THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT...
Exhibit 10.54
THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ALEXZA PHARMACEUTICALS, INC.
WARRANT
dated as of October 5, 2009
THIS CERTIFIES THAT, for value received, [ ] or its successors or permitted
assigns (such Person and such successors and assigns each being the “Warrant Holder” with respect
to the Warrant held by it), at any time and from time to time on any Business Day on or prior to
5:00 p.m. (New York City time), on the Expiration Date (as herein defined), is entitled (a) to
subscribe for the purchase from Alexza Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), [ ] Shares at a price per Share equal to the Exercise Price (as herein defined),
and (b) to the other rights set forth herein; provided that the number of Shares issuable
upon any exercise of this Warrant and the Exercise Price shall be adjusted and readjusted from time
to time in accordance with Section 5. By accepting delivery hereof, the Warrant Holder agrees to
be bound by the provisions hereof.
This Warrant (the “Warrant”) is issued as part of a series of similar Warrants
(collectively, the “Warrants”) issued pursuant to that certain Securities Purchase
Agreement, dated as of September 29, 2009, by and among the Company and the other parties
identified therein (the “Purchase Agreement”).
IN FURTHERANCE THEREOF, the Company irrevocably undertakes and agrees for the benefit of
Warrant Holder as follows:
Section 1. Definitions and Construction.
(a) Certain Definitions. As used herein (the following definitions being applicable
in both singular and plural forms):
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by, or is under common control with such Person.
“Appraised Value” means at any time the fair market value thereof determined in good
faith by the Board of Directors of the Company as of a date which is within ten (10) days of the
date as of which the determination is to be made, subject to the rights of the Requisite Holders
pursuant to Section 5(j).
“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York City are authorized by law to close.
“Closing Price” means, for any trading day with respect to a Share, (a) the last
reported sale price on such day on the principal national securities exchange on which the Shares
are listed or admitted to trading or, if no such reported sale takes place on any such day, the
average of the closing bid and asked prices thereon, as reported in The Wall Street
Journal, or (b) if such Shares shall not be listed or admitted to trading on a national
securities exchange, the last reported sales price on the NASDAQ National Market System or, if no
such reported sale takes place on any such day, the average of the closing bid and asked prices
thereon, as reported in The Wall Street Journal, or (c) if such Shares shall not be quoted
on such National Market System nor listed or admitted to trading on a national securities exchange,
then the average of the closing bid and asked prices, as reported by The Wall Street
Journal for the over-the-
1.
counter market; provided that if clause (a), (b), or (c) applies and no price
is reported in The Wall Street Journal for any trading day, then the price reported in
The Wall Street Journal for the most recent prior trading day shall be deemed to be the
price reported for such trading day.
“Commission” means the Securities and Exchange Commission or any other Federal agency
administering the Securities Act at the time.
“Exchange Act” means the Securities Exchange Act of 1934, or any successor Federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
“Exercise Amount” means for any number of Warrant Shares as to which this Warrant is
being exercised the product of (i) such number of Warrant Shares times (ii) the Exercise
Price.
“Exercise Price” means $2.77 per Warrant Share, as adjusted from time to time pursuant
to Section 5.
“Expiration Date” means October 5, 2016.
“Initial Holder” means [ ].
“Person” means an individual, a corporation, a partnership, an association, a trust or
any other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.
“Requisite Holders” means at any time holders of Warrant Shares and Warrants
representing at least two-thirds of the Warrant Shares outstanding or issuable upon the exercise of
all the outstanding Warrants.
“Securities Act” means the Securities Act of 1933, or any successor Federal statute,
and the rules and regulations of the Commission thereunder, all as the same shall be in effect at
the time.
“Shares” means the Company’s currently authorized common stock, $0.0001 par value, and
stock of any other class or other consideration into which such currently authorized capital stock
may hereafter have been changed.
“Warrant” means, as the context requires, this warrant and any successor warrant or
warrants issued upon a whole or partial transfer or assignment of any such Share purchase warrant
or of any such successor warrant.
“Warrant Shares” means the number of Shares issued or issuable upon exercise of this
Warrant as set forth in the introduction hereto, as adjusted from time to time pursuant to
Section 5, or in the case of other Warrants, issuable upon exercise of those Warrants.
(b) Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles. When used herein, the term “financial
statements” shall include the notes and schedules thereto. References to fiscal periods are to
fiscal periods of the Company.
(c) Computation of Time Periods. With respect to the computation of periods of time
from a specified date to a later specified date, the word “from” means “from and including” and the
words “to” and “until” each mean “to but excluding.” Periods of days shall be counted in calendar
days unless otherwise stated.
(d) Construction. Unless the context requires otherwise, references to the plural
include the singular and to the singular include the plural, references to any gender include any
other gender, the part includes the whole, the term “including” is not limiting, and the term “or”
has, except where otherwise
2.
indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Warrant refer to this Warrant as a whole
and not to any particular provision of this Warrant. Section, subsection, clause, exhibit and
schedule references are to this Warrant, unless otherwise specified. Any reference to this Warrant
includes any and all permitted alterations, amendments, changes, extensions, modifications,
renewals, or supplements thereto or thereof, as applicable.
(e) Exhibits and Schedules. All of the exhibits and schedules attached hereto shall
be deemed incorporated herein by reference.
(f) No Presumption Against Any Party. Neither this Warrant nor any uncertainty or
ambiguity herein or therein shall be construed or resolved using any presumption against any party
hereto or thereto, whether under any rule of construction or otherwise. On the contrary, this
Warrant has been reviewed by each of the parties and their counsel and, in the case of any
ambiguity or uncertainty, shall be construed and interpreted according to the ordinary meaning of
the words used so as to fairly accomplish the purposes and intentions of all parties hereto.
Section 2. Exercise of Warrant.
