WARRANT TO PURCHASE
SHARES OF COMMON STOCK
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
ATLANTIC PHARMACEUTICALS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
Void after November 22, 2001
THIS CERTIFIES THAT, for value received, Xxxx Xxxxxxx ("Holder") is
entitled to purchase, on the terms hereof, Twenty Four Thousand (24,000) shares
of Common Stock (as adjusted pursuant to Sections 3 and 4 hereof, the "Shares")
of Atlantic Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
subject to the provisions and upon the terms and conditions hereinafter set
forth. As used herein, the term "Common Stock" shall mean the Company's
presently authorized Common Stock, par value $.001 per share, and any stock into
or for which such Common Stock may hereafter be converted or exchanged. The term
"Warrant" as used herein shall include this Warrant, and any warrants delivered
in substitution or exchange therefor as provided herein.
The following terms shall apply to this Warrant:
1. Term of Warrant. Subject to the terms and conditions set forth
herein, the term of this Warrant shall commence and this Warrant shall be
exercisable for the Shares, commencing on the date hereof and expiring at 5:00
p.m. Pacific Standard Time on November 22, 2001.
2. Exercise Price: Number of Shares. The exercise price ("Exercise
Price") at which this Warrant may be exercised shall be Seven Dollars ($7.00),
as adjusted from time to time pursuant to Section 4 hereof. The number of shares
of Common Stock for which this Warrant is initially exercisable is Twenty Four
Thousand (24,000) shares of Common Stock, which number is subject to adjustment
pursuant to Sections 3 and 4 of this Warrant.
3. Exercise and Vesting.
3.1. Exercise of Warrant. Subject to the terms of Sections 1
and 32 hereof, the purchase rights represented by this Warrant are exercisable
by Holder during the term hereof, in whole or in part and from time to time, by
the surrender of this Warrant (with the notice of exercise form attached hereto
as Exhibit A duly executed) at the principal office of the Company and by
payment to the Company, by check or wire transfer of an amount equal to the then
applicable Exercise Price multiplied by the number of Shares then being
purchased. In the event of any exercise of the rights represented by this
Warrant, certificates for the Shares so purchased shall be delivered to Holder
hereof as soon as possible and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to Holder hereof as soon as possible.
3.2 Vesting of Warrant.
(a) From the issuance hereof until and including May 21,
1997, the purchase rights represented by this Warrant are exercisable only as to
Eight Thousand (8,000) shares of Common Stock.
(b) From and including May 22, 1997 until and including
November 21, 1997, the purchase rights represented by this Warrant are
exercisable only as to Sixteen Thousand (16,000) shares of Common Stock.
(c) From November 22, 1997 until the expiration of this
Warrant, the purchase rights represented by this Warrant are exercisable as to
Twenty Four Thousand (24,000) shares of Common Stock.
(d) Notwithstanding the foregoing subdivisions of this
Section 3.2, in no event shall any of the shares vest after termination of the
Letter Agreement, as defined in Section 13 hereof.
4. Certain Adjustments.
4.1. Adjustments for Splits, Subdivisions, Recapitalizations
and other Combinations. In case the Company shall (i) pay a dividend in Common
Stock or make a distribution in the form of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, (iv) issue by
reclassification of its Common Stock other securities of the Company, or (v)
take any other action, the effect of which is to reclassify or reorganize the
outstanding shares of Common Stock into a different number of shares or class of
securities, the number of shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be entitled
to receive the kind and number of shares or other securities of the Company
which it would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made with respect to this Section 4.1 shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event. Whenever the number of Shares
purchasable upon the exercise of this Warrant is adjusted, as herein provided,
the Exercise Price payable upon the exercise of this Warrant shall be adjusted
by multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Shares purchasable upon
the exercise of the Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of Warrant shares so purchasable immediately
thereafter. Except as provided above, no adjustment in respect of any dividends
or distributions out of earnings shall be made during the term of this Warrant
or upon the exercise of this Warrant.
