1
EXHIBIT 4.7
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS
EXPRESSLY SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SUCH ACT. ANY SUCH SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS.
Date of Original Issuance:____________________, 1998
HEARx LTD.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, _________________________
or its registered assigns, is entitled to purchase from HEARx LTD., a Delaware
corporation (the "Company"), at any time or from time to time during the period
specified in Paragraph 2 hereof, ____________________ (_______) fully paid and
nonassessable shares of the Company's Common Stock, par value $.10 per share
(the "Common Stock"), at an exercise price of $2.00 per share (the "Exercise
Price"). The term "Warrant Shares", as used herein, refers to the shares of
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph 4 hereof.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or
destruction thereof), the completed Exercise Agreement shall have been
delivered, and payment shall have been made for such shares as set forth above.
Certificates for the
2
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding two (2) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
Notwithstanding anything in this Warrant to the contrary, in no
event shall the Holder of this Warrant be entitled to exercise a number of
Warrants (or portions thereof) in excess of the number of Warrants (or portions
thereof) upon exercise of which the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants) and (ii) the number of shares of Common Stock issuable
upon exercise of the Warrants (or portions thereof) with respect to which the
determination described herein is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.9% of the outstanding
shares of Common Stock. For purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder
(collectively, "Section 13(d)"), except as otherwise provided in clause (i)
thereof.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or
from time to time on or after the date on which this Warrant is issued and
before 5:00 p.m., New York City time on the fifth (5th) anniversary of the date
of original issuance (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants
and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will,
upon issuance in accordance with the terms of this Warrant, be
validly issued, fully paid, and nonassessable and free from all
taxes, liens, and charges with respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period,
the Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of this
Warrant.
(c) LISTING. The Company shall promptly secure the
listing of the shares of Common Stock issuable upon exercise of the
Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon exercise of this
Warrant) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable
-2-
3
upon the exercise of this Warrant; and the Company shall so list
on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of,
any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its charter 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 to be observed or
performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by
the holder of this Warrant in order to protect the exercise
privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant.
Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise
Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation,
or acquisition of all or substantially all the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES
UPON ISSUANCE OF COMMON STOCK. Except as otherwise provided in
Paragraphs 4(c) and 4(e) hereof, if and whenever on or after the
original issuance date of this Warrant, the Company issues or sells,
or in accordance with Paragraph 4(b) hereof is deemed to have issued
or sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection
therewith) less than the Market Price (as hereinafter defined) on
the date of issuance (a "Dilutive Issuance"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be
reduced to a price determined by multiplying the Exercise Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i)
the numerator of which is an amount equal to the sum of (x) the
number of shares of Common Stock Deemed Outstanding (as hereinafter
defined) immediately prior to the Dilutive Issuance, plus (y) the
aggregate consideration, calculated as set forth in Section 4(b)
hereof, received by
-3-
4
the Company upon such Dilutive Issuance, divided by the Market
Price in effect immediately prior to the Dilutive Issuance, and
(ii) the denominator of which is the total number of shares of
Common Stock Deemed Outstanding immediately after the Dilutive
Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under Paragraph
4(a) hereof, the following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company
in any manner issues or grants any warrants, rights
or options, whether or not immediately exercisable, to
subscribe for or to purchase Common Stock or other
securities convertible into or exchangeable for Common
Stock ("Convertible Securities") (such warrants, rights
and options to purchase Common Stock or Convertible
Securities are hereinafter referred to as "Options") and
the price per share for which Common Stock is issuable
upon the exercise of such Options is less than the
Market Price on the date of issuance of the Options,
then the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options will, as
of the date of the issuance or grant of such Options, be
deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For
purposes of the preceding sentence, the "price per share
for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such
Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the case of
Convertible Securities issuable upon the exercise of
such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange
thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum
total number of shares of Common Stock issuable upon the
exercise of all such Options (assuming full conversion
of Convertible Securities, if applicable). No further
adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon the exercise
of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such
Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible
(other than where the same are issuable upon the
exercise of Options) and the price per share for which
Common Stock is issuable upon such conversion or
exchange is less than the Market Price on the date of
issuance of such convertible securities, then the
maximum total number of shares of Common Stock issuable
upon the conversion or exchange of all such Convertible
Securities will, as of the date of the
-4-
5
issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the
