WARRANT AGREEMENT
between
PROGENITOR, INC.
and
[WARRANT AGENT]
Dated as of __________________, 1997
This Agreement, dated as of _______________, 1997, is between Progenitor,
Inc., a Delaware corporation (the "Company"), and American Stock Transfer &
Trust Company, a _________________ (the "Warrant Agent").
RECITALS
The Company, at or about the time that it is entering into this Agreement,
proposes to issue and sell in a public offering up to 3,162,500 Units ("Units")
(including up to 412,500 Units if the Underwriters' over-allotment option is
exercised in full). Each Unit consists of one share of common stock, $.001 par
value, of the Company ("Common Stock") and one redeemable Warrant (collectively,
the "Warrants"), each Warrant exercisable to purchase one share of Common Stock
for $___________, upon the terms and conditions and subject to adjustment in
certain circumstances, all as set forth in this Agreement.
The Company wishes to retain the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and redemption of the Warrants, the issuance of
certificates evidencing the Warrants to be issued under this Agreement (the
"Warrant Certificates") and the exercise of the Warrants.
The Company and the Warrant Agent wish to enter into this Agreement to set
forth the terms and conditions of the Warrants and the rights of the holders
thereof ("Warrantholders") and to set forth the respective rights and
obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth and for the purpose of defining the terms and provisions of the
Warrants and the Warrant Certificates and the respective rights and obligations
thereunder of the Company, the Warrantholders and the Warrant Agent, the parties
hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT
The Company appoints the Warrant Agent to act as agent for the Company in
accordance with the instructions in this Agreement and the Warrant Agent accepts
such appointment.
SECTION 2. DATE, DENOMINATION AND EXECUTION OF WARRANT CERTIFICATES
The Warrant Certificates (and the Form of Election to Purchase and the Form
of Assignment to be printed on the reverse thereof) shall be in registered form
only and shall be substantially in the form attached hereto as EXHIBIT A (the
provisions of which are hereby incorporated herein), and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law, or with any rule
or regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the
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Common Stock (or other securities issuable upon exercise of the Warrants) or the
Warrants may be listed or any automated quotation system, or to conform to
usage. Each Warrant Certificate shall entitle the registered holder thereof,
subject to the provisions of this Agreement and of the Warrant Certificate, to
purchase, on or before the close of business on _____________, 2002 (the
"Expiration Date"), one fully paid and non-assessable share of Common Stock for
each Warrant evidenced by such Warrant Certificate for $_____________ (the
"Exercise Price"), in each case subject to the adjustments provided in Section 6
hereof. Each Warrant Certificate issued as a part of a Unit offered to the
public as described in the recitals, above, shall be dated the date of issuance
thereof; each other Warrant Certificate shall be dated the date on which the
Warrant Agent receives valid issuance instructions from the Company or a
transferring holder of a Warrant Certificate or, if such instructions specify
another date, such other date.
For purposes of this Agreement, the term "close of business" on any given
date shall mean 5:00 p.m., New York Time, on such date; provided, however, that
if such date is not a business day, it shall mean 5:00 p.m., New York Time, on
the next succeeding business day. For purposes of this Agreement, the term
"business day" shall mean any day other than a Saturday, Sunday, or a day on
which banking institutions in New York are authorized or obligated by law to be
closed.
Each Warrant Certificate shall be executed on behalf of the Company by the
Chief Executive Officer or its President or a Vice President, either manually or
by facsimile signature printed thereon, and have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
Each Warrant Certificate shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any Warrant Certificate shall cease
to be such officer of the Company before countersignature by the Warrant Agent
and issue and delivery thereof by the Company, such Warrant Certificate,
nevertheless, may be countersigned by the Warrant Agent, issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company.
SECTION 3. SUBSEQUENT ISSUE OF WARRANT CERTIFICATES
Subsequent to their original issuance, no Warrant Certificates shall be
reissued except (i) Warrant Certificates issued upon transfer thereof in
accordance with Section 4 hereof, (ii) Warrant Certificates issued upon any
combination, split-up or exchange of Warrant Certificates pursuant to Section 4
hereof, (iii) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof,
(iv) Warrant Certificates issued upon the partial exercise of Warrant
Certificates pursuant to Section 7 hereof, and (v) Warrant Certificates issued
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares or securities purchasable thereunder pursuant to Section 22 hereof.
The Warrant Agent is hereby irrevocably authorized to countersign and deliver,
in accordance with the provisions of Sections 4, 5, 7 and 22, the new Warrant
Certificates required for purposes thereof, and the Company, whenever required
by the Warrant
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Agent, will supply the Warrant Agent with Warrant Certificates duly executed
on behalf of the Company for such purposes.
SECTION 4. TRANSFERS AND EXCHANGES OF WARRANT
CERTIFICATES
The Warrant Agent will keep or cause to be kept at its stock transfer
office in _____________________ ("Stock Transfer Office") books for registration
of ownership and transfer of the Warrant Certificates issued hereunder. Such
registers shall show the names and addresses of the respective holders of the
Warrant Certificates and the number of Warrants evidenced by each such Warrant
Certificate.
The Warrant Agent shall, from time to time, register the transfer of any
outstanding Warrants upon the books to be maintained by the Warrant Agent for
that purpose, upon surrender of the Warrant Certificate evidencing such
Warrants, with the Form of Assignment duly filled in and executed with such
signature guaranteed by a member of the Medallion Stamp Program and such
supporting documentation as the Warrant Agent or the Company may reasonably
require, to the Warrant Agent at its Stock Transfer Office at any time on or
before the Expiration Date, and upon payment to the Warrant Agent for the
account of the Company of an amount equal to any applicable transfer tax.
Payment of the amount of such tax may be made in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company.
Upon receipt of a Warrant Certificate, with the Form of Assignment duly
filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Warrants transferred to such transferee;
PROVIDED, HOWEVER, that in case the registered holder of any Warrant Certificate
shall elect to transfer fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent in addition shall promptly countersign and
deliver to such registered holder a new Warrant Certificate or Certificates for
the number of full Warrants not so transferred.
