COMMON STOCK PURCHASE WARRANT AZURRX BIOPHARMA, INC.
Exhibit
4.1
NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
|
Warrant
Shares: [_____]
|
Issuance
Date: July 16, 2020
|
|
Warrant
No. W- [_____]
|
Initial
Exercise Date: [__], 2020
|
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, [_____] or its assigns (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, [including the Stockholder
Approval]1 and the additional limitations set forth
in Sections 2(e), at any time [after the earlier of (i) the
Stockholder Approval and (ii) the date that is six months from the
date hereof]2 (the “Initial Exercise Date”)
and on or prior to the close of business on the five-year
anniversary of the Issuance Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from AzurRx
BioPharma, Inc., a Delaware corporation (the “Company”), up to [_____]
shares (as subject to adjustment hereunder, the “Warrant Shares”) of the
Company’s Common Stock, par value $0.0001 per share
(“Common
Stock”). The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 2(c). This Warrant is being issued [in
accordance with the Convertible Preferred Stock and Warrant
Purchase Agreement (the “Purchase Agreement”),
dated July 16, 2020, among the Company and the purchasers signatory
thereto]3/[pursuant to that certain engagement
letter, dated as of May 1, 2020, by and between the Company and
Alexander Capital, LP].4
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the [Purchase Agreement]5/[Convertible Preferred Stock and Warrant
Purchase Agreement (the “Purchase Agreement”), dated
July 16, 2020, among the Company and the purchasers signatory
thereto].6 The following definitions shall apply
for purposes of this Warrant.
a) “Business Day” means any
day except Saturday, Sunday, any day which is a federal legal
holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
b) [“Stockholder
Approval” means the approval of the Proposal by the
Company’s stockholders as contemplated in Section 8(i) of the
Purchase Agreement.]7
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c) “Trading Day” means a day
on which the principal Trading Market is open for trading;
provided, that in the event that the Common Stock is not listed or
quoted on a Trading Market, then Trading Day shall mean a Business
Day.
d) “Trading Market” means
whichever of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the
New York Stock Exchange, the NYSE American, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market,
the OTC Bulletin Board or any tier of the OTC Markets Group, Inc.
(or any successors to any of the foregoing).
Section
2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by
this Warrant may be made, subject to the [Stockholder Approval
and]8 additional limitations set forth in
Sections 2(e), in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination
Date by delivery to the Company (or such other office or agency of
the Company as it may designate by notice in writing to the
registered Holder at the address of the Holder appearing on the
books of the Company) of a duly executed facsimile copy (or email
attachment) of the Notice of Exercise in the form annexed hereto.
Within the earlier of (i) three (3) Trading Days and (ii) the
number of Trading Days comprising the Standard Settlement Period
(as defined in Section 2(d)(i) herein) following the date of
exercise as aforesaid, the Holder shall deliver the aggregate
Exercise Price for the shares specified in the applicable Notice of
Exercise by wire transfer or cashier’s check drawn on a
United States bank unless the cashless exercise procedure specified
in Section 2(b) below is specified in the applicable Notice of
Exercise. No ink-original Notice of Exercise shall be
required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Notice of Exercise form be
required. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in
full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within five (5) Trading Days of the date
the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of
the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares
purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within two (2) Business Days of receipt
of such notice. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount
stated on the face hereof.
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b) Cashless Exercise. Subject to
[the Stockholder Approval and]9the limitations on exercise set forth in
Sections 2(e), commencing on the Initial Exercise Date, if the Per
Share Market Value (as defined below) of one share of Common Stock
is greater than the Exercise Price (at the date of calculation as
set forth below) [and there is not an effective registration
statement under the Securities Act providing for the resale of the
Warrant Shares]10, in lieu of exercising this Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless
exercise by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Notice of Exercise,
in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following
formula:
X = Y -
(A)(Y)
B
Where
X
=
the number of
Warrant Shares to be issued to the Holder.
Y
=
the number of
Warrant Shares purchasable upon exercise of all of the Warrant or,
if only a portion of the Warrant is being exercised, the portion of
the Warrant being exercised.
A
=
the Exercise
Price.
B
= the
Per Share Market Value of one share of Common Stock.