4.2. Mergers, Consolidations or Sale of Assets. If at any time
there shall be a capital reorganization (other than a combination or subdivision
of Shares otherwise provided for herein), or a merger or consolidation of the
Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the purchase price, the number of shares of stock or
other securities or property of the Company or the successor corporation
resulting from such reorganization, merger, consolidation or sale, to which a
holder of Common Stock deliverable upon exercise of this Warrant would have been
entitled under the provisions of the agreement in such reorganization, merger,
consolidation or sale if this Warrant had
2.
been exercised immediately before that reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the reorganization, merger, consolidation or sale to the end that
the provisions of this Warrant (including adjustment of the purchase price then
in effect and the number of the Shares) shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant; provided, however,
that the aggregate purchase price shall not be adjusted.
4.3. Certificate as to Adjustments. In the case of each
adjustment or readjustment of the purchase price pursuant to this Section 4, the
Company will promptly compute such adjustment or readjustment in accordance with
the terms hereof and cause a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based to be delivered to the Holder of this Warrant. The Company
will, upon the written request at any time of the Holder of this Warrant,
furnish or cause to be furnished to such Holder a certificate setting forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect; and
(c) The number of Shares and the amount, if any, of
other property at the time receivable upon the exercise of the Warrant.
5. Fractional Stock. No fractional shares shall be issued in
connection with any exercise of this Warrant. In lieu of the issuance of such
fractional share, the Company shall make a cash payment equal to the then fair
market value of such fractional share as determined in good faith by the
Company's Board of Directors.
6. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the exercise of this Warrant.
7. Restrictions on Transfer.
Unless the issuance of the Shares has been registered under the Securities
Act of 1933, as amended (the "1933 Act"):
(a) this Warrant and any Shares may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except: (i) to a person who, in
the opinion of counsel to the Company, is a person to whom this Warrant or the
Shares may legally be transferred without registration and without the delivery
of a current prospectus under the 1933 Act with respect thereto and then only
against receipt of an agreement of such person to comply with the provisions of
this Section 6 with respect to any resale or other disposition of such
securities; or (ii) to any person upon the delivery of a prospectus then meeting
the requirements of the 1933 Act relating to such securities and the offering
thereof for such sale or disposition, and thereafter to all successive
assignees;
(b) upon exercise of any of the Warrants and the issuance of
any of the Shares, all certificates representing such shares shall bear on the
face thereof substantially the following legend, insofar as is consistent with
California law, as well as any other legends necessary to comply with applicable
state and federal laws for the issuance of such shares:
3.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES
LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR
PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER
THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED, EXCEPT
IN A TRANSACTION WHICH IS EXEMPT UNDER PROVISIONS OF THE 1933 ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT; AND IN THE CASE OF AN EXEMPTION; ONLY IF THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION OF ANY
SUCH SECURITIES.
8. Rights as Stockholders; Information. Holder shall not be entitled
to vote or receive dividends or be deemed the holder of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon Holder any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders or at any meeting thereof, or to receive notice of
meeting, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
9. Net Issuance.
(a) Right to Convert. In addition to and without limiting the
rights of the Holder under the terms of this Warrant, the Holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Common Stock as provided in this Section 9(a) at any time or from
time to time during the term of this Warrant. Upon exercise of the Conversion
Right with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the Holder (without
payment by the Holder of any exercise price or any cash or other consideration)
that number of shares of fully paid and nonassessable Common Stock equal to the
quotient obtained by dividing (x) the value of this Warrant (or the specified
portion hereof) on the Conversion Date (as defined in subsection (b) hereof),
which value shall be determined by subtracting (1) the aggregate Exercise Price
of the Converted Warrant Shares immediately prior to the exercise of the
Conversion Right from (2) the aggregate fair market value of the Converted
Warrant Shares issuable upon exercise of this Warrant (or the specified portion
hereof) on the Conversion Date (as herein defined) by (y) the fair market value
of one share of Common Stock on the Conversion Date (as herein defined). No
fractional shares shall be issuable upon exercise of the Conversion Right, and,
if the number of shares to be issued determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the fair market value of the resulting fractional share
on the Conversion Date (as hereinafter defined). For purposes of Section 9 of
this Warrant, shares issued pursuant to the Conversion Right shall be treated as
if they were issued upon the exercise of this Warrant.