Any Warrant Certificate or Certificates may be exchanged at the option of
the holder thereof for another Warrant Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same number
of Warrants, upon surrender of such Warrant Certificate or Certificates, with
the Form of Assignment duly filled in and executed, to the Warrant Agent, at any
time or from time to time after the close of business on the date hereof and
prior to the close of business on the Expiration Date. The Warrant Agent shall
promptly cancel the surrendered Warrant Certificate and deliver the new Warrant
Certificate pursuant to the provisions of this Section.
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SECTION 5. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES
Upon receipt by the Company and the Warrant Agent (i) of evidence
reasonably satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate, and (ii) in the case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to them of all reasonable expenses incidental thereto,
and, (iii) in the case of mutilation, upon surrender and cancellation of the
Warrant Certificate, then: the Warrant Agent shall countersign and deliver a new
Warrant Certificate of like tenor for the same number of Warrants.
SECTION 6. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND
EXERCISE PRICE
The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:
A. Subject to the exceptions referred to in Subsection J below, in
case the Company shall, at any time or from time to time after the date hereof,
(1) pay a dividend in, or make a distribution of, shares of capital stock on its
outstanding Common Stock, (2) subdivide its outstanding shares of Common Stock
into a greater number of such shares, (3) combine its outstanding shares of
Common Stock into a smaller number of such shares, or (4) sell any shares of
Common Stock for a consideration per share less than the Market Price (as
defined in Subsection G below) on the date of such sale (any such payment,
distribution, subdivision, combination or sale being referred to as a "Change of
Shares") then, and thereafter upon each further Change of Shares, the Exercise
Price in effect immediately prior to such Change of Shares shall be changed to a
price (including any applicable fraction of a cent) determined by multiplying
the Exercise Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the sum of (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares and (y)
the number of shares of Common Stock which the aggregate consideration, if any,
received (determined as provided in Subsection I(e) below) for the issuance of
such additional shares would purchase at the Market Price and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such adjustment shall
be made successively whenever such an issuance is made.
Upon each adjustment of the Exercise Price pursuant to this clause (ii) of
this Subsection A, the total number of shares of Common Stock purchasable upon
the exercise of each Warrant shall be such number of shares (calculated to the
nearest one-hundredth; provided, however, that in no event shall the aggregate
Exercise Price increase as a result of such rounding calculation) purchasable at
the Exercise Price in effect immediately prior to such adjustment multiplied by
a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment.
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Any adjustment made pursuant to this Subsection A shall, in the case of a
stock dividend or distribution, become effective as of the record date therefor
and, in the case of a subdivision or combination or sale, be made as of the
effective date thereof. If, as a result of an adjustment made pursuant to this
Subsection A, the holder of any Warrant Certificate thereafter surrendered for
exercise shall become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors of the Company (whose
determination shall be conclusive if made in good faith and shall be evidenced
by a certified Board resolution filed with the Warrant Agent) shall determine
the allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.
B. In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in Subsection A above or Subsection D
below), any Warrantholder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive if made in good faith and shall be evidenced by a certified Board
resolution filed with the Warrant Agent) shall be made for the application of
this Section 6 with respect to the rights and interests thereafter of the
Warrantholders (including but not limited to the allocation of the Exercise
Price between or among shares of classes of capital stock), to the end that this
Section 6 (including the adjustments of the number of shares of Common Stock or
other securities purchasable and the Exercise Price thereof) shall thereafter be
reflected, as nearly as reasonably practicable, in all subsequent exercises of
the Warrants for any shares or securities or other property (or cash) thereafter
deliverable upon the exercise of the Warrants. The above provisions of this
Subsection B shall similarly apply to successive reorganizations or
reclassifications.
C. Whenever the Exercise Price or the number of shares of Common
Stock or other securities purchasable upon exercise of a Warrant is adjusted
as provided in this Section 6, the Company will promptly file with the
Warrant Agent a certificate signed by the Chief Executive Officer or the
President or a Vice President of the Company and by the Chief Financial
Officer or the Secretary or an Assistant Secretary of the Company setting
forth (i) the Exercise Price and the number and kind of securities or other
property purchasable upon exercise of a Warrant, as so adjusted, (ii) a
statement that such adjustments in the Exercise Price or the number or kind
of shares or other securities or property, as the case may be, conform to the
requirements of this Section 6, and (iii) a statement showing in detail the
method of calculation and the facts upon which such adjustment or
readjustment is based. Promptly after receipt of such certificate, the
Company, or the Warrant Agent at the Company's request, will deliver, by
first-class, postage prepaid mail, a copy of such certificate (to be supplied
by the Company) to the registered holders of the outstanding Warrant
Certificates; PROVIDED, HOWEVER, that failure to file or to give any notice
required under this Subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section 6; and
PROVIDED,
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FURTHER, that, where appropriate, such notice may be given in advance and
included as part of the notice required to be given pursuant to Section 12
hereof.
D. In case of any consolidation of the Company with, or merger of
the Company into, another corporation or entity (other than a consolidation or
merger which does not result in any reclassification or change of the
outstanding Common Stock), or in case of any sale, lease or conveyance to any
other person or entity of the property of the Company as an entirety or
substantially as an entirety, the Company shall not effect any such
consolidation merger, sale, lease or transfer unless prior to or simultaneously
with the consummation thereof the corporation or entity formed by such
consolidation or merger or the person or entity which shall have acquired or
leased such assets, as the case may be, shall execute and deliver to the Warrant
Agent a supplemental warrant agreement providing (i) that the holder of each
Warrant then outstanding shall have the right thereafter (until the expiration
of such Warrant) to receive, upon exercise of such Warrant, solely the kind and
amount of shares of stock and other securities and property (or cash) receivable
upon such consolidation, merger, sale, lease or transfer by a holder of the
number of shares of Common Stock of the Company for which such Warrant might
have been exercised immediately prior to such consolidation, merger, sale, lease
or transfer and (ii) for the assumption by such successor or purchaser of all
other obligations of the Company under this Agreement. Such supplemental
warrant agreement shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided in this Section 6.
The above provision of this Subsection D shall similarly apply to successive
consolidations, mergers, sales, leases or transfers.
The Warrant Agent shall not be under any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale, lease or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.
E. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Agreement.
F. The Company shall retain a firm of independent public accountants
of recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board, and not disapproved by the Warrant Agent, to make any computation
required under this Section 6, and a certificate signed by such firm shall, in
the absence of fraud or gross negligence, be conclusive evidence of the
correctness of any computation made under this Section 6.