For
purposes hereof, “Per Share Market Value”
means on any particular date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the bid price of the Common
Stock for the time in question (or the nearest preceding date) on
the Trading Market on which the Common Stock is then listed or
quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if the Common Stock is not then listed or quoted for trading on
a Trading Market and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets
Group, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of Common Stock so reported, or (c) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the [Holders of a
majority in interest of the Securities issuable pursuant to the
Purchase Agreement then outstanding]11/[Holder]12and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
If
Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of
the Securities Act, the Warrant Shares shall take on the
characteristics of the Warrants being exercised, and the holding
period of the Warrant Shares being issued may be tacked on to the
holding period of this Warrant. The Company agrees not
to take any position contrary to this Section 2(b).
c) Exercise Price. The exercise
price per share of the Common Stock under this Warrant shall be
$[__], subject to adjustment
hereunder (the “Exercise
Price”).
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d)
Mechanics of
Exercise.
i.
Delivery of Certificates Upon
Exercise. Warrant Shares purchased hereunder shall be
transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s or its designee’s balance
account with The Depository Trust Company through its Deposit or
Withdrawal at Custodian system (“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder and
the Holder has provided the Company with written representations as
reasonably requested by the Company in connection with such legend
removal or (B) the Warrant Shares are eligible for resale by the
Holder without volume or manner-of-sale limitations pursuant to
Rule 144 and the Holder has provided the Company with written
representations as reasonably requested by the Company in
connection with such legend removal, and otherwise by physical
delivery of a certificate, registered in the Company’s share
register in the name of the Holder or its designee, for the number
of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the address specified by the Holder in the Notice of
Exercise by the date that is the earlier of (i) three (3) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period after the delivery to the Company of the Notice
of Exercise (such date, the “Warrant Share Delivery
Date”). Upon delivery of the Notice of Exercise, the
Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date of
delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) two Trading Days
and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise. As
used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Exercise.
ii.
Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part,
the Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
iii.
No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant, and the number of
shares of Warrant Shares to be issued pursuant to any provision
hereof shall be rounded down to the nearest whole
share.
iv.
Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares
shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the
event that Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
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v.
Closing of Books. The Company
will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
e) ▇▇▇▇▇▇’s
Exercise Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group within the meaning of Rule 13D-5
promulgated under the Exchange Act together with the Holder or any
of the Holder’s Affiliates) (such Persons,
“Attribution
Parties”), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates and
Attribution Parties shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which
such determination is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (i) exercise of
the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates (or Attribution
Parties) and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any
of its Affiliates or Attribution Parties. Except as set forth
in the preceding sentence, for purposes of this Section 2(e),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is
not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of
Exercise shall be deemed to be the Holder’s determination of
whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and
Attribution Parties) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(e), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the Securities and
Exchange Commission (the “Commission”), as the case
may be, (B) a more recent public announcement by the Company or (C)
a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in
writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates or Attribution Parties
since the date as of which such number of outstanding shares of
Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 19.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply. Any such increase in the Beneficial Ownership Limitation
will not be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
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Section
3. Certain
Adjustments.
a) Adjustments
for Stock Splits, Combinations, Certain Dividends and
Distributions. If the Company shall, at any time or from
time to time after the Initial Exercise Date, effect a split of the
outstanding Common Stock (or any other subdivision of its shares of
Common Stock into a larger number of shares of Common Stock),
combine the outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or make or issue or set a record
date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of
Common Stock, then, in each event (i) the number of shares of
Common Stock for which this Warrant shall be exercisable
immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock that a
record holder of the same number of shares of Common Stock for
which this Warrant is exercisable immediately prior to the
occurrence of such event would own or be entitled to receive after
the happening of such event, and (ii) the Exercise Price then in
effect shall be adjusted to equal (A) the Exercise Price then in
effect multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment
divided by (B) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such
adjustment.