(a) Exercise and Payment. The Warrant Holder may exercise this Warrant in whole or in
part, at any time or from time to time on any Business Day on or prior to the Expiration Date, by
delivering to the Company a duly executed notice (a “Notice of Exercise”) in the form of
Exhibit A and by payment to the Company of the Exercise Price per Warrant Share, at the
election of the Warrant Holder, either (a) by wire transfer of immediately available funds to the
account of the Company in an amount equal to the Exercise Amount, (b) by receiving from the Company
the number of Warrant Shares equal to (i) the number of Warrant Shares as to which this Warrant is
being exercised minus (ii) the number of Warrant Shares having a value, based on the Closing Price
on the trading day immediately prior to the date of such exercise (or if there is no such Closing
Price, then based on the Appraised Value as of such day), equal to the Exercise Amount, or (c) any
combination of the foregoing. The Company acknowledges that the provisions of clause (b) are
intended, in part, to ensure that a full or partial exchange of this Warrant pursuant to such
clause (b) will qualify as a conversion, within the meaning of paragraph (d)(3)(ii) of Rule 144
under the Securities Act. At the request of any Holder, the Company will accept reasonable
modifications to the exchange procedures provided for in this Section in order to accomplish such
intent. For all purposes of this Warrant (other than this Section 2(a)), any reference herein to
the exercise of this Warrant shall be deemed to include a reference to the exchange of this Warrant
into Shares in accordance with the terms of clause (b).
(b) Effectiveness and Delivery. The Company shall confirm receipt of any Notice of
Exercise delivered pursuant to Section 2(a) within one Business Day of the receipt thereof. As
soon as practicable but not later than three Business Days after the Company shall have received
such Notice of Exercise and payment, the Company shall execute and deliver or cause to be executed
and delivered, in accordance with such Notice of Exercise, a certificate or certificates
representing the number of Shares specified in such Notice of Exercise, issued in the name of the
Warrant Holder or in such other name or names of any Person or Persons designated in such Notice of
Exercise. Without prejudice to the holding periods determined under Rule 144 under the Securities
Act, this Warrant shall be deemed to have been exercised and such Share certificate or certificates
shall be deemed to have been issued, and the Warrant Holder or other Person or Persons designated
in such Notice of Exercise shall be deemed for all purposes to have become a holder of record of
Shares, all as of the date that such Notice of Exercise and payment shall have been received by the
Company.
3.
(c) Surrender of Warrant. The Warrant Holder shall surrender this Warrant to the
Company within five Business Days after it delivers the Notice of Exercise, and in the event of a
partial exercise of the Warrant, the Company shall execute and deliver to the Warrant Holder, at
the time the Company delivers the Share certificate or certificates issued pursuant to such Notice
of Exercise, a new Warrant for the unexercised portion of the Warrant, but in all other respects
identical to this Warrant.
(d) Legend. Subject to the provisions of the Purchase Agreement, each certificate for
Warrant Shares issued upon exercise of this Warrant, unless at the time of exercise such Warrant
Shares are registered under the Securities Act, shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
Any certificate for Warrant Shares issued at any time in exchange or substitution for any
certificate bearing such legend (unless at that time such Warrant Shares are registered under the
Securities Act or otherwise may be issued without legends in accordance with the terms of the
Purchase Agreement or under Rule 144 under the Securities Act) shall also bear such legend unless,
in the written opinion of counsel selected by the holder of such certificate (who may be an
employee of such holder), which counsel and opinion shall be reasonably acceptable to the Company,
the Warrant Shares represented thereby need no longer be subject to restrictions on resale under
the Securities Act.
(e) Fractional Shares. The Company shall not be required to issue fractions of Shares
upon an exercise of the Warrant. If any fraction of a Share would, but for this restriction, be
issuable upon an exercise of the Warrant, in lieu of delivering such fractional Share, the Company
shall pay to the Warrant Holder, in cash, an amount equal to the same fraction times the Closing
Price on the trading day immediately prior to the date of such exercise (or if there is no such
Closing Price, then based on the Appraised Value as of such day).
(f) Expenses and Taxes. The Company shall pay all expenses, taxes and owner charges
payable in connection with the preparation, issuance and delivery of certificates for the Warrant
Shares and any new Warrants, except that if the certificates for the Warrant Shares or the new
Warrants are to be registered in a name or names other than the name of the Warrant Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the
Warrant Holder at the time of its delivery of the Notice of Exercise or promptly upon receipt of a
written request by the Company for payment.
(g) Automatic Cashless Exercise. To the extent that the Closing Price on the trading
day immediately prior to the Expiration Date (or if there is no such Closing Price, then based on
the Appraised Value as of such day) is greater than the Exercise Price and there has not been an
exercise by the Warrant Holder pursuant to Section 2(a) hereof, any portion of the Warrant that
remains unexercised shall be exercised automatically in whole (not in part), upon the Expiration
Date. Payment by the Warrant Holder upon such automatic exercise shall be in the form of the
Warrant Holder receiving from the Company the number of Warrant Shares equal to (i) the number of
Warrant Shares as to which this Warrant is being automatically exercised minus (ii) the number of
Warrant Shares having a value, based on the Closing Price on the trading day immediately prior to
the date of such automatic exercise (or if there is no such Closing Price, then based on the
Appraised Value as of such day), equal to the Exercise Amount.
4.
Section 3. Investment Representation. By accepting the Warrant, the Warrant Holder
represents that it is acquiring the Warrant for its own account and not with the view to any sale
or distribution, that the Warrant Holder will not offer, sell or otherwise dispose of the Warrant
or the Warrant Shares except under circumstances as will not result in a violation of applicable
securities laws, and that the Warrant Holder is an “accredited investor” as that term is defined in
Rule 501 under the Securities Act.
Section 4. Validity of Warrant and Issuance of Shares.
(a) The Company represents and warrants that this Warrant has been duly authorized, is validly
issued, and constitutes the valid and binding obligation of the Company and is enforceable against
the Company in accordance with its terms.