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G. For the purpose of this Section 6, the following terms shall have
the meaning stated in this Subsection G. "Common Stock" shall mean (i) the
class of stock designated as Common Stock in the Certificate of Incorporation of
the Company, as amended, at the date of this Agreement, (ii) in the case of any
consolidation, merger, sale, lease or transfer of the character referred to in
Subsection D of this Section 6, the stock, securities or property provided for
in such Subsection, or (iii) any other class of stock resulting from successive
changes or reclassification of such Common Stock or consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that at any time as a result of an adjustment made pursuant
to this Section 6, the holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 6, and all
other provisions of this Agreement, with respect to the Common Stock, shall
apply on like terms to any such other shares. "Market Price" shall have the
meaning set forth in Section 7E, except that for all purposes of this Section 6,
the time periods set forth in the definition thereof shall be 10 consecutive
trading days.
H. The Company may, from time to time and to the extent permitted by
law, reduce the exercise price of the Warrants by any amount for a period of not
less than 20 days or extend the Expiration Date. If the Company so reduces the
exercise price of the Warrants, or extends the Expiration Date, it will give not
less than 15 days' notice of such decrease or extension (as the case may be),
which notice may be in the form of a publicly disseminated press release, and
shall take such other steps as may be required under applicable law in
connection with any offers or sales of securities at the reduced price or
relating to the extension of the Expiration Date.
I. For purposes of Subsection A hereof, the following provisions (a)
to (e) shall also be applicable:
(a) In the case of the sale by the Company of any units, the
allocation of the offering price of the units between the Common Stock portion
of such unit and any other portion of such unit will be determined by the Board
of Directors of the Company acting in good faith after consultation with an
independent financial adviser.
(b) In case of (1) the sale by the Company for cash (or as a
component of a unit being sold for cash) of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or any
securities convertible into or exchangeable for Common Stock without the payment
of any further consideration other than cash, if any (such securities
convertible, exercisable or exchangeable into Common Stock being herein called
"Convertible Securities"), or (2) the issuance by the Company, without the
receipt by the Company of any consideration therefor, of any rights or warrants
to subscribe for or purchase, or any options for the purchase of, Common Stock
or Convertible Securities, in each case, if (and only if) the consideration
payable to the Company upon the exercise of such rights, warrants or options
shall consist of cash, whether or not such rights, warrants or options, or the
right to
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convert or exchange such Convertible Securities, are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such rights, warrants or options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the minimum aggregate
consideration payable to the Company upon the exercise of such rights, warrants
or options, plus the consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options, plus, in the case of such
Convertible Securities, the minimum aggregate amount of additional
consideration, other than such Convertible Securities, payable upon the
conversion or exchange thereof, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities issuable upon the
exercise of such rights, warrants or options) is less than the Market Price of
the Common Stock on the date of the issuance or sale of such rights, warrants or
options, then the total maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or upon the conversion or
exchange of such Convertible Securities (as of the date of the issuance or sale
of such rights, warrants or options) shall be deemed to be outstanding shares of
Common Stock for purposes of Subsection A hereof and shall be deemed to have
been sold for cash in an amount equal to such price per share.
(c) In case of the sale by the Company for cash of any
Convertible Securities, whether or not the right of conversion or exchange
thereunder is immediately exercisable, and the price per share for which Common
Stock is issuable upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount of consideration received by the
Company for the sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than the Market Price of the
Common Stock on the date of the sale of such Convertible Securities, then the
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be outstanding shares of Common Stock
for purposes of Subsection A hereof and shall be deemed to have been sold for
cash in an amount equal to such price per share.
(d) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (b) or (c) above or
any other securities of the Company convertible, exchangeable or exercisable for
shares of Common Stock, for any reason other than an event that would require
adjustment to prevent dilution, so that the consideration per share received by
the Company after such modification is less than the Market Price on the date
immediately prior to such modification, the Exercise Price to be in effect after
such modification shall be determined by multiplying the Exercise Price in
effect immediately prior to such modification by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on the date
prior to the modification plus the number of shares of Common Stock which the
aggregate consideration receivable by the Company for the securities affected by
the modification would purchase at the Market Price and of which the denominator
shall be the number of shares of Common Stock outstanding on such date plus the
number of
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shares of Common Stock to be issued upon conversion, exchange or exercise of the
modified securities at the modified rate. Such adjustment shall become
effective as of the date upon which such modification shall take effect. On the
expiration of any such right, warrant or option or the termination of any such
right to convert or exchange any such Convertible Securities referred to in (b)
or (c) above, the Exercise Price then in effect hereunder shall forthwith be
readjusted to such Exercise Price as would have obtained (i) had the adjustments
made upon the issuance or sale of such rights, warrants, options or Convertible
Securities been made upon the basis of the issuance of only the number of shares
of Common Stock theretofore actually delivered (and the total consideration
received therefor) upon the exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible Securities and (ii) had
adjustments been made on the basis of the Exercise Price as adjusted under
clause (i) for all transactions (which would have affected such adjusted
Exercise Price) made after the issuance or sale of such rights, warrants,
options or Convertible Securities.
(e) In case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or Convertible Securities, the
consideration received by the Company theretofore shall be deemed to be the
gross sales price therefor without deducting therefrom any expense paid or
incurred by the Company or any underwriting discounts or commissions or
concessions paid or allowed by the Company in connection therewith.
J. Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment of the Exercise Price in the case
of: (i) the issuance of shares of Common Stock upon the sale or exercise in
whole or part of any Warrant or any other Warrant issued in connection with a
firm commitment underwritten initial public offering of the Company; (ii) the
issuance or exercise of shares of Common Stock or any other securities which may
now or hereafter be granted or exercised under the Company's 1992 Stock Option
Plan, 1996 Stock Incentive Plan, 1996 Employee Stock Purchase Plan and 1997
Stock Option Plan (the "Plans") or under any other employee benefit plan of the
Company approved by the Company's board of directors; (iii) the sale of any
shares of Common Stock and/or any Convertible Securities in a firm commitment
underwritten public offering, including, without limitation, shares sold upon
the exercise of any overallotment option granted to the underwriters in
connection with such offering; (iv) the issuance or sale of shares of Common
Stock or Convertible Securities upon the exercise of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common Stock or
Convertible Securities, whether or not any adjustment in the Exercise Price was
made or required to be made upon the issuance or sale of such Common Stock or
Convertible Securities and whether or not such rights, warrants or options were
outstanding on the date of the original sale of the Warrant or were thereafter
issued or sold; (v) the issuance or sale of shares of Common Stock upon
conversion or exchange of any Convertible Securities, whether or not any
adjustment in the Exercise Price was made or required to be made upon the
issuance or sale of such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold; (vi) the issuance of shares of
Common Stock in connection with a bona fide merger, acquisition or other similar
transaction involving the Company or a subsidiary of the Company with or into a
corporation or other entity if the board of directors of the Company has
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obtained a fairness opinion with respect to the issuance of such Common Stock
from a nationally recognized investment bank indicating that the financial
terms of such merger, acquisition or other similar transaction are fair to the
Company when taken as a whole; or (vii) the issuance of shares of Common Stock
in connection with a bona fide private placement transaction not involving
purchasers or placement agents affiliated with the Company or any affiliate of
the Company if (A) the discount to market is not greater than 20% and (B) the
Company has obtained a fairness opinion with respect to the issuance thereof
from a nationally recognized investment banking firm stating that the financial
terms of such transaction are fair to the Company when taken as a whole.
SECTION 7. EXERCISE AND REDEMPTION OF WARRANTS
Unless the Warrants have been redeemed as provided in this Section 7, the
registered holder of any Warrant Certificate may exercise the Warrants evidenced
thereby, in whole or in part from time to time at or prior to the close of
business, on the Expiration Date, subject to the provisions of Section 9, at
which time the Warrant Certificates shall be and become wholly void and of no
value. Warrants may be exercised by their holders or redeemed by the Company as
follows:
A. Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Form of Election to
Purchase on the reverse side thereof duly filled in and executed, to the Warrant
Agent at its Stock Transfer Office, together with payment to the Company of the
Exercise Price (as of the date of such surrender) of the Warrants then being
exercised. Payment of the Exercise Price may be made by wire transfer of same
day funds to an account in a bank designated by the Company for such purpose, or
by certified or bank cashier's check, payable in lawful money of the United
States of America to the order of the Company, or by any combination of such
methods. No adjustment shall be made for any cash dividends, whether paid or
declared, on any securities issuable upon exercise of a Warrant.
B. Upon receipt of a Warrant Certificate, with the Form of Election
to Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised (and an amount equal to any applicable
transfer tax and, if requested by the Company, any other taxes or governmental
charges which the Company may be required by law to collect in respect of such
exercise), the Warrant Agent shall promptly request from the Transfer Agent with
respect to the securities to be issued and shall promptly, and in any event
within five business days thereof, deliver to or upon the order of the
registered holder of such Warrant Certificate, in such name or names as such
registered holder may designate, a certificate or certificates for the number of
full shares of the securities to be purchased, together with cash made available
by the Company pursuant to Section 8 hereof in respect of any fraction of a
share of such securities otherwise issuable upon such exercise. If the Warrant
is then exercisable to purchase property other than securities, the Warrant
Agent shall take appropriate steps to cause such property to be delivered as
soon as practicable to or upon the order of the registered holder of such
Warrant Certificate. In addition, if it is required by law and upon instruction
by the Company, the Warrant Agent will deliver to each Warrantholder a
prospectus which complies
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with the provisions of Section 10 of the Securities Act of 1933, as amended, and
the Company agrees to supply the Warrant Agent with a sufficient number of
prospectuses to effectuate that purpose.
C. In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant Certificate,
the Warrant Agent shall promptly countersign and deliver to the registered
holder of such Warrant Certificate, or to his duly authorized assigns, a new
Warrant Certificate or Certificates evidencing the number of Warrants that were
not so exercised.
D. Each person in whose name any certificate for securities is
issued upon the exercise of Warrants shall for all purposes be deemed to have
become the holder of record of the securities represented thereby as of, and
such certificate shall be dated, the date upon which the Warrant Certificate was
duly surrendered in proper form and payment of the Exercise Price was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date on
which the stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares as of, and the
certificate for such shares shall be dated, the next succeeding business day on
which the stock transfer books of the Company are open (whether before, on or
after the Expiration Date) and the Warrant Agent shall be under no duty to
deliver the certificate for such shares until such date.
E. The Warrants outstanding at the date fixed for redemption may be
redeemed at the option of the Company, in whole or in part on a pro rata basis,
at a price equal to $0.01 per Warrant (the "Redemption Price") at any time after
the date falling six months from the date of first issuance of the Warrants
issued in the public offering as described in the recitals if, at the time
notice of such redemption is given by the Company as provided in Subsection F
below, the Market Price equals or exceeds $__________. For purposes of this
Subsection E, "Calculation Date" shall mean a date within three days of the
mailing of the notice of redemption, as provided in Subsection F below. "Market
Price" shall mean the average last reported sale price of the Common Stock, for
the 30 consecutive trading days ending on the Calculation Date, as reported by
the primary exchange on which the Common Stock is traded, if the Common Stock is
traded on a national securities exchange, or by Nasdaq, if the Common Stock is
traded on the Nasdaq National Market, or, if not listed on the Nasdaq National
Market or traded on any such exchange, the average of the bid and asked price
per share on Nasdaq or, if such quotations are not available, the fair market
value per share of the Common Stock as reasonably determined by the Board of
Directors of the Company. In the event the Company exercises its right to
redeem the Warrants, such Warrants will be exercisable until the close of
business on the business day immediately preceding the date fixed for
redemption. As of the date fixed for redemption, the holders of record of
redeemed Warrants shall be entitled to payment of the Redemption Price upon
surrender of such redeemed Warrants to the Company at the Stock Transfer Office
of the Warrant Agent.
F. Notice of redemption of Warrants shall be given at least 30 days
but not more than 60 days prior to the redemption date by mailing, by registered
or certified mail, return receipt requested, a copy of such notice to the
Warrant Agent and to all of the holders of record
11
of Warrants at their respective addresses appearing on the books or transfer
records of the Company or such other address designated in writing by the holder
of record to the Warrant Agent.