(b) Method of Exercise. The Conversion Right may be exercised
by the Holder by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the Holder thereby
intends to exercise the Conversion Right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in subsection
(a) hereof as the Converted Warrant Shares) in exercise of the Conversion Right.
Such conversion shall be effective
4.
upon receipt by the Company of this Warrant together with the aforesaid written
statement, or on such later date as is specified therein (the "Conversion
Date"). Certificates for the shares issuable upon exercise of the Conversion
Right and, if applicable, a new warrant evidencing the balance of the shares
remaining subject to this Warrant, shall be issued as of the Conversion Date and
shall be delivered to the Holder within thirty (30) days following the
Conversion Date.
(c) Determination of Fair Market Value. For purposes of this
Section 9(c), "fair market value" of a share of Common Stock or a Converted
Warrant Share, as the case may be, as of a particular date (the "Determination
Date") shall mean:
(i) If traded on a securities exchange or on Nasdaq, the
fair market value of the Common Stock shall be deemed to be the closing price of
the Common Stock on such exchange on the business day prior to the Determination
Date;
(ii) If traded over-the-counter, the fair market value
of the Common Stock shall be deemed to be the closing price of the Common Stock
on the business day prior to the Determination Date; and
(iii) If there is no public market for the Common Stock,
then fair market value shall be determined by the Board of Directors of the
Company; provided, however, that if the Holder shall not agree with the fair
market value determined by the Board, the Company shall engage an investment
banker of national reputation (or such other party as shall be mutually
acceptable to the parties) to determine the fair market value. If the valuation
of the investment banker is less than the value determined the Board of
Directors or does not exceed such valuation by 10%, the expenses of the
valuation shall be borne by the Holder. If the valuation of the investment
banker is greater than the value determined by the Board of Directors by more
than 10%, the expenses of such valuation shall be borne by the Company.
10. Transfers and Exchanges. This Warrant may not be transferred in
whole or in part by the Holder without the prior written consent of the Company.
All new warrants issued in connection with transfers or exchanges shall be
identical in form and provision to this Warrant except as to the number of
shares.
11. Successors and Assigns. The terms and provisions of this Warrant
shall be binding upon the Company and the Holder and their respective successors
and assigns.
12. Amendments. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Letter Agreement. This Warrant is issued pursuant to the Letter
of Agreement (the "Letter Agreement"), dated as of November 22, 1996, between
the Company and The Investor's Relationship Group, Inc. The issuance of this
Warrant shall not be construed to indicate that an employment or consulting
relationship exists between the Company and Holder, except to the extent set
forth in the Letter Agreement.
14. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.
5.
15. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
16. Governing Law. The terms and conditions of this Warrant shall be
governed by and construed in accordance with New York law as such laws are
applied to agreements which are entered into solely between New York residents
and are to be performed entirely within that state.
Dated: ATLANTIC PHARMACEUTICALS, INC.
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By: /s/ Xxx X. Xxxxxxxx
--------------------------------
Xxx X. Xxxxxxxx
President and Chief Executive Officer
Dated: ------------------------------------
----------------- Xxxx Xxxxxxx, Ph.D.
EXHIBIT A
NOTICE OF EXERCISE
To: Atlantic Pharmaceuticals, Inc.
1. The undersigned hereby elects to purchase______ shares of Common Stock
of Atlantic Pharmaceuticals, Inc. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase of such shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
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(Name)
-------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
HOLDER
By:
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Its:
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Dated:
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