Company for such price per share. For the purposes of
the preceding sentence, the "price per share for which
Common Stock is issuable upon such conversion or
exchange" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such
Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to
the Company upon the conversion or exchange thereof at
the time such Convertible Securities first become
convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price
will be made upon the actual issuance of such Common
Stock upon conversion or exchange of such Convertible
Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If
there is a change at any time in (i) the amount of
additional consideration payable to the Company upon the
exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the
conversion or exchange of any Convertible Securities; or
(iii) the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock (other
than under or by reason of provisions designed to
protect against dilution), the Exercise Price in effect
at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such
time had such Options or Convertible Securities still
outstanding provided for such changed additional
consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total
number of shares of Common Stock issuable upon exercise
of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the
rights to exercise such Option or to convert or exchange
such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been
in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or
termination (other than in respect of the actual number
of shares of Common Stock issued upon exercise or
conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any
Common Stock, Options or Convertible Securities are
issued, granted or sold for cash, the consideration
received therefor for purposes of this Warrant will be
the amount received by the Company therefor, before
deduction of reasonable commissions, underwriting
discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such
issuance,
-5-
6
grant or sale. In case any Common Stock, Options or
Convertible Securities are issued or sold for a
consideration part or all of which shall be other than
cash, the amount of the consideration other than cash
received by the Company will be the fair value of such
consideration, except where such consideration consists
of securities, in which case the amount of consideration
received by the Company will be the Market Price thereof
as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in
connection with any merger or consolidation in which the
Company is the surviving corporation, the amount of
consideration therefor will be deemed to be the fair
value of such portion of the net assets and business of
the non-surviving corporation as is attributable to such
Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other
than cash or securities will be determined in good faith
by the Board of Directors of the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE.
No adjustment to the Exercise Price will be made (i)
upon the exercise of any warrants, options or
convertible securities issued and outstanding on the
date of the original issuance of this Warrant; (ii) upon
the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of
such stock or options is approved by a majority of the
independent members of the Board of Directors of the
Company or a majority of the members of a committee of
independent directors established for such purpose; or
(iii) upon the exercise of this Warrant.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the
shares of Common Stock acquirable hereunder into a greater number of
shares, then, after the date of record for effecting such
subdivision, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common
Stock acquirable hereunder into a smaller number of shares, then,
after the date of record for effecting such combination, the
Exercise Price in effect immediately prior to such combination will
be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Paragraph
4, the number of shares of Common Stock issuable upon exercise of
this Warrant shall be adjusted by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the
number of shares of Common Stock issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
-6-
7
(e) CONSOLIDATION, MERGER OR SALE. In case of any
consolidation of the Company with, or merger of the Company into any
other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in
connection with a plan of complete liquidation of the Company, then
as a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such
shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common
Stock immediately theretofore acquirable and receivable upon
exercise of this Warrant had such consolidation, merger or sale or
conveyance not taken place. In any such case, the Company will make
appropriate provision to insure that the provisions of this
Paragraph 4 hereof will thereafter be applicable as nearly as may be
in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not
effect any consolidation, merger or sale or conveyance unless prior
to the consummation thereof, the successor corporation (if other
than the Company) assumes by written instrument the obligations
under this Paragraph 4 and the obligations to deliver to the holder
of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled
to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall
declare or make any distribution of its assets to holders of Common
Stock as a partial liquidating dividend, by way of return of capital
or otherwise, then, after the date of record for determining
stockholders entitled to such distribution, but prior to the date of
distribution, the holder of this Warrant shall be entitled upon
exercise of this Warrant for the purchase of any or all of the
shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder
been the holder of such shares of Common Stock on the record date
for the determination of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any
event which requires any adjustment of the Exercise Price, then, and
in each such case, the Company shall give notice thereof to the
holder of this Warrant, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease in the
number of Warrant Shares purchasable at such price upon exercise,
setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall
be certified by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment
of the Exercise Price shall be made in an amount of less than 1% of
the Exercise Price in effect at the time such adjustment is
otherwise required to be made, but any such lesser adjustment shall
be carried forward and shall be made at the time and together
-7-
8
with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than
1% of such Exercise Price.