(b) The Company further represents and warrants that on the date hereof it is duly authorized
and reserved, and the Company hereby agrees that it will at all times until the Expiration Date
have duly authorized and reserved, such number of Shares as will be sufficient to permit the
exercise in full of the Warrant, and that all such Shares are and will be duly authorized and, when
issued upon exercise of the Warrant, will be validly issued, fully paid and non-assessable, and
free and clear of all security interests, claims, liens, equities and other encumbrances.
Section 5. Adjustment Provisions. The Exercise Price in effect at any time, and the
number of Warrant Shares that may be purchased upon any exercise of the Warrant, shall be subject
to change or adjustment as follows:
(a) Share Reorganization. If the Company shall subdivide its outstanding Shares into
a greater number of Shares, by way of a stock split, stock dividend or otherwise, or consolidate
its outstanding Shares into a smaller number of Shares (any such event being herein called a
“Share Reorganization”), then (i) the Exercise Price shall be adjusted, effective
immediately after the effective date of such Share Reorganization, to a price determined by
multiplying the Exercise Price in effect immediately prior to such effective date by a fraction,
the numerator of which shall be the number of Shares outstanding on such effective date before
giving effect to such Share Reorganization and the denominator of which shall be the number of
Shares outstanding after giving effect to such Share Reorganization, and (ii) the number of Shares
subject to purchase upon exercise of this Warrant shall be adjusted, effective at such time, to a
number determined by multiplying the number of Shares subject to purchase immediately before such
Share Reorganization by a fraction, the numerator of which shall be the number of Shares
outstanding after giving effect to such Share Reorganization and the denominator of which shall be
the number of Shares outstanding immediately before giving effect to such Share Reorganization.
(b) Special Distributions. If the Company shall issue or distribute to any holder or
holders of Shares evidences of indebtedness, any other securities of the Company or any cash,
property or other assets (excluding a Share Reorganization), whether or not accompanied by a
purchase, redemption or other acquisition of Shares (any such nonexcluded event being herein called
a “Special Distribution”), then the Warrant Holder shall be entitled to a pro-rata share of
such Special Distribution as though the Warrant Holder had fully exercised this Warrant immediately
prior to the record date for such Special Distribution, and the Company shall pay or distribute
such pro-rata share to Warrant Holder when paid or distributed to the holders of the Shares. A
reclassification of the Shares (other than a change in par value, or from par value to no par value
or from no par value to par value) into shares of any other class of stock shall be deemed to be a
distribution by the Company to the holders of its Shares of such class of stock and, if the
outstanding Shares shall be changed into a larger or smaller number of Shares as part of such
reclassification, a Share Reorganization.
5.
(c) Capital Reorganization. Without limiting any of the other provisions hereof, if
any (i) capital reorganization; (ii) reclassification of the capital stock of the Company; (iii)
merger, consolidation or reorganization or other similar transaction or series of related
transactions which results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or by being converted
into voting securities of the surviving or acquiring entity) less than 50% of the combined voting
power of the voting securities of or economic interests in the Company or such surviving or
acquiring entity outstanding immediately after such merger, consolidation or reorganization; (iv)
sale, lease, license, transfer, conveyance or other disposition of all or substantially all of the
assets of the Company; (v) sale of shares of capital stock of the Company, in a single transaction
or series of related transactions, representing at least 50% of the voting power of the voting
securities of or economic interests in the Company; or (vi) the acquisition by any “person”
(together with his, her or its Affiliates) or “group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) acquires, directly or indirectly, the beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of outstanding shares of capital stock
and/or other equity securities of the Company, in a single transaction or series of related
transactions (including, without limitation, one or more tender offers or exchange offers),
representing at least 50% of the voting power of or economic interests in the then outstanding
shares of capital stock of the corporation (each of (i)-(vi) above a “Corporate Reorganization”)
shall be effected, then the Company shall use its commercially reasonable efforts to ensure that
lawful and adequate provision shall be made whereby each Warrant Holder shall thereafter continue
to have the right to purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Warrant Shares issuable upon exercise of the Warrants held by such
Warrant Holder, shares of stock in the surviving or acquiring entity (“Acquirer”), as the
case may be, such that the aggregate value of the Warrant Holder’s warrants to purchase such number
of shares, where the value of each new warrant to purchase one share in the Acquirer is determined
in accordance with the Black-Scholes Option Pricing formula set forth in Appendix (A) hereto, is
equivalent to the aggregate value of the Warrants held by such Warrant Holder, where the value of
each Warrant to purchase one share in the Company is determined in accordance with the
Black-Scholes Option Pricing formula set forth Appendix (B) hereto. Furthermore, the new warrants
to purchase shares in the Acquirer referred to herein shall have the same expiration date as the
Warrants, and shall have a strike price, KAcq, that is calculated in accordance with
Appendix (A) hereto. For the avoidance of doubt, if the surviving or acquiring entity, as the case
may be, is a member of a consolidated group for financial reporting purposes, the “Acquirer” shall
be deemed to be the parent of such consolidated group for purposes of
this Section 5(c) and
Appendix (A) hereto.
Moreover, appropriate provision shall be made with respect to the rights and interests of each
Warrant Holder to the end that the provisions hereof (including, without limitation, provision for
adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any shares of stock thereafter deliverable upon the exercise thereof.
The Company shall not effect any such Corporate Reorganization unless prior to or simultaneously
with the consummation thereof the successor corporation resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume by written instrument, reasonably deemed by the Board of
Directors of the Company and the Requisite Holders to be satisfactory in form and substance, the
obligation to deliver to the holder of the Warrants, at the last address of such holder appearing
on the books of the Company, such shares of stock, as, in accordance with the foregoing provisions,
such holder may be entitled to purchase, and the other obligations under these Warrants. The
provisions of this Section 5(c) shall similarly apply to successive Corporate Reorganizations. If
the Company, in spite of using its commercially reasonable efforts, is unable to cause these
Warrants to continue in full force and effect until the Expiration Date in connection with any
Corporate Reorganization, then the Company shall pay the Warrant Holders an amount per Warrant to
purchase one share in the Company that is calculated in accordance with the Black-Scholes Option
Pricing formula set forth in Appendix (B) hereto. Such payment shall be made in cash in the event
that the Corporate
6.