G. From and after the redemption date, all rights of the
Warrantholders (except the right to receive the Redemption Price) shall
terminate, but only if (a) no later than one day prior to the redemption date
the Company shall have irrevocably deposited with the Warrant Agent as paying
agent a sufficient amount to pay on the redemption date the Redemption Price for
all Warrants called for redemption and (b) the notice of redemption shall have
stated the name and address of the Warrant Agent and the intention of the
Company to deposit such amount with the Warrant Agent no later than one day
prior to the redemption date.
H. The Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of Warrants
to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
I. Any amounts deposited with the Warrant Agent that are not
required for redemption of Warrants may be withdrawn by the Company. Any
amounts deposited with the Warrant Agent that shall be unclaimed after six
months after the redemption date may be withdrawn by the Company, and thereafter
the holders of the Warrants called for redemption for which such funds were
deposited shall look solely to the Company for payment. The Company shall be
entitled to the interest, if any, on funds deposited with the Warrant Agent and
the holders of redeemed Warrants shall have no right to any such interest.
J. If the Company fails to make a sufficient deposit with the
Warrant Agent as provided above, the holder of any Warrants called for
redemption may at the option of the holder (a) by notice to the Company declare
the notice of redemption a nullity as to such holder, or (b) maintain an action
against the Company for the Redemption Price. If the holder brings such an
action, the Company will pay reasonable attorneys' fees of the holder. If the
holder fails to bring an action against the Company for the Redemption Price
within 60 days after the redemption date, the holder shall be deemed to have
elected to declare the notice of redemption to be a nullity as to such holder
and such notice shall be without any force or effect as to such holder. Except
as otherwise specifically provided in this Subsection J, a notice of redemption,
once mailed by the Company as provided in Subsection F shall be irrevocable.
SECTION 8. FRACTIONAL INTERESTS
The Company shall not be required to issue any Warrant Certificate
evidencing a fraction of a Warrant or to issue fractions of shares of securities
on the exercise of the Warrants. If any fraction (calculated to the nearest
one-hundredth) of a Warrant or a share of securities would, except for the
provisions of this Section, be issuable on the exercise of any Warrant, the
Company shall, at its option, either purchase such fraction for an amount in
cash equal to the current value of such fraction computed on the basis of the
Market Price, except that for all purposes of this Section 8, the time periods
set forth in the definition thereof shall be the trading day immediately
preceding the day upon which such Warrant Certificate was surrendered for
12
exercise in accordance with Section 7 hereof or issue the required, fractional
Warrant or share. By accepting a Warrant Certificate, the holder thereof
expressly waives any right to receive a Warrant Certificate evidencing any
fraction of a Warrant or to receive any fractional share of securities upon
exercise of a Warrant, except as expressly provided in this Section 8.
SECTION 9. RESERVATION AND LISTING OF EQUITY SECURITIES
The Company covenants that it will at all times reserve and keep available,
free from any pre-emptive rights, out of its authorized and unissued equity
securities, solely for the purpose of issue upon exercise of the Warrants, such
number of shares of equity securities of the Company, including the Common
Stock, as shall then be issuable upon the exercise of all outstanding Warrants
("Equity Securities"). The Company covenants that all Equity Securities which
shall be so issuable shall, upon such issue, be duly authorized, validly issued,
fully paid and non-assessable.
The issuance of the Units, the Common Stock and the Warrants included in
the Units and the Equity Securities to be delivered upon the exercise of the
Warrants have been registered under the Securities Act pursuant to the Company's
Registration Statement on Form S-1 (Registration No. 333-05369). The Company
covenants and agrees that from and after the date hereof: (a) it will use its
best efforts to the extent required under applicable law either (i) to maintain
the effectiveness of the Registration Statement through the Expiration Date or
until such time as no Warrants remain outstanding or (ii) to prepare and file
with the Securities and Exchange Commission a registration statement and the
prospectuses used in connection therewith as may be necessary to keep such
registration statement with respect to the Equity Securities to be delivered
upon the exercise of the Warrants effective and current from the date of
issuance thereof through the Expiration Date or until such earlier time as no
Warrants remain outstanding; (b) as expeditiously as possible, it will register
or qualify the Equity Securities to be delivered upon exercise of the Warrants
under the securities or Blue Sky laws of each jurisdiction in which such
registration or qualification is necessary and use its best efforts to maintain
all such registrations or qualifications in effect from the date of issuance
thereof through the Expiration Date or until such earlier time as no Warrants
remain outstanding; PROVIDED, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject; (c) it will pay all expenses
incurred by the Company in complying with this Section 9, including, without
limitation, (i) all registration and filing fees, (ii) all printing expenses,
(iii) all fees and disbursements of counsel for the Company and independent
public accountants, (iv) all NASD and Blue Sky fees and expenses (including fees
and expenses of counsel in connection with any Blue Sky surveys), and (v) the
entire expense of any special audits incident to or required by any such
registration; and (d) it will use its best efforts to list for quotation on the
Nasdaq National Market, or such other over-the-counter quotation system on which
the Common Stock may at any time be listed, or on any national securities
exchange on which the Common Stock may at any time be listed, the Equity
Securities, and will maintain such listing so long as any other shares of Equity
Securities are so listed; and the Company shall use its best efforts to so list
on the Nasdaq National Market, or
13
such other over-the-counter quotation system, or each national securities
exchange, and shall maintain such listing of, any other shares of capital stock
of the Company issuable upon the exercise of the Warrants if and so long as any
shares of capital stock of the same class are traded on the Nasdaq National
Market or such over-the-counter quotation system or listed on such national
securities exchange, and any such quotation or listing will be at the Company's
expense; PROVIDED, HOWEVER, that in no event shall such Equity Securities be
issued, and the Company is authorized to refuse to honor the exercise of any
Warrant, if such exercise would result in the opinion of the Company's Board of
Directors, upon advice of counsel, in the violation of any law.
SECTION 10. REDUCTION OF EXERCISE PRICE BELOW PAR VALUE
Before taking any action that would cause an adjustment pursuant to
Section 6 hereof reducing the portion of the Exercise Price required to purchase
one share of capital stock below the then par value (if any) of a share of such
capital stock, the Company will use its best efforts to take any corporate
action which, in the opinion of its counsel, may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
such capital stock.