b) Adjustment
for Other Dividends and Distributions. If the Company shall,
at any time or from time to time after the Initial Exercise Date,
make or issue or set a record date for the determination of holders
of Common Stock entitled to receive a dividend or other
distribution payable in (i) cash, (ii) any evidences of
indebtedness, or any other securities of the Company or any
property of any nature whatsoever, other than, in each case, shares
of Common Stock; or (iii) any warrants or other rights to subscribe
for or purchase any evidences of indebtedness, or any other
securities of the Company or any property of any nature whatsoever,
other than, in each case, shares of Common Stock, then, and in each
event, (A) the number of shares of Common Stock for which this
Warrant shall be exercisable shall be adjusted to equal the product
of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such adjustment multiplied by a
fraction (1) the numerator of which shall be the last closing bid
price per share of the Common Stock at the date of taking such
record and (2) the denominator of which shall be such last closing
bid price per share of the Common Stock minus the amount allocable
to one share of Common Stock of any such cash so distributable and
of the fair value (as determined in good faith by the Board) of any
and all such evidences of indebtedness, shares of stock, other
securities or property or warrants or other subscription or
purchase rights so distributable, and (B) the Exercise Price then
in effect shall be adjusted to equal (1) the Exercise Price then in
effect multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment
divided by (2) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such adjustment. A
reclassification of the Common Stock (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 Common Stock and shares of any other
class of stock shall be deemed a distribution by the Company to the
holders of its Common Stock of such shares of such other class of
stock within the meaning of this Section 3(b) and, if the
outstanding shares of Common Stock shall be changed into a larger
or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of
Common Stock within the meaning of Section 3(a).
c) Adjustments
for Reclassification, Exchange or Substitution. If the
Common Stock for which this Warrant is exercisable at any time or
from time to time after the Initial Exercise Date shall be changed
to the same or different number of shares of any class or classes
of stock, whether by reclassification, exchange, substitution or
otherwise (other than by way of a stock split or combination of
shares or stock dividends provided for in Section 3(a), Section
3(b), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 3(d)), then, and in each event, an
appropriate revision to the Exercise Price shall be made and
provisions shall be made (by adjustments of the Exercise Price or
otherwise) so that, upon any subsequent exercise of this Warrant,
the Holder shall have the right to receive, in lieu of Common
Stock, the kind and amount of shares of stock and other securities
receivable upon reclassification, exchange, substitution or other
change, by holders of the number of shares of Common Stock for
which this Warrant was exercisable immediately prior to such
reclassification, exchange, substitution or other change, all
subject to further adjustment as provided herein.
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d) Adjustments
for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the
Initial Exercise Date there shall be a capital reorganization of
the Company (other than by way of a stock split or combination of
shares or stock dividends or distributions provided for in Section
3(a), and Section 3(b), or a reclassification, exchange or
substitution of shares provided for in Section 3(c)), or a merger
or consolidation of the Company with or into another corporation
where the holders of the Company’s outstanding voting
securities prior to such merger or consolidation do not own over
50% of the outstanding voting securities of the merged or
consolidated entity, immediately after such merger or
consolidation, or the sale of all or substantially all of the
Company’s properties or assets to any other person (an
“Organic
Change”), then as a part of such Organic Change an
appropriate revision to the Exercise Price shall be made if
necessary and provision shall be made if necessary (by adjustments
of the Exercise Price or otherwise) so that, upon any subsequent
exercise of this Warrant, the Holder shall have the right to
receive, in lieu of Common Stock, the kind and amount of shares of
stock and other securities or property of the Company or any
successor corporation resulting from the Organic Change. In any
such case, appropriate adjustment shall be made in the application
of the provisions of this Section 3(d) with respect to the rights
of the Holder after the Organic Change to the end that the
provisions of this Section 3(d) (including any adjustment in the
Exercise Price then in effect and the number of shares of stock or
other securities deliverable upon exercise of this Warrant) shall
be applied after that event in as nearly an equivalent manner as
may be practicable.
e) Calculations.
All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 3, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.
f)
Notice to Holder.
i.
Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly deliver to the Holder
a notice by facsimile or email setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts
requiring such adjustment.
ii.
Notice to Allow Exercise by
▇▇▇▇▇▇. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class
or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or property, or (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified for such
shorter period as is reasonable, as determined in good faith by the
Board of Directors of the Company, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. The Holder shall remain
entitled to exercise this Warrant during the period commencing on
the date of such notice to the effective date of the event
triggering such notice except as may otherwise be expressly set
forth herein.