Reorganization results in the shareholders of the Company receiving cash from the Acquirer at the
closing of the transaction, and shall be made in shares of the Company (with the value of each
share in the Company is determined according to SCorp in Appendix (B) hereto) in the
event that the Corporate Reorganization results in the shareholders of the Company receiving shares
in the Acquirer or other entity at the closing of the transaction. In the event that the
shareholders of the Company receive both cash and shares at the closing of the transaction, such
payment to the Warrant Holders shall be also be made in both cash and shares in the same proportion
as the consideration received by the shareholders.
(d) Adjustment Rules.
(i) Any adjustments pursuant to this Section 5 shall be made successively whenever any event
referred to herein shall occur, except that, notwithstanding any other provision of this Section 5,
no adjustment shall be made to the number of Warrant Shares to be delivered to the Warrant Holder
(or to the Exercise Price) if such adjustment represents less than 1% of the number of Warrant
Shares previously required to be so delivered, but any lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment which together with
any adjustments so carried forward shall amount to 1% or more of the number of Warrant Shares to be
so delivered.
(ii) No adjustments shall be made pursuant to this Section 5 in respect of the issuance of
Warrant Shares upon exercise of the Warrant;
(iii) If the Company shall take a record of the holders of its Shares for any purpose
referred to in this Section 5, then (x) such record date shall be deemed to be the date of the
issuance, sale, distribution or grant in question and (y) if the Company shall legally abandon such
action prior to effecting such action, no adjustment shall be made pursuant to this Section 5 in
respect of such action.
(iv) In computing adjustments under this Section 5, (A) fractional interests in Shares shall
be taken into account to the nearest one-thousandth of a Share, and (B) calculations of the
Exercise Price shall be carried to the nearest one-thousandth of one cent.
(e) Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent to
the taking of any action which would require an adjustment pursuant to this Section 5, the
Company shall take any action which may be necessary, including obtaining regulatory approvals or
exemptions, in order that the Company may thereafter validly and legally issue as fully paid and
nonassessable all Shares which the Warrant Holder is entitled to receive upon exercise of the
Warrant.
(f) Notice of Adjustment. Not less than 20 days prior to the record date or effective
date, as the case may be, of any action which requires or might require an adjustment or
readjustment pursuant to this Section 5, the Company shall give notice to the Warrant
Holder of such event, describing such event in reasonable detail and specifying the record date or
effective date, as the case may be, and, if determinable, the required adjustment and computation
thereof. If the required adjustment is not determinable as the time of such notice, the Company
shall give notice to the Warrant Holder of such adjustment and computation as soon as reasonably
practicable after such adjustment becomes determinable. In connection with any such adjustment or
readjustment, at its sole cost and expense, the Company will also cause independent certified
public accountants of recognized national standing (which may be the regular auditors of the
Company) selected by the Company to verify its computations and confirm that such computations were
made in accordance with this Section 5 and, in connection with the preparation of the Company’s
quarterly financial statements prepare a report setting forth such adjustment or readjustment and
showing in reasonable detail the method of calculation thereof and the facts upon which such
adjustment or readjustment is based, including a statement of (i) the number of Shares outstanding
or deemed to be outstanding, and (ii) the Exercise Price in effect immediately prior to such
7.
issue or sale and as adjusted and readjusted (if required by this Section 5) on account
thereof. The Company will forthwith mail a copy of each such report to the Warrant Holder and
will, upon the written request at any time of the Warrant Holder, furnish to such holder a like
report setting forth the Exercise Price at the time in effect and showing in reasonable detail how
it was calculated. The Company will also keep copies of all such reports at its office and will
cause the same to be available for inspection at such office during normal business hours by the
Warrant Holder or any prospective purchaser of this Warrant designated by the Warrant Holder.
(g) Disputes. Any dispute which arises between the Warrant Holder and the Company
with respect to the calculation of the adjusted Exercise Price or Warrant Shares issuable upon
exercise shall be determined by the independent auditors of the Company in accordance with the
terms of this Warrant, and such determination shall be binding upon the Company and the holders of
the Warrants and the Warrant Shares if made in good faith and without manifest error.
(h) Other Actions Affecting Shares.
(i) Equitable Equivalent. In case any event shall occur as to which the provisions of
this Section 5 set forth above hereof are not strictly applicable but the failure to make any
adjustment would not, or if the application of the provisions of this Section 5 otherwise would
not, in the opinion of the Warrant Holder, fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of this Section 5, then, in each
such case, at the request of the Warrant Holder, the Company shall appoint a firm of independent
investment bankers of recognized national standing (which shall be completely independent of the
Company and shall be satisfactory to the holder or the Requisite Holders), which shall give their
opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles
established in this Section 5, necessary to preserve the purchase rights of such Warrant Holder
represented by this Warrant. Upon receipt of such opinion, the Company will promptly mail a copy
thereof to the holder of this Warrant and shall make the adjustments described therein.
(ii) No Avoidance. The Company shall not, by amendment of its certificate of
incorporation or by-laws or through any consolidation, merger, reorganization, transfer of assets,
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 action as may be
necessary or appropriate in order to protect the rights of the holder of this Warrant against
dilution or other impairment as if the holder was a shareholder of the Company entitled to the
benefit of fiduciary duties afforded to shareholders under Delaware law.
