration statement in the event that the registration
statement has not been filed or (ii) the request for acceleration of
effectiveness in the event that the registration statement has not yet been
declared effective by the Commission, for up to 120 days in its sole discretion.
In the event that the Company requires the Registered Stockholder to exercise
its warrants in accordance with Section 2.01(b) more than two (2) years from the
date hereof, then the Company shall not be obligated to register the Registrable
Common Shares received upon such exercise pursuant to this Section 5.03 if the
Registered Stockholder shall have exercised its warrant pursuant to Section
2.02(h).
Section 5.04 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its reasonable commercial efforts to effect or cause the
registration of any Registrable Common Shares under the 1933 Act under this
Agreement, the Company will:
(a) prepare and file with the Commission the registration statement
with respect to such Registrable Common Shares on the applicable form and use
its reasonable commercial efforts to cause such registration statement to become
and remain effective; provided that the Company may discontinue any registration
of its securities which is being effected pursuant hereto at any time prior to
the effective date of the registration statement relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the applicable period and to comply with the provisions of the 1933 Act with
respect to the sale or other disposition of all securities covered by such
registration statement during such period;
(c) furnish without charge to the Registered Stockholder and each
underwriter, if any, such number of copies of such registration statement and of
each amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such registration statement,
in conformity with the requirements of the 1933 Act, and such other documents as
the Registered Stockholder and underwriter, if any, may reasonably request in
order to facilitate the public sale of the Registrable Common Shares;
(d) use its reasonable commercial efforts to register or qualify such
Registrable Common Shares covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as the Registered
Stockholder and each underwriter, if
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any, shall reasonably request, and do any and all other acts and things which
may be necessary or advisable to enable the Registered Stockholder and each
underwriter, if any, to consummate the disposition in such jurisdictions of such
Registrable Common Shares owned by such seller, provided, however, that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign company in any jurisdiction wherein it would not but for
the requirements of this clause (d) be obligated to be qualified, to subject
itself to taxation in any such jurisdiction, to consent itself to taxation in
any such jurisdiction or to consent to general service of process in any such
jurisdiction;
(e) notify the Registered Stockholder and each underwriter, if any,
promptly, and (if requested by any such person) confirm such advice in writing
(1) of the filing of a prospectus or any prospectus supplement or post-effective
amendment, and with respect to a registration statement or amendment thereto of
the effectiveness thereof, (2) of any request by the Commission for amendments
or supplements to a registration statement or related prospectus or for
additional information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of a registration statement or the initiation of
any proceeding for that purpose, (4) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any of the
Registrable Common Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (5) of the happening of any
event that makes any statement made in the registration statement, the
prospectus or any document incorporated therein by reference untrue or which
that the making of any changes in the registration statement or prospectus so
that they will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(f) make reasonable commercial efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement at the earliest
possible moment; and
(g) use its reasonable commercial efforts to cause all Registrable
Common Shares covered by the registration statements to be listed on each
securities exchange, if any, on which similar securities issued by the Company
are then listed.
The Company may require the Registered Stockholder to furnish the
Company such information regarding the Registered Stockholder and the
distribution of the applicable Registrable Common Shares as the Company may from
time to time reasonably request.
Section 5.05 EXPENSES. The Company shall pay all Registration Expenses
(as defined below) in connection with the resale registration of the Registrable
Common Shares underlying the Warrant pursuant to this Article V; provided,
however, that the Registered Stockholder shall pay all underwriting discounts
and commissions and transfer taxes, if any, relating to, and fees and expenses
of the Registered Stockholder's counsel and accountants in connection with, the
sale or disposition of the Registrable Common Shares pursuant to a registration
statement effected pursuant to this Article V.
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"Registration Expenses" shall mean any and all expenses incident to the
registration of the Registrable Common Shares, including without limitation, (i)
all Commission and stock exchange or National Association of Securities Dealers,
Inc. registration and filing fees, (ii) all fees and expenses of complying with
state securities or blue sky laws (including reasonable fees and disbursements
of counsel for the underwriters, if any, in connection with blue sky
qualifications of any Registrable Common Shares), (iii) all printing, messenger
and delivery expenses, and (iv) the reasonable fees and disbursements of counsel
for the Company and of the Company's independent public accountants.