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Section
4. Transfer
of Warrant.
a) Transferability. Subject to
compliance with any applicable securities laws, this Warrant and
all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations
reasonably requested in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant
to the Company unless the Holder has assigned this Warrant in full,
in which case, the Holder shall surrender this Warrant to the
Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant
full. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may
be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants
are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which
may be involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice. All Warrants issued on transfers or exchanges shall be
dated the Initial Exercise Date and shall be substantially
identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d) Transfer
Restrictions. If, at the
time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of
this Warrant shall not be either (i) registered pursuant to an
effective registration statement under the Securities Act and
under applicable state securities or
blue sky laws or (ii) eligible for resale without volume or
manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, comply with the provisions of
[the Purchase Agreement and]13 applicable
securities laws.
e) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.
-8-
Section
5. [Call.
Notwithstanding anything herein to the contrary, the Company, at
its sole option, may call up to one hundred percent (100%) of this
Warrant by providing the Holder of this Warrant written notice
pursuant to Section 6(j) (the “Call Notice”) if the Per
Share Market Value of the Common Stock has been equal to or greater
than three hundred fifty (350%) percent of the Exercise Price (as
may be adjusted pursuant Section 3(a)) for a period of twenty (20)
consecutive Trading Days immediately prior to the date of delivery
of the Call Notice. The rights and privileges granted pursuant to
this Warrant with respect to the Warrant Shares subject to the Call
Notice (the “Called
Warrant Shares”) shall expire on the 10th Trading Day after
the Holder receives the Call Notice (the “Early Termination Date”)
if this Warrant is not exercised with respect to such Called
Warrant Shares prior to such Early Termination Date. In the event
this Warrant is not exercised with respect to the Called Warrant
Shares, the Company shall remit to the Holder of this Warrant (1)
$0.01 per Called Warrant Share and (2) a new Warrant representing
the number of Warrant Shares, if any, which shall not have been
subject to the Call Notice upon the Holder tendering to the Company
the applicable Warrant certificate. The Company may not provide a
Call Notice, and any attempt to issue a Call Notice or require the
cancellation of this Warrant shall be voidable, to the extent that:
(U) the Company has not obtained the Stockholder Approval; (V) a
Holder would be unable, pursuant to Section 2(e), to exercise the
Warrant, except to the extent the Company makes reasonable
provision for the issuance of a prefunded warrant (or similar
instrument) with a similar Beneficial Ownership Limitation, as
those specified in Section 2(e) (a “Prefunded Warrant”) in
lieu of Common Stock in connection with any such exercise; (W) the
Holder is in possession of any information provided by the Company
to the Holder that constitutes, or reasonably might constitute,
material non-public information; (X) the Company has failed to
honor any attempted exercise of the Warrants as of 6:30 p.m. New
York City time on the date of the Call Notice; (Y) at any time
between the date of the Call Notice and Early Termination Date the
Common Stock is neither listed on a securities exchange or market
nor quoted on the OTC Bulletin Board or the Pink Sheets, LLC (or
similar organization or agency succeeding to its functions of
reporting prices); or (Z) the issuance of the Warrant Shares would
cause a breach of the covenants in Sections 6(e).]14
Section
6. Miscellaneous.
a) No Rights as Stockholder Until
Exercise. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section
2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such
right may be exercised on the next succeeding Business
Day.
d) Automatic Exercise upon
Expiration. In the event that, upon the Termination Date,
the Per Share Market Value of one share of Common Stock (or other
security issuable upon the exercise hereof) as determined in
accordance with this Warrant above is greater than the Exercise
Price in effect on such date, then this Warrant shall automatically
be deemed on and as of such date to be exercised pursuant to a
Cashless Exercise as to all shares (or such other securities) for
which this Warrant shall not previously have been exercised or
converted, and the Company shall promptly deliver the shares (or
such other securities) issued upon such exercise to the Holder;
provided,
however, to the
extent that the foregoing automatic exercise would result in the
Holder exceeding the Beneficial Ownership Limitation, then the
Company shall issue to the Holder [a Prefunded Warrant]15/[a prefunded warrant (or similar
instrument) with a similar Beneficial Ownership Limitation, as
those specified in Section 2(e) (a “Prefunded
Warrant”)]16 in an equivalent manner so that the
number of shares of Common Stock underlying such Prefunded Warrant
would equal the number of Warrant Shares issuable upon such
automatic exercise, as would not result in the Holder exceeding the
Beneficial Ownership Limitation.