(i) Adjustment of Par Value. If for any reason (including the operation of the
adjustment provisions set forth in this Warrant), the Exercise Price on any date of exercise of
this Warrant shall not be lawful and adequate consideration for the issuance of the relevant
Warrant Shares, then the Company shall take such steps as are necessary (including the amendment of
its certificate of incorporation so as to reduce the par value of the Shares) to cause such
Exercise Price to be adequate and lawful consideration on the date the payment thereof is due, but
if the Company shall fail to take such steps, then the Company acknowledges that the Warrant Holder
shall have been damaged by the Company in an amount equal to an amount, which, when added to the
total Exercise Price for the relevant Warrant Shares, would equal lawful and adequate consideration
for the issuance of such Warrant Shares, and the Company irrevocably agrees that if the Warrant
Holder shall then forgive the right to recover such damages from the Company, such forgiveness
shall constitute, and Company shall accept such forgiveness as, additional lawful consideration for
the issuance of the relevant Warrant Shares.
8.
(j) Appraisal.
(i) If the Requisite Holders shall, for any reason whatsoever, disagree with the Company’s
determination of the Appraised Value of a Share, then such holders shall by notice to the Company
(an “Appraisal Notice”) given within sixty (60) days after the Company notifies the holders
of such determination, elect to dispute such determination, and such dispute shall be resolved as
set forth in clause (ii) of this Section.
(ii) The Company shall within ten (10) days after an Appraisal Notice shall have been given,
engage an independent investment bank of national repute (the “Appraiser”) selected by the
Requisite Holders and retained pursuant to an engagement letter between the Company and the
Appraiser with respect to such valuation in form and substance reasonably acceptable to Requisite
Holders, to make an independent determination of the Appraised Value of a Share; such value shall
be determined without deduction for (a) liquidity considerations, (b) minority shareholder status,
or (c) any liquidation or other preference or any right of redemption in favor of any other equity
securities of the Company. The costs of engagement of such investment bank for any such
determination of Appraised Value shall be paid by the Company.
Section 6. Registration Rights and Extension of Expiration Date. The Warrant Holder
is entitled to the benefit of certain registration rights with respect to the Warrant Shares as
provided in the Purchase Agreement, and any subsequent holder hereof shall be entitled to such
rights to the extent provided in the Purchase Agreement.
Section 7. Transfer of Warrant. The Warrant Holder upon transfer of the Warrant must
deliver to the Company a duly executed Warrant Assignment in the form of Exhibit B and upon
surrender of this Warrant to the Company, the Company shall execute and deliver a new Warrant with
appropriate changes to reflect such Assignment, in the name or names of the assignee or assignees
specified in the Warrant Assignment or other instrument of assignment and, if the Warrant Holder’s
entire interest is not being transferred or assigned, in the name of the Warrant Holder, and upon
the Company’s execution and delivery of such new Warrant, this Warrant shall promptly be cancelled;
and provided that any assignee shall have all of the rights of an Initial Holder hereunder.
The Company shall pay any transfer tax imposed in connection with such assignment (if any). Any
transfer or exchange of this Warrant shall be without charge to the Warrant Holder (except as
provided above with respect to transfer taxes, if any) and any new Warrant issued shall be dated
the date hereof.
Section 8. Assistance in Disposition of Warrant or Warrant Shares. Notwithstanding
any other provision herein, in the event that it becomes unlawful for the Warrant Holder to
continue to hold the Warrant, in whole or in part, or some or all of the Shares held by it, or
restrictions are imposed on any the Warrant Holder by any statute, regulation or governmental
authority which, in the judgment of the Warrant Holder, make it unduly burdensome to continue to
hold the Warrant or such Shares, the Warrant Holder may sell or otherwise dispose of the Warrant
(subject to the restrictions on transfer provided in Section 7) or its Shares, and the Company
agrees to provide reasonable assistance to the Warrant Holder in disposing of the Warrant and such
Shares in a prompt and orderly manner and, at the request of the Warrant Holder, to provide (and
authorize the Warrant Holder to provide) financial and other information concerning the Company to
any prospective purchaser of the Warrant or Shares owned by the Warrant Holder.
Section 9 Identity of Transfer Agent. The Transfer Agent for the Shares is Mellon
Investor Services LLC. Upon the appointment of any subsequent transfer agent for the Shares, the
Company will mail to the Warrant Holder a statement setting forth the name and address of such
transfer agent.
9.
Section 10. Covenants. The Company agrees that:
(a) Information. So long as this Warrant remains outstanding or any Initial Holder
holds any Warrant Shares, the Company will deliver to the Warrant Holder (or Initial Holder) upon
the request of such Warrant Holder (or Initial Holder):
(i) as soon as available and in any event within 120 days after the end of each fiscal year,
an audited consolidated balance sheet of the Company and its consolidated subsidiaries as of the
end of such fiscal year and the related consolidated statements of income, of cash flows, and of
changes in shareholders’ equity for such fiscal year, prepared in conformity with generally
accepted accounting principles in the United States applied on a consistent basis, except as
otherwise noted therein, and setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and reported on without qualification by public
accountants of nationally recognized standing;
(ii) as soon as available but not later than 45 days after the end of each fiscal quarter, a
consolidated balance sheet of the Company as of the end of such fiscal quarter, and the related
consolidated statements of income, cash flows, and changes in shareholders’ equity for such fiscal
quarter and for the portion of the fiscal year ended at the end of such fiscal quarter, prepared in
conformity with generally accepted accounting principles in the United States applied on a
consistent basis, except for normal, recurring adjustments or to the extent that such financial
statements do not include footnotes or as otherwise noted therein, and setting forth, in each case,
in comparative form the figures for the corresponding fiscal quarter and the corresponding portion
of the previous fiscal year;
(iii) promptly upon the filing thereof, copies of all registration statements (other than the
exhibits thereto and any registration statements on Form S-8 or its equivalent) and to the extent
the Company is required by law or pursuant to the terms of any outstanding indebtedness of the
Company to prepare such reports, any annual reports, quarterly reports and other periodic reports
pursuant to Section 13 or 15(d) of the Exchange Act actually prepared by the Company as soon as
available; and
(iv) promptly, upon the issuance thereof, all statements and notices sent to the Company’s
shareholders.