Section 5.06 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration of
any securities of the Company under the 1933 Act pursuant to this Article V, the
Company will indemnify and hold harmless, to the extent permitted by law, the
Registered Stockholder and its directors and officers, each other person, if
any, who participates as an underwriter in the offering or sale of such
securities and each other person, if any, who controls the Registered
Stockholder or any such underwriter within the meaning of the 1933 Act, against
any and all losses, claims, damages or liabilities, joint or several, and
expenses (including any amounts paid in any settlement effected with the
Company's consent) to which the Registered Stockholder, any such director or
officer or any such underwriter or controlling person may become subject under
the 1933 Act, the Exchange Act, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such securities were registered under the 1933 Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, together with the documents incorporated by reference
therein (as amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), if used prior to the
effective date of such registration statement, or contained in the prospectus,
together with the documents incorporated by reference therein (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or (iii) any violation by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company will reimburse the Registered Stockholder and each
such director, officer, underwriter and controlling person for any legal or any
other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that the Company shall not be liable to any the
Registered Stockholder or any such director, officer, underwriter or controlling
person in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based
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upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment thereof or supplement
thereto or in any such preliminary or final prospectus in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of the Registered Stockholder or any director or officer of the Registered
Stockholder, underwriter or controlling person of the Registered Stockholder,
for use specifically in the preparation thereof; and provided further, that the
Company will not be liable to any person who participates as an underwriter in
the offering or sale of Registrable Common Shares or any other person, if any,
who controls such underwriter within the meaning of the 1933 Act, under the
indemnity agreement in this Section 5.06(a) with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented as the case may be, to the extent that any such loss, claim, damage
or liability of such underwriter or controlling person results from the fact
that such underwriter sold Registrable Common Shares to a person to whom there
was not sent or given at or prior to the written confirmation of such sale, a
copy of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company had previously furnished copies thereof to such
underwriter and such final prospectus, as then amended or supplemented, had
corrected such misstatement or omission. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Registered Stockholder or any director, officer, underwriter or controlling
person and shall survive the transfer of such securities by the Registered
Stockholder.
(b) INDEMNIFICATION BY THE REGISTERED STOCKHOLDER. The Company may
require, as a condition to including any Registrable Common Shares in any
registration statement filed in accordance with this Article V, that the Company
shall have received an undertaking reasonably satisfactory to it from the
Registered Stockholder and any underwriter to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 5.06(a)) the
Company and its directors and officers and each person controlling the Company
within the meaning of the 1933 Act and all other prospective sellers of
securities of the Company and their directors, officers and respective
controlling persons with respect to (i) any untrue statement or alleged untrue
statement of a material fact in or omission or alleged omission to state a
material fact required to be stated or necessary to make the statements not
misleading from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company or its representatives by or on behalf of such seller or any underwriter
specifically for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing and (ii) the sale
by the Registered Stockholder of such Registrable Common Shares to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final prospectus as then amended or supplemented,
whichever is most recent, if the Company had previously furnished copies thereof
to the Registered Stockholder and such final prospectus, as amended or
supplemented, had corrected any misstatement or omission. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or the Registered Stockholder or any of their respective
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directors, officers or controlling persons and shall survive the transfer of
such securities of the Registered Stockholder.
(c) NOTICES OF CLAIMS, ETC. As soon as possible after the receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5.06, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give notice to the
latter of the commencement of such action; provided, however, that the failure
of any indemnified party to give such notice shall not relieve the indemnifying
party of its obligations under this Section 5.06, except to the extent that the
indemnifying party is actually prejudiced by such failure. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 5.06 for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. In any such proceeding, an indemnified party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the indemnifying party has assumed the defense of such
proceeding and has failed within a reasonable time to retain counsel reasonably
satisfactory to such indemnified party or (iii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interests between
them based on the advice of such counsel. In the event that the indemnifying
party fails to elect to assume the defense of such claim or action, the
Registered Stockholder and its respective officers, directors and controlling
persons or the Company and its officers, directors and controlling person, as
the case may be, shall have the right to employ one counsel (together with
appropriate local counsel) to represent such indemnified parties and, in that
event, the reasonable fees and expenses of such separate counsel shall be paid
by the indemnifying party. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party will consent to entry of any judgment or enter into any settlement that
does not include as a term thereof the giving by the claimant or plaintiff to
such indemnified party of an unconditional release from all liability in respect
of such claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding subsections of this Section 5.06 (with appropriate modifications)
shall be given
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by the Company and the Registered Stockholder with respect to any required
registration or other qualifications of securities under any state securities or
blue sky laws.