SECTION 11. PAYMENT OF CERTAIN TAXES
The Company covenants and agrees that it will pay when due and payable any
and all federal and state documentary stamp and other original issue taxes which
may be payable in respect of the original issuance of the Warrant Certificates,
or any shares of Common Stock or other securities upon the exercise of Warrants.
The Company shall not, however, be required (i) to pay any tax which may be
payable in respect of any transfer involved in the transfer and delivery of
Warrant Certificates or the issuance or delivery of certificates for Common
Stock or other securities in a name other than that of the registered holder of
the Warrant Certificate surrendered for purchase or (ii) to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
any Warrant Certificate until any such tax shall have been paid, all such taxes
being payable by the holder of such Warrant Certificate at the time of
surrender.
SECTION 12. NOTICE OF CERTAIN CORPORATE ACTION
In case the Company after the date hereof shall propose (i) to take a
record of the holders of any class of securities for the purpose of determining
the holders thereof that are entitled to receive any dividend or other
distribution, rights to subscribe for or purchase any additional shares of any
class of its capital stock or any other securities or property, any evidences of
its indebtedness or assets, or any other rights or options, (ii) to effect any
reclassification of Common Stock (other than a change in the par value of the
Common Stock) or any capital reorganization, or any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or any sale, lease, transfer or other disposition of all or
substantially all of its property and assets, or the liquidation, voluntary or
involuntary dissolution or winding-up of the Company, or (iii) the commencement
by any
14
"person" or "group" (within the meaning of Section 13(d) and Section 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")) of a BONA FIDE tender
offer or exchange offer in accordance with the rules and regulations of the
Exchange Act to purchase shares of Common Stock of the Company, then, in each
such case, the Company shall file with the Warrant Agent, and the Company, or
the Warrant Agent on its behalf, shall mail (by first-class, postage prepaid
mail) to all registered holders of the Warrant Certificates notice of such
proposed action, which notice shall specify the date on which the books of the
Company shall close or a record be taken for such dividend, distribution, offer
of rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, lease, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up shall take place
or commence, as the case may be, and which shall also specify any record date
for determination of holders of Common Stock entitled to vote thereon or
participate therein, and as of which the holders of record of the Company's
Common Stock (or other securities) shall be entitled to exchange their shares of
such Common Stock (or other securities) for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, sale, lease, transfer, other disposition, dissolution,
liquidation, winding-up or other event, and shall set forth such facts with
respect thereto as shall be reasonably necessary to indicate any adjustments in
the Exercise Price and the number or kind of shares or other securities
purchasable upon exercise of Warrants which will be required as a result of such
action, if applicable. Such notice shall be filed and mailed in the case of any
action covered by clause (i) above, at least 10 days prior to the record date
for determining holders of the Common Stock for purposes of such action or, if a
record is not to be taken, the date as of which the holders of shares of Common
Stock of record are to be entitled to such offering; and, in the case of any
action covered by clauses (ii) and (iii) above, at least 20 days prior to the
earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, lease, transfer, other disposition, liquidation,
voluntary or involuntary dissolution or winding-up, or exchange is expected to
become effective and the date on which it is expected that holders of shares of
Common Stock of record on such date shall be entitled to exchange their shares
for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up or exchange.
Failure to give any notice or any defect therein shall not affect the
legality or validity of any transaction listed in this Section 12.
SECTION 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANT CERTIFICATES,
ETC.
The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its Stock Transfer
Office. Copies of this Agreement may be obtained upon written request addressed
to the Warrant Agent at its Stock Transfer Office.
15
SECTION 14. WARRANTHOLDER NOT DEEMED A STOCKHOLDER
No Warrantholder, as such, shall be entitled to vote, 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 of the Warrants represented
thereby for any purpose whatsoever, nor shall anything contained herein or in
any Warrant Certificate be construed to confer upon any Warrantholder, as such,
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 stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance or otherwise), or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 12 hereof), or to receive
dividends or subscription rights, or otherwise, until such Warrant Certificate
shall have been exercised in accordance with the provisions hereof and the
receipt by the Warrant Agent of the Exercise Price and any other amounts payable
upon such exercise.
SECTION 15. RIGHTS OF ACTION
All rights of action in respect to this Agreement are vested in the
respective registered holders of the Warrant Certificates; and any registered
holder of any Warrant Certificate, without the consent of the Warrant Agent or
of any other holder of a Warrant Certificate, may, in his own behalf for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, his right
to exercise the Warrants evidenced by such Warrant Certificate, for the purchase
of shares of the Common Stock in the manner provided in the Warrant Certificate
and in this Agreement.
SECTION 16. AGREEMENT OF HOLDERS OF WARRANT CERTIFICATES
Every holder of a Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent and with every other holder of a
Warrant Certificate that:
A. The Warrant Certificates are transferable on the registry books
of the Warrant Agent only upon the terms and conditions set forth in this
Agreement; and
B. The Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute and lawful
owner of the Warrant (notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Company or the Warrant Agent) for all
purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
SECTION 17. CANCELLATION OF WARRANT CERTIFICATES
In the event that the Company shall purchase or otherwise acquire any
Warrant Certificate or Certificates after the issuance thereof, such Warrant
Certificate or Certificates shall thereupon be delivered to the Warrant Agent
and be canceled by it and retired. The Warrant
16
Agent shall also cancel any Warrant Certificate delivered to it for exercise, in
whole or in part, or delivered to it for transfer, split-up, combination or
exchange. Warrant Certificates so canceled shall be delivered by the Warrant
Agent to the Company from time to time, or disposed of in accordance with the
instructions of the Company.
SECTION 18. CONCERNING THE WARRANT AGENT
The Company agrees to pay to the Warrant Agent from time to time, on demand
of the Warrant Agent, reasonable compensation for all services rendered by it
hereunder and also its reasonable expenses, including counsel fees, and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees
to indemnify the Warrant Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Warrant Agent, arising out of or in connection
with the acceptance and administration of this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT
Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, any
of the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrant Certificates so countersigned;
and in case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant Certificates so countersigned; and in case at that time any
of the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
17
SECTION 20. DUTIES OF WARRANT AGENT
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Warrant Certificates, by their acceptance thereof, shall be
bound:
A. The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel for the Company or the Warrant Agent's in-house counsel),
and the opinion of such counsel shall be full and complete authorization and
protection to the Warrant Agent as to any action taken, suffered or omitted by
it in good faith and in accordance with such opinion; PROVIDED, HOWEVER, that
the Warrant Agent shall have exercised reasonable care in the selection of such
counsel. Fees and expenses of such counsel, to the extent reasonable, shall be
paid by the Company.