(b) Maintenance of Business. The Company (i) will, and will cause each of its
subsidiaries to, continue, to engage in the business the Company and its subsidiaries are engaged
in as of the date hereof and business activities substantially related thereto, (ii) will not, and
will not permit any of its subsidiaries to, expand into any other lines of business except those
lines of business in which they are engaged in as of the date hereof, and as substantially related
thereto, (iii) will preserve, renew, and keep in full force and effect, and will, and will cause
each of its subsidiaries to, preserve, renew, and keep in full force and effect, its existence as a
limited liability company and all material rights, privileges, and franchises necessary or
desirable in the customary conduct of business, and (iv) will not, and will not permit any of its
subsidiaries to, consolidate with or merge with or into any other Person or take any action in
furtherance thereof.
(c) Securities Filings; Rules 144 & 144A. The Company will (i) file any reports
required to be filed by it under the Securities Act, the Exchange Act or the rules and regulations
adopted by the Commission thereunder, (ii) use its commercially reasonable efforts to cooperate
with the Warrant Holder and each holder of Warrant Shares in supplying such information concerning
the Company as may be necessary for the Warrant Holder or holder of Warrant Shares to complete and
file any information reporting forms currently or hereafter required by the Commission as a
condition to the availability of an exemption from the Securities Act for the sale of any Warrants
or Warrant Shares, (iii) take such further action as the Warrant Holder may reasonably request to
the extent required from time to time to enable
10.
the Warrant Holder to sell Warrant Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 or 144A under the Securities Act, as such
Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the
Commission, and (iv) upon the request of the Warrant Holder, deliver to the Warrant Holder a
written statement as to whether it has complied with such reporting requirements; provided
that this subsection (c) shall not require the Company to make any filing under the
Securities Act or Exchange Act which the Company is not otherwise obligated to make.
(d) Obtaining of Governmental Approvals and Stock Exchange Listings. The Company
will, at its own expense, (i) obtain and keep effective any and all permits, consents and approvals
of governmental agencies and authorities which may from time to time be required of the Company in
order to satisfy its obligations hereunder, and (ii) take all action which may be necessary so that
the Warrant Shares, immediately upon their issuance upon the exercise of the Warrants, will be
listed on each securities exchange, if any, on which the Shares are then listed.
(e) Inspection and Access. So long as this Warrant remains outstanding or any Holder
holds any Warrant Shares, the Company shall permit any authorized representatives designated by the
Warrant Holder (or Initial Holder) to visit and inspect any of the properties of the Company and
its subsidiaries, including its and their books of account, and to discuss its and their affairs,
finances and accounts with its and their officers, all at such times as the Warrant Holder (or
Initial Holder) may request.
(f) Structural Dilution. So long as this Warrant remains outstanding, the Company
shall not permit any of its subsidiaries to issue, sell, distribute or otherwise grant in any
manner (including by assumption) any rights to subscribe for or to purchase, or any warrants or
options for the purchase of any equity securities of such subsidiary or any securities convertible
into or exchangeable for such equity securities (or any rights to subscribe for or to purchase, or
any warrants or options for the purchase of any such convertible or exchangeable securities),
whether or not immediately exercisable or exercisable prior to the Expiration Date or thereafter.
(g) Notices Of Corporate Action. In the event of:
(i) any taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any distribution, or any
right to subscribe for, purchase or otherwise acquire any Shares or any other securities or
property, or to receive any other right, or
(ii) any capital reorganization of the Company, any reclassification or recapitalization of
the capital stock of the Company, any consolidation or merger involving the Company and any other
Person or any transfer of all or substantially all the assets of the Company to any other Person,
or any Corporate Reorganization, or
(iii) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,
the Company will mail to the Warrant Holder a notice specifying (i) the date or expected date
on which any such record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right, (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, (iii) the time, if any such time
is to be fixed, as of which the holders of record of Shares (or other securities under Section
5(c)) shall be entitled to exchange their Shares (or other securities under Section 5(c)) for the
securities or other property deliverable upon such
11.
reorganization, reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up and a description in reasonable detail of the transaction
and (iv) the date of such issuance, together with a description of the security so issued and the
consideration received by the Company therefor. Such notice shall be mailed at least forty-five
(45) days prior to the date therein specified.
Section 11. Lost, Mutilated or Missing Warrants. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any
Warrant, and, in the case of loss, theft or destruction, upon receipt of indemnification
satisfactory to the Company (in the case of an Initial Holder its unsecured, unbonded agreement of
indemnity or affidavit of loss shall be sufficient) or, in the case of mutilation, upon surrender
and cancellation of the mutilated Warrant, the Company shall execute and deliver a new Warrant of
like tenor and representing the right to purchase the same aggregate number of Warrant Shares.
Section 12. Limitation on Exercise. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares that may be acquired by the Warrant Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to ensure
that, following such exercise (or other issuance), the total number of Shares then beneficially
owned by the Warrant Holder and any other Persons whose beneficial ownership of
Shares would be aggregated with the Warrant Holder’s for purposes of Section 13(d) of the Exchange
Act, does not exceed 4.999% of the total number of then issued and outstanding Shares (including
for such purpose the Shares issuable upon such exercise). For such purposes, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder, it being acknowledged by the Warrant Holder that the Company
is not representing to such Warrant Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and such Warrant Holder is solely responsible for any schedules required
to be filed in accordance therewith. To the extent that the limitation contained in this Section
12 applies, the determination of whether this Warrant is exercisable (in relation to other
securities owned by such Warrant Holder) and of which portion of this Warrant is exercisable shall
be in the sole discretion of the Warrant Holder, and the submission of a Notice of Exercise shall
be deemed to be the Warrant Holder’s determination of whether this Warrant is exercisable (in
relation to other securities owned by such Warrant Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination. 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 12, in determining the number of outstanding Shares, the Warrant Holder
may rely on the number of outstanding Shares as reflected in (x) the Company’s most recent Form
10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z)
any other notice by the Company or the Company’s transfer agent setting forth the number of Shares
outstanding. Upon the written request of the Warrant Holder, the Company shall within three
Business Days confirm orally and in writing to such Warrant Holder the number of Shares. This
provision shall not restrict the number of Shares which a Warrant Holder may receive or
beneficially own in order to determine the amount of securities or other consideration that such
Warrant Holder may receive in the event of a transaction contemplated in Section 5 of this Warrant.