(i) NO FRACTIONAL SHARES. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant, but the
Company shall pay a cash adjustment in respect of any fractional
share which would otherwise be issuable in an amount equal to the
same fraction of the Market Price of a share of Common Stock on the
date of such exercise.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend
upon the Common Stock payable in shares of stock of any
class or make any other distribution (other than
dividends or distributions payable in cash out of
retained earnings) to the holders of the Common Stock;
(ii) the Company shall offer for
subscription pro rata to the holders of the Common Stock
any additional shares of stock of any class or other
rights;
(iii) there shall be any capital
reorganization of the Company, or reclassification of
the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially
all its assets to, another corporation or entity; or
(iv) there shall be a voluntary or
involuntary dissolution, liquidation or winding-up of
the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type
contemplated by the adjustment provisions of this Paragraph 4 but
not expressly provided for by such provisions,
-8-
9
the Company will give notice of such event as provided in Paragraph
4(g) hereof, and the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of
shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the Holder shall be neither enhanced nor
diminished by such event.
(l) CERTAIN DEFINITIONS.
(i) "Common Stock Deemed Outstanding" shall
mean the number of shares of Common Stock actually
outstanding (not including shares of Common Stock held
in the treasury of the Company), plus (x) the number of
shares of Common Stock issuable upon exercise or
conversion of all Options and Convertible Securities
outstanding at such time and which were outstanding as
of May 3, 1996, plus (y) in the case of Paragraph
4(b)(i) hereof, the maximum total number of shares of
Common Stock issuable upon the exercise of the Options
issued in the transaction for which the adjustment is
required under this Section 4, calculated as of the date
of such issuance or grant of such Options, if any, and
(z) in the case of Paragraph 4(b)(ii) hereof, the
maximum total number of shares of Common Stock issuable
upon conversion or exchange of the Convertible
Securities issued in the transaction for which the
adjustment is required under this Section 4, calculated,
as of the date of issuance of such Convertible
Securities, if any.
(ii) "Market Price," as of any date, (i)
means the average of the last reported sale prices for
the shares of Common Stock as reported by the American
Stock Exchange ("AMEX") for the ten (10) trading days
immediately preceding such date, or (ii) if AMEX is not
the principal trading market for the shares of Common
Stock, the average of the last reported sale prices on
the principal trading market for the Common Stock during
the same period, or (iii) if market value cannot be
calculated as of such date on any of the foregoing
bases, the Market Price shall be the average fair market
value as reasonably determined in good faith by the
Board of Directors of the Company. The manner of
determining the Market Price of the Common Stock set
forth in the foregoing definition shall apply with
respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii) "Common Stock," for purposes of this
Paragraph 4, includes the Common Stock, par value $.10
per share, and any additional class of stock of the
Company having no preference as to dividends or
distributions on liquidation, provided that the shares
purchasable pursuant to this Warrant shall include only
shares of Common Stock, par value $.10 per share, in
respect of which this Warrant is exercisable, or shares
resulting from any subdivision or combination of such
Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the
character referred to in Paragraph 4(e) hereof, the
stock or other securities or property provided for in
such Paragraph.
-9-
10
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part,
upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of
the Company referred to in Paragraph 7(e) below, provided, however,
that any transfer or assignment shall be subject to the conditions
set forth in Paragraph 7(f) hereof. Until due presentment for
registration of transfer on the books of the Company, the Company
may treat the registered holder hereof as the owner and holder
hereof for all purposes, and the Company shall not be affected by
any notice to the contrary. Notwithstanding anything to the contrary
contained herein, the registration rights described in Paragraph 8
are assignable only in accordance with the provisions of that
certain Registration Rights Agreement, dated as of even date with
the original issuance of this Warrant, by and among the Company and
the other signatories thereto (the "Registration Rights Agreement").
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS.
This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the office or agency of the Company referred to in
Paragraph 7(e) below, for new Warrants of like tenor representing in
the aggregate the right to purchase the number of shares of Common
Stock which may be purchased hereunder, each of such new Warrants to
represent the right to purchase such number of shares as shall be
designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any
such loss, theft, or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
-10-
11
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the
surrender of this Warrant in connection with any transfer, exchange,
or replacement as provided in this Paragraph 7, this Warrant shall
be promptly canceled by the Company. The Company shall pay all taxes
(other than securities transfer taxes) and all other expenses (other
than legal expenses, if any, incurred by the Holder or transferees)
and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Paragraph 7.