-9-
e) [Surrender of Warrant.
Notwithstanding anything contained herein to the contrary, in the
event that the Company failed to obtain the Stockholder Approval on
or prior to the Stockholder Approval Deadline (as defined in the
Certificate of Designation), the Holder shall surrender the Warrant
to the Company for cancellation simultaneously with the redemption
of the Series B Preferred Stock (as defined in the Certificate of
Designation).]17
f) Authorized Shares. The Company
covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of issuing the necessary Warrant Shares upon
the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation. The Company
covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will,
upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect
of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be reasonably necessary or appropriate to
protect the rights of ▇▇▇▇▇▇ as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (ii) take all such action as
may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use
commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having
jurisdiction thereof, as may be, reasonably necessary to enable the
Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be reasonably
necessary from any public regulatory body or bodies having
jurisdiction thereof.
g) Governing Law; Jurisdiction.
This Warrant shall be governed by and construed in accordance with
the internal laws of the State of New York, without giving effect
to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. Each of
the Company and the Holder (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New
York located in New York county for the purposes of any suit,
action or proceeding arising out of or relating to this Warrant or
any of the other Transaction Documents or the transactions
contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or
proceeding is improper.
h) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant will have restrictions upon resale imposed by state
and federal securities laws.
-10-
i) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice the Holder’s rights, powers or
remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall
pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.
j) Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via facsimile or email at
the facsimile number or email address of the addressee at or prior
to 5:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile or email at the facsimile
number or email address of the addressee on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the second (2nd) Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth in the
Company’s records.
k) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
l) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
m) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder or holder of Warrant Shares.
n) Amendment. This Warrant may be
modified or amended or the provisions hereof waived with the prior
written consent of the Company and the [holders of a majority of
the Warrant Shares underlying the then outstanding Warrants issued
pursuant to the Purchase Agreement,
provided that any modification or amendment which adversely impacts
the Holder’s rights under this Warrant in a manner
disproportionately from the holders of the other outstanding
Warrants shall require the approval of the]18 Holder.
o) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Warrant.
p) Headings. The headings used in
this Warrant are for the convenience of reference only and shall
not, for any purpose, be deemed a part of this
Warrant.
********************
-11-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
|
|
|
By:__________________________________________
Name:
Title:
|
-12-
NOTICE OF EXERCISE
(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a
certificate or certificates representing said Warrant Shares in the
name of the undersigned or in such other name as is specified
below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(3)
Accredited
Investor. The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended.
(4)
The undersigned
intends that payment of the Exercise Price shall be made as (check
one):
Cash
Exercise_______
Cashless
Exercise_______
If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of
$________ by certified or official bank check (or via wire
transfer) to the Company in accordance with the terms of the
Warrant.
If the
Holder has elected a Cashless Exercise, a certificate shall be
issued to the Holder for the number of shares equal to the whole
number portion of the product of the calculation set forth below,
which is ___________. The Company shall pay a cash adjustment in
respect of the fractional portion of the product of the calculation
set forth below in an amount equal to the product of the fractional
portion of such product and the Per Share Market Value on the date
of exercise, which product is ____________.
X = Y -
(A)(Y)
B
Where:
The
number of shares of Common Stock to be issued to the Holder is
(“X”).
The
number of shares of Common Stock purchasable upon exercise of all
of the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised is
(“Y”).
The
Exercise Price is (“A”).
The Per
Share Market Value of one share of Common Stock on the date of
exercise is (“B”).
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_________________________________________________________________
Signature of Authorized Signatory of Investing
Entity:
___________________________________________
Name of
Authorized Signatory:
_____________________________________________________________
Title
of Authorized Signatory:
______________________________________________________________
Date:
__________________________________________________________________________________
-13-
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, [____ all of or [_______ shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to
_______________________________________________
whose address is
_______________________________________________________________.
Dated:
______________, _______
Holder’s
Signature:
_____________________________
Holder’s
Address:
_____________________________
_____________________________
-14-