By written notice to the Company, which will not be effective until the 61st day after such notice
is delivered to the Company, the Warrant Holder may waive the provisions of this Section 12 (but
such waiver will not affect any other holder) to change the beneficial ownership limitation to
9.99% of the number of Shares outstanding immediately after giving effect to the issuance of Shares
upon exercise of this Warrant, and the provisions of this Section 12 shall continue to apply. Upon
such a change by a Warrant Holder of the beneficial ownership limitation from such 4.99% limitation
to such 9.99% limitation, the beneficial ownership limitation may not be further waived by such
Warrant Holder.
12.
Section 13. Waivers; Amendments. Any provision of this Warrant may be amended or
waived with (but only with) the written consent of the Company and the Warrant Holder. No failure
or delay of the Company or the Warrant Holder in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereon or the exercise of any other right or power. No notice or demand on
the Company in any case shall entitle the Company to any other or future notice or demand in
similar or other circumstances. The rights and remedies of the Company and the Warrant Holder
hereunder are cumulative and not exclusive of any rights or remedies which it would otherwise have.
Section 14. Miscellaneous.
(a) Shareholder Rights. The Warrant shall not entitle any Warrant Holder, prior to
the exercise of the Warrant, to any voting rights as a shareholder of the Company.
(b) Expenses. The Company shall pay all reasonable expenses of the Warrant Holder,
including reasonable fees and disbursements of counsel, in connection with the preparation of the
Warrant, any waiver or consent hereunder or any amendment or modification hereof (regardless of
whether the same becomes effective), or the enforcement of the provisions hereof; provided
that the Company shall not be required to pay any expenses of the Warrant Holder arising solely in
connection with a transfer of the Warrant.
(c) Successors and Assigns. All the provisions of this Warrant by or for the benefit
of the Company or the Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns.
(d) Severability. In case any one or more of the provisions contained in this Warrant
shall be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.
(e) Notices. Any notice or other communication hereunder shall be in writing and
shall be sufficient if sent by first-class mail or courier, postage prepaid, and addressed as
follows: (a) if to the Company, addressed to the Company at its address for notices as set forth
below its signature hereon or any other address as the Company may hereafter notify to the Warrant
Holder and(b) if to the Warrant Holder, addressed to such address as the Warrant Holder may
hereafter from time to time notify to the Company for the purposes of notice hereunder.
(f) Equitable Remedies. Without limiting the rights of the Company and the Warrant
Holder to pursue all other legal and equitable rights available to such party for the other
parties’ failure to perform its obligations hereunder, the Company and the Warrant Holder each
hereto acknowledge and agree that the remedy at law for any failure to perform any obligations
hereunder would be inadequate and that each shall be entitled to specific performance, injunctive
relief or other equitable remedies in the event of any such failure.
(g) Continued Effect. Rights and benefits conferred on the holders of Warrant Shares
pursuant to the provisions hereof (including Section 6) shall continue to inure to the
benefit of, and shall be enforceable by, such holders, notwithstanding the surrender of the Warrant
to, and its cancellation by, the Company upon the full or partial exercise or repurchase hereof.
13.
(h) Confidentiality. The Warrant Holder agrees to keep confidential any proprietary
information relating to the Company delivered by the Company hereunder; provided that
nothing herein shall prevent the Warrant Holder from disclosing such information: (i) to any
holder of Warrants or Warrant Shares, (ii) to any Affiliate of any holder of Warrants or Warrant
Shares or any actual or potential transferee of the rights or obligations hereunder that agrees to
be bound by this Section 14(h), (iii) upon order, subpoena, or other process of any court
or administrative agency or otherwise required by law, (iv) upon the request or demand of any
regulatory agency or authority having jurisdiction over such party, (v) which has been publicly
disclosed, (vi) which has been obtained from any Person that is not a party hereto or an affiliate
of any such party, (vii) in connection with the exercise of any remedy, or the resolution of any
dispute hereunder, (viii) to the legal counsel or certified public accountants for any holder of
Warrants or Warrant Shares, or (ix) as otherwise expressly contemplated by this Warrant.
(i) Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF
LAW.
(j) Section Headings. The section headings used herein are for convenience of
reference only and shall not be construed in any way to affect the interpretation of any provisions
of the Warrant.
14.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
signatory as of the day and year first above written.
| Alexza Pharmaceuticals, Inc., a Delaware corporation |
||||
| By | ||||
| Name: | ||||
| Title: | ||||
Address for Notices: 0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Xxxxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
1
Exhibit A to Warrant
Form of Notice of Exercise
,20____
To: Alexza Pharmaceuticals, Inc.
Reference is made to the Warrant dated October 5, 2009. Terms defined therein are used herein
as therein defined.
The undersigned, pursuant to the provisions set forth in the Warrant, hereby irrevocably
elects and agrees to purchase Shares, and makes payment herewith in full therefor at the
Exercise Price of $ in the following form:
.
.
[If the number of Shares as to which the Warrant is being exercised is less than all of the
Shares purchasable thereunder, the undersigned hereby requests that a new Warrant representing the
remaining balance of the Shares be registered in the name of , whose address is:
.]
.]
The undersigned hereby represents that it is exercising the Warrant for its own account or the
account of an Affiliate and not with the view to any sale or distribution and that the Warrant
Holder will not offer, sell or otherwise dispose of the Warrant or any underlying Warrant Shares in
violation of applicable securities laws.
| [NAME OF WARRANT HOLDER] |
||||
| By: | ||||
| Name: | ||||
| Title: [ADDRESS OF WARRANT HOLDER] |
||||
Exhibit B to Warrant
Form of Warrant Assignment
Reference is made to the Warrant dated October 5, 2009, issued by Alexza Pharmaceuticals, Inc.