B. Whenever in the performance of its duties under this Agreement,
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chief Executive Officer or the
President or a Vice President or the Secretary of the Company and delivered to
the Warrant Agent; and such certificate shall be full authorization to the
Warrant Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
C. The Warrant Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
D. The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
E. The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant Certificate;
nor shall it be responsible for the making of any change in the number of shares
of Common Stock for which a Warrant is exercisable required under the provisions
of Section 6 or responsible for the manner, method or amount of any such change
or the ascertaining of the existence of facts that would require any such
adjustment or change (except with respect to the exercise of Warrant
Certificates after actual notice of any adjustment of the Exercise Price); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any
18
Warrant Certificate or as to whether any shares of Common Stock will, when
issued, be validly issued, fully paid and non-assessable.
F. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrant Certificates, as their respective
rights or interests may appear.
G. The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity.
H. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer or President or a Vice President or the Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with the Warrant Agent's duties, and it shall not be liable for any action taken
or suffered or omitted by it in good faith in accordance with instructions of
any such officer.
I. The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
J. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct; PROVIDED, HOWEVER, that reasonable care shall
have been exercised in the selection and continued employment of such attorneys,
agents and employees.
K. The Warrant Agent will not incur any liability or responsibility
to the Company or to any holder of any Warrant Certificate for any action taken,
or any failure to take action, in reliance on any notice, resolution, waiver,
consent, order, certificates or other paper, document or instrument reasonably
believed by the Warrant Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.
19
L. The Warrant Agent will act hereunder solely as agent of the
Company in a ministerial capacity, and its duties will be determined solely by
the provisions hereof The Warrant Agent will not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own negligence, bad faith or willful conduct.
SECTION 21. CHANGE OF WARRANT AGENT
The Warrant Agent may resign and be discharged from all further duties and
liabilities under this Agreement (except liabilities arising as a result of the
Warrant Agent's own negligence or willful misconduct) upon 30 days' prior notice
in writing mailed, by registered or certified mail, to the Company. The Company
may remove the Warrant Agent or any successor warrant agent upon 30 days' prior
notice in writing, mailed to the Warrant Agent or successor warrant agent, as
the case may be, by registered or certified mail. If the Warrant Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Warrant Agent and shall, within 15 days
following such appointment, give notice thereof in writing to each registered
holder of the Warrant Certificates. If the Company shall fail to make such
appointment within a period of 15 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent, then the holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Warrant Agent. Any new Warrant Agent, whether appointed by the Company
or by such a court, shall be a bank or trust company having capital and surplus
of not less than $10,000,000 or a stock transfer company that is a registered
transfer agent under the Exchange Act. After appointment and execution of a
copy of this Agreement in effect at that time, the successor Warrant Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent,
within a reasonable time, any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this Section, however,
or any defect therein shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be.
SECTION 22. ISSUANCE OF NEW WARRANT CERTIFICATES
Notwithstanding any of the provisions of this Agreement or the several
Warrant Certificates to the contrary, the Company may, at its option, issue new
Warrant Certificates in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares purchasable under the several Warrant Certificates made in accordance
with the provisions of this Agreement.
SECTION 23. NOTICES
Notice or demand pursuant to this Agreement to be given or made on the
Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows: Progenitor, Inc.,
20
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. Given M.D.,
Ph.D., with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows: __________________________, Attention: Corporate Trust Department.
Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to the
last address of such holder as it shall appear on the registers maintained by
the Warrant Agent.
SECTION 24 MODIFICATION OF AGREEMENT
The Company and the Warrant Agent, without the consent of any Warrant
holder, may supplement this Agreement in order to make any changes in this
Agreement which the Warrant Agent has been advised by counsel (i) are required
to cure any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error contained herein, (ii) add to the
covenants and agreements of the Company or the Warrant Agent in the Warrants
such further covenants and agreements thereafter to be observed or (iii) result
in the surrender of any right or power reserved to or conferred upon the Company
or the Warrant Agent in the Warrants, but which changes or corrections do not or
will not adversely affect, alter or change the rights, privileges or immunities
of the registered holders of Warrants. In addition, this Agreement may be
modified, supplemented or altered with the consent in writing of the holders of
Warrants representing not less than 50% of the Warrants then outstanding, except
that no change in the number or nature of the securities purchasable upon the
exercise of any Warrant, or increase in the applicable Exercise Price therefor,
or acceleration of the Expiration Date shall be made without the consent in
writing of the registered holder of each Warrant. For the purposes of any
amendment, modification or waiver hereunder, Warrants held by the Company or any
affiliates shall be disregarded.
Any modification or amendment made in accordance with this Agreement will
be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment made in accordance with this Agreement will be
conclusive and binding on all subsequent holders of such Warrant Certificate.
As of the date hereof, this Agreement contains the entire and only
agreement, understanding, representation, condition, warranty or covenant
between the parties hereto with respect to the matters herein, supersedes any
and all other agreements between the parties hereto
21
relating to such matters, and may be modified or amended only by a written
agreement signed by both parties hereto pursuant to the authority granted by the
first sentence of this Section.
SECTION 25. SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 26. GOVERNING LAW
This Agreement and each Warrant Certificate issued hereunder shall be
governed by and construed in accordance with the laws of the State of New York,
without reference to principles of conflict of laws.
SECTION 27. TERMINATION
This Agreement shall terminate as of the close of business on the
Expiration Date, or such earlier date upon which all Warrants shall have been
exercised or redeemed, except that the Warrant Agent shall account to the
Company as to all Warrants outstanding and all cash held by it as of the close
of business on the Expiration Date.
SECTION 28. BENEFITS OF THIS AGREEMENT
Nothing in this Agreement or in the Warrant Certificates shall be construed
to give to any person or corporation other than the Company, the Warrant Agent,
their respective successors and assigns hereunder, and the registered holders of
the Warrant Certificates any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent, their respective successors and assigns
hereunder, and the registered holders of the Warrant Certificates.