(e) REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the
name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each transferee and each
prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at
the time of the surrender of this Warrant in connection with any
exercise, transfer, or exchange of this Warrant, this Warrant (or,
in the case of any exercise, the Warrant Shares issuable hereunder),
shall not be registered under the Securities Act and under
applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant, as the
case may be, furnish to the Company a written opinion of counsel,
which opinion and counsel are reasonably acceptable to the Company,
to the effect that such exercise, transfer, or exchange may be made
without registration under said Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a) promulgated under
the Securities Act; provided that no such opinion, letter or status
as an "accredited investor" shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act; provided
further, however, that no "Subject Holder" (as defined below) may
sell or otherwise transfer the Warrants, except (i) to the Company
or to a stockholder or a group of stockholders who immediately prior
to the sale control a majority of the Company's voting shares (a
"Controlling Stockholder" or "Controlling Group", as applicable);
(ii) to an affiliate of such Holder; (iii) in connection with any
merger, consolidation, reorganization or sale of more than 50% of
the outstanding Common Stock of the Company (a "Reorganization");
(iv) in a registered public offering or a public sale pursuant to
Rule 144 or other applicable exemption from the registration
requirements of the Securities Act (or any successor rule or
regulation); or (v) in a private sale (otherwise than to the
Company, to a Controlling Stockholder or a Controlling Group, to an
affiliate of such Holder, or in a Reorganization), provided that the
Holder shall not sell or otherwise transfer during any ninety (90)
day period a portion(s) of the Warrants which, if converted into
Common Stock, would represent, at the time of the transfer, in the
aggregate (together with any other shares of Common Stock the
beneficial ownership of which is transferred), beneficial ownership
by the transferee(s) of more than 4.9% percent of the Common Stock
then outstanding. Subject Holder means any Holder who, but
-11-
12
for the provisions contained in the last paragraph of Section 1,
would beneficially own 5% or more of the outstanding Common Stock of
the Borrower. The first holder of this Warrant, by taking and
holding the same, represents to the Company that such holder is
acquiring this Warrant for investment and not with a view to the
distribution thereof. For the purposes of this paragraph, beneficial
ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in Section 2 of the
Registration Rights Agreement.
9. NOTICES. All notices, requests, and other communications required
or permitted to be given or delivered hereunder to the holder of this Warrant
shall be in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to such holder at the address shown for such holder on
the books of the Company, or at such other address as shall have been furnished
to the Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, M.D., Chairman, or at such
other address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request, or other communication may be
sent by facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice (or upon such
person's refusal to accept such notice) at the address of such person for
purposes of this Paragraph 9, or, if mailed by registered or certified mail or
with a recognized overnight mail courier upon deposit with the United States
Post Office or such overnight mail courier, if postage is prepaid and the
mailing is properly addressed, as the case may be.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof
may only be amended by an instrument in writing signed by the
Company and the holder hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of
the several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of
any of the provisions hereof.
-12-
13
(c) CASHLESS EXERCISE. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act, this Warrant may be
exercised by presentation and surrender of this Warrant to the
Company at its principal executive offices with a written notice of
the holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant
for that number of shares of Common Stock determined by multiplying
the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference
between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
HEARx LTD.
By:
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇, M. D.
--------------------------
Title Chairman
--------------------------
-13-
14
FORM OF EXERCISE AGREEMENT
Dated: ________, ____.
To:_____________________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by surrender of securities issued by the
Company (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:
Name:
----------------------------------
Signature:
------------------------------
Address:
------------------------------
------------------------------
Note: The above signature should correspond exactly with
the name on the face of the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
15
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No of Shares
, and hereby irrevocably constitutes and appoints ______________
________________________ as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of substitution in
the premises.
Dated: _____________________, ____,
In the presence of
------------------
Name:
-----------------------------------
Signature:
------------------------
Title of Signing Officer or Agent (if any):
---------------------------------
Address:
-------------------------
-------------------------
Note: The above signature should correspond
exactly with the name on the face of the within
Warrant.