Terms defined therein are used herein as therein defined.
FOR VALUE RECEIVED (the “Assignor”) hereby sells, assigns and transfers
all of the rights of the Assignor as set forth in such Warrant, with respect to the number of
Warrant Shares covered thereby as set forth below, to the Assignee(s) as set forth below:
Number of Warrant Shares
| Number of Warrant | ||||||||
| Name(s) of Assignee(s) | Address(es) | Shares | ||||||
All notices to be given by the Company to the Assignor as Warrant Holder shall be sent to the
Assignee(s) at the above listed address(es), and, if the number of Shares being hereby assigned is
less than all of the Shares covered by the Warrant held by the Assignor, then also to the Assignor.
In accordance with Section 7 of the Warrant, the Assignor requests that the Company execute
and deliver a new Warrant or Warrants in the name or names of the assignee or assignees, as is
appropriate, or, if the number of Shares being hereby assigned is less than all of the Shares
covered by the Warrant held by the Assignor, new Warrants in the name or names of the assignee or
the assignees, as is appropriate, and in the name of the Assignor.
The undersigned represents that the Assignee has represented to the Assignor that the Assignee
is acquiring the Warrant for its own account or the account of an Affiliate for investment purposes
and not with the view to any sale or distribution, and that the Assignee will not offer, sell or
otherwise dispose of the Warrant or the Warrant Shares except under circumstances as will not
result in a violation of applicable securities laws.
Dated: , 20___
| [NAME OF ASSIGNOR] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[ADDRESS OF ASSIGNOR]
APPENDIX A
Black Scholes Option Pricing formula to be used when calculating the value of each new warrant to
purchase one share in the Acquirer shall be:
CAcq = value of each warrant to purchase one share in the Acquirer
SAcq = price of Acquirer’s stock as determined by reference to the average of the
closing prices on the securities exchange or Nasdaq Global Market over the 20-day period ending
three trading days prior to the closing of the Corporate Reorganization described in Section 5(c)
if the Acquirer’s stock is then traded on such exchange or system, or the average of the closing
bid or sale prices (whichever is applicable) in the over-the-counter market over the 20-day period
ending three trading days prior to the closing of the Corporate Reorganization if the Acquirer’s
stock is then actively traded in the over-the-counter market, or the then most recently completed
financing if the Acquirer’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.
TAcq = expiration date of new warrants to purchase shares in the Acquirer =
TCorp
tAcq = date of issue of new warrants to purchase shares in the Acquirer
TAcq-tAcq = time until warrant expiration, expressed in years
s = volatility = annualized standard deviation of daily log-returns (using a 262-day annualization
factor) of the Acquirer’s stock price on the securities exchange or Nasdaq Global Market over a
20-day trading period, determined by the Warrant Holders, that is within the 100-day trading period
ending on the trading day immediately after the public announcement of the Corporate Reorganization
described in Section 5(c) if the Acquirer’s stock is then traded on such exchange or system, or the
annualized standard deviation of daily-log returns (using a 262-day annualization factor) of the
closing bid or sale prices (whichever is applicable) in the over-the-counter market over a 20-day
trading period, determined by the Warrant Holder, that is within the 100-day trading period ending
on the trading day immediately after the public announcement of the Corporate Reorganization if the
Acquirer’s stock is then actively traded in the over-the-counter market, or 0.6 (or 60%) if the
Acquirer’s stock is not then traded on a securities exchange or system or in the over-the-counter
market.
N = cumulative normal distribution function
ln = natural logarithm
λ = dividend rate of the Acquirer for the most recent 12-month period at the time of closing of the
Corporate Reorganization.
KAcq = strike price of new warrants to purchase shares in the Acquirer = KCorp
* (SAcq / SCorp)
r = annual yield, as reported by Bloomberg at time tAcq, of the United States Treasury
security measuring the nearest time TAcq
APPENDIX B
Black Scholes Option Pricing formula to be used when calculating the value of each Warrant to
purchase one share in the Company shall be:
CCorp = value of each Warrant to purchase one share in the Company
SCorp = price of Company stock as determined by reference to the average of the closing
prices on the securities exchange or Nasdaq Global Market over the 20-day period ending three
trading days prior to the closing of the Corporate Reorganization described in Section 5(c) if the
Company’s stock is then traded on such exchange or system, or the average of the closing bid or
sale prices (whichever is applicable) in the over-the-counter market over the 20-day period ending
three trading days prior to the closing of the Corporate Reorganization if the Company’s stock is
then actively traded in the over-the-counter market, or the then most recently completed financing
if the Company’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.
TCorp = expiration date of Warrants to purchase shares in the Company
tCorp = date of public announcement of transaction
TCorp-tCorp = time until Warrant expiration, expressed in years
s = volatility = the annualized standard deviation of daily log-returns (using a 262-day
annualization factor) of the Company’s stock price on the securities exchange or Nasdaq Global
Market over a 20-day trading period, determined by the Warrant Holders, that is within the 100-day
trading period ending on the trading day immediately after the public announcement of the Corporate
Reorganization described in Section 5(c) if the Company’s stock is then traded on such exchange or
system, or the annualized standard deviation of daily-log returns (using a 262-day annualization
factor) of the closing bid or sale prices (whichever is applicable) in the over-the-counter market
over a 20-day trading period, determined by the Warrant Holder, that is within the 100-day trading
period ending on the trading day immediately after the public announcement of the Corporate
Reorganization if the Company’s stock is then actively traded in the over-the-counter market, or
0.6 (or 60%) if the Company’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.
N = cumulative normal distribution function
ln = natural logarithm
λ = dividend rate of the Company for the most recent 12-month period at the time of closing of the
Corporate Reorganization.
KCorp = strike price of warrant
r = annual yield, as reported by Bloomberg at time tCorp, of the United States Treasury
security measuring the nearest time TCorp