Section 5.07 CONTRIBUTION. If the indemnification provided for in
Section 5.06 hereof is unavailable or insufficient to hold harmless a party
indemnified under Section 5.06(a) or 5.06(b) hereof, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages or liabilities referred to in Section
5.06(a) or 5.06(b) hereof in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other in connection with statements or omissions or actions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference, among other things, to whether any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 5.07 were to be determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in the first two sentences of this Section 5.07. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first two sentences of this Section 5.07 shall
be deemed to include legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim (which shall be limited as provided in Section 5.06(c) hereof if the
indemnifying party has assumed the defense of any such action in accordance with
the provisions thereof that is the subject to this Section 5.07. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything to in this
Section 5.07 to the contrary, no indemnifying party (other than the Company)
shall be required pursuant to this Section 5.07 to contribute any amount in
excess of the proceeds received by such indemnifying party from the sale of
Registrable Common Shares in the offering to which the losses, claims, damages
or liabilities of the indemnified parties relate.
Section 5.08 RECAPITALIZATION, EXCHANGES, ETC. AFFECTING COMMON STOCK.
The provisions of this Article V shall apply to the full extent set forth herein
with respect to the Registrable Common Shares and to any and all shares of
capital stock of the Company or any successor or assign of the Company (whether
by merger, consolidation, sale of assets or otherwise) that may be issued in
respect of, in exchange for, or in substitution of the Common Stock, by reason
of any stock dividend, stock split, reverse stock split, combination,
recapitalization, reclassification, merger or consolidation.
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ARTICLE VI
MISCELLANEOUS
Section 6.01 TAXES AND CHARGES. The Company will from time to time
promptly pay all taxes and charges that may be imposed upon the Company in
respect of the issuance or delivery of shares of Common Stock upon the exercise
of this Warrant, but the Company shall not be obligated to pay any transfer
taxes in respect of this Warrant or such shares.
Section 6.02 ASSIGNS. All the covenants and provisions of this Warrant
by or for the benefit of the Company or the holder of this Warrant shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 6.03 NOTICES. All notices, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given, when
delivered personally or three days after having been sent by certified mail
return receipt requested, postage prepaid, or upon transmission by telex,
telecopy, facsimile or similar electronic medium to the parties at the addresses
set forth in the Assignment Agreement (or at such other address for a party as
shall be specified by like notice).
Section 6.04 GOVERNING LAW. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of New
York.
Section 6.05 THIRD PARTIES. Nothing in this Warrant expressed and
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or company other than
the parties hereto and the holders of this Warrant any right, remedy or claim
hereunder or by reason of any covenant, condition, stipulation, promise or
agreement hereof, and all covenants, conditions, stipulations, promises and
agreements in this Warrant shall be for the sole and exclusive benefit of the
parties hereto and their successors and of the holders of this Warrant.
Section 6.06 WARRANTHOLDER. The Company may deem and treat the person
in whose name this Warrant is registered as the absolute owner for all purposes
whatever (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company) and the Company shall not be affected by
any notice to the contrary.
Section 6.07 HEADINGS. The Article and Section headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its President and attested by its Secretary.
Dated: April 26, 2001
GLIATECH INC.
By: /s/ XXXXXX X. XXXXX
--------------------------------
Xxxxxx X. Xxxxx, President
Attest:
/s/ XXXXXX X. XXXXXX
------------------------------------
Xxxxxx X. Xxxxxx, Secretary
Acknowledged and agreed:
XXXX CAPITAL ROYALTY ACQUISITION FUND, L.P.
By: /s/ XXXXXX XXXXXXXXXX
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Name: Xxxxxx Xxxxxxxxxx, M.D.
Title: Partner
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EXHIBIT A
WARRANT
ELECTION TO EXERCISE NOTICE
Dated _________
The undersigned hereby irrevocably elects to exercise its right to
purchase _______ shares of the Common Stock, $0.01 par value per share, of
Gliatech Inc., such right being pursuant to a Warrant dated April __, 2001, as
issued to the undersigned by Gliatech Inc., and remits herewith the sum of
$______ in payment for same in accordance with the Warrant Price specified in
such Warrant.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
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(Please typewrite or print in block letters)
Address
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Signature
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Shares Heretofore Purchased
Under Warrant
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