SECTION 29. DESCRIPTIVE HEADINGS
The descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
SECTION 30. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute one and
the same instrument.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
PROGENITOR, INC.
By:
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. Given M.D., Ph.D.
President and Chief Executive Officer
[WARRANT AGENT]
By:
-------------------------------------
Title:
----------------------------------
23
EXHIBIT A
VOID AFTER 5:00 P.M. NEW YORK TIME ON _________________, 2002
WARRANTS TO PURCHASE COMMON STOCK
W________ _________ Warrants
PROGENITOR, INC.
CUSIP 743188 10 4
THIS CERTIFIES THAT FOR VALUE RECEIVED _____________________ or registered
assigns, is the registered holder of the number of Warrants ("Warrants") set
forth above. Each Warrant initially entitles the registered holder thereof to
purchase from Progenitor, Inc., a corporation incorporated under the laws of the
State of Delaware (the "Company"), subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement (as hereinafter defined), one fully
paid and nonassessable share of Common Stock, $0.001 par value, of the Company
("Common Stock") upon presentation and surrender of this Warrant Certificate
with the Subscription Form on the reverse hereof duly executed, at any time
prior to 5:00 p.m., New York Time, on ___________, 2002 or, if such Warrant is
redeemed as provided in the Warrant Agreement, at any time prior to the
effective time of such redemption, at the stock transfer office of American
Stock Transfer & Trust Company, Warrant Agent of the Company (the "Warrant
Agent"), or of its successor warrant agent or, if there be no successor warrant
agent, at the corporate offices of the Company, and upon payment of the Exercise
Price (as defined in the Warrant Agreement) paid either in cash, or by certified
or official bank check, payable in lawful money of the United States of America
to the order of the Company. Each Warrant initially entitles the holder to
purchase one share of Common Stock for $______________. In the event of certain
contingencies provided for in the Warrant Agreement, the Exercise Price or the
number and kind of securities or other property for which the Warrants are
exercisable are subject to adjustment or modification. The Company may redeem
any or all outstanding and unexercised Warrants at any time after
_______________, 1998 if the Market Price (as defined in the Warrant Agreement)
equals or exceeds $________________ for each of the 30 consecutive trading days
immediately preceding the third day before the date of notice of such
redemption, upon 30 days' notice, at a price equal to $0.01 per Warrant.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of _______________, 1997 ("Warrant
Agreement"), between the Company and the Warrant Agent, to all of which terms,
provisions and conditions the registered holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is incorporated herein by
reference and made a part hereof and reference is made to the Warrant Agreement
for a full description of the rights, limitations of rights, obligations, duties
and immunities of the Warrant Agent, the Company and the holders of the Warrant
Certificates.
1
Copies of the Warrant Agreement are available for inspection at the stock
transfer office of the Warrant Agent or may be obtained upon written request
addressed to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention:
President and Chief Executive Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise of
Warrants would violate the securities laws of the United States, certain states
thereof or other jurisdictions. The Company has agreed in the Warrant Agreement
that, among other things: (a) it will use its best efforts to the extent
required under applicable law either (i) to maintain the effectiveness of the
Registration Statement through the Expiration Date or until such time as no
Warrants remain outstanding or (ii) to prepare and file with the Securities and
Exchange Commission a registration statement and the prospectuses used in
connection therewith as may be necessary to keep such registration statement
with respect to the Equity Securities to be delivered upon the exercise of the
Warrants effective and current from the date of issuance thereof through the
Expiration Date or until such earlier time as no Warrants remain outstanding;
and (b) as expeditiously as possible, it will register or qualify the Equity
Securities to be delivered upon exercise of the Warrants under the securities or
Blue Sky laws of each jurisdiction in which such registration or qualification
is necessary and use its best efforts to maintain all such registrations or
qualifications in effect from the date of issuance thereof through the
Expiration Date or until such earlier time as no Warrants remain outstanding;
PROVIDED, that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject However, the Company will not be required to
honor the exercise of Warrants if, in the opinion of the Board of Directors,
upon advice of counsel, the sale of securities upon such exercise would be
unlawful. In certain cases, the Company may, but is not required to, purchase
Warrants submitted for exercise for a cash price equal to the difference between
the market price of the securities obtainable upon such exercise and the
exercise price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote,
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 whatsoever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this
2
Warrant Certificate, as such, 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 stockholders at any meeting thereof or give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the receipt by the Warrant Agent of the Exercise Price.
The Company shall not be required to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the holder of this Warrant Certificate pursuant to the
Warrant Agreement shall have been paid, such tax being payable by the holder of
this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or by facsimile signatures of the proper officers of the
Company and a facsimile of its corporate seal to be imprinted hereon.
Dated: _______________________, 1997.
PROGENITOR, INC.
By:
---------------------------------------
President and Chief Executive Officer
Attest:
-----------------------------------
Secretary
Countersigned
------------------------------
, as Warrant Agent
------------
By:
-----------------------
Authorized Officer
3
[FORM OF REVERSE OF WARRANT CERTIFICATE]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder
hereby irrevocably elects to exercise _____________ of the Warrants represented
by this Warrant Certificate, and to purchase the securities issuable upon the
exercise of such Warrants, and requests that certificates for such securities
shall be issued in the name of:
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
------------------------------
------------------------------
------------------------------
------------------------------
[please print or type name and address]
and be delivered to
------------------------------
------------------------------
------------------------------
------------------------------
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
1
If applicable, the undersigned represents that the exercise of the Warrants
evidenced hereby was solicited by a member of the National Association of
Securities Dealers, Inc. If not solicited by an NASD member, please leave blank
or write "unsolicited" in the space below.
------------------------------------
(Name of NASD Member)
Dated:
------------
-----------------------------------
-----------------------------------
-----------------------------------
Address
-----------------------------------
Taxpayer Identification Number
-----------------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST
BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM.
2
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED,______________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
----------------------
----------------------
----------------------
----------------------
[please print or type name and address]
__________ of the Warrants represented by this Warrant Certificate, and
hereby irrevocably constitutes and appoints ______________ Attorney to transfer
this Warrant Certificate on the books of the Company, with full power of
substitution in the premises.
Dated:
-------------
------------------------------
Signature Guaranteed
------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST
BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM.
3
